FILAMER CHRISTIAN INSTITUTE, petitioner, vs.

HONORABLE COURT
OF APPEALS, HONORABLE ENRIQUE P. SUPLICO, in his capacity as
Judge of the Regional Trial Court,. Branch XIV, Roxas City and the late
POTENCIANO KAPUNAN, SR., as substituted by his heirs, namely:
LEONA KAPUNAN TIANGCO, CICERO KAPUNAN, JESUS KAPUNAN,
SANTIAGO KAPUNAN, POTENCIANO KAPUNAN, JR., PAZ KAPUNAN
PUBLICO, SUSA KAPUNAN GENUINO and ERLINDA KAPUNAN
TESORO, respondents.
FERNAN, C.J.:
This is a petition for review of the decision 1 of the Court of Appeals affirming
the judgment of the Regional Trial Court (RTC) of Roxas City, Branch 14 in
Civil Case No. V-4222 which found petitioner Filamer Christian Institute and
Daniel Funtecha negligent and therefore answerable for the resulting injuries
caused to private respondent Potenciano Kapunan, Sr.
Private respondent Potenciano Kapunan, Sr., an eighty-two-year old retired
schoolteacher (now deceased), was struck by the Pinoy jeep owned by
petitioner Filamer and driven by its alleged employee, Funtecha, as
Kapunan, Sr. was walking along Roxas Avenue, Roxas City at 6:30 in the
evening of October 20, 1977. As a result of the accident, Kapunan, Sr.
suffered multiple injuries for which he was hospitalized for a total of twenty
(20) days.
Evidence showed that at the precise time of the vehicular accident, only one
headlight of the jeep was functioning. Funtecha, who only had a student
driver's permit, was driving after having persuaded Allan Masa, the
authorized driver, to turn over the wheels to him. The two fled from the scene
after the incident. A tricycle driver brought the unconscious victim to the
hospital.
Thereafter, Kapunan, Sr. instituted a criminal case against Funtecha alone in
the City Court of Roxas City for serious physical injuries through reckless
imprudence. Kapunan, Sr. reserved his right to file an independent civil
action. The inferior court found Funtecha guilty as charged and on appeal,
his conviction was affirmed by the then Court of First Instance of Capiz. 2

Pursuant to his reservation, Kapunan, Sr. commenced a civil case for

damages 3 before the RTC of Roxas City. Named defendants in the
complaint were petitioner Filamer and Funtecha. Also included was Agustin
Masa, the director and president of Filamer Christian Institute, in his
personal capacity in that he personally authorized and allowed said Daniel
Funtecha who was his houseboy at the time of the incident, to drive the
vehicle in question despite his knowledge and awareness that the latter did
not have the necessary license or permit to drive said vehicle. His son, Allan
Masa, who was with Funtecha at the time of the accident,
was not impleaded as a co-defendant. 4
On December 14, 1983, the trial court rendered judgment finding not only
petitioner Filamer and Funtecha to be at fault but also Allan Masa, a nonparty. Thus:
WHEREFORE, finding the averments in the complaint as supported by
preponderance of evidence to be reasonable and justified, and that
defendants Daniel Funtecha, Filamer Christian Institute and Allan Masa are
at fault and negligent of the acts complained of which causes (sic) injury to
plaintiff, judgment is hereby rendered in favor of the plaintiff and against the
defendants, namely: Daniel Funtecha and Filamer Christian Institute, the
employer whose liability is primary and direct, jointly and severally, to pay
plaintiff the following:
(1) to pay the sum of TWO THOUSAND NINE HUNDRED
FIFTY PESOS AND FIFTY CENTAVOS (P2,950.50) as
medical expenses (Exh. "A");
(2) to pay TWO HUNDRED FORTY ONE PESOS
(P241.00) as doctor's fee (Exh. "C");
(3) to pay THREE HUNDRED NINETY PESOS (P390.00)
as additional expenses incurred for thirty-nine days at
P10.00 a day, for remuneration of plaintiff's helper while
recuperating;
(4) to pay FOUR THOUSAND PESOS (P4,000.00) as
Court litigation expenses;

(5) to pay THREE THOUSAND PESOS (P3,000.00) as

loss of earnings capacity;
(6) to pay TWENTY THOUSAND (P20,000.00) pesos as
moral damages;
(7) to pay FOUR THOUSAND FIVE HUNDRED PESOS
(P4,500.00) as attorney's fees;
(8) to pay TWENTY THOUSAND PESOS (P20,000.00)as
insurance indemnity on the policy contract;
and without prejudice to the right of defendant Filamer
Christian Institute to demand from co-defendant Daniel
Funtecha part-time employee and/or Allan Masa a full time
employee reimbursement of the damages paid to herein
plaintiff.
The defendant Agustin Masa as director of defendant
Filamer Christian Institute has also failed to exercise the
diligence required of a good father of a family in the
supervision of his employee Allan Masa, being his son.
However, the court absolved defendant Agustin Masa from
any personal liability with respect to the complaint filed
against him in his personal and private capacity, cause he
was not in the vehicle during the alleged incident.
For failure to prove their respective counterclaims filed by
the defendant Daniel Funtecha, Dr. Agustin Masa, and
Filamer Christian Institute, as against the herein plaintiff,
same are hereby dismissed.
The Zenith Insurance Corporation as third party defendant
has failed to prove that there was a policy violation made
by the defendant Filamer Christian Institute which
absolves them from liability under the aforesaid insurance
policy. The record shows that the defendant Daniel
Funtecha while driving the said vehicle was having a

student drivers license marked Exh. "1" and accompanied

by Allan Masa who is the authorized driver of said vehicle
with a professional drivers license as shown by Exh. "3".
This Court finds that defendant Daniel Funtecha while
driving the said vehicle is considered as authorized driver
in accordance with the policy in question marked Exh. "2Masa and FCI".
Finding the averments in the third party complaint filed by
defendant Filamer Christian Institute as supported by
preponderance of evidence as shown by their exhibits to
be reasonable and justified, judgment is hereby rendered
in favor of the said defendant and third party plaintiff
Filamer Christian Institute as against third party defendant
Zenith Insurance Corporation.
The Zenith Insurance Corporation as third party defendant
is hereby ordered to pay in favor of the defendant and
third party plaintiff, Filamer Christian Institute, the
following:
(1) to pay TWENTY THOUSAND
PESOS (P20,000.00) as third party
liability as provided in the Zenith
Insurance Corporation policy (Exh. "2");
(2) to pay TEN THOUSAND PESOS
(P10,000.00)as moral damages;
(3) to pay FOUR THOUSAND PESOS
(P4,000.00) as Court litigation and
actual expenses;
(4) to pay THREE THOUSAND PESOS
(P3,000.00) as attorney's fees;

The defendants Daniel Funtecha, Filamer Christian

Institute and third party defendant Zenith Insurance
Corporation are hereby ordered jointly and severally, to
pay the costs of the suit. 5

The responsibility treated of in this article shall cease

when the persons herein mentioned prove that they
observe all the diligence of a good father of a family to
prevent damage. (Emphasis supplied).

Only petitioner Filamer and third-party defendant Zenith Insurance

Corporation appealed the lower court's judgment to the Court of Appeals and
as a consequence, said lower court's decision became final as to Funtecha.
For failure of the insurance firm to pay the docket fees, its appeal was
dismissed on September 18, 1984. On December 17, 1985, the Appellate
Court rendered the assailed judgment affirming the trial court's decision in
toto.6 Hence the present recourse by petitioner Filamer.

The legal issue in this appeal is whether or not the term "employer" as used
in Article 2180 is applicable to petitioner Filamer with reference to Funtecha.

It is petitioner Filamer's basic contention that it cannot be held responsible

for the tortious act of Funtecha on the ground that there is no existing
employer-employee relationship between them. We agree.
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. 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.
Art. 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 xxx
Employers shall be liable for the damages caused by
their employees and household helpers acting within the
scope of their assigned tasks, even though the former are
not engaged in any business or industry.
xxx xxx xxx

In disclaiming liability, petitioner Filamer has invoked the provisions of the

Labor Code, 7 specifically Section 14, Rule X of Book III which reads:
Sec. 14. Working scholars. There is no employeremployee relationship between students on the one hand,
and schools, colleges or universities on the other, where
students work for the latter in exchange for the privilege to
study free of charge; provided the students are given real
opportunity, including such facilities as may be
reasonable, necessary to finish their chosen court under
such arrangement. (Emphasis supplied).
It is manifest that under the just-quoted provision of law, petitioner Filamer
cannot be considered as Funtecha's employer. Funtecha belongs to that
special category of students who render service to the school in exchange
for free tuition Funtecha worked for petitioner for two hours daily for five days
a week. He was assigned to clean the school passageways from 4:00 a.m.
to 6:00 a.m. with sufficient time to prepare for his 7:30 a.m. classes. As
admitted by Agustin Masa in open court, Funtecha was not included in the
company payroll. 8
The wording of Section 14 is clear and explicit and leaves no room for
equivocation. To dismiss the implementing rule as one which governs only
the "personal relationship" between the school and its students and not
where there is already a third person involved, as espoused by private
respondents, is to read into the law something that was not legislated there
in the first place. The provision of Section 14 is obviously intended to
eliminate an erstwhile gray area in labor relations and seeks to define in
categorical terms the precise status of working scholars in relation to the
learning institutions in which they work for the privilege of a free education.

But even if we were to concede the status of an employee on Funtecha, still

the primary responsibility for his wrongdoing cannot be imputed to petitioner
Filamer for the plain reason that at the time of the accident, it has been
satisfactorily shown that Funtecha was not acting within the scope of his
supposed employment. His duty was to sweep the school passages for two
hours every morning before his regular classes. Taking the wheels of the
Pinoy jeep from the authorized driver at 6:30 in the evening and then driving
the vehicle in a reckless manner resulting in multiple injuries to a third
person were certainly not within the ambit of his assigned tasks. In other
words, at the time of the injury, Funtecha was not engaged in the execution
of the janitorial services for which he was employed, but for some purpose of
his own. It is but fair therefore that Funtecha should bear the full brunt of his
tortious negligence. Petitioner Filamer cannot be made liable for the
damages he had caused.
Private respondents' attempt to hold petitioner Filamer directly and primarily
answerable to the injured party under Article 2180 of the Civil Code would
have prospered had they proceeded against Allan Masa, the authorized
driver of the Pinoy jeep and undisputably an employee of petitioner. It was
Allan's irresponsible act of entrusting the wheels of the vehicle to the
inexperienced Funtecha which set into motion the chain of events leading to
the accident resulting in injuries to Kapunan, Sr. But under the present set of
circumstances, even if the trial court did find Allan guilty of negligence, such
conclusion would not be binding on Allan. It must be recalled that Allan was
never impleaded in the complaint for damages and should be considered as
a stranger as far as the trial court's judgment is concerned. It is axiomatic
that no man shall be affected by a proceeding to which he is a stranger. 9
WHEREFORE, in view of the foregoing, the decision under review of the
Court of Appeals is hereby SET ASIDE. The complaint for damages 10 is
ordered DISMISSED as against petitioner Filamer Christian Institute for lack
of cause of action. No costs.
SO ORDERED.
Bidin and Cortes, JJ., concur.
Feliciano, J., is on leave.

These two petitions for review on certiorari under Rule 45 of the Revised
Rules of Court stem from an action to recover damages by petitioner
Lourdes Valenzuela in the Regional Trial Court of Quezon City for injuries
sustained by her in a vehicular accident in the early morning of June 24,
1990. The facts found by the trial court are succinctly summarized by the
Court of Appeals below:
This is an action to recover damages based on quasi-delict, for serious
physical injuries sustained in a vehicular accident.

MA. LOURDES VALENZUELA, petitioner, vs. COURT OF APPEALS,

RICHARD LI and ALEXANDER COMMERCIAL, INC., respondents.
x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x
G.R. No. 117944

February 7, 1996

RICHARD LI, petitioner, vs. COURT OF APPEALS and LOURDES

VALENZUELA, respondents.
DECISION
KAPUNAN, J.:

Plaintiff's version of the accident is as follows: At around 2:00 in the morning

of June 24, 1990, plaintiff Ma. Lourdes Valenzuela was driving a blue
Mitsubishi lancer with Plate No. FFU 542 from her restaurant at Marcos
highway to her home at Palanza Street, Araneta Avenue. She was travelling
along Aurora Blvd. with a companion, Cecilia Ramon, heading towards the
direction of Manila. Before reaching A. Lake Street, she noticed something
wrong with her tires; she stopped at a lighted place where there were
people, to verify whether she had a flat tire and to solicit help if needed.
Having been told by the people present that her rear right tire was flat and
that she cannot reach her home in that car's condition, she parked along the
sidewalk, about 1-1/2 feet away, put on her emergency lights, alighted from
the car, and went to the rear to open the trunk. She was standing at the left
side of the rear of her car pointing to the tools to a man who will help her fix
the tire when she was suddenly bumped by a 1987 Mitsubishi Lancer driven
by defendant Richard Li and registered in the name of defendant Alexander
Commercial, Inc. Because of the impact plaintiff was thrown against the
windshield of the car of the defendant, which was destroyed, and then fell to
the ground. She was pulled out from under defendant's car. Plaintiff's left leg
was severed up to the middle of her thigh, with only some skin and sucle
connected to the rest of the body. She was brought to the UERM Medical
Memorial Center where she was found to have a "traumatic amputation, leg,
left up to distal thigh (above knee)". She was confined in the hospital for
twenty (20) days and was eventually fitted with an artificial leg. The
expenses for the hospital confinement (P120,000.00) and the cost of the
artificial leg (P27,000.00) were paid by defendants from the car insurance.
In her complaint, plaintiff prayed for moral damages in the amount of P1
million, exemplary damages in the amount of P100,000.00 and other

medical and related expenses amounting to a total of P180,000.00, including

loss of expected earnings.
Defendant Richard Li denied that he was negligent. He was on his way
home, travelling at 55 kph; considering that it was raining, visibility was
affected and the road was wet. Traffic was light. He testified that he was
driving along the inner portion of the right lane of Aurora Blvd. towards the
direction of Araneta Avenue, when he was suddenly confronted, in the
vicinity of A. Lake Street, San Juan, with a car coming from the opposite
direction, travelling at 80 kph, with "full bright lights". Temporarily blinded, he
instinctively swerved to the right to avoid colliding with the oncoming vehicle,
and bumped plaintiff's car, which he did not see because it was midnight
blue in color, with no parking lights or early warning device, and the area
was poorly lighted. He alleged in his defense that the left rear portion of
plaintiff's car was protruding as it was then "at a standstill diagonally" on the
outer portion of the right lane towards Araneta Avenue (par. 18, Answer). He
confirmed the testimony of plaintiff's witness that after being bumped the car
of the plaintiff swerved to the right and hit another car parked on the
sidewalk. Defendants counterclaimed for damages, alleging that plaintiff was
reckless or negligent, as she was not a licensed driver.
The police investigator, Pfc. Felic Ramos, who prepared the vehicular
accident report and the sketch of the three cars involved in the accident,
testified that the plaintiff's car was "near the sidewalk"; this witness did not
remember whether the hazard lights of plaintiff's car were on, and did not
notice if there was an early warning device; there was a street light at the
corner of Aurora Blvd. and F. Roman, about 100 meters away. It was not
mostly dark, i.e. "things can be seen" (p. 16, tsn, Oct. 28, 1991).
A witness for the plaintiff, Rogelio Rodriguez, testified that after plaintiff
alighted from her car and opened the trunk compartment, defendant's car
came approaching very fast ten meters from the scene; the car was
"zigzagging". The rear left side of plaintiff's car was bumped by the front right
portion of defendant's car; as a consequence, the plaintiff's car swerved to
the right and hit the parked car on the sidewalk. Plaintiff was thrown to the
windshield of defendant's car, which was destroyed, and landed under the
car. He stated that defendant was under the influence of liquor as he could
"smell it very well" (pp. 43, 79, tsn, June 17, 1991).

After trial, the lower court sustained the plaintiff's submissions and found
defendant Richard Li guilty of gross negligence and liable for damages
under Article 2176 of the Civil Code. The trial court likewise held Alexander
Commercial, Inc., Li's employer, jointly and severally liable for damages
pursuant to Article 2180. It ordered the defendants to jointly and severally
pay the following amounts:
1. P41,840.00, as actual damages, representing the miscellaneous
expenses of the plaintiff as a result of her severed left leg;
2. The sums of (a) P37,500.00, for the unrealized profits because of the
stoppage of plaintiff's Bistro La Conga restaurant three (3) weeks after the
accident on June 24, 1990; (b) P20,000.00, a month, as unrealized profits of
the plaintiff in her Bistro La Conga restaurant, from August, 1990 until the
date of this judgment and (c) P30,000.00, a month for unrealized profits in
plaintiff's two (2) beauty salons from July, 1990 until the date of this decision;
3. P1,000,000.00, in moral damages;
4. P50,000.00, as exemplary damages;
5. P60,000.00, as reasonable attorney's fees; and
6. Costs.
As a result of the trial court's decision, defendants filed an Omnibus Motion
for New Trial and for Reconsideration, citing testimony in Criminal Case O.C.
No. 804367 (People vs. Richard Li), tending to show that the point of impact,
as depicted by the pieces of glass/debris from the parties' cars, appeared to
be at the center of the right lane of Aurora Blvd. The trial court denied the
motion. Defendants forthwith filed an appeal with the respondent Court of
Appeals. In a Decision rendered March 30, 1994, the Court of Appeals found
that there was "ample basis from the evidence of record for the trial court's
finding that the plaintiff's car was properly parked at the right, beside the
sidewalk when it was bumped by defendant's car."1 Dismissing the
defendants' argument that the plaintiff's car was improperly parked, almost
at the center of the road, the respondent court noted that evidence which
was supposed to prove that the car was at or near center of the right lane
was never presented during the trial of the case. 2 The respondent court
furthermore observed that:

Defendant Li's testimony that he was driving at a safe speed of 55 km./hour

is self serving; it was not corroborated. It was in fact contradicted by
eyewitness Rodriguez who stated that he was outside his beerhouse located
at Aurora Boulevard after A. Lake Street, at or about 2:00 a.m. of June 24,
1990 when his attention was caught by a beautiful lady (referring to the
plaintiff) alighting from her car and opening the trunk compartment; he
noticed the car of Richard Li "approaching very fast ten (10) meters away
from the scene"; defendant's car was zigzagging", although there were no
holes and hazards on the street, and "bumped the leg of the plaintiff" who
was thrown against the windshield of defendant's care, causing its
destruction. He came to the rescue of the plaintiff, who was pulled out from
under defendant's car and was able to say "hurting words" to Richard Li
because he noticed that the latter was under the influence of liquor, because
he "could smell it very well" (p. 36, et. seq., tsn, June 17, 1991). He knew
that plaintiff owned a beerhouse in Sta. Mesa in the 1970's, but did not know
either plaintiff or defendant Li before the accident.
In agreeing with the trial court that the defendant Li was liable for the injuries
sustained by the plaintiff, the Court of Appeals, in its decision, however,
absolved the Li's employer, Alexander Commercial, Inc. from any liability
towards petitioner Lourdes Valenzuela and reduced the amount of moral
damages to P500,000.00. Finding justification for exemplary damages, the
respondent court allowed an award of P50,000.00 for the same, in addition
to costs, attorney's fees and the other damages. The Court of Appeals,
likewise, dismissed the defendants' counterclaims.3
Consequently, both parties assail the respondent court's decision by filing
two separate petitions before this Court. Richard Li, in G.R. No. 117944,
contends that he should not be held liable for damages because the
proximate cause of the accident was Ma. Lourdes Valenzuela's own
negligence. Alternatively, he argues that in the event that this Court finds him
negligent, such negligence ought to be mitigated by the contributory
negligence of Valenzuela.
On the other hand, in G.R. No. 115024, Ma. Lourdes Valenzuela assails the
respondent court's decision insofar as it absolves Alexander Commercial,
Inc. from liability as the owner of the car driven by Richard Li and insofar as
it reduces the amount of the actual and moral damages awarded by the trial
court.4

