ACTUAL/ COMPENSATORY

DAMAGES
Purpose
Actual or compensatory damages simply make good or replace the loss caused by the wrong.

Manner of Determination
Claimant must produce competent proof or the best evidence obtainable such as receipts to justify
an award therefore. Actual or compensatory damages cannot be presumed but must be proved with
reasonable certainty. (People v. Ereno, Feb. 22, 2000)

Special/Ordinary
Ordinary
NOTE: Ordinary Damages are those generally inherent in a breach of a typical contract

MORAL DAMAGES
Purpose
Awarded only to enable the injured party to obtain means, diversion or amusement that will alleviate
the moral suffering he has undergone, by reason of defendants culpable action. (Robleza v. CA, 174
SCRA 354)

Manner of Determination
No proof of pecuniary loss is necessary. The assessment is left to the discretion of the court
according to the circumstances of each case. However, there must be proof that the defendant
caused physical suffering etc. (Compania Maritima v. Allied Free Worker’s Union, G.R. No. L-31379,
Aug. 29, 1988). GR: Factual basis must be alleged. Aside from the need for the claimant to
satisfactorily prove the existence of the factual basis of the damages, it is also necessary to prove its
causal relation to the defendant’s act (Raagas v. Trava, G.R. No. L-20081, Feb. 27,1968; People v.
Manero, G.R. Nos. 86883-85, Jan. 29, 1993).

Exception: Criminal cases. Moral damages may be awarded to the victim in criminal proceedings in
such amount as the court deems just without need for pleading or proof of the basis thereof (People
v. Paredes, July 30, 1998).

Special/Ordinary
Special
NOTE: Special Damages are those which exist because of special circumstances and for which a
debtor in good faith can be held liable if he had been previously informed of such. circumstances.

NOMINAL DAMAGES
Purpose
Vindicating or recognizing the injured party’s right to a property that has been violated or invaded.
(Tan v. Bantegui, 473 SCRA 663)

Manner of Determination
No proof of pecuniary loss is necessary. Proof that a legal right has been violated is what is only
required. Usually awarded in the absence of proof of actual damages.

Special/Ordinary
Special
NOTE: Special Damages are those which exist because of special circumstances and for which a
debtor in good faith can be held liable if he had been previously informed of such. circumstances.

TEMPERATE DAMAGES
Purpose
When the court is convinced that there has been such a loss, the judge is empowered to calculate
moderate damages rather than let the complainant suffer without redress. (GSIS v. Labung-Deang,
365 SCRA 341)

Manner of Determination
May be recovered when the court finds that some pecuniary loss has been suffered but its amount
cannot, from the nature of the case, be proved with certainty. No proof of pecuniary loss is
necessary.

Special/Ordinary
Special
NOTE: Special Damages are those which exist because of special circumstances and for which a
debtor in good faith can be held liable if he had been previously informed of such. circumstances.
LIQUIDATED DAMAGES
Purpose
Liquidated damages are frequently agreed upon by the parties, either by way of penalty or in order
to avoid controversy on the amount of damages.

Manner of Determination
If intended as a penalty in obligations with a penal cause, proof of actual damages suffered by the
creditor is not necessary in order that the penalty may be demanded (Art. 1228, NCC). No proof of
pecuniary loss is necessary.

Special/Ordinary
Special
NOTE: Special Damages are those which exist because of special circumstances and for which a
debtor in good faith can be held liable if he had been previously informed of such. circumstances.

EXEMPLARY/CORRECTIVE
DAMAGES
Purpose
Exemplary or corrective damages are intended to serve as a deterrent to serious wrongdoings.
(People v. Orilla, 422 SCRA 620)

Manner of Determination
1. That the claimant is entitled to moral, temperate or compensatory damages; and

2. That the crime was committed with 1 or more aggravating circumstances, or the quasi-‐delict was
committed with gross negligence, or in contracts and quasi-contracts the act must be accompanied
by bad faith or done in wanton, fraudulent, oppressive or malevolent manner. No proof of pecuniary
loss is necessary.

Special/Ordinary
Special
NOTE: Special Damages are those which exist because of special circumstances and for which a
debtor in good faith can be held liable if he had been previously informed of such. circumstances.
What is the doctrine of attractive
nuisance?
One who maintains on his estate or premises an attractive nuisance without exercising due case to
prevent children from playing therewith or resorting thereto, is liable to a child of tender years who is
injured thereby, even if the child is technically a trespasser in the premises. (Jarco Marketing Corp.
v. CA, 117 SCAD 818, 321 SCRA 375 (1991), Paras, p. 741)

WHEN MAY ATTORNEY’S FEES BE

AWARDED?
 Attorney’s fees may be awarded only when a separate civil action to recover civil liability has
been filed or when exemplary damages are awarded
 The reason for this is that there is no attorney in a criminal case, only a public prosecutor, who
is compensated by the government

WHEN CAN ATTORNEY’S FEES BE

AWARDED IN CRIMINAL CASES?
 If there is award of exemplary damages

WHAT IS THE DIFFERENCE

BETWEEN DAMAGE AND
DAMAGES?
> Damages refers to the actionable loss resulting from another person’s act or omission. It is
the detriment, loss, or injury which
is occasioned by reason of fault of another in the property or
person
> Damages refer to the sum of money which can be awarded for the damage done. These are the
pecuniary consequences which the law imposes for the breach of some duty or the violation of
some
right
WHEN ARE EXEMPLARY DAMAGES
AWARDED?
EXEMPLARY DAMAGES MAY BE AWARDED IN THE FOLLOWING CASES:
1. In criminal actions, when the crime was committed with one or more aggravating
circumstances
2. In quasi-delicts, if the defendant acted with gross negligence
3. In contracts and quasi-contracts, if the defendant acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner

WHAT ARE THE MANDATORY

AWARDS IN CASE OF RAPE CASES?
 In rape cases, a civil indemnity of P50000 is mandatory
 An award of moral damages is also mandatory without need of pleading or proof.
 If it is qualified rape, the mandatory civil indemnity is P75,000

WHAT SHOULD THE OFFENDED P

ARTY PROVE IF HE WANTS TO
CLAIM ACTUAL DAMAGES OR LOSS
OF EARNING CAPACITY?
 The offended party must show proof of the amount of the
pecuniary loss, such as receipts
 Actual damages not supported by evidence may not be awarded
 However, if death results from the crime or the quasi-delict, the heirs need only to prove
the fact of death in order to claim actual or compensatory damages

IS THERE NEED FOR PROOF

OF PECUNIARY LOSS IN
ORDED THAT
MORAL, NOMINAL, TEMPORATE,
LIQUIDATED, OR EXEMPLARY
DAMAGES MAY BE ADJUDICATED?
 No, Article 2216 of the Civil Code provides that no proof is needed
 The assessment of the damage depends on the discretion of the court

MAY DAMAGES BE INCREASED ON

APPEAL?
 Yes, an appeal opens the whole case on review by the appellate court, and this includes the
award of damages

WHAT ARE NOMINAL DAMAGES?