As the issues are intimately related, both petitions are hereby consolidated.
It is plainly evident that the petition for review in G.R. No. 117944 raises no
substantial questions of law. What it, in effect, attempts to have this Court
review are factual findings of the trial court, as sustained by the Court of
Appeals finding Richard Li grossly negligent in driving the Mitsubishi Lancer
provided by his company in the early morning hours of June 24, 1990. This
we will not do. As a general rule, findings of fact of the Court of Appeals are
binding and conclusive upon us, and this Court will not normally disturb such
factual findings unless the findings of fact of the said court are palpably
unsupported by the evidence on record or unless the judgment itself is
based on a misapprehension of facts.5
In the first place, Valenzuela's version of the incident was fully corroborated
by an uninterested witness, Rogelio Rodriguez, the owner-operator of an
establishment located just across the scene of the accident. On trial, he
testified that he observed a car being driven at a "very fast" speed, racing
towards the general direction of Araneta Avenue. 6 Rodriguez further added
that he was standing in front of his establishment, just ten to twenty feet
away from the scene of the accident, when he saw the car hit Valenzuela,
hurtling her against the windshield of the defendant's Mitsubishi Lancer, from
where she eventually fell under the defendant's car. Spontaneously reacting
to the incident, he crossed the street, noting that a man reeking with the
smell of liquor had alighted from the offending vehicle in order to survey the
incident.7 Equally important, Rodriguez declared that he observed
Valenzuela's car parked parallel and very near the sidewalk,8 contrary to Li's
allegation that Valenzuela's car was close to the center of the right lane. We
agree that as between Li's "self-serving" asseverations and the observations
of a witness who did not even know the accident victim personally and who
immediately gave a statement of the incident similar to his testimony to the
investigator immediately after the incident, the latter's testimony deserves
greater weight. As the court emphasized:
The issue is one of credibility and from Our own examination of the
transcript, We are not prepared to set aside the trial court's reliance on the
testimony of Rodriguez negating defendant's assertion that he was driving at
a safe speed. While Rodriguez drives only a motorcycle, his perception of
speed is not necessarily impaired. He was subjected to cross-examination
and no attempt was made to question .his competence or the accuracy of

his statement that defendant was driving "very fast". This was the same
statement he gave to the police investigator after the incident, as told to a
newspaper report (Exh. "P"). We see no compelling basis for disregarding
his testimony.

merely at a speed of 55 kph. when "out of nowhere he saw a dark maroon

lancer right in front of him, which was (the) plaintiff's car". He alleged that
upon seeing this sudden "apparition" he put on his brakes to no avail as the
road was slippery.9

The alleged inconsistencies in Rodriguez' testimony are not borne out by an

examination of the testimony. Rodriguez testified that the scene of the
accident was across the street where his beerhouse is located about ten to
twenty feet away (pp. 35-36, tsn, June 17, 1991). He did not state that the
accident transpired immediately in front of his establishment. The ownership
of the Lambingan se Kambingan is not material; the business is registered in
the name of his mother, but he explained that he owns the establishment (p.
5, tsn, June 20, 1991). Moreover, the testimony that the streetlights on his
side of Aurora Boulevard were on the night the accident transpired (p. 8) is
not necessarily contradictory to the testimony of Pfc. Ramos that there was a
streetlight at the corner of Aurora Boulevard and F. Roman Street (p. 45, tsn,
Oct. 20, 1991).

One will have to suspend disbelief in order to give credence to Li's

disingenuous and patently self-serving asseverations. The average
motorist alert to road conditions will have no difficulty applying the brakes to
a car traveling at the speed claimed by Li. Given a light rainfall, the visibility
of the street, and the road conditions on a principal metropolitan
thoroughfare like Aurora Boulevard, Li would have had ample time to react to
the changing conditions of the road if he were alert - as every driver should
be - to those conditions. Driving exacts a more than usual toll on the senses.
Physiological "fight or flight" 10 mechanisms are at work, provided such
mechanisms were not dulled by drugs, alcohol, exhaustion, drowsiness,
etc.11 Li's failure to react in a manner which would have avoided the accident
could therefore have been only due to either or both of the two factors: 1)
that he was driving at a "very fast" speed as testified by Rodriguez; and 2)
that he was under the influence of alcohol.12 Either factor working
independently would have diminished his responsiveness to road conditions,
since normally he would have slowed down prior to reaching Valenzuela's
car, rather than be in a situation forcing him to suddenly apply his brakes. As
the trial court noted (quoted with approval by respondent court):

With respect to the weather condition, Rodriguez testified that there was only
a drizzle, not a heavy rain and the rain has stopped and he was outside his
establishment at the time the accident transpired (pp. 64-65, tsn, June 17,
1991). This was consistent with plaintiff's testimony that it was no longer
raining when she left Bistro La Conga (pp. 10-11, tsn, April 29, 1991). It was
defendant Li who stated that it was raining all the way in an attempt to
explain why he was travelling at only 50-55 kph. (p. 11, tsn, Oct. 14, 1991).
As to the testimony of Pfc. Ramos that it was raining, he arrived at the scene
only in response to a telephone call after the accident had transpired (pp. 910, tsn, Oct. 28, 1991). We find no substantial inconsistencies in Rodriguez's
testimony that would impair the essential integrity of his testimony or reflect
on his honesty. We are compelled to affirm the trial court's acceptance of the
testimony of said eyewitness.
Against the unassailable testimony of witness Rodriguez we note that Li's
testimony was peppered with so many inconsistencies leading us to
conclude that his version of the accident was merely adroitly crafted to
provide a version, obviously self-serving, which would exculpate him from
any and all liability in the incident. Against Valenzuela's corroborated claims,
his allegations were neither backed up by other witnesses nor by the
circumstances proven in the course of trial. He claimed that he was driving

Secondly, as narrated by defendant Richard Li to the San Juan Police

immediately after the incident, he said that while driving along Aurora Blvd.,
out of nowhere he saw a dark maroon lancer right in front of him which was
plaintiff's car, indicating, again, thereby that, indeed, he was driving very fast,
oblivious of his surroundings and the road ahead of him, because if he was
not, then he could not have missed noticing at a still far distance the parked
car of the plaintiff at the right side near the sidewalk which had its
emergency lights on, thereby avoiding forcefully bumping at the plaintiff who
was then standing at the left rear edge of her car.
Since, according to him, in his narration to the San Juan Police, he put on
his brakes when he saw the plaintiff's car in front of him, but that it failed as
the road was wet and slippery, this goes to show again, that, contrary to his
claim, he was, indeed, running very fast. For, were it otherwise, he could
have easily completely stopped his car, thereby avoiding the bumping of the

plaintiff, notwithstanding that the road was wet and slippery. Verily, since, if,
indeed, he was running slow, as he claimed, at only about 55 kilometers per
hour, then, inspite of the wet and slippery road, he could have avoided hitting
the plaintiff by the mere expedient or applying his brakes at the proper time
and distance.

normally applied to an individual who is in no such situation. The law takes

stock of impulses of humanity when placed in threatening or dangerous
situations and does not require the same standard of thoughtful and
reflective care from persons confronted by unusual and oftentimes
threatening conditions.15

It could not be true, therefore, as he now claims during his testimony, which
is contrary to what he told the police immediately after the accident and is,
therefore, more believable, that he did not actually step on his brakes but
simply swerved a little to the right when he saw the on-coming car with
glaring headlights, from the opposite direction, in order to avoid it.

Under the "emergency rule" adopted by this Court in Gan vs. Court of
Appeals,16 an individual who suddenly finds himself in a situation of danger
and is required to act without much time to consider the best means that
may be adopted to avoid the impending danger, is not guilty of negligence if
he fails to undertake what subsequently and upon reflection may appear to
be a better solution, unless the emergency was brought by his own
negligence.17

For, had this been what he did, he would not have bumped the car of the
plaintiff which was properly parked at the right beside the sidewalk. And, it
was not even necessary for him to swerve a little to the right in order to
safely avoid a collision with the on-coming car, considering that Aurora Blvd.
is a double lane avenue separated at the center by a dotted white paint, and
there is plenty of space for both cars, since her car was running at the right
lane going towards Manila on the on-coming car was also on its right lane
going to Cubao.13
Having come to the conclusion that Li was negligent in driving his companyissued Mitsubishi Lancer, the next question for us to determine is whether or
not Valenzuela was likewise guilty of contributory negligence in parking her
car alongside Aurora Boulevard, which entire area Li points out, is a no
parking zone.
We agree with the respondent court that Valenzuela was not guilty of
contributory negligence.
Contributory negligence is conduct on the part of the injured party,
contributing as a legal cause to the harm he has suffered, which falls below
the standard to which he is required to conform for his own
protection.14 Based on the foregoing definition, the standard or act to which,
according to petitioner Li, Valenzuela ought to have conformed for her own
protection was not to park at all at any point of Aurora Boulevard, a no
parking zone. We cannot agree.
Courts have traditionally been compelled to recognize that an actor who is
confronted with an emergency is not to be held up to the standard of conduct

Applying this principle to a case in which the victims in a vehicular accident

swerved to the wrong lane to avoid hitting two children suddenly darting into
the street, we held, in Mc Kee vs. Intermediate Appellate Court,18 that the
driver therein, Jose Koh, "adopted the best means possible in the given
situation" to avoid hitting the children. Using the "emergency rule" the Court
concluded that Koh, in spite of the fact that he was in the wrong lane when
the collision with an oncoming truck occurred, was not guilty of negligence.19
While the emergency rule applies to those cases in which reflective thought,
or the opportunity to adequately weigh a threatening situation is absent, the
conduct which is required of an individual in such cases is dictated not
exclusively by the suddenness of the event which absolutely negates
thoroughful care, but by the over-all nature of the circumstances. A woman
driving a vehicle suddenly crippled by a flat tire on a rainy night will not be
faulted for stopping at a point which is both convenient for her to do so and
which is not a hazard to other motorists. She is not expected to run the
entire boulevard in search for a parking zone or turn on a dark street or alley
where she would likely find no one to help her. It would be hazardous for her
not to stop and assess the emergency (simply because the entire length of
Aurora Boulevard is a no-parking zone) because the hobbling vehicle would
be both a threat to her safety and to other motorists. In the instant case,
Valenzuela, upon reaching that portion of Aurora Boulevard close to A. Lake
St., noticed that she had a flat tire. To avoid putting herself and other
motorists in danger, she did what was best under the situation. As narrated
by respondent court: "She stopped at a lighted place where there were

people, to verify whether she had a flat tire and to solicit help if needed.
Having been told by the people present that her rear right tire was flat and
that she cannot reach her home she parked along the sidewalk, about 1 1/2
feet away, behind a Toyota Corona Car."20 In fact, respondent court noted,
Pfc. Felix Ramos, the investigator on the scene of the accident confirmed
that Valenzuela's car was parked very close to the sidewalk. 21 The sketch
which he prepared after the incident showed Valenzuela's car partly
straddling the sidewalk, clear and at a convenient distance from motorists
passing the right lane of Aurora Boulevard. This fact was itself corroborated
by the testimony of witness Rodriguez.22
Under the circumstances described, Valenzuela did exercise the standard
reasonably dictated by the emergency and could not be considered to have
contributed to the unfortunate circumstances which eventually led to the
amputation of one of her lower extremities. The emergency which led her to
park her car on a sidewalk in Aurora Boulevard was not of her own making,
and it was evident that she had taken all reasonable precautions.
Obviously in the case at bench, the only negligence ascribable was the
negligence of Li on the night of the accident. "Negligence, as it is commonly
understood is conduct which creates an undue risk of harm to others."23It is
the failure to observe that degree of care, precaution, and vigilance which
the circumstances justly demand, whereby such other person suffers
injury.24 We stressed, in Corliss vs. Manila Railroad Company,25 that
negligence is the want of care required by the circumstances.
The circumstances established by the evidence adduced in the court below
plainly demonstrate that Li was grossly negligent in driving his Mitsubishi
Lancer. It bears emphasis that he was driving at a fast speed at about 2:00
A.M. after a heavy downpour had settled into a drizzle rendering the street
slippery. There is ample testimonial evidence on record to show that he was
under the influence of liquor. Under these conditions, his chances of
effectively dealing with changing conditions on the road were significantly
lessened. As Presser and Keaton emphasize:
[U]nder present day traffic conditions, any driver of an automobile must be
prepared for the sudden appearance of obstacles and persons on the
highway, and of other vehicles at intersections, such as one who sees a
child on the curb may be required to anticipate its sudden dash into the

street, and his failure to act properly when they appear may be found to
amount to negligence.26
Li's obvious unpreparedness to cope with the situation confronting him on
the night of the accident was clearly of his own making.
We now come to the question of the liability of Alexander Commercial, Inc.
Li's employer. In denying liability on the part of Alexander Commercial, the
respondent court held that:
There is no evidence, not even defendant Li's testimony, that the visit was in
connection with official matters. His functions as assistant manager
sometimes required him to perform work outside the office as he has to visit
buyers and company clients, but he admitted that on the night of the
accident he came from BF Homes Paranaque he did not have "business
from the company" (pp. 25-26, ten, Sept. 23, 1991). The use of the company
car was partly required by the nature of his work, but the privilege of using it
for non-official business is a "benefit", apparently referring to the fringe
benefits attaching to his position.
Under the civil law, an employer is liable for the negligence of his employees
in the discharge of their respective duties, the basis of which liability is
not respondeat superior, but the relationship of pater familias, which theory
bases the liability of the master ultimately on his own negligence and not on
that of his servant (Cuison v. Norton and Harrison Co., 55 Phil. 18). Before
an employer may be held liable for the negligence of his employee, the act
or omission which caused damage must have occurred while an employee
was in the actual performance of his assigned tasks or duties (Francis High
School vs. Court of Appeals, 194 SCRA 341). In defining an employer's
liability for the acts done within the scope of the employee's assigned tasks,
the Supreme Court has held that this includes any act done by an employee,
in furtherance of the interests of the employer or for the account of the
employer at the time of the infliction of the injury or damage (Filamer
Christian Institute vs. Intermediate Appellate Court, 212 SCRA 637). An
employer is expected to impose upon its employees the necessary discipline
called for in the performance of any act "indispensable to the business and
beneficial to their employer" (at p. 645).
In light of the foregoing, We are unable to sustain the trial court's finding that
since defendant Li was authorized by the company to use the company car

"either officially or socially or even bring it home", he can be considered as

using the company car in the service of his employer or on the occasion of
his functions. Driving the company car was not among his functions as
assistant manager; using it for non-official purposes would appear to be a
fringe benefit, one of the perks attached to his position. But to impose liability
upon the employer under Article 2180 of the Civil Code, earlier quoted, there
must be a showing that the damage was caused by their employees in the
service of the employer or on the occasion of their functions. There is no
evidence that Richard Li was at the time of the accident performing any act
in furtherance of the company's business or its interests, or at least for its
benefit. The imposition of solidary liability against defendant Alexander
Commercial Corporation must therefore fail.27

diligent supervision,
employment.

We agree with the respondent court that the relationship in question is not
based on the principle of respondeat superior, which holds the master liable
for acts of the servant, but that of pater familias, in which the liability
ultimately falls upon the employer, for his failure to exercise the diligence of
a good father of the family in the selection and supervision of his employees.
It is up to this point, however, that our agreement with the respondent court
ends. Utilizing the bonus pater familias standard expressed in Article 2180 of
the Civil Code, 28 we are of the opinion that Li's employer, Alexander
Commercial, Inc. is jointly and solidarily liable for the damage caused by the
accident of June 24, 1990.

It is customary for large companies to provide certain classes of their

employees with courtesy vehicles. These company cars are either wholly
owned and maintained by the company itself or are subject to various plans
through which employees eventually acquire their vehicles after a given
period of service, or after paying a token amount. Many companies provide
liberal "car plans" to enable their managerial or other employees of rank to
purchase cars, which, given the cost of vehicles these days, they would not
otherwise be able to purchase on their own.

First, the case of St. Francis High School vs. Court of Appeals29 upon which
respondent court has placed undue reliance, dealt with the subject of a
school and its teacher's supervision of students during an extracurricular
activity. These cases now fall under the provision on special parental
authority found in Art. 218 of the Family Code which generally encompasses
all authorized school activities, whether inside or outside school premises.
Second, the employer's primary liability under the concept of pater
familias embodied by Art 2180 (in relation to Art. 2176) of the Civil Code is
quasi-delictual or tortious in character. His liability is relieved on a showing
that he exercised the diligence of a good father of the family in the selection
and supervision of its employees. Once evidence is introduced showing that
the employer exercised the required amount of care in selecting its
employees, half of the employer's burden is overcome. The question of

however,

depends

on

the

circumstances

of

Ordinarily, evidence demonstrating that the employer has exercised diligent

supervision of its employee during the performance of the latter's assigned
tasks would be enough to relieve him of the liability imposed by Article 2180
in relation to Article 2176 of the Civil Code. The employer is not expected to
exercise supervision over either the employee's private activities or during
the performance of tasks either unsanctioned by the former or unrelated to
the employee's tasks. The case at bench presents a situation of a different
character, involving a practice utilized by large companies with either their
employees of managerial rank or their representatives.

Under the first example, the company actually owns and maintains the car
up to the point of turnover of ownership to the employee; in the second
example, the car is really owned and maintained by the employee himself. In
furnishing vehicles to such employees, are companies totally absolved of
responsibility when an accident involving a company-issued car occurs
during private use after normal office hours?
Most pharmaceutical companies, for instance, which provide cars under the
first plan, require rigorous tests of road worthiness from their agents prior to
turning over the car (subject of company maintenance) to their
representatives. In other words, like a good father of a family, they entrust
the company vehicle only after they are satisfied that the employee to whom
the car has been given full use of the said company car for company or
private purposes will not be a threat or menace to himself, the company or to
others. When a company gives full use and enjoyment of a company car to
its employee, it in effect guarantees that it is, like every good father, satisfied
that its employee will use the privilege reasonably and responsively.