 Nominal damages are awarded in recognition of a violation of a right of the plaintiff when
no actual damage was done to him
 Under article 2221 of the CC, these are damages recoverable in order to vindicate or
recognize the rights of the plaintiff which has been violated or invaded by the defendant

Employer's Liability Based On

Quasi-Delict
An employer’s liability based on a quasi-delict is primary and direct, while the employer’s liability
based on a delict is merely subsidiary. (People vs. Fabro, 93 SCRA 200 (1979). The words “primary
and direct” as contrasted with “subsidiary”, refer to the remedy provided by law for enforcing the
obligation rather than to the character and limits of the obligation. (33A Words and Phrases 215
(197, Ed.). Although liability under Article 2180 originates from negligent act of the employee, the
aggrieved party may sue the employer directly. When an employee causes damage, the law
presumes that the employer has himself committed an act of negligence in not preventing or
avoiding the damage. This is the fault that the law condemns. While the employer is civilly liable in a
subsidiary capacity for the employee’s criminal negligence, the employer is also civilly liable directly
and separately for his own civil negligence in failing to exercise due diligence in selecting and
supervising his employee.
 Liability Of Registered Owner of
Vehicle
It has been consistently ruled that the registered owner of any vehicle is directly and primarily
responsible to the public and third persons while it is being operated. The rationale behind such
doctrine was explained way back in 1957 in Erezo vs. Jepte where it was said that the principle upon
which this doctrine is based is that in dealing with vehicles registered under the Public Service Law,
the public has the right to assume or presume that the registered owner is the actual owner thereof,
for it would be difficult for the public to enforce the actions that they may have for injuries caused to
them by the vehicles being negligently operated if the public should be required to prove who the
actual owner is. How would the public or third persons know against whom to enforce their rights in
case of subsequent transfers of the vehicles? We do not imply by his doctrine, however, that the
registered owner may not recover whatever amount he had paid by virtue of his liability to third
persons from the person to whom he had actually sold, assigned or conveyed the vehicle.
(Villanueva vs. Domingo, et al., G.R. No. 144274, September 20, 2004).

Liability Of Hospitals Under The

Doctrine of Apparent Authority
and Doctrine of Corporate
Negligence
The case of Professional Services, Inc. v. Agana, G.R. No. 126297; Agana, et al. v. Fuentes, G.R.
No. 126467; Ampil v. Agana, et al., G.R. No. 127590, January 31, 2007 set the precedent for the
liability of hospitals for the negligence of doctors employed by it, or even consultants. The SC said
that courts in holding a hospital liable for damages, having undertaken one of mankind’s most
important and delicate endeavors, must assume the grave responsibility of pursuing it with
appropriate care. The care and service dispensed through this high trust, however technical,
complex and esoteric its character may be, must meet standards of responsibility commensurate
with the undertaking to preserve and protect the health, and indeed, the very lives of those placed in
the hospital’s keeping. (Beeck v. Tuzon General Hospital, 500 P. 2d 1153 (1972), citing Darling v.
Charleston Community Memorial Hospital, 33 Ill. 2d 326, 211 N.E. 2d 253).

Dr. Ampil, assisted by the medical staff of the Medical City Hospital, performed an anterior resection
surgery on Natividad. He found that the malignancy in her sigmoid area had spread on her left ovary,
necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained the consent of
Natividad’s husband, Enrique Agana, to permit Dr. Juan Fuentes, to perform hysterectomy on her.

After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took over, completed the operation
and closed the incision.
The operation appeared to be flawed, because the attending nurse entered these remarks:

“sponge count lacking 2

“announced to surgeon searched (sic) done but to no avail continue for closure.”

Natividad was released from the hospital, but later on complained of excruciating pain in her anal
region. She consulted both doctors about it. They told her that the pain is the natural consequence of
the surgery. Dr. Ampil then recommended that she consult an oncologist to examine the cancerous
nodes which were not removed during the operation.

Accompanied by her husband she went to the United States to seek further treatment. After four
months of consultations and laboratory examinations, she was told she was free of cancer. Hence,
she was advised to return to the Philippines.

After her return to the Philippines, her daughter found a piece of gauze protruding from her vagina.
Upon being informed about it, Dr. Ampil proceeded to her house where he managed to extract by
hand a piece of gauze measuring 1.5 inches in width. He then assured her that the pains would soon
vanish.

Dr. Ampil’s assurance did not come true. Instead, the pains intensified, prompting Natividad to seek
treatment at the Polymedic General Hospital. While confined there, Dr. Ramon Gutierrez detected
the presence of another foreign object in her vagina – a foul-smelling gauze measuring 1.5 inches in
width badly infected her vaginal vault. A recto-vaginal fistula had formed in her reproductive organs
which forced stool to excrete through the vagina. Another surgical operation was needed to remedy
the damage. Thus, in October 1984, she underwent another surgery.

The spouses filed a complaint for damages alleging that the doctors are liable for negligence for
leaving two pieces of gauze inside Natividad’s body and malpractice for concealing their acts of
negligence.

On February 16, 1986, pending the outcome of the above case, she died and was duly substituted
by her children.

The trial court rendered a judgment holding the doctors liable for negligence and malpractice.

On appeal, the CA dismissed the case against Dr. Fuentes but affirmed the judgment against Dr.
Ampil and the hospital.

On September 6, 1996, the Court of Appeals rendered its Decision jointly disposing of CA-GR CV
No. 42062 and CA-GR SP No. 32198, dismissing the case against Dr. Fuentes and holding PSI and
Dr. Ampil solidarily liable.

Only Dr. Ampil filed a motion for reconsideration, but was denied.

PSI alleged in its petition that the Court of Appeals erred in holding that: (1) it is estopped from
raising the defense that Dr. Ampil is not its employee; (2) it is solidarily liable with Dr. Ampil; and (3)
it is not entitled to its counterclaim against the Aganas. PSI contended that Dr. Ampil is not its
employee, but a mere consultant or independent contractor. As such, he alone should answer for his
negligence.

The Aganas maintained that the Court of Appeals erred in finding that Dr. Fuentes is not guilty of
negligence or medical malpractice, invoking the doctrine of res ipsa loquitur. They contended that
the pieces of gauze are prima facie proofs that the operating surgeons have been negligent.

Dr. Ampil asserted that the Court of Appeals erred in finding him liable for negligence and
malpractice sans evidence that he left the two pieces of gauze in Natividad’s vagina. He pointed to
other probable cause, such as: (1) it was Dr. Fuentes who used gauzes in performing the
hysterectomy; (2) the attending nurses’ failure to properly count the gauzes used during surgery; and
(3) the medical intervention of the American doctors who examined Natividad in the United States of
America.

The issues submitted to the court were: first, whether the Court of Appeals erred in holding Dr. Ampil
liable for negligence and malpractice; second, whether the Court of Appeals erred in absolving Dr.
Fuentes of any liability; and third, whether PSI may be held solidarily liable for the negligence of Dr.
Ampil.

Held: (1) Whether the Court of Appeals erred in holding Dr. Ampil liable for negligence and
malpractice.

Dr. Ampil argued that the Court should not discount either of the following possibilities: first, Dr.
Fuentes left the gauzes in Natividad’s body after performing hysterectomy; second, the attending
nurses erred in counting the gauzes; and third, the American doctors were the ones who placed the
gauzes in Natividad’s body.

The arguments are purely conjectural and without basis. Records show that he did not present any
evidence to prove that the American doctors were the ones who put or left the gauzes in Natividad’s
body. Neither did he submit evidence to rebut the correctness of the record of operation, particularly
the number of gauzes used. As to the alleged negligence of Dr. Fuentes, Dr. Ampil examined his
work and found it in order.