In the ordinary course of business, not all company employees are given the
privilege of using a company-issued car. For large companies other than
those cited in the example of the preceding paragraph, the privilege serves
important business purposes either related to the image of success an entity
intends to present to its clients and to the public in general, or - for practical
and utilitarian reasons - to enable its managerial and other employees of
rank or its sales agents to reach clients conveniently. In most cases,
providing a company car serves both purposes. Since important business
transactions and decisions may occur at all hours in all sorts of situations
and under all kinds of guises, the provision for the unlimited use of a
company car therefore principally serves the business and goodwill of a
company and only incidentally the private purposes of the individual who
actually uses the car, the managerial employee or company sales agent. As
such, in providing for a company car for business use and/or for the purpose
of furthering the company's image, a company owes a responsibility to the
public to see to it that the managerial or other employees to whom it entrusts
virtually unlimited use of a company issued car are able to use the company
issue capably and responsibly.
In the instant case, Li was an Assistant Manager of Alexander Commercial,
Inc. In his testimony before the trial court, he admitted that his functions as
Assistant Manager did not require him to scrupulously keep normal office
hours as he was required quite often to perform work outside the office,
visiting prospective buyers and contacting and meeting with company
clients. 30 These meetings, clearly, were not strictly confined to routine hours
because, as a managerial employee tasked with the job of representing his
company with its clients, meetings with clients were both social as well as
work-related functions. The service car assigned to Li by Alexander
Commercial, Inc. therefore enabled both Li - as well as the corporation - to
put up the front of a highly successful entity, increasing the latter's goodwill
before its clientele. It also facilitated meeting between Li and its clients by
providing the former with a convenient mode of travel.
Moreover, Li's claim that he happened to be on the road on the night of the
accident because he was coming from a social visit with an officemate in
Paranaque was a bare allegation which was never corroborated in the court
below. It was obviously self-serving. Assuming he really came from his
officemate's place, the same could give rise to speculation that he and his

officemate had just been from a work-related function, or they were together
to discuss sales and other work related strategies.
In fine, Alexander Commercial, inc. has not demonstrated, to our
satisfaction, that it exercised the care and diligence of a good father of the
family in entrusting its company car to Li. No allegations were made as to
whether or not the company took the steps necessary to determine or
ascertain the driving proficiency and history of Li, to whom it gave full and
unlimited use of a company car.31 Not having been able to overcome the
burden of demonstrating that it should be absolved of liability for entrusting
its company car to Li, said company, based on the principle of bonus pater
familias, ought to be jointly and severally liable with the former for the
injuries sustained by Ma. Lourdes Valenzuela during the accident.
Finally, we find no reason to overturn the amount of damages awarded by
the respondent court, except as to the amount of moral damages. In the
case of moral damages, while the said damages are not intended to enrich
the plaintiff at the expense of a defendant, the award should nonetheless be
commensurate to the suffering inflicted. In the instant case we are of the
opinion that the reduction in moral damages from an amount of
P1,000,000.00 to P800,000,00 by the Court of Appeals was not justified
considering the nature of the resulting damage and the
predictable sequelae of the injury.
As a result of the accident, Ma. Lourdes Valenzuela underwent a traumatic
amputation of her left lower extremity at the distal left thigh just above the
knee. Because of this, Valenzuela will forever be deprived of the full
ambulatory functions of her left extremity, even with the use of state of the
art prosthetic technology. Well beyond the period of hospitalization (which
was paid for by Li), she will be required to undergo adjustments in her
prosthetic devise due to the shrinkage of the stump from the process of
healing.
These adjustments entail costs, prosthetic replacements and months of
physical and occupational rehabilitation and therapy. During her lifetime, the
prosthetic devise will have to be replaced and re-adjusted to changes in the
size of her lower limb effected by the biological changes of middle-age,
menopause and aging. Assuming she reaches menopause, for example, the
prosthetic will have to be adjusted to respond to the changes in bone
resulting from a precipitate decrease in calcium levels observed in the bones

of all post-menopausal women. In other words, the damage done to her

would not only be permanent and lasting, it would also be permanently
changing and adjusting to the physiologic changes which her body
would normally undergo through the years. The replacements, changes, and
adjustments will require corresponding adjustive physical and occupational
therapy. All of these adjustments, it has been documented, are painful.
The foregoing discussion does not even scratch the surface of the nature of
the resulting damage because it would be highly speculative to estimate the
amount of psychological pain, damage and injury which goes with the
sudden severing of a vital portion of the human body. A prosthetic device,
however technologically advanced, will only allow a reasonable amount of
functional restoration of the motor functions of the lower limb. The sensory
functions are forever lost. The resultant anxiety, sleeplessness,
psychological injury, mental and physical pain are inestimable.
As the amount of moral damages are subject to this Court's discretion, we
are of the opinion that the amount of P1,000,000.00 granted by the trial court
is in greater accord with the extent and nature of the injury - physical and
psychological - suffered by Valenzuela as a result of Li's grossly negligent
driving of his Mitsubishi Lancer in the early morning hours of the accident.
WHEREFORE, PREMISES CONSIDERED, the decision of the Court of
Appeals is modified with the effect of REINSTATING the judgment of the
Regional Trial Court.
SO ORDERED.
CASTILEX INDUSTRIAL CORPORATION, petitioner, vs. VICENTE
VASQUEZ, JR. and LUISA SO VASQUEZ, and CEBU DOCTORS
HOSPITAL, INC.,respondents.
DECISION
DAVIDE, JR., C.J.:
The pivotal issue in this petition is whether an employer may be held
vicariously liable for the death resulting from the negligent operation by a
managerial employee of a company-issued vehicle.

The antecedents, as succinctly summarized by the Court of Appeals, are as

follows:
On 28 August 1988, at around 1:30 to 2:00 in the morning, Romeo So
Vasquez, was driving a Honda motorcycle around Fuente Osmea
Rotunda. He was traveling counter-clockwise, (the normal flow of traffic in a
rotunda) but without any protective helmet or goggles. He was also only
carrying a Students Permit to Drive at the time. Upon the other hand,
Benjamin Abad [was a] manager of Appellant Castilex Industrial Corporation,
registered owner [of] a Toyota Hi-Lux Pick-up with plate no. GBW-794. On
the same date and time, Abad drove the said company car out of a parking
lot but instead of going around the Osmea rotunda he made a short cut
against [the] flow of the traffic in proceeding to his route to General Maxilom
St. or to Belvic St.
In the process, the motorcycle of Vasquez and the pick-up of Abad collided
with each other causing severe injuries to the former. Abad stopped his
vehicle and brought Vasquez to the Southern Islands Hospital and later to
the Cebu Doctors Hospital.
On September 5, 1988, Vasquez died at the Cebu Doctors Hospital. It was
there that Abad signed an acknowledgment of Responsible Party (Exhibit K)
wherein he agreed to pay whatever hospital bills, professional fees and other
incidental charges Vasquez may incur.
After the police authorities had conducted the investigation of the accident, a
Criminal Case was filed against Abad but which was subsequently dismissed
for failure to prosecute. So, the present action for damages was
commenced by Vicente Vasquez, Jr. and Luisa So Vasquez, parents of the
deceased Romeo So Vasquez, against Jose Benjamin Abad and Castilex
Industrial Corporation. In the same action, Cebu Doctors Hospital
intervened to collect unpaid balance for the medical expense given to
Romeo So Vasquez.[1]
The trial court ruled in favor of private respondents Vicente and Luisa
Vasquez and ordered Jose Benjamin Abad (hereafter ABAD) and petitioner
Castilex Industrial Corporation (hereafter CASTILEX) to pay jointly and
solidarily (1) Spouses Vasquez, the amounts of P8,000.00 for burial
expenses; P50,000.00 as moral damages; P10,000.00 as attorneys fees;
and P778,752.00 for loss of earning capacity; and (2) Cebu Doctors

Hospital, the sum of P50,927.83 for unpaid medical and hospital bills at 3%
monthly interest from 27 July 1989 until fully paid, plus the costs of litigation.
[2]

CASTILEX and ABAD separately appealed the decision.

In its decision[3] of 21 May 1997, the Court of Appeals affirmed the ruling of
the trial court holding ABAD and CASTILEX liable but held that the liability of
the latter is only vicarious and not solidary with the former. It reduced the
award of damages representing loss of earning capacity from P778,752.00
to P214,156.80; and the interest on the hospital and medical bills, from 3%
per month to 12% per annum from 5 September 1988 until fully paid.
Upon CASTILEXs motion for reconsideration, the Court of Appeals modified
its decision by (1) reducing the award of moral damages from P50,000
to P30,000 in view of the deceaseds contributory negligence; (b) deleting
the award of attorneys fees for lack of evidence; and (c) reducing the
interest on hospital and medical bills to 6% per annum from 5 September
1988 until fully paid.[4]

when the award made by the trial court was borne both by evidence
adduced during the trial regarding deceaseds wages and by jurisprudence
on life expectancy. Moreover, they point out that the petition is procedurally
not acceptable on the following grounds: (1) lack of an explanation for
serving the petition upon the Court of Appeals by registered mail, as required
under Section 11, Rule 13 of the Rules of Civil Procedure; and (2) lack of a
statement of the dates of the expiration of the original reglementary period
and of the filing of the motion for extension of time to file a petition for review.
For its part, respondent Cebu Doctors Hospital maintains that petitioner
CASTILEX is indeed vicariously liable for the injuries and subsequent death
of Romeo Vasquez caused by ABAD, who was on his way home from taking
snacks after doing overtime work for petitioner. Although the incident
occurred when ABAD was not working anymore the inescapable fact
remains that said employee would not have been situated at such time and
place had he not been required by petitioner to do overtime work. Moreover,
since petitioner adopted the evidence adduced by ABAD, it cannot, as the
latters employer, inveigle itself from the ambit of liability, and is thus
estopped by the records of the case, which it failed to refute.

Hence, CASTILEX filed the instant petition contending that the Court of
Appeals erred in (1) applying to the case the fifth paragraph of Article 2180
of the Civil Code, instead of the fourth paragraph thereof; (2) that as a
managerial employee, ABAD was deemed to have been always acting within
the scope of his assigned task even outside office hours because he was
using a vehicle issued to him by petitioner; and (3) ruling that petitioner had
the burden to prove that the employee was not acting within the scope of his
assigned task.

We shall first address the issue raised by the private respondents regarding
some alleged procedural lapses in the petition.

Jose Benjamin ABAD merely adopted the statement of facts of petitioner

which holds fast on the theory of negligence on the part of the deceased.

SEC. 11. Priorities in modes of service and filing. -- Whenever practicable,

the service and filing of pleadings and other papers shall be done
personally. Except with respect to papers emanating from the court, a resort
to other modes must be accompanied by a written explanation why the
service or filing was not done personally. A violation of this Rule may be
cause to consider the paper as not filed.

On the other hand, respondents Spouses Vasquez argue that their sons
death was caused by the negligence of petitioners employee who was
driving a vehicle issued by petitioner and who was on his way home from
overtime work for petitioner; and that petitioner is thus liable for the resulting
injury and subsequent death of their son on the basis of the fifth paragraph
of Article 2180. Even if the fourth paragraph of Article 2180 were applied,
petitioner cannot escape liability therefor. They moreover argue that the
Court of Appeals erred in reducing the amount of compensatory damages

Private respondents contention of petitioners violation of Section 11 of Rule

13 and Section 4 of Rule 45 of the 1997 Rules of Civil Procedure holds no
water.
Section 11 of Rule 13 provides:

The explanation why service of a copy of the petition upon the Court of
Appeals was done by registered mail is found on Page 28 of the
petition. Thus, there has been compliance with the aforequoted provision.

As regards the allegation of violation of the material data rule under Section
4 of Rule 45, the same is unfounded. The material dates required to be
stated in the petition are the following: (1) the date of receipt of the
judgment or final order or resolution subject of the petition; (2) the date of
filing of a motion for new trial or reconsideration, if any; and (3) the date of
receipt of the notice of the denial of the motion. Contrary to private
respondents claim, the petition need not indicate the dates of the expiration
of the original reglementary period and the filing of a motion for extension of
time to file the petition. At any rate, aside from the material dates required
under Section 4 of Rule 45, petitioner CASTILEX also stated in the first page
of the petition the date it filed the motion for extension of time to file the
petition.
Now on the merits of the case.
The negligence of ABAD is not an issue at this instance. Petitioner
CASTILEX presumes said negligence but claims that it is not vicariously
liable for the injuries and subsequent death caused by ABAD.
Petitioner contends that the fifth paragraph of Article 2180 of the Civil Code
should only apply to instances where the employer is not engaged in
business or industry. Since it is engaged in the business of manufacturing
and selling furniture it is therefore not covered by said provision. Instead,
the fourth paragraph should apply.
Petitioners interpretation of the fifth paragraph is not accurate. The phrase
even though the former are not engaged in any business or industry found
in the fifth paragraph should be interpreted to mean that it is not necessary
for the employer to be engaged in any business or industry to be liable for
the negligence of his employee who is acting within the scope of his
assigned task.[5]
A distinction must be made between the two provisions to determine what is
applicable. Both provisions apply to employers: the fourth paragraph, to
owners and managers of an establishment or enterprise; and the fifth
paragraph, to employers in general, whether or not engaged in any business
or industry. The fourth paragraph covers negligent acts of employees
committed either in the service of the branches or on the occasion of their
functions, while the fifth paragraph encompasses negligent acts of
employees acting within the scope of their assigned task. The latter is an

expansion of the former in both employer coverage and acts

included. Negligent acts of employees, whether or not the employer is
engaged in a business or industry, are covered so long as they were acting
within the scope of their assigned task, even though committed neither in the
service of the branches nor on the occasion of their functions. For,
admittedly, employees oftentimes wear different hats. They perform
functions which are beyond their office, title or designation but which,
nevertheless, are still within the call of duty.
This court has applied the fifth paragraph to cases where the employer was
engaged in a business or industry such as truck operators[6] and banks.
[7]
The Court of Appeals cannot, therefore, be faulted in applying the said
paragraph of Article 2180 of the Civil Code to this case.
Under the fifth paragraph of Article 2180, whether or not engaged in any
business or industry, an employer is liable for the torts committed by
employees within the scope of his assigned tasks. But it is necessary to
establish the employer-employee relationship; once this is done, the plaintiff
must show, to hold the employer liable, that the employee was acting within
the scope of his assigned task when the tort complained of was
committed. It is only then that the employer may find it necessary to
interpose the defense of due diligence in the selection and supervision of the
employee.[8]
It is undisputed that ABAD was a Production Manager of petitioner
CASTILEX at the time of the tort occurrence. As to whether he was acting
within the scope of his assigned task is a question of fact, which the court a
quo and the Court of Appeals resolved in the affirmative.
Well-entrenched in our jurisprudence is the rule that the factual findings of
the Court of Appeals are entitled to great respect, and even finality at
times. This rule is, however, subject to exceptions such as when the
conclusion is grounded on speculations, surmises, or conjectures. [9] Such
exception obtain in the present case to warrant review by this Court of the
finding of the Court of Appeals that since ABAD was driving petitioners
vehicle he was acting within the scope of his duties as a manager.
Before we pass upon the issue of whether ABAD was performing acts within
the range of his employment, we shall first take up the other reason invoked
by the Court of Appeals in holding petitioner CASTILEX vicariously liable for

ABADs negligence, i.e., that the petitioner did not present evidence that
ABAD was not acting within the scope of his assigned tasks at the time of
the motor vehicle mishap. Contrary to the ruling of the Court of Appeals, it
was not incumbent upon the petitioner to prove the same. It was enough for
petitioner CASTILEX to deny that ABAD was acting within the scope of his
duties; petitioner was not under obligation to prove this negative
averment. Ei incumbit probatio qui dicit, non qui negat (He who asserts, not
he who denies, must prove). The Court has consistently applied the ancient
rule that if the plaintiff, upon whom rests the burden of proving his cause of
action, fails to show in a satisfactory manner facts which he bases his claim,
the defendant is under no obligation to prove his exception or defense.[10]
Now on the issue of whether the private respondents have sufficiently
established that ABAD was acting within the scope of his assigned tasks.
ABAD, who was presented as a hostile witness, testified that at the time of
the incident, he was driving a company-issued vehicle, registered under the
name of petitioner. He was then leaving the restaurant where he had some
snacks and had a chat with his friends after having done overtime work for
the petitioner.
No absolutely hard and fast rule can be stated which will furnish the
complete answer to the problem of whether at a given moment, an employee
is engaged in his employers business in the operation of a motor vehicle, so
as to fix liability upon the employer because of the employees action or
inaction; but rather, the result varies with each state of facts.[11]
In Filamer Christian Institute v. Intermediate Appellate Court,[12] this Court
had the occasion to hold that acts done within the scope of the employees
assigned tasks includes any act done by an employee in furtherance of the
interests of the employer or for the account of the employer at the time of the
infliction of the injury or damages.
The court a quo and the Court of Appeals were one in holding that the
driving by a manager of a company-issued vehicle is within the scope of his
assigned tasks regardless of the time and circumstances.
We do not agree. The mere fact that ABAD was using a service vehicle at
the time of the injurious incident is not of itself sufficient to charge petitioner

with liability for the negligent operation of said vehicle unless it appears that
he was operating the vehicle within the course or scope of his employment.
The following are principles in American Jurisprudence on the employers
liability for the injuries inflicted by the negligence of an employee in the use
of an employers motor vehicle:
I. Operation of Employers Motor Vehicle in Going to or from Meals

It has been held that an employee who uses his employers vehicle in going
from his work to a place where he intends to eat or in returning to work from
a meal is not ordinarily acting within the scope of his employment in the
absence of evidence of some special business benefit to the
employer. Evidence that by using the employers vehicle to go to and from
meals, an employee is enabled to reduce his time-off and so devote more
time to the performance of his duties supports the finding that an employee
is acting within the scope of his employment while so driving the vehicle.[13]
II. Operation of Employers Vehicle in Going to or from Work

In the same vein, traveling to and from the place of work is ordinarily a
personal problem or concern of the employee, and not a part of his services
to his employer. Hence, in the absence of some special benefit to the
employer other than the mere performance of the services available at the
place where he is needed, the employee is not acting within the scope of his
employment even though he uses his employers motor vehicle.[14]
The employer may, however, be liable where he derives some special
benefit from having the employee drive home in the employers vehicle as
when the employer benefits from having the employee at work earlier and,
presumably, spending more time at his actual duties. Where the employees
duties require him to circulate in a general area with no fixed place or hours
of work, or to go to and from his home to various outside places of work, and
his employer furnishes him with a vehicle to use in his work, the courts have
frequently applied what has been called the special errand or roving
commission rule, under which it can be found that the employee continues
in the service of his employer until he actually reaches home. However,
even if the employee be deemed to be acting within the scope of his
employment in going to or from work in his employers vehicle, the employer
is not liable for his negligence where at the time of the accident, the

employee has left the direct route to his work or back home and is pursuing
a personal errand of his own.

who then shouted: Daddy, Daddy![19] This woman could not have been
ABADs daughter, for ABAD was only 29 years old at the time.

III. Use of Employers Vehicle Outside Regular Working Hours

To the mind of this Court, ABAD was engaged in affairs of his own or was
carrying out a personal purpose not in line with his duties at the time he
figured in a vehicular accident. It was then about 2:00 a.m. of 28 August
1988, way beyond the normal working hours. ABADs working day had
ended; his overtime work had already been completed. His being at a place
which, as petitioner put it, was known as a haven for prostitutes, pimps, and
drug pushers and addicts, had no connection to petitioners business;
neither had it any relation to his duties as a manager. Rather, using his
service vehicle even for personal purposes was a form of a fringe benefit or
one of the perks attached to his position.

An employer who loans his motor vehicle to an employee for the latters
personal use outside of regular working hours is generally not liable for the
employees negligent operation of the vehicle during the period of permissive
use, even where the employer contemplates that a regularly assigned motor
vehicle will be used by the employee for personal as well as business
purposes and there is some incidental benefit to the employer. Even where
the employees personal purpose in using the vehicle has been
accomplished and he has started the return trip to his house where the
vehicle is normally kept, it has been held that he has not resumed his
employment, and the employer is not liable for the employees negligent
operation of the vehicle during the return trip.[15]
The foregoing principles and jurisprudence are applicable in our jurisdiction
albeit based on the doctrine of respondeat superior, not on the principle
of bonus pater familias as in ours. Whether the fault or negligence of the
employee is conclusive on his employer as in American law or jurisprudence,
or merely gives rise to the presumption juris tantum of negligence on the part
of the employer as in ours, it is indispensable that the employee was acting
in his employers business or within the scope of his assigned task.[16]
In the case at bar, it is undisputed that ABAD did some overtime work at the
petitioners office, which was located in Cabangcalan, Mandaue
City. Thereafter, he went to Goldies Restaurant in Fuente Osmea, Cebu
City, which is about seven kilometers away from petitioners place of
business.[17] A witness for the private respondents, a sidewalk vendor,
testified that Fuente Osmea is a lively place even at dawn because
Goldies Restaurant and Back Street were still open and people were
drinking thereat. Moreover, prostitutes, pimps, and drug addicts littered the
place.[18]
At the Goldies Restaurant, ABAD took some snacks and had a chat with
friends. It was when ABAD was leaving the restaurant that the incident in
question occurred. That same witness for the private respondents testified
that at the time of the vehicular accident, ABAD was with a woman in his car,

Since there is paucity of evidence that ABAD was acting within the scope of
the functions entrusted to him, petitioner CASTILEX had no duty to show
that it exercised the diligence of a good father of a family in providing ABAD
with a service vehicle. Thus, justice and equity require that petitioner be
relieved of vicarious liability for the consequences of the negligence of ABAD
in driving its vehicle.[20]
WHEREFORE, the petition is GRANTED, and the appealed decision and
resolution of the Court of Appeals is AFFIRMED with the modification that
petitioner Castilex Industrial Corporation be absolved of any liability for the
damages caused by its employee, Jose Benjamin Abad.
SO ORDERED.
Puno, Kapunan, Pardo, and Ynares-Santiago, JJ., concur.