The glaring truth is that all the major circumstances, taken together, as specified by the Court of
Appeals, directly point to Dr. Ampil as the negligent party, thus:

First, it is not disputed that the surgeons used gauzes as sponges to control the bleeding of the
patient during the surgical operation.

Second, immediately after the operation, the nurses who assisted in the surgery noted in their
support that the ‘sponge count (was) lacking 2’; that such anomaly was ‘announced to surgeon’ and
that a ‘search was done but to no avail’ prompting Dr. Ampil to ‘continue for closure’ x x x.

Third, after the operation, two (2) gauzes were extracted from the same spot of the body of Mrs.
Agana where the surgery was performed.

An operation requiring the placing of sponges in the incision is not complete until the sponges are
properly removed, and it is settled that the leaving of sponges or other foreign substances in the
wound after the incision has been closed is at least prima facie negligence by the operating surgeon.
(Rule v. Cheeseman, 317 P. 2d 472 (1957), citing Russel v. Newman, 116 Kan. 268 P. 752;
Bernsden v. Johnson, 174 Kan. 230, 255 P. 2d 1033). To put simply, such act is considered so
inconsistent with due care as to raise an inference of negligence. There are even legions of
authorities to the effect that such act is negligence per se.

The SC further ruled that it is not blind to the reality that there are times when danger to a patient’s
life precludes a surgeon from further searching missing sponges or foreign objects left in the body.
But this does not leave him free from any obligation. Even if it has been shown that a surgeon was
required by the urgent necessities of the case to leave a sponge in his patient’s abdomen, because
of the dangers attendant upon delay, still, it is his legal duty to so inform his patient within a
reasonable time thereafter by advising her of what he had been compelled to do. This is in order that
she might seek relief from the effects of the foreign object left in her body as her condition might
permit. In Smith v. Zeagler, it was ruled, thus:

“The removal of all sponges used is part of a surgical operation, and when a physician or surgeon
fails to remove a sponge he has placed in his patient’s body that should be removed as part of the
operation, he thereby leaves his operation uncompleted and creates a new condition which imposes
upon him the legal duty of calling the new condition to his patient’s attention, and endeavoring with
the means he has at hand to minimize and avoid untoward results likely to ensue therefrom. (157
So. 328 Pla. (1934)).

Dr. Ampil did not inform Natividad about the missing two pieces of gauze. Worse, he even misled
her that the pain she was experiencing was the ordinary consequence of her operation. Had he been
more candid, Natividad could have taken the immediate and appropriate medical remedy to remove
the gauzes from her body. What was initially an act of negligence by Dr. Ampil has ripened into a
deliberate wrongful act of deceiving his patient.

To successfully pursue this kind of case, a patient must only prove that a health care provider either
failed to do something which a reasonably prudent health care provider would have done, or that he
did something that a reasonably prudent provider would not have done; and that failure or action
caused injury to the patient. (Garcia-Rueda v. Pascasio, G.R. No. 118141, September 5, 1997, 278
SCRA 769). Simply put, the elements are duty, breach, injury and proximate causation. Dr. Ampil, as
the lead surgeon, had the duty to remove all foreign objects, such as gauzes, from Natividad’s body
before closure of the incision. When he failed to do so, it was his duty to inform Natividad about it.
Dr. Ampil breached both duties. Such breach caused injury to Natividad, necessitating her further
examination by American doctors and another surgery. That Dr. Ampil’s negligence is the proximate
cause of Natividad’s injury could be traced from his act of closing the incision despite the information
given by the attending nurses that two pieces of gauze were still missing. That they were later on
extracted from Natividad’s vagina established the causal link between Dr. Ampil’s negligence and
the injury. And what further aggravated such injury was his deliberate concealment of the missing
gauzes from the knowledge of Natividad and her family.

(2) Whether the Court of Appeals erred in absolving Dr. Fuentes of any liability.

The Aganas assailed the dismissal by the trial court of the case against Dr. Fuentes on the ground
that it is contrary to the doctrine of res ipsa loquitur. According to them, the fact that the two pieces
of gauze were left inside Natividad’s body is a prima facie evidence of Dr. Fuentes’ negligence.

Held: The SC ruled otherwise.

Literally, res ipsa loquitur means “the thing speaks for itself”. It is the rule that the fact of the
occurrence of an injury, taken with the surrounding circumstances, may permit an inference or raise
a presumption of negligence, or make out a plaintiff’s prima facie case, and present a question of
fact for defendant to meet with an explanation. (Ramos v. CA, G.R. No. 124354, December 29,
1999, 321 SCRA 584). Stated differently, where the thing which caused the injury, without the fault
of the injured, is under the exclusive control of the defendant and the injury is such that it should not
have occurred if he, having such control used proper care, it affords reasonable evidence, in the
absence of explanation that the injury arose from the defendant’s want of care, and the burden of
proof is shifted to him to establish that he has observed due care and diligence. (Africa v. Caltex
(Phils.) Inc., 123 Phil. 280).
From the foregoing statements of the rule, the requisites for the applicability of the doctrine of res
ipsa loquitur are: (1) the occurrence of an injury; (2) the thing which caused the injury was under the
control and management of the defendant; (3) the occurrence was such that in the ordinary course
of things, would not have happened if those who had control or management used proper care; and
(4) the absence of explanation by the defendant. Of the foregoing requisites, the most instrumental
is the “control and management of the thing which cause the injury”.

The element of “control and management of the thing which caused the injury” are wanting in the
case. Hence, the doctrine of res ipsa loquitur will not lie.

Captain of the Ship Rule

Dr. Ampil was the lead surgeon during the operation of Natividad. He requested the assistance of
Dr. Fuentes only to perform hysterectomy when he found that the malignancy in her sigmoid area
had spread to her left ovary. Dr. Fuentes performed the surgery and thereafter reported and showed
his work to Dr. Ampil. The latter examined it and finding everything to be in order, allowed Dr.
Fuentes to leave the operating room. Dr. Ampil then resumed operating on Natividad. He was about
to finish the procedure when the attending nurses informed him that two pieces of gauze were
missing. A “diligent search” was conducted, but the misplaced gauzes were not found. Dr. Ampil
then directed that the incision be closed. During this entire period, Dr. Fuentes was no longer in the
operating room and had, in fact, left the hospital.

Under the “Captain of the Ship” rule, the operating surgeon is the person in complete charge of the
surgery room and all personnel connected with the operation. Their duty is to obey his orders. (Rural
Educational Assn. v. Bush, 42 Tenn. App. 34, 298 S.W. 2d 761 (1956)). As stated before, Dr. Ampil
was the lead surgeon. In other words, he was the “Captain of the Ship”. That he discharged such
role is evidenced from his following conduct: (1) calling Dr. Fuentes to perform a hysterectomy; (2)
examining the work of Dr. Fuentes and finding it in order; (3) granting Dr. Fuentes’ permission to
leave; and (4) ordering the closure of the incision. It was this act of ordering the closure of the
incision notwithstanding that two pieces of gauze remained unaccounted for, that caused injury to
Natividad’s body. Clearly, the control and management of the thing which caused the injury was in
the hands of Dr. Ampil, not Dr. Fuentes.

In this jurisdiction, res ipsa loquitur is not a rule of substantive law, hence, does not per se create or
constitute an independent or separate ground of liability, being a mere evidentiary rule. In other
words, mere invocation and application of the doctrine does not dispense with the requirement of
proof of negligence. Here, the negligence was proven to have been committed by Dr. Ampil and not
by Dr. Fuentes.

(3) Whether PSI is liable for the negligence of Dr. Ampil.

The third issue necessitates a glimpse at the historical development of hospitals and the resulting
theories concerning their liability for the negligence of physicians.

Until the mid-nineteenth century, hospitals were generally charitable institutions, providing medical
services to the lowest classes of society, without regard for a patient’s ability to pay. Those who
could afford medical treatment were usually treated at home by their doctors. However, the days of
house calls and philanthropic health care are over. The modern health care industry continues to
distance itself from its charitable past and has experienced a significant conversion from a not-for-
profit health care to for-profit hospital business. Consequently, significant changes in health law have
accompanied the business-related changes in the hospital industry. One important legal change is
an increase in hospital liability for medical malpractice. Many courts now allow claims for hospital
vicarious liability under the theories of respondeat superior, apparent authority, ostensible authority,
or agency by estoppel.

The statute governing liability for negligent acts is Article 2176 of the Civil Code, which reads:

Article 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a quasi-delict and is governed by the
provisions of this Chapter.

A derivated of this provision is Article 2180, the rule governing vicarious liability under the doctrine of
respondeat superior, thus:

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

xxx xxx

The owners and managers of an establishment or enterprise are likewise responsible for damages
caused by their employees in the service of the branches in which the latter are employed or on the
occasion of their functions.

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

xxx xxx

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

Professionals engaged by an employer, such as physicians, dentists, and pharmacists, are not
“employees” under this article because the manner in which they perform their work is not within the
control of the latter (employer). In other words, professionals are considered personally liable for the
fault or negligence they commit in the discharge of their duties, and their employer cannot be held
liable for such fault or negligence. In the context of the present case, “a hospital cannot be held
liable for the fault or negligence of a physician or surgeon in the treatment or operation of patients.

Such view is grounded on the traditional notion that the professional status and the very nature of
the physician’s calling preclude him from being classed as an agent or employee of a hospital,
whenever he acts in a professional capacity. It has been said that medical practice strictly involves
highly developed and specialized knowledge, such that physicians are generally free to exercise
their own skill and judgment in rendering medical services sans interference. Hence, when a doctor
practices medicine in a hospital setting, the hospital and its employees are deemed to subserve him
in his ministrations to the patient and his actions are of his own responsibility.

The case of Schloendorff v. Society of New York Hospital, 211 N.Y. 125, 105 N.E. 92, 52 L.R.A.,
N.S. 505 (1914), was then considered an authority for this view. The “Schloendorff doctrine” regards
a physician, even if employed by a hospital, as an independent contractor because of the skill he
exercises and the lack of control exerted over his work. Under this doctrine, hospitals are exempt
from the application of the respondeat superior principle for fault or negligence committed by
physicians in the discharge of their profession.
However, the efficacy of such doctrine has weakened with the significant developments in medical
care. Courts came to realize that modern hospitals are increasingly taking active role in supplying
and regulating medical care to patients. No longer were a hospital’s functions limited to furnishing
room, food, facilities for treatment and operation, and attendants for its patients. Thus, in Bing v.
Thunig, 2 N.Y. 2d 656, 163 NYS 2d 3, 143 (1957), the New York Court of Appeals deviated from the
Schloendorff doctrine, noting that modern hospitals actually do far more than provide facilities for
treatment. Rather, they regularly employ, on a salaried basis, a large staff of physicians, interns,
nurses, administrative and manual workers. They charge patients for medical care and treatment,
even collecting for such services through legal action, if necessary. The court then concluded that
there is no reason to exempt hospitals from the universal rule of respondeat superior.

In our shores, the nature of the relationship between the hospital and the physicians is rendered
inconsequential in view of our categorical pronouncement in Ramos v. Court of Appeals, that for
purposes of apportioning responsibility in medical negligence cases, an employer-employee
relationship in effect exists between hospitals and their attending and visiting physicians. Thus, it
was held:

“We now discuss the responsibility of the hospital in this particular incident. The unique practice
(among private hospitals) of filling up specialist staff with attending and visiting “consultants”, who
are allegedly not hospital employees, presents problems in apportioning responsibility for negligence
in medical malpractice cases. However, the difficulty is more apparent than real.

In the first place, hospitals exercise significant control in the hiring and firing of consultants and in the
conduct of their work within the hospital premises. Doctors who apply for ‘consultant’ slots, visiting or
attending, are required to submit proof of completion of residency, their educational qualifications,
generally, evidence of accreditation by the appropriate board (diplomate), evidence of fellowship in
most cases, and references. These requirements are carefully scrutinized by members of the
hospital administration or by a review committee set up by the hospital who either accept or reject
the application.

After a physician is accepted, either as a visiting or attending consultant, he is normally required to

attend clinico-pathological conferences, conduct bedside rounds for clerks, interns and residents,
moderate grand rounds and patient audits and perform other tasks and responsibilities, for the
privilege of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients
into the hospital. In addition to these, the physician’s performance as a specialist is generally
evaluated by a peer review committee on the basis of mortality and morbidity statistics, and
feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a
consultant who regularly falls short of the minimum standards acceptable to the hospital or its peer
review committee, is normally politely terminated.

In other words, private hospitals, hire, fire and exercise real control over their attending and visiting
‘consultant’ staff. While ‘consultants’ are not, technically employees, x x x , the control exercised, the
hiring, and the right to terminate consultants all fulfill the important hallmarks of an employer-
employee relationship, with the exception of the payment of wages. In assessing whether such a
relationship in fact exists, the control test is determining. Accordingly, on the basis of the foregoing,
we rule that for the purpose of allocating responsibility in medical negligence cases, an employer-
employee relationship in effect exists between hospitals and their attending and visiting physicians.”
 Doctrine Of Apparent Authority
The Ramos pronouncement is not the only basis in sustaining PSI’s liability. Its liability is also
anchored upon the agency principle of apparent authority or agency by estoppel and the doctrine of
corporate negligence which have gained acceptance in the determination of a hospital’s liability for
negligent acts of health professionals.

Doctrine of apparent authority or

the holding out theory;
or doctrine of ostensible agency
or agency by estoppel
This doctrine imposes liability, not as the result of the reality of a contractual relationship, but rather
because of the actions of a principal or an employer in somehow misleading the public into believing
that the relationship or the authority exists. (Irving v. Doctors Hospital of Lake Worth, Inc., 415 So.
2d 55 (1982), quoting Arthur v. St. Peters Hospital, 169 N.J. 575, 405 A 2d 443 (1979)). The concept
is essentially one of estoppel.

Under the rule, the principal is bound by the acts of his agent with the apparent authority which he
knowingly permits the agent to assume, or which he holds to the agent out to the public as
possessing. The question in every case is whether the principal has by his voluntary act placed the
agent with business usages and the nature of the particular business, is justified in presuming that
such agent has authority to perform the particular act in question. (Hudson C., Loan Assn., Inc. v.
Horowytz, 116 N.J.L. 605, 608 A 437 (Supp. Ct. 1936).

The applicability of the doctrine of apparent authority in the field of hospital liability has been upheld
in Irving v. Doctor Hospital of Lake Worth Inc.. In this case, it was said that there does not appear to
be any rational basis for excluding the concept of apparent authority from the field of hospital liability.
In cases where it can be shown that a hospital, by its actions, has held out a particular physician as
its agent and/or employee and that the patient has accepted treatment from the physician in the
reasonable belief that it is being tendered in behalf of the hospital, then the hospital will be liable for
the physician’s negligence.