The action is for damages under Articles 1902 and 1903 of the old Civil
Code. It appears that in the afternoon of March 18, 1948 a fire broke out at
the Caltex service station at the corner of Antipolo street and Rizal Avenue,
Manila. It started while gasoline was being hosed from a tank truck into the
underground storage, right at the opening of the receiving tank where the
nozzle of the hose was inserted. The fire spread to and burned several
neighboring houses, including the personal properties and effects inside
them. Their owners, among them petitioners here, sued respondents Caltex
(Phil.), Inc. and Mateo Boquiren, the first as alleged owner of the station and
the second as its agent in charge of operation. Negligence on the part of
both of them was attributed as the cause of the fire.
The trial court and the Court of Appeals found that petitioners failed to prove
negligence and that respondents had exercised due care in the premises
and with respect to the supervision of their employees.
The first question before Us refers to the admissibility of certain reports on
the fire prepared by the Manila Police and Fire Departments and by a certain
Captain Tinio of the Armed Forces of the Philippines. Portions of the first two
reports are as follows:
1. Police Department report:

DECISION

Investigation disclosed that at about 4:00 P.M. March 18, 1948, while
Leandro Flores was transferring gasoline from a tank truck, plate No. T-5292
into the underground tank of the Caltex Gasoline Station located at the
corner of Rizal Avenue and Antipolo Street, this City, an unknown Filipino
lighted a cigarette and threw the burning match stick near the main valve of
the said underground tank. Due to the gasoline fumes, fire suddenly blazed.
Quick action of Leandro Flores in pulling off the gasoline hose
connecting the truck with the underground tank prevented a terrific
explosion. However, the flames scattered due to the hose from which the
gasoline was spouting. It burned the truck and the following accessories and
residences.

MAKALINTAL., J.:

2. The Fire Department report:

This case is before us on a petition for review of the decision of the Court of
Appeals, which affirmed that of the Court of First Instance of Manila
dismissing petitioners second amended complaint against respondents.

In connection with their allegation that the premises was (sic) subleased for
the installation of a coca-cola and cigarette stand, the complainants
furnished this Office a copy of a photograph taken during the fire and which

THE SPOUSES BERNABE AFRICA and SOLEDAD C. AFRICA, and the

HEIRS OF DOMINGA ONG, petitioners-appellants, vs. CALTEX (PHIL.),
INC., MATEO BOQUIREN and THE COURT OF APPEALS, respondentsappellees.

is submitted herewith. it appears in this picture that there are in the premises
a coca-cola cooler and a rack which according to information gathered in the
neighborhood contained cigarettes and matches, installed between the
gasoline pumps and the underground tanks.
The report of Captain Tinio reproduced information given by a certain Benito
Morales regarding the history of the gasoline station and what the chief of
the fire department had told him on the same subject.
The foregoing reports were ruled out as double hearsay by the Court of
Appeals and hence inadmissible. This ruling is now assigned as error. It is
contended: first, that said reports were admitted by the trial court without
objection on the part of respondents; secondly, that with respect to the police
report (Exhibit V-Africa) which appears signed by a Detective Zapanta
allegedly for Salvador Capacillo, the latter was presented as witness but
respondents waived their right to cross-examine him although they had the
opportunity to do so; and thirdly, that in any event the said reports are
admissible as an exception to the hearsay rule under section 35 of Rule 123,
now Rule 130.
The first contention is not borne out by the record. The transcript of the
hearing of September 17, 1953 (pp. 167-170) shows that the reports in
question, when offered as evidence, were objected to by counsel for each of
respondents on the ground that they were hearsay and that they were
irrelevant, immaterial and impertinent. Indeed, in the courts resolution only
Exhibits J, K, K-5 and X-6 were admitted without objection; the admission of
the others, including the disputed ones, carried no such explanation.
On the second point, although Detective Capacillo did take the witness
stand, he was not examined and he did not testify as to the facts mentioned
in his alleged report (signed by Detective Zapanta). All he said was that he
was one of those who investigated the location of the fire and, if possible,
gather witnesses as to the occurrence, and that he brought the report with
him. There was nothing, therefore, on which he need be cross-examined;
and the contents of the report, as to which he did not testify, did not thereby
become competent evidence. And even if he had testified, his testimony
would still have been objectionable as far as information gathered by him
from third persons was concerned.

Petitioners maintain, however, that the reports in themselves, that is, without
further testimonial evidence on their contents, fall within the scope of section
35, Rule 123, which provides that entries in official records made in the
performance of his duty by a public officer of the Philippines, or by a person
in the performance of a duty specially enjoined by law, are prima
facie evidence of the facts therein stated.
There are three requisites for admissibility under the rule just mentioned: (a)
that the entry was made by a public officer, or by another person specially
enjoined by law to do so; (b) that it was made by the public officer in the
performance of his duties, or by such other person in the performance of a
duty specially enjoined by law; and (c) that the public officer or other person
had sufficient knowledge of the facts by him stated, which must have been
acquired by him personally or through official information (Moran, Comments
on the Rules of Court, Vol. 3 [1957] p. 398).
Of the three requisites just stated, only the last need be considered here.
Obviously the material facts recited in the reports as to the cause and
circumstances of the fire were not within the personal knowledge of the
officers who conducted the investigation. Was knowledge of such facts,
however, acquired by them through official information? As to some facts the
sources thereof are not even identified. Others are attributed to Leopoldo
Medina, referred to as an employee at the gas station were the fire occurred;
to Leandro Flores, driver of the tank truck from which gasoline was being
transferred at the time to the underground tank of the station; and to
respondent Mateo Boquiren, who could not, according to Exhibit V-Africa,
give any reason as to the origin of the fire. To qualify their statements as
official information acquired by the officers who prepared the reports, the
persons who made the statements not only must have personal knowledge
of the facts stated but must have the duty to give such statements for
record.1
The reports in question do not constitute an exception to the hearsay rule;
the facts stated therein were not acquired by the reporting officers
through official information, not having been given by the informants
pursuant to any duty to do so.
The next question is whether or not, without proof as to the cause and origin
of the fire, the doctrine of res ipsa loquitur should apply so as to presume
negligence on the part of appellees. Both the trial court and the appellate

court refused to apply the doctrine in the instant case on the grounds that
as to (its) applicability in the Philippines, there seems to be nothing
definite, and that while the rules do not prohibit its adoption in appropriate
cases, in the case at bar, however, we find no practical use for such
doctrine. The question deserves more than such summary dismissal. The
doctrine has actually been applied in this jurisdiction, in the case of Espiritu
vs. Philippine Power and Development Co. (CA-G.R. No. 3240-R,
September 20, 1949), wherein the decision of the Court of Appeals was
penned by Mr. Justice J.B.L. Reyes now a member of the Supreme Court.
The facts of that case are stated in the decision as follows:
In the afternoon of May 5, 1946, while the plaintiff-appellee and other
companions were loading grass between the municipalities of Bay and
Calauan, in the province of Laguna, with clear weather and without any wind
blowing, an electric transmission wire, installed and maintained by the
defendant Philippine Power and Development Co., Inc. alongside the road,
suddenly parted, and one of the broken ends hit the head of the plaintiff as
he was about to board the truck. As a result, plaintiff received the full shock
of 4,400 volts carried by the wire and was knocked unconscious to the
ground. The electric charge coursed through his body and caused extensive
and serious multiple burns from skull to legs, leaving the bone exposed in
some parts and causing intense pain and wounds that were not completely
healed when the case was tried on June 18, 1947, over one year after the
mishap.
The defendant therein disclaimed liability on the ground that the plaintiff had
failed to show any specific act of negligence, but the appellate court
overruled the defense under the doctrine of res ipsa loquitur. The court said:
The first point is directed against the sufficiency of plaintiffs evidence to
place appellant on its defense. While it is the rule, as contended by the
appellant, that in case of noncontractual negligence, or culpa aquiliana, the
burden of proof is on the plaintiff to establish that the proximate cause of his
injury was the negligence of the defendant, it is also a recognized principal
that where the thing which caused injury, without fault of the injured person,
is under the exclusive control of the defendant and the injury is such as in
the ordinary course of things does not occur if he having such control use
proper care, it affords reasonable evidence, in the absence of the
explanation, that the injury arose from defendants want of care.

And the burden of evidence is shifted to him to establish that he has

observed due care and diligence. (San Juan Light & Transit Co. v. Requena,
244, U.S. 89, 56 L. ed. 680.) This rule is known by the name of res ipsa
loquitur (the transaction speaks for itself), and is peculiarly applicable to the
case at bar, where it is unquestioned that the plaintiff had every right to be
on the highway, and the electric wire was under the sole control of defendant
company. In the ordinary course of events, electric wires do not part
suddenly in fair weather and injure people, unless they are subjected to
unusual strain and stress or there are defects in their installation,
maintenance and supervision; just as barrels do not ordinarily roll out of the
warehouse windows to injure passersby, unless some one was negligent.
(Byrne v. Boadle, 2 H & Co. 722; 159 Eng. Reprint 299, the leading case that
established that rule). Consequently, in the absence of contributory
negligence (which is admittedly not present), the fact that the wire snapped
suffices to raise a reasonable presumption of negligence in its installation,
care and maintenance. Thereafter, as observed by Chief Baron Pollock, if
there are any facts inconsistent with negligence, it is for the defendant to
prove.
It is true of course that decisions of the Court of Appeals do not lay down
doctrines binding on the Supreme Court, but we do not consider this a
reason for not applying the particular doctrine of res ipsa loquitur in the case
at bar. Gasoline is a highly combustible material, in the storage and sale of
which extreme care must be taken. On the other hand, fire is not considered
a fortuitous event, as it arises almost invariably from some act of man. A
case strikingly similar to the one before Us is Jones vs. Shell Petroleum
Corporation, et al., 171 So. 447:
Arthur O. Jones is the owner of a building in the city of Hammon which in the
year 1934 was leased to the Shell Petroleum Corporation for a gasoline
filling station. On October 8, 1934, during the term of the lease, while
gasoline was being transferred from the tank wagon, also operated by the
Shell Petroleum Corporation, to the underground tank of the station, a fire
started with resulting damages to the building owned by Jones. Alleging that
the damages to his building amounted to $516.95, Jones sued the Shell
Petroleum Corporation for the recovery of that amount. The judge of the
district court, after hearing the testimony, concluded that plaintiff was entitled
to a recovery and rendered judgment in his favor for $427.82. The Court of
Appeals for the First Circuit reversed this judgment, on the ground the

testimony failed to show with reasonable certainty any negligence on the

part of the Shell Petroleum Corporation or any of its agents or employees.
Plaintiff applied to this Court for a Writ of Review which was granted, and the
case is now before us for decision.
In resolving the issue of negligence, the Supreme Court of Louisiana held:
Plaintiffs petition contains two distinct charges of negligence one relating
to the cause of the fire and the other relating to the spreading of the gasoline
about the filling station.
Other than an expert to assess the damages caused plaintiffs building by
the fire, no witnesses were placed on the stand by the defendant.
Taking up plaintiffs charge of negligence relating to the cause of the fire, we
find it established by the record that the filling station and the tank truck were
under the control of the defendant and operated by its agents or employees.
We further find from the uncontradicted testimony of plaintiffs witnesses that
fire started in the underground tank attached to the filling station while it was
being filled from the tank truck and while both the tank and the truck were in
charge of and being operated by the agents or employees of the defendant,
extended to the hose and tank truck, and was communicated from the
burning hose, tank truck, and escaping gasoline to the building owned by the
plaintiff.
Predicated on these circumstances and the further circumstance of
defendants failure to explain the cause of the fire or to show its lack of
knowledge of the cause, plaintiff has evoked the doctrine of res ipsa loquitur.
There are many cases in which the doctrine may be successfully invoked
and this, we think, is one of them.
Where the thing which caused the injury complained of is shown to be under
the management of defendant or his servants and the accident is such as in
the ordinary course of things does not happen if those who have its
management or control use proper care, it affords reasonable evidence, in
absence of explanation by defendant, that the accident arose from want of
care. (45 C.J. #768, p. 1193).
This statement of the rule of res ipsa loquitur has been widely approved and
adopted by the courts of last resort. Some of the cases in this jurisdiction in

which the doctrine has been applied are the following, viz.:Maus v.
Broderick, 51 La. Ann. 1153, 25 So. 977; Hebert v. Lake Charles Ice, etc.,
Co., 111 La. 522, 35 So. 731, 64 L.R.A. 101, 100 Am. St. Rep. 505; Willis v.
Vicksburg, etc., R. Co., 115 La. 63, 38 So. 892; Bents v. Page, 115 La. 560,
39 So. 599.
The principle enunciated in the aforequoted case applies with equal force
here. The gasoline station, with all its appliances, equipment and
employees, was under the control of appellees. A fire occurred therein and
spread to and burned the neighboring houses. The persons who knew or
could have known how the fire started were appellees and their employees,
but they gave no explanation thereof whatsoever. It is a fair and reasonable
inference that the incident happened because of want of care.
In the report submitted by Captain Leoncio Mariano of the Manila Police
Department (Exh. X-1 Africa) the following appears:
Investigation of the basic complaint disclosed that the Caltex Gasoline
Station complained of occupies a lot approximately 10 m x 10 m at the
southwest corner of Rizal Avenue and Antipolo. The location is within a very
busy business district near the Obrero Market, a railroad crossing and very
thickly populated neighborhood where a great number of people mill around
throughout the day until late at night. The circumstances put the gasoline
station in a situation primarily prejudicial to its operation because the
passerby, those waiting for buses or transportation, those waiting to cross
the streets and others loafing around have to occupy not only the sidewalks
but also portion of the gasoline station itself. Whatever be the activities of
these people smoking or lighting a cigarette cannot be excluded and this
constitute a secondary hazard to its operation which in turn endangers the
entire neighborhood to conflagration.
Furthermore, aside from precautions already taken by its operator the
concrete walls south and west adjoining the neighborhood are only 2-1/2
meters high at most and cannot avoid the flames from leaping over it in case
of fire.
Records show that there have been two cases of fire which caused not only
material damages but desperation and also panic in the neighborhood.

Although the soft drinks stand had been eliminated, this gasoline service
station is also used by its operator as a garage and repair shop for his fleet
of taxicabs numbering ten or more, adding another risk to the possible
outbreak of fire at this already small but crowded gasoline station.
The foregoing report, having been submitted by a police officer in the
performance of his duties on the basis of his own personal observation of
the facts reported, may properly be considered as an exception to the
hearsay rule. These facts, descriptive of the location and objective
circumstances surrounding the operation of the gasoline station in question,
strengthen the presumption of negligence under the doctrine of res ipsa
loquitur, since on their face they called for more stringent measures of
caution than those which would satisfy the standard of due diligence under
ordinary circumstances. There is no more eloquent demonstration of this
than the statement of Leandro Flores before the police investigator. Flores
was the driver of the gasoline tank wagon who, alone and without
assistance, was transferring the contents thereof into the underground
storage when the fire broke out. He said: Before loading the underground
tank there were no people, but while the loading was going on, there were
people who went to drink coca-cola (at the coca-cola stand) which is about a
meter from the hole leading to the underground tank. He added that when
the tank was almost filled he went to the tank truck to close the valve, and
while he had his back turned to the manhole he, heard someone shout
fire.
Even then the fire possibly would not have spread to the neighboring houses
were it not for another negligent omission on the part of defendants, namely,
their failure to provide a concrete wall high enough to prevent the flames
from leaping over it. As it was the concrete wall was only 2-1/2 meters high,
and beyond that height it consisted merely of galvanized iron sheets, which
would predictably crumple and melt when subjected to intense heat.
Defendants negligence, therefore, was not only with respect to the cause of
the fire but also with respect to the spread thereof to the neighboring
houses.
There is an admission on the part of Boquiren in his amended answer to the
second amended complaint that the fire was caused through the acts of a
stranger who, without authority, or permission of answering defendant,
passed through the gasoline station and negligently threw a lighted match in

the premises. No evidence on this point was adduced, but assuming the
allegation to be true certainly any unfavorable inference from the
admission may be taken against Boquiren it does not extenuate his
negligence. A decision of the Supreme Court of Texas, upon facts analogous
to those of the present case, states the rule which we find acceptable here.
It is the rule that those who distribute a dangerous article or agent, owe a
degree of protection to the public proportionate to and commensurate with a
danger involved we think it is the generally accepted rule as applied to
torts that if the effects of the actors negligent conduct actively and
continuously operate to bring about harm to another, the fact that the active
and substantially simultaneous operation of the effects of a third persons
innocent, tortious or criminal act is also a substantial factor in bringing about
the harm, does not protect the actor from liability. (Restatement of the Law
of Torts, vol. 2, p. 1184, #439). Stated in another way, The intention of an
unforeseen and unexpected cause, is not sufficient to relieve a wrongdoer
from consequences of negligence, if such negligence directly and
proximately cooperates with the independent cause in the resulting injury.
(MacAfee, et al. vs. Travers Gas Corporation, 153 S.W. 2nd 442.)
The next issue is whether Caltex should be held liable for the damages
caused to appellants. This issue depends on whether Boquiren was an
independent contractor, as held by the Court of Appeals, or an agent of
Caltex. This question, in the light of the facts not controverted, is one of law
and hence may be passed upon by this Court. These facts are: (1) Boquiren
made an admission that he was an agent of Caltex; (2) at the time of the fire
Caltex owned the gasoline station and all the equipment therein; (3) Caltex
exercised control over Boquiren in the management of the state; (4) the
delivery truck used in delivering gasoline to the station had the name of
CALTEX painted on it; and (5) the license to store gasoline at the station
was in the name of Caltex, which paid the license fees. (Exhibit T-Africa;
Exhibit U-Africa; Exhibit X-5 Africa; Exhibit X-6 Africa; Exhibit Y-Africa).
In Boquirens amended answer to the second amended complaint, he
denied that he directed one of his drivers to remove gasoline from the truck
into the tank and alleged that the alleged driver, if one there was, was not in
his employ, the driver being an employee of the Caltex (Phil.) Inc. and/or the
owners of the gasoline station. It is true that Boquiren later on amended his
answer, and that among the changes was one to the effect that he was not
acting as agent of Caltex. But then again, in his motion to dismiss appellants

second amended complaint the ground alleged was that it stated no cause
of action since under the allegations thereof he was merely acting as agent
of Caltex, such that he could not have incurred personal liability. A motion to
dismiss on this ground is deemed to be an admission of the facts alleged in
the complaint.
Caltex admits that it owned the gasoline station as well as the equipment
therein, but claims that the business conducted at the service station in
question was owned and operated by Boquiren. But Caltex did not present
any contract with Boquiren that would reveal the nature of their relationship
at the time of the fire. There must have been one in existence at that time.
Instead, what was presented was a license agreement manifestly tailored for
purposes of this case, since it was entered into shortly before the expiration
of the one-year period it was intended to operate. This so-called license
agreement (Exhibit 5-Caltex) was executed on November 29, 1948, but
made effective as of January 1, 1948 so as to cover the date of the fire,
namely, March 18, 1948. This retroactivity provision is quite significant, and
gives rise to the conclusion that it was designed precisely to free Caltex from
any responsibility with respect to the fire, as shown by the clause that Caltex
shall not be liable for any injury to person or property while in the property
herein licensed, it being understood and agreed that LICENSEE (Boquiren)
is not an employee, representative or agent of LICENSOR (Caltex).
But even if the license agreement were to govern, Boquiren can hardly be
considered an independent contractor. Under that agreement Boquiren
would pay Caltex the purely nominal sum of P1.00 for the use of the
premises and all the equipment therein. He could sell only Caltex Products.
Maintenance of the station and its equipment was subject to the approval, in
other words control, of Caltex. Boquiren could not assign or transfer his
rights as licensee without the consent of Caltex. The license agreement was
supposed to be from January 1, 1948 to December 31, 1948, and thereafter
until terminated by Caltex upon two days prior written notice. Caltex could at
any time cancel and terminate the agreement in case Boquiren ceased to
sell Caltex products, or did not conduct the business with due diligence, in
the judgment of Caltex. Termination of the contract was therefore a right
granted only to Caltex but not to Boquiren. These provisions of the contract
show the extent of the control of Caltex over Boquiren. The control was such
that the latter was virtually an employee of the former.