The Civil Code recognizes the concept of agency by implication or estoppel. Article 1869 of the Civil
Code provides:

“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.”

The defendant Professional Services, Inc. displayed in the lobby of the Medical City Hospital the
names and specializations of the physicians associated or accredited by it. It is estopped from
passing all blame to the physicians whose names it proudly paraded in the public directory leading
the public to believe that it vouched for their skill and competence. That is tantamount to holding out
to the public that the hospital through its accredited physicians, offers quality health care services.
By accrediting the doctors and publicly advertising their qualifications, the hospital created the
impression that they were agents, authorized to perform medical and surgical services for its
patients. As expected, the patients accepted the services on the reasonable belief that such were
being rendered by the hospital or its employees, agents or servants.

As aptly said by the trial court:

“x x x regardless of the education and status in life of the patient, he ought not be burdened with the
defense of absence of employer-employee relationship between the hospital and the independent
physician whose name and competence are certainly certified to the general public by the hospital’s
act of listing him and his specialty in its lobby. The high costs of today’s medical and health care
should not at least exact on the hospital greater, if not broader, legal responsibility for the conduct of
treatment and surgery within its facility by its accredited physician or surgeon, regardless of whether
he is independent or employed.”

The wisdom of such reasoning is easy to discern. Corporate entities like hospitals are capable of
acting only through other individuals like physicians. If these accredited physicians do their job well,
the hospital succeeds in its mission of offering quality medical services and thus, profits financially.
Logically, where negligence mars the quality of its services, the hospital should not be allowed to
escape liability for the acts of its ostensible agents. (Professional Services, Inc. v. Agana, G.R. No.
126297; Agana v. Juan Fuentes, G.R. No. 126467; Ampil v. Agana, G.R. No. 127590, January 31,
2007).

Doctrine Of Corporate
Negligence Or Corporate
Responsibility
The complaint alleged that PSI as owner, operator and manager of Medical City Hospital did not
perform the necessary supervision or exercise diligent efforts in the supervision of Dr. Ampil and
Fuentes and its nursing staff, resident doctors, medical interns who assisted the doctors in the
performance of their duties. Hence, premised on the doctrine of corporate negligence, PSI is directly
liable for such breach of duty.

Is the contention correct? Why?

Held: Yes. It was duly established that PSI operates the Medical City Hospital for the purpose and
under the concept of providing comprehensive medical services to the public. Accordingly, it has the
duty to exercise reasonable care to protect from harm all patients admitted into its facility for medical
treatment. Unfortunately, PSI failed to perform such duty. The findings of the trial court are
convincing, thus:

x x x x PSI’s liability is traceable to its failure to conduct an investigation of the matter reported in the
nota bene of the count nurse. Such failure established PSI’s part in the dark conspiracy of silence
and concealment about the gauzes. Ethical considerations, if not also legal, dictated the holding of
an immediate inquiry into the events, if not for the benefit of the patient to whom the duty is primarily
owed, then in the interest of arriving at the truth. The Court cannot accept that the medical and the
healing professions, through their members like defendant surgeons, and their institutions like PSI’s
hospital facility, can callously turn their backs on and disregard even a mere probability of mistake or
negligence by refusing or failing to investigate a report of such seriousness as the one in Natividad’s
case.

It is worthy to note that Dr. Ampil and Dr. Fuentes operated on Natividad with the assistance of the
Medical City Hospital’s staff, composed of resident doctors, nurses, and interns. As such, it is
reasonable to conclude that PSI, as the operator of the hospital, has actual or constructive
knowledge of the procedures carried out, particularly the report of the attending nurses that the two
pieces of gauze were missing. In Fridena v. Evans,127 Ariz. 516, 622 P. 2d 463 (1980), it was held
that a corporation is bound by the knowledge acquired by or notice given to its agents or officers
within the scope of their authority and in reference to a matter to which their authority extends. This
means that the knowledge of any of the staff of Medical City Hospital constitutes knowledge of PSI.
The failure of PSI, despite the attending nurses’ report, to investigate and inform the patient
regarding the missing gauzes amounts to callous negligence. Not only did PSI breach its duties to
oversee or supervise all persons who practice medicine within its walls, it also failed to take an
active step in fixing the negligence committed. This renders PSI, not only vicariously liable for the
negligence of Dr. Ampil under Article 2180 of the Civil Code, but also directly liable for its own
negligence under Article 2176. In Fridena, the Supreme Court of Arizona held:

x x x In recent years, however, the duty of care owed to the patient by the hospital has expanded.
The emerging trend is to hold the hospital responsible where the hospital has failed to monitor and
review medical services being provided within its walls. See Kahn Hospital Malpractice Prevention,
27 De Paul. Rev. 23 (1977).

Among the cases indicative of the ‘emerging trend’ is Purcell v. Zimbelman, 18 Ariz. App. 75,500 P.
2d 335 (1972). In Purcell, the hospital argued that it could not be held liable for the malpractice of a
medical practitioner because he was an independent contractor within the hospital. The Court of
Appeals pointed out that the hospital had created a professional staff whose competence and
performance was to be monitored and reviewed by the governing body of the hospital, and the court
held that a hospital would be negligent where it had knowledge or reason to believe that a doctor
using the facilities was employing a method of treatment or care which fell below the recognized
standard of care.

Subsequent to the Purcell decision, the Arizona Court of Appeals held that a hospital has certain
inherent responsibilities regarding the quality of medical care furnished to patients within its walls
and it must meet the standards of responsibility commensurate with this undertaking. Beeck v.
Tucson General Hospital, 18 Ariz. App. 165, 500 P. 2d 1153 (1972). This court has confirmed the
rulings of the Court of Appeals that a hospital has the duty of supervising the competence of the
doctors on its staff. xxx.
xxx xxx

In the amended complaint, the plaintiffs did plead that the operation was performed at the hospital
with its knowledge, aid, and assistance, and that the negligence of the defendants was the
proximate cause of the patient’s injuries. We find that such general allegations of negligence, along
with the evidence produced at the trial of this case, are sufficient to support the hospital’s liability
based on the theory of negligent supervision.”

Anent the corollary issue of whether PSI is solidarily liable with Dr. Ampil for damages, let it be
emphasized that PSI, apart from a general denial of its responsibility, failed to adduce evidence
showing that it exercised the diligence of a good father of a family in the accreditation and
supervision of the latter. In neglecting to offer such proof, PSI failed to discharge its burden under
the last paragraph of Article 2180 cited earlier, and, therefore, must be adjudged solidarily liable with
Dr. Ampil. Moreover, as we have discussed, PSI is also directly liable to the Aganas.

One final word. Once a physician undertakes the treatment and care of a patient, the law imposes
on him certain obligations. In order to escape liability, he must possess that reasonable degree of
learning, skill and experience required by his profession. At the same time, he must apply
reasonable care and diligence in the exercise of his skill and the application of his knowledge, and
exert his best judgment.

Nature Of Owner’s Liability To

Suppliers
In JL Investment & Dev. Corp., v. Tendon Phils., Inc., et al., G.R. No. 148596, January 22, 2007, the
SC had the occasion to rule on nature of the liability of owners to suppliers of materials. It held that:

“Those who put their labor upon or furnish materials for a price of work undertaken by the contractor
have an action against the owner up to the amount owing from the latter to the contractor at the time
the claim is made. However, the following shall not prejudice the laborers, employees and furnishers
of materials:

1. Payments made by the owner to the contractor before they are due;
2. Renunciation by the contractor of any amount due from the owner.

This article is subject to the provisions of special laws. (Art. 1729, NCC).

This provision imposes a direct liability on an owner of a piece of work in favor of suppliers of
materials (and laborers) hired by the contractor “up to the amount owing from the [owner] to the
contractor at the time the claim is made.” (Flores v. Ruelo, No. 13905-R, September 29, 1955, 52
O.G. No. 2, 850). Thus, to this extent, the owner’s liability is solidary with the contractor, if both are
sued together. By creating a constructive vinculum between suppliers of materials (and laborers), on
the one hand, and the owner of a piece of work, on the other hand, as an exception to the rule on
privity of contracts, Article 1729 protects suppliers of materials (and laborers) from unscrupulous
contractors and possible connivance between owners and contractors. (Velasco v. CA, L-47544,
January 28, 1980, 95 SCRA 616). The supplier’s cause of action under this provision, reckoned from
the time of judicial or extra-judicial demand, subsists so long as any amount remains owing from the
owner to the contractor. Only full payment of the agreed contract price serves as a defense against
the supplier’s claim. (JL Investment & Dev. Corp. v. Tendon Phils. Inc., et al., G.R. No. 148596,
January 22, 2007).
 QUASI-DELICT
Q – What are the requisites of quasi-
delict?
Answer: The requisites of quasi-delict are the following:

(a) there must be an act or omission;

(b) such act or omission causes damage to another;

(c) such act or omission is caused by fault or negligence; and

(d) there is no pre-existing contractual relation between the parties. (Chan, Jr. v. Iglesia Ni Cristo,
Inc., G.R. No. 160283, October 14, 2005).

Res Ipsa Loquitur; Medical

Negligence Cases
Once again, the SC in Dr. Milagros Cantre v. Sps. Go, G.R. No. 160889, April 27, 2007, had the
occasion to say that the Hippocratic Oath mandates physicians to give primordial consideration to
the well-being of their patients. If a doctor fails to live up to this precept, he is accountable for his
acts. This notwithstanding, courts face a unique restraint in adjudicating medical negligence cases
because physicians are not guarantors of case and, they never set out to intentionally cause injury to
their patients. However, intent is immaterial in negligence cases because where negligence exists
and is proven, it automatically gives the injured a right to reparation for the damage caused. (Ramos
v. CA, G.R. No. 124354, December 29, 1999, 321 SCRA 584).

In cases involving medical negligence, the doctrine of res ipsa loquitur allows the mere existence of
an injury to justify a presumption of negligence on the part of the person who controls the instrument
causing the injury, provided that the following requisites concur:

1. The accident is of a kind which ordinarily does not occur in the absence of someone’s negligence;

2. It is caused by an instrumentality within the exclusive control of the defendant or defendants; and

3. the possibility of contributing conduct would make the plaintiff responsible is eliminated.

In this case, a woman gave birth. Due to the operation, there was profuse bleeding inside her womb,
hence, the doctors performed various medical procedures. Her blood pressure was monitored with
the use of a sphygmomamometer. It was observed later on that there was a fresh gaping wound in
the inner portion of her left arm. The NBI-Medico Legal found out that it appeared to be a burn
resulting in the placing of a droplight near her skin. Despite surgical operation, there was an
unsightly mark in her left arm and the pain remained and her movements were restricted. A
complaint was filed praying for damages where the RTC rendered judgment holding the doctor
liable. The CA affirmed, but modified the judgment. On appeal to the SC it was contended that the
wound was not caused by the droplight but by the constant taking of her blood pressure.

The SC said that, that is immaterial. The medical practice is to deflate the blood pressure cuff
immediately after each use. Otherwise, the inflated band can cause injury to the patient similar to
what could have happened in this case. Thus, if the wound was caused by the blood pressure cuff,
then the taking of the blood pressure must have been done so negligently as to have inflicted a
gaping wound on her arm, for which the defendant cannot escape liability under the “captain of the
ship” doctrine.

The argument that the failed plastic surgery was not intended as a cosmetic procedure, but rather as
a measure to prevent complication does not help her case. It does not negate negligence on her
part.

Based on the foregoing, the presumption that defendant was negligent in the exercise of her
profession stands unrebutted. In this connection, the Civil Code provides:

ART. 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done…

ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.
Though incapable of pecuniary computation, moral damages may be recovered if they are the
proximate result of the defendant’s wrongful act or omission.

Clearly, under the law, the defendant is obliged to pay plaintiff for moral damages suffered by the
latter as a proximate result of her negligence.

On the presumption of negligence under the principle of res ipsa loquitur, the SC in applying the
requirements of the rule said:

As to the first requirement, the gaping wound the plaintiff’s certainly not an ordinary occurrence in
the act of delivering a baby, far removed as the arm is from the organs involved in the process of
giving birth. Such injury could not have happened unless negligence had set in somewhere.

Second, whether the injury was caused by the droplight or by the blood pressure cuff is of no
moment. Both instruments are deemed within the exclusive control of the physician in charge under
the “captain of the ship” doctrine. This doctrine holds the surgeon in charge of an operation liable for
the negligence of his assistants during the time when those assistants are under the surgeon’s
control. (Black Law Dictionary, 192 (5th ed., 1979). In this particular case, it can be logically inferred
that defendant, the senior consultant in charge during the delivery of the baby, exercised control
over the assistants assigned to both the use of the droplight and the taking of the plaintiff’s blood
pressure. Hence, the use of the droplight and the blood pressure cuff is also within her exclusive
control.

Third, the gaping wound on the plaintiff’s left arm, by its very nature and considering her condition,
could only be caused by something external to her and outside her control as she was unconscious
while in hypovolemic shock. Hence, plaintiff could not, by any stretch of the imagination, have
contributed to her own injury.
The defense that the wound was caused not by the droplight but by the constant taking of her blood
pressure, even if the latter was necessary given her condition, does not absolve her from liability.

Malicious Prosecution and

Damages

When someone may be liable for

malicious prosecution.
In Antonio Diaz v. Davao Light & Power Corp., et al., G.R. No. 160959, April 4, 2007 (Callejo, J),
petitioner unilaterally installed a meter to replace another one. There was a notice of disconnection
and eventually, the connection was cut. There was a petition for mandatory injunction to restore
connection. It was however settled by way of a compromise agreement where the parties agreed to
reduce the respondent’s claim and to waive the counterclaim and to install the electric service. There
was no agreement to bar the institution of other action. Thereafter, respondent filed criminal cases
for theft against the petitioner, hence, a complaint for damages for abuse of right under Article 19,
NCC was filed.

Petitioner insisted that the compromise agreement as well as the decision based on it already settled
the controversies between them; yet, DLPC instituted the theft case against petitioner, and worse,
instituted another action for violation of P.D. 401, as amended by B.P. 876. Thus, the only
conclusion that can be inferred from the acts of DLPC is that they were designed to harass,
embarrass, prejudice, and ruin him. He further averred that the compromise agreement in civil case
completely erased litigious matters that could necessarily arise out of either Electric Meter No. 84737
or 86673509. Moreover, he asserted that the evidence he presented is sufficient to prove the
damages he suffered by reason of the malicious institution of the criminal cases. In brushing aside
his contentions, the SC

Held: Article 2028 of the Civil Code defines a compromise as a contract whereby the parties, by
making reciprocal concessions, avoid litigation or put an end to one already commenced. The
purpose of compromise is to settle the claims of the parties and bar all future disputes and
controversies. However, criminal liability is not affected by compromise for it is a public offense
which must be prosecuted and punished by the Government on its own motion, though complete
reparation should have been made of the damages suffered by the offended party. A criminal case is
committed against the People, and the offended party may not waive or extinguish the criminal
liability that the law imposes for the commission of the offense. Moreover, a compromise is not one
of the grounds prescribed by the Revised Penal Code for the extinction of criminal liability.