Taking into consideration the fact that the operator owed his position to the
company and the latter could remove him or terminate his services at will;
that the service station belonged to the company and bore its tradename
and the operator sold only the products of the company; that the equipment
used by the operator belonged to the company and were just loaned to the
operator and the company took charge of their repair and maintenance; that
an employee of the company supervised the operator and conducted
periodic inspection of the companys gasoline and service station; that the
price of the products sold by the operator was fixed by the company and not
by the operator; and that the receipts signed by the operator indicated that
he was a mere agent, the finding of the Court of Appeals that the operator
was an agent of the company and not an independent contractor should not
be disturbed.
To determine the nature of a contract courts do not have or are not bound to
rely upon the name or title given it by the contracting parties, should thereby
a controversy as to what they really had intended to enter into, but the way
the contracting parties do or perform their respective obligations stipulated or
agreed upon may be shown and inquired into, and should such performance
conflict with the name or title given the contract by the parties, the former
must prevail over the latter. (Shell Company of the Philippines, Ltd. vs.
Firemens Insurance Company of Newark, New Jersey, 100 Phil. 757).
The written contract was apparently drawn for the purpose of creating the
apparent relationship of employer and independent contractor, and of
avoiding liability for the negligence of the employees about the station; but
the company was not satisfied to allow such relationship to exist. The
evidence shows that it immediately assumed control, and proceeded to
direct the method by which the work contracted for should be performed. By
reserving the right to terminate the contract at will, it retained the means of
compelling submission to its orders. Having elected to assume control and to
direct the means and methods by which the work has to be performed, it
must be held liable for the negligence of those performing service under its
direction. We think the evidence was sufficient to sustain the verdict of the
jury. (Gulf Refining Company v. Rogers, 57 S.W. 2d, 183).
Caltex further argues that the gasoline stored in the station belonged to
Boquiren. But no cash invoices were presented to show that Boquiren had

bought said gasoline from Caltex. Neither was there a sales contract to
prove the same.
As found by the trial court the Africas sustained a loss of P9,005.80, after
deducting the amount of P2,000.00 collected by them on the insurance of
the house. The deduction is now challenged as erroneous on the ground
that Article 2207 of the New Civil Code, which provides for the subrogation of
the insurer to the rights of the insured, was not yet in effect when the loss
took place. However, regardless of the silence of the law on this point at that
time, the amount that should be recovered be measured by the damages
actually suffered, otherwise the principle prohibiting unjust enrichment would
be violated. With respect to the claim of the heirs of Ong P7,500.00 was
adjudged by the lower court on the basis of the assessed value of the
property destroyed, namely, P1,500.00, disregarding the testimony of one of
the Ong children that said property was worth P4,000.00. We agree that the
court erred, since it is of common knowledge that the assessment for
taxation purposes is not an accurate gauge of fair market value, and in this
case should not prevail over positive evidence of such value. The heirs of
Ong are therefore entitled to P10,000.00.
WHERFORE, the decision appealed from is REVERSED and respondentsappellees are held liable solidarily to appellants, and ordered to pay them
the aforesaid sum of P9,005.80 and P10,000.00, respectively, with interest
from the filing of the complaint, and costs.
PILIPINAS
SHELL
PETROLEUM
CORPORATION,
petitioner,
vs. THE HONORABLE COURT OF APPEALS and CLARITA T.
CAMACHO, respondents.
DECISION
CAMPOS, JR., J:
Was the hydro-pressure test of the underground storage tank in private
respondent Clarita T. Camacho's gasoline station conducted by an
independent contractor or not? A negative answer will make petitioner
Pilipinas Shell Petroleum Corporation (Shell, for brevity) liable for the said
independent contractor's acts or omissions; otherwise, no. This is the issue
that this Court is called upon to resolve in this case.

The facts are as follows:

Private respondent Clarita T. Camacho (private respondent for short) was
the operator of a gasoline station in Naguilian Road, Baguio City, wherein
she sells petitioner Shell's petroleum products. Sometime in April 1983,
private respondent requested petitioner to conduct a hydro-pressure test on
the underground storage tanks of the said station in order to determine
whether or not the sales losses she was incurring for the past several
months were due to leakages therein. Petitioner acceded to the said request
and on April 27, 1983, one Jesus "Jessie" Feliciano together with other
workers, came to private respondent's station with a Job Order from
petitioner to perform the hydro-pressure test.
On the same day, Feliciano and his men drained the underground storage
tank which was to be tested of its remaining gasoline. After which, they filled
the tank with water through a water hose from the deposit tank of private
respondent. Then, after requesting one of private respondent's gasoline
boys to shut off the water when the tank was filled, Feliciano and his men
left. At around 2:00 a.m. the following day, private respondent saw that the
water had reached the lip of the pipe of the underground storage tank and
so, she shut off the water faucet.
At around 5:30 a.m., private respondent's husband opened the station and
started selling gasoline. But at about 6:00 a.m., the customers who had
bought gasoline returned to the station complaining that their vehicles stalled
because there was water in the gasoline that they bought. On account of
this, private respondent was constrained to replace the gasoline sold to the
said customers. However, a certain Eduardo Villanueva, one of the
customers, filed a complaint with the police against private respondent for
selling the adulterated gasoline. In addition, he caused the incident to be
published in two local newspapers.
Feliciano, who arrived later that morning, did not know what caused the
water pollution of the gasoline in the adjacent storage tank. So he called up
Nick Manalo, Superintendent of Shell's Poro Point Installation at San
Fernando, La Union, and referred the matter to the latter. Manalo went up to
Baguio in the afternoon to investigate. Thereafter, he and Feliciano again
filled with water the underground storage tank undergoing hydro-pressure
test whereat they noticed that the water was transferring to the other tanks
from whence came the gasoline being sold. Manalo asked permission from

Shell's Manila Office to excavate the underground pipes of the station. Upon
being granted permission to do so, Feliciano and his men began excavating
the driveway of private respondent's station in order to expose the
underground pipeline. The task was continued by one Daniel "Danny"
Pascua who replaced Feliciano, Pascua removed the corroded pipeline and
installed new independent vent pipe for each storage tank.
Meanwhile, petitioner undertook to settle the criminal complaint filed by
Villanueva. Subsequently, Villanueva filed an Affidavit of Desistance, 1
declaring, inter alia
"THAT, after careful evaluation of the surrounding circumstances, especially
the explanation of the representatives of SHELL Phils., that the gasoline
tanks of Mrs. Camacho were subject to Hydro test, in such a way that water
was used for the said test, I believe that she may not have had anything to
do with the filling of water in the tank of my car;
xxx xxx xxx
THAT, said representatives of SHELL Phils. have interceded for and in
behalf of Mrs. Camacho and have fully satisfied my claim against her.
THAT, in view of all the foregoing I do not intend to prosecute the case and I
am therefore asking for the dismissal of the case against Mrs. Camacho."
Thereafter, private respondent demanded from petitioner the payment of
damages in the amount of P10,000.00. Petitioner, instead, offered private
respondent additional credit line and other beneficial terms, which offer was,
however, rejected. cdrep
Subsequently, or on October 12, 1983, private respondent filed before the
trial court a complaint for damages against petitioner due to the latter's
alleged negligence in the conduct of the hydro-pressure test in her gasoline
station. For its part, petitioner denied liability because, according to it, the
hydro-pressure test on the underground storage tanks was conducted by an
independent contractor.
The trial court dismissed private respondent's complaint for damages for the
reason that:

"The hydro-pressure test which brought about the incident was conducted by
Jesus Feliciano, who was neither an employee nor agent nor representative
of the defendant. Jesus Feliciano is responsible for his own acts and
omissions. He alone was in control of the manner of how he is to undertake
the hydro-pressure test.
Considering that the conduct of said hydro-pressure test was under the sole
and exclusive control and supervision of Jesus Feliciano, the overflow with
water causing the same to sip into the adjoining tank cannot be attributed to
the fault or negligence of defendant. 2
From the adverse decision of the trial court, private respondent appealed to
the Court of Appeals which court reversed the decision of the trial court.
Thus,
"PREMISES CONSIDERED, the decision being appealed from is hereby
SET ASIDE and, in lieu thereof, another rendered ordering defendant to pay
plaintiff:
1. P100,000.00 as moral damages;
2. P2,639.25 and P15,000.00 representing the actual losses suffered by
plaintiff as a result of the water pollution of the gasoline.
No costs.
SO ORDERED." 3
Petitioner moved to have the above decision reconsidered but the same was
denied in a Resolution dated March 9, 1992. Hence, this recourse.
As stated at the very outset, the pivotal issue in this case is whether or not
petitioner should be held accountable for the damage to private respondent
due to the hydro-pressure test conducted by Jesus Feliciano.
It is a well-entrenched rule that an employer-employee relationship must
exist before an employer may be held liable for the negligence of his
employee. It is likewise firmly settled that the existence or non-existence of
the employer-employee relationship is commonly to be determined by
examination of certain factors or aspects of that relationship. These include:
(a) the manner of selection and engagement of the putative employee; (b)

the mode of payment of wages; (c) the presence or absence of a power to

control the putative employee's conduct, 4 although the latter is the most
important element. 5

further amplified by the absence of any Shell representative in the job site
time when the test was conducted. Roberto Mitra was never there. Only
Feliciano and his men were.

In this case, respondent Court of Appeals held petitioner liable for the
damage caused to private respondent as a result of the hydro-pressure test
conducted by Jesus Feliciano due to the following circumstances: 6

True, it was petitioner who sent Feliciano to private respondent's gasoline

station in conduct the hydro-pressure test as per the request of private
respondent herself. But this single act did not automatically make Feliciano
an employee of petitioner. As discussed earlier, more than mere hiring is
required. It must further be established that petitioner is the one who is
paying Felicia's salary on a regular basis; that it has the power to dismiss
said employee, and more importantly, that petitioner has control and
supervision over the work of Feliciano. The last requisite was sorely missing
in the instant case.

1. Feliciano was hired by petitioner;

2. He received his instructions from the Field Engineer of petitioner, Mr.
Roberto Mitra;
3. While he was at private respondent's service station, he also received
instructions from Nick Manalo, petitioner's Poro Point Depot Superintendent;
4. Instructions from petitioner's Manila Office were also relayed to him while
he was at .the job site at Baguio City;
5. His work was under the constant supervision of petitioner's engineer;
6. Before he could complete the work, he was instructed by Mr. Manalo,
petitioner's Superintendent, to discontinue the same and it was turned over
to Daniel Pascua, who was likewise hired by petitioner.
Based on the foregoing, respondent Court of Appeals concluded that
Feliciano was not an independent contractor but was under the control and
supervision of petitioner in the performance of the hydro-pressure test,
hence, it held petitioner liable for the former's acts and omissions.
We are not in accord with the above finding of respondent Court of Appeals.
As aptly held by the trial court, petitioner did not exercise control and
supervision over Feliciano with regard to the manner in which he conducted
the hydro-pressure test. All that petitioner did, through its Field Engineer,
Roberto Mitra, was relay to Feliciano the request of private respondent for a
hydro-pressure test, to determine any possible leakages in the storage tanks
in her gasoline station. The mere hiring of Feliciano by petitioner for that
particular task is not the form of control and supervision contemplated by
may be the basis for establishing an employer-employee relationship
between petitioner and Feliciano. The fact that there was no such control is

A careful perusal of the records will lead to the conclusion that Feliciano is
an independent contractor. Section 8 of Rule VIII, Book III of the Omnibus
Rules Implementing the Labor Code provides:
"Sec. 8. Job contracting. There is job contracting permissible under the
Code if the following conditions are met:
(1) The contractor carries on an independent business and undertakes the
contract work on his own account under his own responsibility according to
his own manner and method, free from the control and direction of his
employer or principal in all matters connected with the performance of the
work except as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools,
equipment, machineries, work premises, and other materials which are
necessary in the conduct of his business."
Feliciano is independently maintaining a business under a duly registered
business name, "JFS Repair and Maintenance Service," and is duly
registered with the Bureau of Domestic Trade. 7 He does not enjoy a fixed
salary but instead charges a lump sum consideration for every piece of work
he accomplishes. 8 If he is not able to finish his work, he does not get paid,
as what happened in this case. 9 Further, Feliciano utilizes his own tools and
equipment and has a complement of workers. Neither is he required to work
on a regular basis. Instead, he merely awaits calls from clients such as
petitioner whenever repairs and maintenance services are requested.

Moreover, Feliciano does not exclusively service petitioner because he can

accept other business but not from other oil companies. 10 All these are the
hallmarks of an independent contractor.
Being an independent contractor, Feliciano is responsible for his own acts
and omissions. As he alone was in control over the manner of how he was to
undertake the hydro-pressure test, he alone must bear the consequences of
his negligence, if any, in the conduct of the same.
Anent the issue of damages, the same has been rendered moot by the
failure of private respondent to establish an employer-employee relationship
between petitioner and Feliciano. Absent said relationship, petitioner cannot
be held liable for the acts and omissions of the independent contractor,
Feliciano.
WHEREFORE, premises considered, the appealed decision of respondent
Court of Appeals is hereby SET ASIDE and the decision of the trial court
REINSTATED. Without pronouncement as to costs.
SO ORDERED.

Hermana R. Cerezo, petitioner, vs. David Tuazon, respondent.

DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari[1] to annul the Resolution[2] dated 21
October 1999 of the Court of Appeals in CA-G.R. SP No. 53572, as well as
its Resolution dated 20 January 2000 denying the motion for
reconsideration. The Court of Appeals denied the petition for annulment of
the
Decision[3] dated 30
May
1995 rendered
by
the Regional Trial Court of AngelesCity, Branch 56 (trial court), in Civil
Case No. 7415. The trial court ordered petitioner Hermana R. Cerezo (Mrs.

Cerezo) to pay respondent David Tuazon (Tuazon) actual damages, loss

of earnings, moral damages, and costs of suit.
Antecedent Facts
Around noontime of 26 June 1993, a Country Bus Lines passenger bus with
plate number NYA 241 collided with a tricycle bearing plate number TC RV
126 along Captain M. Palo Street, Sta. Ines, Mabalacat, Pampanga. On 1
October 1993, tricycle driver Tuazon filed a complaint for damages against
Mrs. Cerezo, as owner of the bus line, her husband Attorney Juan Cerezo
(Atty. Cerezo), and bus driver Danilo A. Foronda (Foronda). The
complaint alleged that:
7.
At the time of the incident, plaintiff [Tuazon] was in his proper lane
when the second-named defendant [Foronda], being then the driver and
person in charge of the Country Bus with plate number NYA 241, did then
and there willfully, unlawfully, and feloniously operate the said motor vehicle
in a negligent, careless, and imprudent manner without due regard to traffic
rules and regulations, there being a Slow Down sign near the scene of the
incident, and without taking the necessary precaution to prevent loss of lives
or injuries, his negligence, carelessness and imprudence resulted to severe
damage to the tricycle and serious physical injuries to plaintiff thus making
him unable to walk and becoming disabled, with his thumb and middle finger
on the left hand being cut[.][4]
On 1 October 1993, Tuazon filed a motion to litigate as a
pauper. Subsequently, the trial court issued summons against Atty. Cerezo
and Mrs. Cerezo (the Cerezo spouses) at theMakati address stated in the
complaint. However, the summons was returned unserved on 10 November
1993 as the Cerezo spouses no longer held office nor resided
in Makati. On 18 April 1994, the trial court issued alias summons against the
Cerezo spouses at their address in Barangay Sta. Maria, Camiling,
Tarlac. The alias summons and a copy of the complaint were finally served
on 20 April 1994 at the office of Atty. Cerezo, who was then working as
Tarlac Provincial Prosecutor. Atty. Cerezo reacted angrily on learning of the
service of summons upon his person. Atty. Cerezo allegedly told Sheriff
William Canlas: Punyeta, ano ang gusto mong mangyari? Gusto mong
hindi ka makalabas ng buhay dito? Teritoryo ko ito. Wala ka sa teritoryo
mo.[5]

The records show that the Cerezo spouses participated in the proceedings
before the trial court. The Cerezo spouses filed a comment with motion for
bill of particulars dated 29 April 1994 and a reply to opposition to comment
with motion dated 13 June 1994.[6] On 1 August 1994, the trial court issued
an order directing the Cerezo spouses to file a comment to the opposition to
the bill of particulars. Atty. Elpidio B. Valera (Atty. Valera) of Valera and
Valera Law Offices appeared on behalf of the Cerezo spouses. On 29
August 1994, Atty. Valera filed an urgent ex-parte motion praying for the
resolution of Tuazons motion to litigate as a pauper and for the issuance of
new summons on the Cerezo spouses to satisfy proper service in
accordance with the Rules of Court.[7]
On 30 August 1994, the trial court issued an order resolving Tuazons motion
to litigate as a pauper and the Cerezo spouses urgent ex-parte motion. The
order reads:
At the hearing on August 30, 1994, the plaintiff [Tuazon] testified that he is
presently jobless; that at the time of the filing of this case, his son who is
working in Malaysia helps him and sends him once in a while P300.00 a
month, and that he does not have any real property. Attached to the Motion
to Litigate as Pauper are his Affidavit that he is unemployed; a Certification
by the Barangay Captain of his poblacion that his income is not enough for
his familys subsistence; and a Certification by the Office of the Municipal
Assessor
that
he
has
no
landholding
in
the Municipality of Mabalacat, Province ofPampanga.
The Court is satisfied from the unrebutted testimony of the plaintiff that he is
entitled to prosecute his complaint in this case as a pauper under existing
rules.

On 27 September 1994, the Cerezo spouses filed an urgent ex-parte motion

for reconsideration. The trial court denied the motion for reconsideration.
On 14 November 1994, the trial court issued an order directing the Cerezo
spouses to file their answer within fifteen days from receipt of the order. The
Cerezo spouses did not file an answer. On 27 January 1995, Tuazon filed a
motion to declare the Cerezo spouses in default. On 6 February 1995, the
trial court issued an order declaring the Cerezo spouses in default and
authorizing Tuazon to present his evidence. [9]
On 30 May 1995, after considering Tuazons testimonial and documentary
evidence, the trial court ruled in Tuazons favor. The trial court made no
pronouncement on Forondas liability because there was no service of
summons on him. The trial court did not hold Atty. Cerezo liable as Tuazon
failed to show that Mrs. Cerezos business benefited the family, pursuant to
Article 121(3) of the Family Code. The trial court held Mrs. Cerezo solely
liable for the damages sustained by Tuazon arising from the negligence of
Mrs. Cerezos employee, pursuant to Article 2180 of the Civil Code. The
dispositive portion of the trial courts decision reads:
WHEREFORE, judgment is hereby rendered ordering the defendant
Hermana Cerezo to pay the plaintiff:
a) For Actual Damages
1) Expenses for operation and medical
Treatment
2) Cost of repair of the tricycle

P69,485.35

39,921.00

On the other hand, the Court denies the prayer in the Appearance and
Urgent Ex-Parte Motion requiring new summons to be served to the
defendants. The Court is of the opinion that any infirmity in the service of
the summons to the defendant before plaintiff was allowed to prosecute his
complaint in this case as a pauper has been cured by this Order.

b) For loss of earnings

43,300.00

c) For moral damages

20,000.00

If within 15 days from receipt of this Order, the defendants do not question
on appeal this Order of this Court, the Court shall proceed to resolve the
Motion for Bill of Particulars.[8]

The docket fees and other expenses in the filing of this suit shall be lien on
whatever judgment may be rendered in favor of the plaintiff.

d) And to pay the cost of the suit.