Petitioner is not entitled to damages under Articles 19, 20 and 21, and Article 2217 and 2219(8) of
the New Civil Code.

The elements of abuse of rights are the following: (a) the existence of a legal right or duty; (b) which
is exercise in bad faith; and (c) for the sole intent of prejudicing or injuring another. (Hongkong and
Shanghai Banking Corp., Limited v. Catalan, G.R. No. 159591, October 18, 2004, 440 SCRA 498,
511-512; Saber v. Court of Appeals, G.R. No. 132981, August 31, 2004, 437 SCRA 259). Thus,
malice or bad faith is at the core of the above provisions. Good faith refers to the state of the mind
which is manifested by the acts of the individual concerned. In consists of the intention to abstain
from taking an unconscionable and unscrupulous advantage of another. Good faith is presumed and
he who alleges bad faith has the duty to prove the same. Bad faith, on the other hand, does not
simply connote bad judgment to simple negligence, dishonest purpose or some moral obloquy and
conscious doing of a wrong, a breach of known duty due to some motives or interest or ill-will that
partakes of the nature of fraud. Malice connotes ill-will or spite and speaks not in response to duty. It
implies an intention to do ulterior and unjustifiable harm. Malice is bad faith or bad motive.

There was no malice or bad faith. Petitioner himself alleged in his complaint that he unilaterally
installed a meter after it was removed by DLPC. No less than the Court, admonished petitioner and
reminded him that connections of electrical service and installations of electric meters should always
be upon mutual contract of the parties, and that payments for electrical consumption should also be
made promptly whenever due. Based on these established facts, petitioner has not shown that the
acts of respondent were done with the sole intent of prejudicing and injuring him.

Petitioner may have suffered damages as a result of the filing of the complaints. However, there is a
material distinction between damages and injury. Injury is the illegal invasion of a legal right; damage
is the loss, hurt or harm which results from the injury; and damages are the recompense or
compensation awarded for the damage suffered. Thus, there can be damage without injury in those
instances in which the loss or harm was not the result of a violation of a legal duty. In such cases,
the consequences must be borne by the injured person alone; the law affords no remedy for
damages resulting from an act which does not amount to a legal injury or wrong. These situations
are often called damnum absque injuria. (Far East Bank and Trust Company v. Pacilan, Jr., G.R. No.
157314, July 29, 2005, 465 SCRA 372, 384-385). Whatever damages petitioner may have suffered
would have to be borne by him alone since it was his acts which led to the filing of the complaints
against him.

Concept of malicious prosecution.

On the other hand, malicious prosecution has been defined as an action for damages brought by or
against who a criminal prosecution, civil suit or other legal proceeding has been instituted
maliciously and without probable cause, after the termination of such prosecution, suit, or other
proceeding in favor of the defendant therein. (Yasonña v. De Ramos, 440 SCRA 154 (2004). It
is an established rule that in order for malicious prosecution to prosper, the following requisites must
be proven by petitioner: (1) the fact of prosecution and the further fact that the defendant
(respondent) was himself the prosecutor, and that the action finally terminated with an acquittal; (2)
that in bringing the action, the prosecutor acted without probable cause; and (3) that the prosecutor
was actuated or impelled by legal malice, that is, by improper or sinister motive. The foregoing are
necessary to preserve a person’s right to litigate which may be emasculated by the undue filing of
malicious prosecution cases. From the foregoing requirements, it can be inferred that malice and
want of probable cause must both be clearly established to justify an award of damages based on
malicious prosecution. (Id. At 158-159; Villanueva v. UCPB, G.R. No. 138291, March 7, 2000, 327
SCRA 391, 400; Ponce v. Legaspi, G.R. No. 79184, May 6, 1992, 208 SCRA 377, 388).

A claim for damages based on malicious prosecution will prosper only if the three elements
aforecited are shown to exist. In this case, the cases were dismissed by the prosecutor before they
could be filed in court, hence, they did not end in acquittal.

It cannot be likewise concluded that respondent DLPC acted without probable cause when it
instituted the actions. The events which led to the filing of the complaints are undisputed, and
respondent DLPC cannot be faulted for filing them. In the early case of Buchanan v. Esteban, 32
Phil. 363 (1915) it was stressed that “one cannot be held liable in damages for maliciously instituting
a prosecution where he acted with probable cause.” As Justice Moreland explained in that case:

Probable cause is the existence of such facts and circumstances as would excite the belief, in a
reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged
was guilty of the crime for which he was prosecuted. The general rule is well settled that one cannot
be held liable in damages for maliciously instituting a prosecution where he acted with probable
cause. In other words, a suit will lie only in cases where a legal prosecution has been carried on
without probable cause. And the reason for the rule as stated by Blackstone, is that it would be a
very great discouragement to public justice is prosecutors, who had a tolerable ground of suspicion,
were liable to be sued at law when their indictments miscarried.

Thus, the element of malice and the absence of probable cause must be proved. (China Banking
Corp. v. CA, G.R. No. 94182, March 28, 1994, 231 SCRA 472, 478; Albenson Enterprise Corp. v.
CA, G.R. No. 88694, January 11, 1993, 217 SCRA 16, 29). There must be proof that the prosecution
was prompted by a sinister design to vex and humiliate a person, and that it was initiated
deliberately knowing that the charge was false and baseless to entitle the victims to damages. The
two elements must simultaneously exist; otherwise, the presence of probable cause signifies, as a
legal consequence, the absence of malice. (Lucas v. Royo, G.R. No. 136185, October 30, 2000; 344
SCRA 481). In the instant case, it is evidence that respondent DLPC was not motivated by malicious
intent or by a sinister design to unduly harass petitioner, but only by a well-founded anxiety to protect
its rights. Respondent DLPC cannot therefore be faulted in availing of the remedies provided for by
the law.

In a free society, controversies are heard and settled under the rule of law in the forum of the courts
of justice. It is one of the virtues of our system of government that a person who feels aggrieved
does not have to take the law into his or her hands or resort to the use of force for the vindication of
injury. The courts are there to hear and act on the complaint. The right to litigate is an escape valve
to relieve the pressures of personal disagreements that might otherwise explode in physical
confrontation. It is necessary not only for upholding one’s claims when they are unjustly denied but
also for the maintenance of peace, if not goodwill, among incipient antagonists. Without the right to
litigate, conflicting claims cannot be examined and resolved in accordance with one of the primary
purposes of government, which is to provide for a just and orderly society. Hence, the mere act of
submitting a case to the authorities for prosecution does not render a person liable for malicious
prosecution should he or she be unsuccessful, for the law could not have meant to impose a penalty
on the right to litigate. (Rivera v. Roman, G.R. No. 142402, September 20, 2005, 470 SCRA 276;
Saber v, CA, supra., at 290; China Banking Corp. v. CA, supra.).

Moral damages.
The award of moral and exemplary damages and attorney’s fees was likewise upheld:

“The award of moral damages is aimed at a restoration, within the limits of the possible, of the
spiritual status quo ante. (Roque v. Tomas, G.R. No. 157632, December 6, 2006). Moral damages
are designed to compensate and alleviate in some way the physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and
similar injury unjustly caused a person. Although incapable of pecuniary computation, they must be
proportionate to the suffering inflicted. (PNR v. Brunty, G.R. No. 169891, November 2, 2006). The
amount of the award bears no relation whatsoever with the wealth or means of the offender.

Evidence of moral damages.

Stephen Huang the victim and his parents Richard and Carmen Huang testified to the intense
suffering they continue to experience as a result of the accident. Stephen recounted the nightmares
and traumas he suffers almost every night when he relives the accident. He also gets depression
when he thinks of his bleak future. He feels frustration and embarrassment in needing to be helped
with almost everything and in his inability to do simple things he used to do. Similarly, respondent
spouses and the rest of the family undergo their own private suffering. They live with the day-to-day
uncertainty of respondent Stephen Huang’s condition. They know that the chance of full recovery is
nil. Moreover, respondent Stephen Huang’s paralysis has made him prone to many other illnesses.
His family, especially respondent spouses, have to make themselves available for Stephen twenty-
four hours a day. They have patterned their daily life around taking care of him, ministering to his
daily needs, altering the lifestyle to which they had been accustomed.

Exemplary damages.
On the matter of exemplary damages, Art. 2231 of the Civil Code provides that in cases of quasi-
delicts, exemplary damages may be granted if the defendant acted with gross negligence. At the
time of the accident, the employee was driving without a license because he was previously ticketed
for reckless driving. The evidence also showed that he failed to step on his brakes immediately after
the impact. Had he done so, the injuries which the victim sustained could have been greatly
reduced. Wanton acts such as that committed by the employer need be suppressed; and employers
like Mercury Drug should be more circumspect in the observance of due diligence in the selection
and supervision of their employees. The award of exemplary damages is therefore justified.

Attorney’s fees.
With the award of exemplary damages, the award of attorney’s fees was upheld. (Art. 2208(1),
NCC). In addition, attorney’s fees may be granted when a party is compelled to litigate or incur
expenses to protect his interest by reason of an unjustified act of the other party. (Art. 2208(4),
NCC).
 Liability of the employer for the
acts or omissions of the
employee
Once again, the SC in Mercury Drug, et al. v. Sps. Huang, et al., G.R. No. 172122, June 22, 2007,
(Puno, J) had the occasion to rule on the liability of the employer for the negligent act of the
employee while in the performance of his duties and functions.

The liability of the employer under Art. 2180 of the Civil Code is direct or immediate. It is not
conditioned on a prior recourse against the negligent employee, or a prior showing of insolvency of
such employee. It is also joint and solidary with the employee. (Art. 2194, NCC).

To be relieved of liability, the employer should show that it exercised the diligence of a good father of
a family, both in the selection of the employee and in the supervision of the performance of his
duties. Thus, in the selection of its prospective employees, the employer is required to examine them
as to their qualifications, experience, and service records. (Estacion v. Bernardo, G.R. No. 144723,
February 27, 2006, 483 SCRA 222; Campo v. Camarote, 100 Phil. 459 (1056)). With respect to the
supervision of its employees, the employer should formulate standard operating procedures, monitor
their implementation, and impose disciplinary measures for their breach. To establish compliance
with these requirements, employers must submit concrete proof, including documentary evidence.
(Victory Liner, Inc. v. Heirs of Andres Malecdan, G.R. No. 154278, December 27, 2002, 394 SCRA
520).

In this case, the employer, Mercury Drug presented testimonial evidence on its hiring procedure.
According to Mrs. Merlie Caamic, the Recruitment and Training Manager of petitioner Mercury Drug,
applicants are required to take theoretical and actual driving tests, and psychological examination. In
the case of employee, however, Mrs. Caamic admitted that he took the driving tests and
psychological examination when he applied for the position of Delivery Man, but not when he applied
for the position of Truck Man. Mrs. Caamic also admitted that employee used a Galant which is a
light vehicle, instead of a truck during the driving tests. Further, no tests were conducted on the
motor skills development, perceptual speed, visual attention, depth visualization, eye and hand
coordination and steadiness of the employee. No NBI and police clearances were also presented.
Lastly, he attended only three driving seminars. In effect, the only seminar he attended before the
accident which occurred in 1996 was held twelve years ago in 1984.

Furthermore, in this case, the employer did back-up driver for long trips. At the time of the accident,
the employee has been out on the road for more than thirteen hours, without any alternate. The
witness admitted that she did not know of any company policy requiring back-up drivers for long
trips.

The employer likewise failed to show that it exercised due diligence on the supervision and discipline
over its employees. In fact, on the day of the accident, the employee was driving without a license.
He was holding a TVR for reckless driving. He testified that he reported the incident to his superior,
but nothing was done about it. He was not suspended or reprimanded. No disciplinary action
whatsoever was taken against him. Thus, the employer failed to discharge its burden of proving that
it exercised due diligence in the selection and supervision of its employee.
Damage recoverable.

Liability of the employer for the acts or

omissions of the employee
With regard to actual damages, Art. 2199 of the Civil Code provides that “Except as provided by law
or by stipulation one is entitled to an adequate compensation only for such pecuniary loss suffered
by him as he has duly proved x x x.” In this case, the actual damages claimed were supported by
receipts. The amount of P2,973,000.00 represented cost of hospital expenses, medicines, medical
services and supplies, and nursing care services provided on the victim of the vehicular accident.

Petitioners are also liable for all damages which are the natural and probable consequences of the
act or omission complained of. (Art. 2202, NCC). The doctors who attended to the victim are one in
their prognosis that his chances of walking again and performing basic body functions are nil. For
the rest of his life, he will need continuous rehabilitation and therapy to prevent further complications
such as pneumonia, bladder and rectum infection, renal failure, sepsis and severe bed sores,
osteoporosis and fractures, and other spinal cord injury-related conditions. He will be completely
dependent on the care and support of his family, hence, the award of P23,461,062.00 for the life
care cost of the victim was uphold based on his average monthly expense and the actuarial
computation of the remaining years that he is expected to live; and the conservative amount of
P10,000,000.00, for the loss or impairment of his earning capacity, (Art. 2205, NCC), considering his
age, probable life expectancy, the state of his health, and his mental and physical condition before
the accident. He was only seventeen years old, nearly six feet tall and weighed 175 pounds. He was
in fourth year high school, and a member of the school varsity basketball team. He was also class
president and editor-in-chief of the school annual. He had shown very good leadership qualities. He
was looking forward to his college life, having just passed the entrance examinations of the
University of the Philippines, De La Salle University, and the University of Asia and the Pacific. The
University of Sto. Tomas even offered him a chance to obtain an athletic scholarship, but the
accident prevented him from attending the basketball try-outs. Without doubt, he was an exceptional
student. He excelled both in his academics and extracurricular undertakings. He is intelligent and
motivated, a go-getter. Had the accident not happened, he had a rosy future ahead of him. He
wanted to embark on a banking career, get married and raise children. Taking into account his
outstanding abilities, he would have enjoyed a successful professional career in banking. But, now, it
is highly unlikely for someone like respondent to ever secure a job in a bank.