SO ORDERED.[10]

Mrs. Cerezo received a copy of the decision on 25 June 1995. On 10 July

1995, Mrs. Cerezo filed before the trial court a petition for relief from
judgment on the grounds of fraud, mistake or excusable
negligence. Testifying before the trial court, both Mrs. Cerezo and Atty.
Valera denied receipt of notices of hearings and of orders of the court. Atty.
Valera added that he received no notice before or during the 8 May
1995 elections, when he was a senatorial candidate for the KBL Party, and
very busy, using his office and residence as Party National
Headquarters. Atty. Valera claimed that he was able to read the decision of
the trial court only after Mrs. Cerezo sent him a copy.[11]

Exhibit 7-B

- Courts return slip addressed to Spouses Juan

and Hermana Cerezo;

Exhibit 8

- Decision dated May [30], 1995

Exhibit 8-A

- Courts return slip addressed to defendant Hermana

Cerezo;

Exhibit 8-B

- Courts return slip addressed to defendants counsel,

Tuazon did not testify but presented documentary evidence to prove the
participation of the Cerezo spouses in the case. Tuazon presented the
following exhibits:

Exhibit 9

- Order dated September 21, 1995;

Exhibit 1

- Sheriffs return and summons;

Exhibit 9-A

- Second Page of Exhibit 9;

Exhibit 1-A

- Alias summons dated April 20, 1994;

Exhibit 9-B

- Third page of Exhibit 9;

Exhibit 2

- Comment with Motion;

Exhibit 9-C

- Fourth page of Exhibit 9;

Exhibit 3

- Minutes of the hearing held on August 1, 1994;

Exhibit 9-D

- Courts return slip addressed to Atty. Elpidio Valera;

Exhibit 3-A

- Signature of defendants counsel;

Exhibit 4

- Minutes of the hearing held on August 30, 1994;

Exhibit 4-A

- Signature of the defendants counsel;

Exhibit 5

- Appearance and Urgent Ex-Parte Motion;

Exhibit 6

- Order dated November 14, 1994;

Exhibit 6-A

- Postal certification dated January 13, 1995;

Exhibit 7

- Order dated February [illegible];

Exhibit 7-A

- Courts return slip addressed to Atty. Elpidio

Valera;

Atty. Elpidio Valera;

and
Exhibit 9-E

- Courts return slip addressed to plaintiffs counsel,

Atty. Norman Dick de Guzman.[12]

On 4 March 1998, the trial court issued an order[13] denying the petition for
relief from judgment. The trial court stated that having received the decision
on 25 June 1995, the Cerezo spouses should have filed a notice of appeal
instead of resorting to a petition for relief from judgment. The trial court
refused to grant relief from judgment because the Cerezo spouses could
have availed of the remedy of appeal. Moreover, the Cerezo spouses not
only failed to prove fraud, accident, mistake or excusable negligence by
conclusive evidence, they also failed to prove that they had a good and
substantial defense. The trial court noted that the Cerezo spouses failed to
appeal because they relied on an expected settlement of the case.

The Cerezo spouses subsequently filed before the Court of Appeals a

petition for certiorari under Section 1 of Rule 65. The petition was docketed
as CA-G.R. SP No. 48132.[14] The petition questioned whether the trial court
acquired jurisdiction over the case considering there was no service of
summons on Foronda, whom the Cerezo spouses claimed was an
indispensable party. In a resolution[15] dated 21 January 1999, the Court of
Appeals denied the petition for certiorari and affirmed the trial courts order
denying the petition for relief from judgment. The Court of Appeals declared
that the Cerezo spouses failure to file an answer was due to their own
negligence, considering that they continued to participate in the proceedings
without filing an answer. There was also nothing in the records to show that
the Cerezo spouses actually offered a reasonable settlement to
Tuazon. The Court of Appeals also denied Cerezo spouses motion for
reconsideration for lack of merit.

wrongfully declared in default while waiting for an amicable settlement of the

complaint for damages. The court a quo correctly ruled that such petition is
without merit. The defendant spouses admit that during the initial hearing
they appeared before the court and even mentioned the need for an
amicable settlement. Thus, the lower court acquired jurisdiction over the
defendant spouses.

The Cerezo spouses filed before this Court a petition for review
on certiorari under Rule 45. Atty. Cerezo himself signed the petition,
docketed as G.R. No. 137593. On 13 April 1999, this Court rendered a
resolution denying the petition for review on certiorari for failure to attach an
affidavit of service of copies of the petition to the Court of Appeals and to the
adverse parties. Even if the petition complied with this requirement, the
Court would still have denied the petition as the Cerezo spouses failed to
show that the Court of Appeals committed a reversible error. The Courts
resolution was entered in the Book of Entries and Judgments when it
became final and executory on 28 June 1999.[16]

SO ORDERED.[18]

Undaunted, the Cerezo spouses filed before the Court of Appeals on 6 July
1999 a petition for annulment of judgment under Rule 47 with prayer for
restraining order. Atty. Valera and Atty. Dionisio S. Daga (Atty. Daga)
represented Mrs. Cerezo in the petition, docketed as CA-G.R. SP No.
53572.[17] The petition prayed for the annulment of the 30 May 1995 decision
of the trial court and for the issuance of a writ of preliminary injunction
enjoining execution of the trial courts decision pending resolution of the
petition.
The Court of Appeals denied the petition for annulment of judgment in a
resolution dated 21 October 1999. The resolution reads in part:
In this case, records show that the petitioner previously filed with the lower
court a Petition for Relief from Judgment on the ground that they were

Therefore, petitioner having availed of a petition for relief, the remedy of an

annulment of judgment is no longer available. The proper action for the
petitioner is to appeal the order of the lower court denying the petition for
relief.
Wherefore, the instant petition could not be given due course and should
accordingly be dismissed.

On 20 January 2000, the Court of Appeals denied the Cerezo spouses

motion for reconsideration.[19] The Court of Appeals stated:
A distinction should be made between a courts jurisdiction over a person
and its jurisdiction over the subject matter of a case. The former is acquired
by the proper service of summons or by the parties voluntary appearance;
while the latter is conferred by law.
Resolving the matter of jurisdiction over the subject matter, Section 19(1) of
B[atas] P[ambansa] 129 provides that Regional Trial Courts shall exercise
exclusive original jurisdiction in all civil actions in which the subject of the
litigation is incapable of pecuniary estimation. Thus it was proper for the
lower court to decide the instant case for damages.
Unlike jurisdiction over the subject matter of a case which is absolute and
conferred by law; any defects [sic] in the acquisition of jurisdiction over a
person (i.e., improper filing of civil complaint or improper service of
summons) may be waived by the voluntary appearance of parties.
The lower court admits the fact that no summons was served on defendant
Foronda. Thus, jurisdiction over the person of defendant Foronda was not
acquired, for which reason he was not held liable in this case. However, it

has been proven that jurisdiction over the other defendants was validly
acquired by the court a quo.
The defendant spouses admit to having appeared in the initial hearings and
in the hearing for plaintiffs motion to litigate as a pauper. They even
mentioned conferences where attempts were made to reach an amicable
settlement with plaintiff. However, the possibility of amicable settlement is
not a good and substantial defense which will warrant the granting of said
petition.
xxx
Assuming arguendo that private respondent failed to reserve his right to
institute a separate action for damages in the criminal action, the petitioner
cannot now raise such issue and question the lower courts jurisdiction
because petitioner and her husband have waived such right by voluntarily
appearing in the civil case for damages. Therefore, the findings and the
decision of the lower court may bind them.

1. In dismissing the Petition for Annulment of Judgment, the Court of

Appeals assumes that the issues raised in the petition for annulment is
based on extrinsic fraud related to the denied petition for relief
notwithstanding that the grounds relied upon involves questions of lack of
jurisdiction.
2. In dismissing the Petition for Annulment, the Court of Appeals
disregarded the allegation that the lower court[s] findings of negligence
against defendant-driver Danilo Foronda [whom] the lower court did not
summon is null and void for want of due process and consequently, such
findings of negligence which is [sic] null and void cannot become the basis of
the lower court to adjudge petitioner-employer liable for civil damages.
3. In dismissing the Petition for Annulment, the Court of Appeals ignored the
allegation that defendant-driver Danilo A. Foronda whose negligence is the
main issue is an indispensable party whose presence is compulsory but
[whom] the lower court did not summon.

Records show that the petitioner previously filed with the lower court a
Petition for Relief from Judgment on the ground that they were wrongfully
declared in default while waiting for an amicable settlement of the complaint
for damages. The court a quo correctly ruled that such petition is without
merit, jurisdiction having been acquired by the voluntary appearance of
defendant spouses.

4. In dismissing the Petition for Annulment, the Court of Appeals ruled that
assuming arguendo that private respondent failed to reserve his right to
institute a separate action for damages in the criminal action, the petitioner
cannot now raise such issue and question the lower courts jurisdiction
because petitioner [has] waived such right by voluntarily appearing in the
civil case for damages notwithstanding that lack of jurisdiction cannot be
waived.[21]

Once again, it bears stressing that having availed of a petition for relief, the
remedy of annulment of judgment is no longer available.

The Courts Ruling

Based on the foregoing, the motion for reconsideration could not be given
due course and is hereby DENIED.
SO ORDERED.[20]
The Issues
On 7 February 2000, Mrs. Cerezo, this time with Atty. Daga alone
representing her, filed the present petition for review on certiorari before this
Court. Mrs. Cerezo claims that:

The petition has no merit. As the issues are interrelated, we shall discuss
them jointly.
Remedies Available
to a Party Declared in Default
An examination of the records of the entire proceedings shows that three
lawyers filed and signed pleadings on behalf of Mrs. Cerezo, namely, Atty.
Daga, Atty. Valera, and Atty. Cerezo. Despite their number, Mrs. Cerezos
counsels failed to avail of the proper remedies. It is either by sheer
ignorance or by malicious manipulation of legal technicalities that they have

managed to delay the disposition of the present case, to the detriment of

pauper litigant Tuazon.
Mrs. Cerezo claims she did not receive any copy of the order declaring the
Cerezo spouses in default. Mrs. Cerezo asserts that she only came to know
of the default order on 25 June 1995, when she received a copy of the
decision. On 10 July 1995, Mrs. Cerezo filed before the trial court a petition
for relief from judgment under Rule 38, alleging fraud, mistake, or excusable
negligence as grounds. On 4 March 1998, the trial court denied Mrs.
Cerezos petition for relief from judgment. The trial court stated that Mrs.
Cerezo could have availed of appeal as a remedy and that she failed to
prove that the judgment was entered through fraud, accident, mistake, or
excusable negligence. Mrs. Cerezo then filed before the Court of Appeals a
petition for certiorari under Section 1 of Rule 65 assailing the denial of the
petition for relief from judgment. On 21 January 1999, the Court of Appeals
dismissed Mrs. Cerezos petition. On 24 February 1999, the appellate court
denied Mrs. Cerezos motion for reconsideration. On 11 March 1999, Mrs.
Cerezo filed before this Court a petition for review on certiorariunder Rule
45, questioning the denial of the petition for relief from judgment. We denied
the petition and our resolution became final and executory on 28 June 1999.
On 6 July 1999, a mere eight days after our resolution became final and
executory, Mrs. Cerezo filed before the Court of Appeals a petition for
annulment of the judgment of the trial court under Rule 47. Meanwhile,
on 25 August 1999, the trial court issued over the objection of Mrs. Cerezo
an order of execution of the judgment in Civil Case No. 7415. On 21
October 1999, the Court of Appeals dismissed the petition for annulment of
judgment. On 20 January 2000, the Court of Appeals denied Mrs. Cerezos
motion for reconsideration. On 7 February 2000, Mrs. Cerezo filed the
present petition for review on certiorari under Rule 45 challenging the
dismissal of her petition for annulment of judgment.
Lina v. Court of Appeals[22] enumerates the remedies available to a party
declared in default:
a) The defendant in default may, at any time after discovery thereof and
before judgment, file a motion under oath to set aside the order of
default on the ground that his failure to answer was due to fraud, accident,
mistake or excusable negligence, and that he has a meritorious defense
(Sec. 3, Rule 18 [now Sec. 3(b), Rule 9]);

b) If the judgment has already been rendered when the defendant

discovered the default, but before the same has become final and executory,
he may file a motion for new trial under Section 1 (a) of Rule 37;
c) If the defendant discovered the default after the judgment has become
final and executory, he may file a petition for relief under Section 2 [now
Section 1] of Rule 38; and
d) He may also appeal from the judgment rendered against him as contrary
to the evidence or to the law, even if no petition to set aside the order of
default has been presented by him (Sec. 2, Rule 41). (Emphasis added)
Moreover, a petition for certiorari to declare the nullity of a judgment by
default is also available if the trial court improperly declared a party in
default, or even if the trial court properly declared a party in default, if grave
abuse of discretion attended such declaration.[23]
Mrs. Cerezo admitted that she received a copy of the trial courts decision
on 25 June 1995. Based on this admission, Mrs. Cerezo had at least three
remedies at her disposal: an appeal, a motion for new trial, or a petition
for certiorari.
Mrs. Cerezo could have appealed under Rule 41 [24] from the default
judgment within 15 days from notice of the judgment. She could have
availed of the power of the Court of Appeals to try cases and conduct
hearings, receive evidence, and perform all acts necessary to resolve factual
issues raised in cases falling within its appellate jurisdiction.[25]
Mrs. Cerezo also had the option to file under Rule 37 [26] a motion for new trial
within the period for taking an appeal. If the trial court grants a new trial, the
original judgment is vacated, and the action will stand for trial de novo. The
recorded evidence taken in the former trial, as far as the same is material
and competent to establish the issues, shall be used at the new trial without
retaking the same.[27]
Mrs. Cerezo also had the alternative of filing under Rule 65 [28] a petition
for certiorari assailing the order of default within 60 days from notice of the
judgment. An order of default is interlocutory, and an aggrieved party may
file an appropriate special civil action under Rule 65.[29] In a petition

for certiorari, the appellate court may declare void both the order of default
and the judgment of default.
Clearly, Mrs. Cerezo had every opportunity to avail of these remedies within
the reglementary periods provided under the Rules of Court. However, Mrs.
Cerezo opted to file a petition for relief from judgment, which is
available only in exceptional cases. A petition for relief from judgment
should be filed within the reglementary period of 60 days from knowledge of
judgment and six months from entry of judgment, pursuant to
Rule 38 of the Rules of Civil Procedure.[30] Tuason v. Court of
Appeals[31] explained the nature of a petition for relief from judgment:
When a party has another remedy available to him, which may either be a
motion for new trial or appeal from an adverse decision of the trial court, and
he was not prevented by fraud, accident, mistake or excusable negligence
from filing such motion or taking such appeal, he cannot avail himself of this
petition. Indeed, relief will not be granted to a party who seeks avoidance
from the effects of the judgment when the loss of the remedy at law was due
to his own negligence; otherwise the petition for relief can be used to revive
the right to appeal which has been lost thru inexcusable negligence.
Evidently, there was no fraud, accident, mistake, or excusable negligence
that prevented Mrs. Cerezo from filing an appeal, a motion for new trial or a
petition for certiorari. It was error for her to avail of a petition for relief from
judgment.
After our resolution denying Mrs. Cerezos petition for relief became final and
executory, Mrs. Cerezo, in her last ditch attempt to evade liability, filed before
the Court of Appeals a petition for annulment of the judgment of the trial
court. Annulment is available only on the grounds of extrinsic fraud and lack
of jurisdiction. If based on extrinsic fraud, a party must file the petition within
four years from its discovery, and if based on lack of jurisdiction, before
laches or estoppel bars the petition. Extrinsic fraud is not a valid ground if
such fraud was used as a ground, or could have been used as a ground, in a
motion for new trial or petition for relief from judgment.[32]
Mrs. Cerezo insists that lack of jurisdiction, not extrinsic fraud, was her
ground for filing the petition for annulment of judgment. However, a party
may avail of the remedy of annulment of judgment under Rule 47 only if the

ordinary remedies of new trial, appeal, petition for relief from judgment, or
other appropriate remedies are no longer available through no fault of the
party.[33] Mrs. Cerezo could have availed of a new trial or appeal but through
her own fault she erroneously availed of the remedy of a petition for relief,
which was denied with finality. Thus, Mrs. Cerezo may no longer avail of the
remedy of annulment.
In any event, the trial court clearly acquired jurisdiction over Mrs. Cerezos
person. Mrs. Cerezo actively participated in the proceedings before the trial
court, submitting herself to the jurisdiction of the trial court. The defense of
lack of jurisdiction fails in light of her active participation in the trial court
proceedings. Estoppel or laches may also bar lack of jurisdiction as a
ground for nullity especially if raised for the first time on appeal by a party
who participated in the proceedings before the trial court, as what happened
in this case.[34]
For these reasons, the present petition should be dismissed for utter lack of
merit. The extraordinary action to annul a final judgment is restricted to the
grounds specified in the rules. The reason for the restriction is to prevent this
extraordinary action from being used by a losing party to make a complete
farce of a duly promulgated decision that has long become final and
executory. There would be no end to litigation if parties who have
unsuccessfully availed of any of the appropriate remedies or lost them
through their fault could still bring an action for annulment of judgment.
[35]
Nevertheless, we shall discuss the issues raised in the present petition to
clear any doubt about the correctness of the decision of the trial court.
Mrs. Cerezos Liability and the
Trial Courts Acquisition of Jurisdiction
Mrs. Cerezo contends that the basis of the present petition for annulment is
lack of jurisdiction. Mrs. Cerezo asserts that the trial court could not validly
render judgment since it failed to acquire jurisdiction over Foronda. Mrs.
Cerezo points out that there was no service of summons on
Foronda. Moreover, Tuazon failed to reserve his right to institute a separate
civil action for damages in the criminal action. Such contention betrays a
faulty foundation. Mrs. Cerezos contention proceeds from the point of view
of criminal law and not of civil law, while the basis of the present action of

Tuazon is quasi-delict under the Civil Code, not delict under the Revised
Penal Code.
The same negligent act may produce civil liability arising from a delict under
Article 103 of the Revised Penal Code, or may give rise to an action for a
quasi-delict under Article 2180 of the Civil Code. An aggrieved party may
choose between the two remedies. An action based on a quasi-delict may
proceed independently from the criminal action.[36] There is, however, a
distinction between civil liability arising from a delict and civil liability arising
from a quasi-delict. The choice of remedy, whether to sue for a delict or a
quasi-delict, affects the procedural and jurisdictional issues of the action.[37]
Tuazon chose to file an action for damages based on a quasi-delict. In his
complaint, Tuazon alleged that Mrs. Cerezo, without exercising due care
and diligence in the supervision and management of her employees and
buses, hired Foronda as her driver. Tuazon became disabled because of
Forondas recklessness, gross negligence and imprudence, aggravated by
Mrs. Cerezos lack of due care and diligence in the selection and
supervision of her employees, particularly Foronda.[38]
The trial court thus found Mrs. Cerezo liable under Article 2180 of the Civil
Code. Article 2180 states in part:
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.
Contrary to Mrs. Cerezos assertion, Foronda is not an indispensable party
to the case. An indispensable party is one whose interest is affected by the
courts action in the litigation, and without whom no final resolution of the
case is possible.[39] However, Mrs. Cerezos liability as an employer in an
action for a quasi-delict is not only solidary, it is also primary and
direct. Foronda is not an indispensable party to the final resolution of
Tuazons action for damages against Mrs. Cerezo.
The responsibility of two or more persons who are liable for a quasi-delict is
solidary.[40] Where there is a solidary obligation on the part of debtors, as in
this case, each debtor is liable for the entire obligation. Hence, each debtor
is liable to pay for the entire obligation in full. There is no merger or
renunciation of rights, but only mutual representation.[41] Where the obligation

of the parties is solidary, either of the parties is indispensable, and the other
is not even a necessary party because complete relief is available from
either.[42] Therefore, jurisdiction over Foronda is not even necessary as
Tuazon may collect damages from Mrs. Cerezo alone.
Moreover, an employers liability based on a quasi-delict is primary and
direct, while the employers liability based on a delict is merely subsidiary.
[43]
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.[44] Although liability under Article 2180
originates from the 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 employees 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. The idea that the employers
liability is solely subsidiary is wrong.[45]
The action can be brought directly against the person responsible (for
another), without including the author of the act. The action against the
principal is accessory in the sense that it implies the existence of a
prejudicial act committed by the employee, but it is not subsidiary in the
sense that it can not be instituted till after the judgment against the author of
the act or at least, that it is subsidiary to the principal action; the action for
responsibility (of the employer) is in itself a principal action.[46]
Thus, there is no need in this case for the trial court to acquire jurisdiction
over Foronda. The trial courts acquisition of jurisdiction over Mrs. Cerezo is
sufficient to dispose of the present case on the merits.
In contrast, an action based on a delict seeks to enforce the subsidiary
liability of the employer for the criminal negligence of the employee as
provided in Article 103 of the Revised Penal Code. To hold the employer
liable in a subsidiary capacity under a delict, the aggrieved party must initiate
a criminal action where the employees delict and corresponding primary
liability are established.[47] If the present action proceeds from a delict, then
the trial courts jurisdiction over Foronda is necessary. However, the present

action is clearly for the quasi-delict of Mrs. Cerezo and not for the delict of
Foronda.
The Cerezo spouses contention that summons be served anew on them is
untenable in light of their participation in the trial court proceedings. To
uphold the Cerezo spouses contention would make a fetish of a technicality.
[48]
Moreover, any irregularity in the service of summons that might have
vitiated the trial courts jurisdiction over the persons of the Cerezo spouses
was deemed waived when the Cerezo spouses filed a petition for relief from
judgment.[49]
We hold that the trial court had jurisdiction and was competent to decide the
case in favor of Tuazon and against Mrs. Cerezo even in the absence of
Foronda. Contrary to Mrs. Cerezos contention, Foronda is not an
indispensable party to the present case. It is not even necessary for Tuazon
to reserve the filing of a separate civil action because he opted to file a civil
action for damages against Mrs. Cerezo who is primarily and directly liable
for her own civil negligence. The words of Justice Jorge Bocobo in Barredo
v. Garcia still hold true today as much as it did in 1942:
x x x [T]o hold that there is only one way to make defendants liability
effective, and that is, to sue the driver and exhaust his (the latters) property
first, would be tantamount to compelling the plaintiff to follow a devious and
cumbersome method of obtaining relief. True, there is such a remedy under
our laws, but there is also a more expeditious way, which is based on the
primary and direct responsibility of the defendant under article [2180] of the
Civil Code. Our view of the law is more likely to facilitate remedy for civil
wrongs, because the procedure indicated by the defendant is wasteful and
productive of delay, it being a matter of common knowledge that professional
drivers of taxis and other similar public conveyances do not have sufficient
means with which to pay damages. Why, then, should the plaintiff be
required in all cases to go through this roundabout, unnecessary, and
probably useless procedure? In construing the laws, courts have
endeavored to shorten and facilitate the pathways of right and justice.[50]
Interest at the rate of 6% per annum is due on the amount of damages
adjudged by the trial court.[51] The 6% per annum interest shall commence
from 30 May 1995, the date of the decision of the trial court. Upon finality of
this decision, interest at 12% per annum, in lieu of 6% per annum, is due on
the amount of damages adjudged by the trial court until full payment.

WHEREFORE, we DENY the instant petition for review. The Resolution

dated 21 October 1999 of the Court of Appeals in CA-G.R. SP No. 53572, as
well as its Resolution dated 20 January 2000 denying the motion for
reconsideration, is AFFIRMED with the MODIFICATION that the amount due
shall earn legal interest at 6% per annum computed from 30 May 1995, the
date of the trial courts decision. Upon finality of this decision, the amount
due shall earn interest at 12% per annum, in lieu of 6% per annum, until full
payment.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, and Azcuna, JJ., concur.
Panganiban, J., on official leave.

Tomas, Pampanga. The truck bumped the bus driven by Pangalangan,

which was owned by Philippine Rabbit Bus Lines, Inc. As a result of the
bumping, Pangalangan suffered injuries and the bus was damaged and
could not be used for seventy-nine days, thus depriving the company of
earnings amounting to P8,665.51. Balingit was the manager of PhilAmerican Forwarders, Inc.
Among the defenses interposed by the defendants in their answer was that
Balingit was not Pineda's employer.
Balingit moved that the complaint against him be dismissed on the ground
that the bus company and the bus driver had no cause of action against him.
As already stated, the lower court dismissed the action as to Balingit. The
bus company and its driver appealed.
The Civil Code provides:t.hqw
ART. 2176. Whoever by act or omission causes damage to another, there
being fault or negligence, is obliged to pay for the damage done. Such fault
or negligence, if there is no pre-existing contractual relation between the
parties, is called a quasi-delict and is governed by the provisions of this
Chapter.
PHILIPPINE
RABBIT
BUS
LINES,
INC.
and
FELIX
PANGALANGAN, plaintiffs-appellants,
vs.
PHIL-AMERICAN
FORWARDERS, INC., ARCHIMEDES J. BALINGIT and FERNANDO
PINEDA, defendants-appellees.
AQUINO, J.:
Philippine Rabbit Bus Lines, Inc. and Felix Pangalangan appealed on pure
questions of law from the order of the Court of First Instance of Tarlac,
dismissing their complaint against Archimedes J. Balingit.
The dismissal was based on the ground that Balingit as the manager of PhilAmerican Forwarders, Inc., which together with Fernando Pineda and
Balingit, was sued for damages in an action based on quasi-delict or culpa
aquiliana, is not the manager of an establishment contemplated in article
2180 of the Civil Code (Civil Case No. 3865).
In the complaint for damages filed by the bus company and Pangalangan
against Phil-American Forwarders, Inc., Balingit and Pineda, it was alleged
that on November 24, 1962, Pineda drove recklessly a freight truck, owned
by Phil-American Forwarders, Inc., along the national highway at Sto.

ART. 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 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 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. (1903a)

The novel and unprecedented legal issue in this appeal is whether the terms
"employers" and "owners and managers of an establishment or enterprise"
(dueos o directores de un establicimiento o empresa) used in article 2180
of the Civil Code, formerly article 1903 of the old Code, embrace the
manager of a corporation owning a truck, the reckless operation of which
allegedly resulted in the vehicular accident from which the damage arose.
We are of the opinion that those terms do not include the manager of a
corporation. It may be gathered from the context of article 2180 that the term
"manager" ("director" in the Spanish version) is used in the sense of
"employer".
Hence, under the allegations of the complaint, no tortious or quasi-delictual
liability can be fastened on Balingit as manager of Phil-American
Forwarders, Inc., in connection with the vehicular accident already
mentioned because he himself may be regarded as an employee or
dependiente of his employer, Phil-American Forwarders, Inc.
Thus, it was held "que es dependiente, a los efectos de la responsabilidad
subsidiaria establecida en el num 3.0del (art.) 1903, el director de un
periodico explotado por una sociedad, porque cualquiera que sea su
jerarquia y aunque Ileve la direccion de determinadas convicciones politicas
no por eso deja de estar subordinado a la superior autoridad de la Empresa"
(Decision of Spanish Supreme Court dated December 6, 1912 cited in 12
Manresa, Codigo Civil Espaol 5th Ed. 662; 1913 Enciclopedia Juridica
Espaola 992).
The bus company and its driver, in their appellants' brief, injected a new
factual issue which was not alleged in their complaint. They argue that PhilAmerican Forwarders, Inc. is merely a business conduit of Balingit because
out of its capital stock with a par value of P41,200, Balingit and his wife had
subscribed P40,000 and they paid P10,000 on their subscription, while the
other incorporators, namely, Rodolfo Limjuco, Ponciano Caparas and Rafael
Suntay paid P250.25 and P25, respectively.
That argument implies that the veil of corporate fiction should be pierced and
that Phil-American Forwarders, Inc. and Balingit and his wife should be
treated as one and the same civil personality.
We cannot countenance that argument in this appeal. It was not raised in the
lower court. The case has to be decided on the basis of the pleadings filed in
the trial court where it was assumed that Phil-American Forwarders, Inc. has
a personality separate and distinct from that of the Balingit spouses.

The legal issue, which the plaintiffs-appellants can ventilate in this appeal, is
one which was raised in the lower court and which is within the issues
framed by the parties (Sec. 18, Rule 46, Rules of Court).
When a party deliberately adopts a certain theory and the case is decided
upon that theory in the court below, he will not be permitted to change his
theory on appeal because, to permit him to do so, could be unfair to the
adverse party (2 Moran's Comments on the Rules of Court, 1970 Ed. p.
505).
WHEREFORE, the lower court's order of dismissal is affirmed. Costs against
the plaintiffs-appellants.
SO ORDERED.
Fernando (Chairman), Barredo, Antonio and Fernandez, JJ., concur.

defendant Mayor Fernando Q. Miguel is concerned. The CA absolved Mayor

Miguel from any liability since it was not he, but the Municipality of
Koronadal, that was the employer of the negligent driver.
The Facts
On February 5, 1989, Mayor Miguel of Koronadal, South Cotabato was on
board the Isuzu pick-up truck driven by Fidel Lozano, an employee of the
Municipality of Koronadal.2 The pick-up truck was registered under the name
of Rodrigo Apostol, but it was then in the possession of Ernesto
Simbulan.3 Lozano borrowed the pick-up truck from Simbulan to bring Miguel
to Buayan Airport at General Santos City to catch his Manila flight.4
The pick-up truck accidentally hit Marvin C. Jayme, a minor, who was then
crossing the National Highway in Poblacion, Polomolok, South
Cotabato.5 The intensity of the collision sent Marvin some fifty (50) meters
away from the point of impact, a clear indication that Lozano was driving at a
very high speed at the time of the accident.6

SPS. BUENAVENTURA JAYME AND ROSARIO JAYME, petitioners,

vs.
RODRIGO APOSTOL, FIDEL LOZANO, ERNESTO SIMBULAN, MAYOR
FERNANDO Q. MIGUEL, MUNICIPALITY OF KORONADAL (NOW CITY
OF KORONADAL), PROVINCE OF SOUTH COTABATO, represented by
the MUNICIPAL TREASURER and/or MUNICIPAL MAYOR FERNANDO Q.
MIGUEL, and THE FIRST INTEGRATED BONDING AND INSURANCE
COMPANY, INC., respondents.
DECISION
REYES, R.T., J.:
MAY a municipal mayor be held solidarily liable for the negligent acts of the
driver assigned to him, which resulted in the death of a minor pedestrian?
Challenged in this petition for review on certiorari is the Decision1 of the
Court of Appeals (CA) which reversed and set aside the decision of the
Regional Trial Court (RTC), Polomolok, Cotabato City, Branch 39, insofar as

Marvin sustained severe head injuries with subdural hematoma and diffused
cerebral contusion.7 He was initially treated at the Howard Hubbard
Memorial Hospital.8 Due to the seriousness of his injuries, he was airlifted to
the Ricardo Limso Medical Center in Davao City for more intensive
treatment.9Despite medical attention, Marvin expired six (6) days after the
accident.10
Petitioners spouses Buenaventura and Rosario Jayme, the parents of
Marvin, filed a complaint for damages with the RTC against respondents.11 In
their complaint, they prayed that all respondents be held solidarily liable for
their loss. They pointed out that that proximate cause of Marvin's death was
Lozano's negligent and reckless operation of the vehicle. They prayed for
actual, moral, and exemplary damages, attorney's fees, and litigation
expenses.
In their respective Answers, all respondents denied liability for Marvin's
death. Apostol and Simbulan averred that Lozano took the pick-up truck
without their consent. Likewise, Miguel and Lozano pointed out that Marvin's
sudden sprint across the highway made it impossible to avoid the accident.
Yet, Miguel denied being on board the vehicle when it hit Marvin. The
Municipality of Koronadal adopted the answer of Lozano and Miguel. As for

First Integrated Bonding and Insurance Company, Inc., the vehicle insurer, it
insisted that its liability is contributory and is only conditioned on the right of
the insured. Since the insured did not file a claim within the prescribed
period, any cause of action against it had prescribed.

Dissatisfied with the RTC ruling, Mayor Miguel interposed an appeal to the
CA.

RTC Disposition

In his appeal, Mayor Miguel contended that the RTC erred in ruling that he
was Lozano's employer and, hence, solidarily liable for the latter's negligent
act. Records showed that the Municipality of Koronadal was the driver's true
and lawful employer. Mayor Miguel also denied that he did not exercise due
care and diligence in the supervision of Lozano. The incident, although
unfortunate, was unexpected and cannot be attributed to him.

On January 25, 1999, the RTC rendered judgment in favor of spouses

Jayme, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, the defendant Municipality of
Koronadal cannot be held liable for the damages incurred by other
defendant (sic) being an agency of the State performing a (sic)
governmental functions. The same with defendant Hermogenes Simbulan,
not being the owner of the subject vehicle, he is absolved of any liability. The
complaint against defendant First Integrated Bonding Insurance Company,
Inc. is hereby ordered dismissed there being no cause of action against said
insurance company.
However, defendants Fidel Lozano, Rodrigo Apostol, and Mayor Fernando
Miguel of Koronadal, South Cotabato, are hereby ordered jointly and
severally to pay the plaintiff (sic) the following sums:
1. One Hundred Seventy Three Thousand One Hundred One and Forty
Centavos (P173,101.40) Pesos as actual damages with legal interest of 12%
per annum computed from February 11, 1989 until fully paid;
2. Fifty Thousand (P50,000.00) Pesos as moral damages;
3. Twenty Thousand (P20,000.00) Pesos as exemplary damages;
4. Twenty Thousand (P20,000.00) Pesos as Attorney's fees;
5. Fifty Thousand (P50,000.00) Pesos for the death of Marvin Jayme;
6. Three Thousand (P3,000.00) as litigation expenses; and
7. To pay the cost of this suit.
SO ORDERED.12

CA Disposition

On October 22, 2003, the CA granted the appeal, disposing as follows:

WHEREFORE, the Decision appealed from is REVERSED and SET ASIDE,
insofar as defendant-appellant Mayor Fernando Q. Miguel is concerned, and
the complaint against him is DISMISSED.
IT IS SO ORDERED.13
The CA held that Mayor Miguel should not be held liable for damages for the
death of Marvin Jayme. Said the appellate court:
Moreover, plaintiffs-appellees admitted that Mayor Miguel was not the
employer of Lozano. Thus, paragraph 9 of the complaint alleged that
the Municipality of Koronadal was the employer of both Mayor Miguel
and Lozano. Not being the employer of Lozano, Mayor Miguel could not
thus be held liable for the damages caused by the former. Mayor Miguel
was a mere passenger in the Isuzu pick-up at the time of the
accident.14 (Emphasis supplied)
The CA also reiterated the settled rule that it is the registered owner of a
vehicle who is jointly and severally liable with the driver for damages
incurred by passengers or third persons as a consequence of injuries or
death sustained in the operation of the vehicle.
Issues
The spouses Jayme have resorted to the present recourse and assign to the
CA the following errors:

I.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT
MAYOR FERNANDO MIGUEL CANNOT BE HELD LIABLE FOR THE
DEATH OF MARVIN JAYME WHICH CONCLUSION IS CONTRARY TO
LAW AND THE SETTLED PRONOUNCEMENTS OF THIS HONORABLE
TRIBUNAL;
II.
THE FINDINGS OF FACTS OF THE HONORABLE COURT OF APPEALS
ARE CONTRARY TO THE FINDINGS OF THE TRIAL COURT AND ARE
CONTRADICTED BY THE EVIDENCE ON RECORD; MOREOVER, THE
CONCLUSIONS DRAWN BY THE HONORABLE COURT OF APPEALS
ARE ALL BASED ON CONJECTURES AND SURMISES AND AGAINST
ACCEPTED COURSE OF JUDICIAL PROCEEDINGS WHICH URGENTLY
CALL FOR AN EXERCISE OF THIS HONORABLE COURT'S
SUPERVISION.15
Our Ruling
The doctrine of vicarious liability or imputed liability finds no
application in the present case.
Spouses Jayme contend, inter alia, that vicarious liability attaches to Mayor
Miguel. He was not a mere passenger, but instead one who had direct
control and supervision over Lozano during the time of the accident.
According to petitioners, the element of direct control is not negated by the
fact that Lozano's employer was the Municipality of Koronadal. Mayor
Miguel, being Lozano's superior, still had control over the manner the vehicle
was operated.

Article 218016 of the Civil Code provides that a person is not only liable for
one's own quasi-delictual acts, but also for those persons for whom one is
responsible for. This liability is popularly known as vicarious or imputed
liability. To sustain claims against employers for the acts of their employees,
the following requisites must be established: (1) That the employee was
chosen by the employer personally or through another; (2) That the service
to be rendered in accordance with orders which the employer has the
authority to give at all times; and (3) That the illicit act of the employee was
on the occasion or by reason of the functions entrusted to him.17
Significantly, to make the employee liable under paragraphs 5 and 6 of
Article 2180, it must be established that the injurious or tortuous act was
committed at the time the employee was performing his functions.18
Furthermore, the employer-employee relationship cannot be assumed. It is
incumbent upon the plaintiff to prove the relationship by preponderant
evidence. In Belen v. Belen,19 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 rue is in harmony with the provisions of Section 297 of
the Code of Civil Procedure holding that each party must prove his own
affirmative allegations, etc.20
In resolving the present controversy, it is imperative to find out if Mayor
Miguel is, indeed, the employer of Lozano and therefore liable for the
negligent acts of the latter. To determine the existence of an employment
relationship, We rely on the four-fold test. This involves: (1) the employer's
power of selection; (2) payment of wages or other remuneration; (3) the
employer's right to control the method of doing the work; and (4) the
employer's right of suspension or dismissal.21
Applying the foregoing test, the CA correctly held that it was the Municipality
of Koronadal which was the lawful employer of Lozano at the time of the
accident. It is uncontested that Lozano was employed as a driver by the
municipality. That he was subsequently assigned to Mayor Miguel during the
time of the accident is of no moment. This Court has, on several occasions,

held that an employer-employee relationship still exists even if the employee

was loaned by the employer to another person or entity because control over
the employee subsists.22 In the case under review, the Municipality of
Koronadal remains to be Lozano's employer notwithstanding Lozano's
assignment to Mayor Miguel.
Spouses Jayme argued that Mayor Miguel had at least supervision and
control over Lozano and how the latter operated or drove the Isuzu pick-up
during the time of the accident. They, however, failed to buttress this claim.
Even assuming arguendo that Mayor Miguel had authority to give
instructions or directions to Lozano, he still can not be held liable. In Benson
v. Sorrell,23 the New England Supreme Court ruled that mere giving of
directions to the driver does not establish that the passenger has control
over the vehicle. Neither does it render one the employer of the driver. This
Court, in Soliman, Jr. v. Tuazon,24 ruled in a similar vein, to wit:
x x x The fact that a client company may give instructions or directions to the
security guards assigned to it, does not, by itself, render the client
responsible as an employer of the security guards concerned and liable for
their wrongful acts and omissions. Those instructions or directions are
ordinarily no more than requests commonly envisaged in the contract for
services entered into with the security agency. x x x25 (Emphasis supplied)
Significantly, no negligence may be imputed against a fellow employee
although the person may have the right to control the manner of the vehicle's
operation.26 In the absence of an employer-employee relationship
establishing vicarious liability, the driver's negligence should not be attributed
to a fellow employee who only happens to be an occupant of the
vehicle.27 Whatever right of control the occupant may have over the driver is
not sufficient by itself to justify an application of the doctrine of vicarious
liability. Handley v. Lombardi28 is instructive on this exception to the rule on
vicarious liability:
Plaintiff was not the master or principal of the driver of the truck, but only an
intermediate and superior employee or agent. This being so, the doctrine
of respondeat superior or qui facit per alium is not properly applicable to
him. His power to direct and control the driver was not as master, but only by
virtue of the fact that they were both employed by Kruse, and the further fact

that as Kruse's agent he was delegated Kruse's authority over the driver. x x
x
In the case of actionable negligence, the rule is well settled both in this state
and elsewhere that the negligence of a subordinate employee or subagent is
not to be imputed to a superior employee or agent, but only to the master or
principal. (Hilton v. Oliver, 204 Cal. 535 [61 A. L. R. 297, 269 Pac. 425; Guild
v. Brown, 115 Cal. App. 374 [1 Pac. (2d) 528; Ellis v. Southern Ry. Co., 72 S.
C. 464 [2 L. R. A. (N. S.) 378, 52 S. E. 228; Thurman v. Pittsburg & M.
Copper Co., 41 Mont. 141 [108 Pac. 588]; 2 Cor. Jur., p. 829; and see the
elaborate note in 61 A. L. R. 277, and particularly that part commencing at p.
290.) We can see no logical reason for drawing any distinction in this regard
between actionable negligence and contributory negligence. x x x29
The rule was reiterated in Bryant v. Pacific Elec. Ry. Co.[30 and again
in Sichterman v. Hollingshead Co.31
In Swanson v. McQuown,32 a case involving a military officer who happened
to be riding in a car driven by a subordinate later involved in an accident, the
Colorado Supreme Court adhered to the general rule that a public official is
not liable for the wrongful acts of his subordinates on a vicarious basis since
the relationship is not a true master-servant situation.33 The court went on to
rule that the only exception is when they cooperate in the act complained of,
or direct or encourage it.34
In the case at bar, Mayor Miguel was neither Lozano's employer nor the
vehicle's registered owner. There existed no causal relationship between him
and Lozano or the vehicle used that will make him accountable for Marvin's
death. Mayor Miguel was a mere passenger at the time of the accident.
Parenthetically, it has been held that the failure of a passenger to assist the
driver, by providing him warnings or by serving as lookout does not make the
passenger liable for the latter's negligent acts.35The driver's duty is not one
that may be delegated to others.36
As correctly held by the trial court, the true and lawful employer of Lozano is
the Municipality of Koronadal. Unfortunately for Spouses Jayme, the
municipality may not be sued because it is an agency of the State engaged
in governmental functions and, hence, immune from suit. This immunity is

illustrated in Municipality of San Fernando, La Union v. Firme,37 where this

Court held:
It has already been remarked that municipal corporations are suable
because their charters grant them the competence to sue and be sued.
Nevertheless, they are generally not liable for torts committed by them in the
discharge of governmental functions and can only be held answerable only if
it can be shown that they were acting in proprietary capacity. In permitting
such entities to be sued, the State merely gives the claimant the right to
show that the defendant was not acting in governmental capacity when the
injury was committed or that the case comes under the exceptions
recognized by law. Failing this, the claimant cannot recover.38
Verily, liability attaches to the registered owner, the negligent driver and his
direct employer. The CA observation along this line are worth restating:
Settled is the rule that the registered owner of a vehicle is jointly and
severally liable with the driver for damages incurred by passengers and third
persons as a consequence of injuries or death sustained in the operation of
said vehicles. Regardless of who the actual owner of the vehicle is, the
operator of record continues to be the operator of the vehicle as regards the
public and third persons, and as such is directly and primarily responsible for
the consequences incident (sic) to its operation x x x.39
The accidental death of Marvin Jayme is a tragic loss for his parents.
However, justice demands that only those liable under our laws be held
accountable for Marvin's demise. Justice can not sway in favor of petitioners
simply to assuage their pain and loss. The law on the matter is clear: only
the negligent driver, the driver's employer, and the registered owner of the
vehicle are liable for the death of a third person resulting from the negligent
operation of the vehicle.
WHEREFORE,
the
Decision AFFIRMED.
SO ORDERED.

petition

is DENIED and

the

appealed

Inc., Cesario Pea and Vicente Gaddi are held jointly and severally liable to
pay plaintiffs-appellees Spouses Benjamin C. Mamaril and Sonia P. Mamaril
the amount of Two Hundred Thousand Pesos (P200,000.00) representing
the cost of the lost vehicle, and to pay the cost of suit. The other monetary
awards are DELETED for lack of merit and/or basis.
Defendant-Appellant Boy Scout of the Philippines is absolved from any
liability.
SO ORDERED.3
The Antecedent Facts

SPOUSES
BENJAMIN
C.
MAMARIL
AND
SONIA
P.
MAMARIL, Petitioners,
vs.
THE BOY SCOUT OF THE PHILIPPINES, AIB SECURITY AGENCY, INC.,
CESARIO PEA,* AND VICENTE GADDI, Respondents.
DECISION
PERLAS-BERNABE, J.:
This is a Petition for Review on Certiorari assailing the May 31, 2007
Decision1 and August 16, 2007 Resolution2of the Court of Appeals (CA) in
CA-G.R. CV No. 75978. The dispositive portion of the said Decision reads:
WHEREFORE, the Decision dated November 28, 2001 and the Order dated
June 11, 2002 rendered by the Regional Trial Court of Manila, Branch 39 is
hereby MODIFIED to the effect that only defendants AIB Security Agency,

Spouses Benjamin C. Mamaril and Sonia P. Mamaril (Sps. Mamaril) are

jeepney operators since 1971. They would park their six (6) passenger
jeepneys every night at the Boy Scout of the Philippines' (BSP) compound
located at 181 Concepcion Street, Malate, Manila for a fee of P300.00 per
month for each unit. On May 26, 1995 at 8 o'clock in the evening, all these
vehicles were parked inside the BSP compound. The following morning,
however, one of the vehicles with Plate No. DCG 392 was missing and was
never recovered.4 According to the security guards Cesario Pea (Pea) and
Vicente Gaddi (Gaddi) of AIB Security Agency, Inc. (AIB) with whom BSP
had contracted5 for its security and protection, a male person who looked
familiar to them took the subject vehicle out of the compound.
On November 20, 1996, Sps. Mamaril filed a complaint 6 for damages before
the Regional Trial Court (RTC) of Manila, Branch 39, against BSP, AIB, Pea
and Gaddi. In support thereof, Sps. Mamaril averred that the loss of the
subject vehicle was due to the gross negligence of the above-named
security guards on-duty who allowed the subject vehicle to be driven out by
a stranger despite their agreement that only authorized drivers duly
endorsed by the owners could do so. Pea and Gaddi even admitted their
negligence during the ensuing investigation. Notwithstanding, BSP and AIB
did not heed Sps. Mamaril's demands for a conference to settle the matter.
They therefore prayed that Pea and Gaddi, together with AIB and BSP, be
held liable for: (a) the value of the subject vehicle and its accessories in the
aggregate amount of P300,000.00; (b) P275.00 representing daily loss of
income/boundary reckoned from the day the vehicle was lost; (c) exemplary
damages; (d) moral damages; (e) attorney's fees; and (f) cost of suit.

In its Answer,7 BSP denied any liability contending that not only did Sps.
Mamaril directly deal with AIB with respect to the manner by which the
parked vehicles would be handled, but the parking ticket 8 itself expressly
stated that the "Management shall not be responsible for loss of vehicle or
any of its accessories or article left therein." It also claimed that Sps. Mamaril
erroneously relied on the Guard Service Contract. Apart from not being
parties thereto, its provisions cover only the protection of BSP's properties,
its officers, and employees.
In addition to the foregoing defenses, AIB alleged that it has observed due
diligence in the selection, training and supervision of its security guards
while Pea and Gaddi claimed that the person who drove out the lost vehicle
from the BSP compound represented himself as the owners' authorized
driver and had with him a key to the subject vehicle. Thus, they contended
that Sps. Mamaril have no cause of action against them.
The RTC Ruling
After due proceedings, the RTC rendered a Decision9 dated November 28,
2001 in favor of Sps. Mamaril. The dispositive portion of the RTC decision
reads:

5. To pay jointly and severally the attorney's fees of P50,000.00 and

appearances in court the amount ofP1,500.00 per appearance; and
6. To pay cost.
SO ORDERED.10
The RTC found that the act of Pea and Gaddi in allowing the entry of an
unidentified person and letting him drive out the subject vehicle in violation of
their internal agreement with Sps. Mamaril constituted gross negligence,
rendering AIB and its security guards liable for the former's loss. BSP was
also adjudged liable because the Guard Service Contract it entered into with
AIB offered protection to all properties inside the BSP premises, which
necessarily included Sps. Mamaril's vehicles. Moreover, the said contract
stipulated AIB's obligation to indemnify BSP for all losses or damages that
may be caused by any act or negligence of its security guards. Accordingly,
the BSP, AIB, and security guards Pea and Gaddi were held jointly and
severally liable for the loss suffered by Sps. Mamaril.
On June 11, 2002, the RTC modified its decision reducing the cost of the
stolen vehicle from P250,000.00 toP200,000.00.11

WHEREFORE, judgment is hereby rendered ordering the defendants Boy

Scout of the Philippines and AIB Security Agency, with security guards
Cesario Pena and Vicente Gaddi: -

Only BSP appealed the foregoing disquisition before the CA.

1. To pay the plaintiffs jointly and severally the cost of the vehicle which
is P250,000.00 plus accessories ofP50,000.00;

In its assailed Decision,12 the CA affirmed the finding of negligence on the

part of security guards Pea and Gaddi. However, it absolved BSP from any
liability, holding that the Guard Service Contract is purely between BSP and
AIB and that there was nothing therein that would indicate any obligation
and/or liability on the part of BSP in favor of third persons, such as Sps.
Mamaril. Nor was there evidence sufficient to establish that BSP was
negligent.

2. To pay jointly and severally to the plaintiffs the daily loss of the
income/boundary of the said jeepney to be reckoned fromits loss up to the
final adjudication of the case, which is P275.00 a day;
3. To pay jointly and severally to the plaintiffs moral damages in the amount
of P50,000.00;
4. To pay jointly and severally to the plaintiffs exemplary damages in the
amount of P50,000.00;

The CA Ruling

It further ruled that the agreement between Sps. Mamaril and BSP was
substantially a contract of lease whereby the former paid parking fees to the
latter for the lease of parking slots. As such, the lessor, BSP, was not an
insurer nor bound to take care and/or protect the lessees' vehicles.

On the matter of damages, the CA deleted the award of P50,000.00

representing the value of the accessories inside the lost vehicle and
the P275.00 a day for loss of income in the absence of proof to support
them. It also deleted the award of moral and exemplary damages and
attorney's fees for lack of factual and legal bases.

IV.

Sps. Mamaril's motion for reconsideration thereof was denied in the August
16, 2007 Resolution.13

In fine, Sps. Mamaril maintain that: (1) BSP should be held liable for the loss
of their vehicle based on the Guard Service Contract and the parking ticket it
issued; and (2) the CA erred in deleting the RTC awards of damages and
attorney's fees.

Issues Before the Court

Hence, the instant petition based on the following assignment of errors, to
wit:
I.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
ABSOLVING RESPONDENT BOY SCOUT OF THE PHILIPPINES FROM
ANY LIABILITY.
II.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS
MISTAKE WHEN IT RULED THAT THE GUARD SERVICE CONTRACT IS
PURELY BETWEEN BOY SCOUT OF THE
PHILIPPINES AND AIB SECURITY AGENCY, INC., AND IN HOLDING
THAT THERE IS ABSOLUTELY NOTHING IN THE SAID CONTRACT THAT
WOULD INDICATE ANY OBLIGATION AND/OR LIABILITY ON THE PART
OF THE PARTIES THEREIN IN FAVOR OF THIRD PERSONS, SUCH AS
PETITIONERS HEREIN.
III.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR
IN THE INTERPRETATION OF LAW WHEN IT CONSIDERED THE
AGREEMENT BETWEEN BOY SCOUT OF THE PHILIPPINES AND
PETITIONERS A CONTRACT OF LEASE, WHEREBY THE BOY SCOUT IS
NOT DUTY BOUND TO PROTECT OR TAKE CARE OF PETITIONERS'
VEHICLES.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT

RULED THAT PETITIONERS ARE NOT ENTITLED TO DAMAGES AND
ATTORNEY'S FEES.14

The Court's Ruling

The petition lacks merit.
Article 20 of the Civil Code provides that every person, who, contrary to law,
willfully or negligently causes damage to another, shall indemnify the latter
for the same. Similarly, Article 2176 of the Civil Code states:
Art. 2176. Whoever by act or omission causes damage to another, there
being fault or negligence, is obliged to pay for the damage done. Such fault
or negligence, if there is no preexisting contractual relation between the
parties, is called a quasi-delict and is governed by the provisions of this
Chapter.
In this case, it is undisputed that the proximate cause of the loss of Sps.
Mamaril's vehicle was the negligent act of security guards Pea and Gaddi
in allowing an unidentified person to drive out the subject vehicle. Proximate
cause has been defined as that cause, which, in natural and continuous
sequence, unbroken by any efficient intervening cause, produces the injury
or loss, and without which the result would not have occurred.15
Moreover, Pea and Gaddi failed to refute Sps. Mamaril's contention 16 that
they readily admitted being at fault during the investigation that ensued.
On the other hand, the records are bereft of any finding of negligence on the
part of BSP. Hence, no reversible error was committed by the CA in
absolving it from any liability for the loss of the subject vehicle based on fault
or negligence.

Neither will the vicarious liability of an employer under Article 2180 17 of the
Civil Code apply in this case. It is uncontested that Pea and Gaddi were
assigned as security guards by AIB to BSP pursuant to the Guard Service
Contract. Clearly, therefore, no employer-employee relationship existed
between BSP and the security guards assigned in its premises.
Consequently, the latter's negligence cannot be imputed against BSP but
should be attributed to AIB, the true employer of Pea and Gaddi.18
In the case of Soliman, Jr. v. Tuazon,19 the Court enunciated thus:
It is settled that where the security agency, as here, recruits, hires and
assigns the work of its watchmen or security guards, the agency is the
employer of such guards and watchmen. Liability for illegal or harmful acts
committed by the security guards attaches to the employer agency, and not
to the clients or customers of such agency. As a general rule, a client or
customer of a security agency has no hand in selecting who among the pool
of security guards or watchmen employed by the agency shall be assigned
to it; the duty to observe the diligence of a good father of a family in the
selection of the guards cannot, in the ordinary course of events, be
demanded from the client whose premises or property are protected by the
security guards. The fact that a client company may give instructions or
directions to the security guards assigned to it, does not, by itself, render the
client responsible as an employer of the security guards concerned and
liable for their wrongful acts or omissions. Those instructions or directions
are ordinarily no more than requests commonly envisaged in the contract for
services entered into with the security agency.20

Nor can it be said that a principal-agent relationship existed between BSP

and the security guards Pea and Gaddi as to make the former liable for the
latter's complained act. Article 1868 of the Civil Code states that "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." The basis for agency therefore is
representation,21which element is absent in the instant case. Records show
that BSP merely hired the services of AIB, which, in turn, assigned security
guards, solely for the protection of its properties and premises. Nowhere can
it be inferred in the Guard Service Contract that AIB was appointed as an
agent of BSP. Instead, what the parties intended was a pure principal-client
relationship whereby for a consideration, AIB rendered its security services
to BSP.
Notwithstanding, however, Sps. Mamaril insist that BSP should be held liable
for their loss on the basis of the Guard Service Contract that the latter
entered into with AIB and their parking agreement with BSP.
Such contention cannot be sustained.
Article 1311 of the Civil Code states:
Art. 1311. Contracts take effect only between the parties, their assigns and
heirs, except in case where the rights and obligations arising from the
contract are not transmissible by their nature, or by stipulation or by
provision of law. The heir is not liable beyond the value of the property he
received from the decedent.
If a contract should contain some stipulation in favor of a third person, he
may demand its fulfillment provided he communicated his acceptance to the
obligor before its revocation. A mere incidental benefit or interest of a person
is not sufficient. The contracting parties must have clearly and deliberately
conferred a favor upon a third person.
Thus, in order that a third person benefited by the second paragraph of
Article 1311, referred to as a stipulation pour autrui, may demand its
fulfillment, the following requisites must concur: (1) There is a stipulation in
favor of a third person; (2) The stipulation is a part, not the whole, of the
contract; (3) The contracting parties clearly and deliberately conferred a
favor to the third person - the favor is not merely incidental; (4) The favor is

unconditional and uncompensated; (5) The third person communicated his

or her acceptance of the favor before its revocation; and (6) The contracting
parties do not represent, or are not authorized, by the third party. 22 However,
none of the foregoing elements obtains in this case.
It is undisputed that Sps. Mamaril are not parties to the Guard Service
Contract.1wphi1 Neither did the subject agreement contain any stipulation
pour autrui. And even if there was, Sps. Mamaril did not convey any
acceptance thereof. Thus, under the principle of relativity of contracts, they
cannot validly claim any rights or favor under the said agreement. 23 As
correctly found by the CA:
First, the Guard Service Contract between defendant-appellant BSP and
defendant AIB Security Agency is purely between the parties therein. It may
be observed that although the whereas clause of the said agreement
provides that defendant-appellant desires security and protection for its
compound and all properties therein, as well as for its officers and
employees, while inside the premises, the same should be correlated with
paragraph 3(a) thereof which provides that the security agency shall
indemnify defendant-appellant for all losses and damages suffered by it
attributable to any act or negligence of the former's guards.
Otherwise stated, defendant-appellant sought the services of defendant AIB
Security Agency for the purpose of the security and protection of its
properties, as well as that of its officers and employees, so much so that in
case of loss of [sic] damage suffered by it as a result of any act or
negligence of the guards, the security agency would then be held
responsible therefor. There is absolutely nothing in the said contract that
would indicate any obligation and/or liability on the part of the parties therein
in favor of third persons such as herein plaintiffs-appellees.24
Moreover, the Court concurs with the finding of the CA that the contract
between the parties herein was one of lease25 as defined under Article
164326 of the Civil Code. It has been held that the act of parking a vehicle in
a garage, upon payment of a fixed amount, is a lease.27 Even in a majority of
American cases, it has been ruled that where a customer simply pays a fee,
parks his car in any available space in the lot, locks the car and takes the
key with him, the possession and control of the car, necessary elements in
bailment, do not pass to the parking lot operator, hence, the contractual
relationship between the parties is one of lease.28

In the instant case, the owners parked their six (6) passenger jeepneys
inside the BSP compound for a monthly fee of P300.00 for each unit and
took the keys home with them. Hence, a lessor-lessee relationship
indubitably existed between them and BSP. On this score, Article 1654 of the
Civil Code provides that "the lessor (BSP) is obliged: (1) to deliver the thing
which is the object of the contract in such a condition as to render it fit for the
use intended; (2) to make on the same during the lease all the necessary
repairs in order to keep it suitable for the use to which it has been devoted,
unless there is a stipulation to the contrary; and (3) to maintain the lessee in
the peaceful and adequate enjoyment of the lease for the entire duration of
the contract." In relation thereto, Article 1664 of the same Code states that
"the lessor is not obliged to answer for a mere act of trespass which a third
person may cause on the use of the thing leased; but the lessee shall have a
direct action against the intruder." Here, BSP was not remiss in its obligation
to provide Sps. Mamaril a suitable parking space for their jeepneys as it
even hired security guards to secure the premises; hence, it should not be
held liable for the loss suffered by Sps. Mamaril.
It bears to reiterate that the subject loss was caused by the negligence of the
security guards in allowing a stranger to drive out plaintiffs-appellants'
vehicle despite the latter's instructions that only their authorized drivers may
do so. Moreover, the agreement with respect to the ingress and egress of
Sps. Mamaril's vehicles were coordinated only with AIB and its security
guards,29 without the knowledge and consent of BSP. Accordingly, the
mishandling of the parked vehicles that resulted in herein complained loss
should be recovered only from the tort feasors (Pea and Gaddi) and their
employer, AIB; and not against the lessor, BSP.30
Anent Sps. Mamaril's claim that the exculpatory clause: "Management shall
not be responsible for loss of vehicle or any of its accessories or article left
therein"31 contained in the BSP issued parking ticket was void for being a
contract of adhesion and against public policy, suffice it to state that
contracts of adhesion are not void per se. It is binding as any other ordinary
contract and a party who enters into it is free to reject the stipulations in its
entirety. If the terms thereof are accepted without objection, as in this case,
where plaintiffs-appellants have been leasing BSP's parking space for more
or less 20 years,32 then the contract serves as the law between
them.33 Besides, the parking fee of P300.00 per month or P10.00 a day for

each unit is too minimal an amount to even create an inference that BSP
undertook to be an insurer of the safety of plaintiffs-appellants' vehicles.
On the matter of damages, the Court noted that while Sonia P. Mamaril
testified that the subject vehicle had accessories worth around !J50,000.00,
she failed to present any receipt to substantiate her claim. 34 Neither did she
submit any record or journal that would have established the
purported P275.0035 daily earnings of their jeepney. It is axiomatic that actual
damages must be proved with reasonable degree of certainty and a party is
entitled only to such compensation for the pecuniary loss that was duly
proven. Thus, absent any competent proof of the amount of damages
sustained, the CA properly deleted the said awards.36
Similarly, the awards of moral and exemplary damages and attorney's fees
were properly disallowed by the CA for lack of factual and legal bases. While
the RTC granted these awards in the dispositive portion of its November 28,
2001 decision, it failed to provide sufficient justification therefor.37
WHEREFORE premises considered, the instant petition is DENIED. The
May 31, 2007 Decision and August 16, 2007 Resolution of the Court of
Appeals in CA-G.R. CV No. 75978 are AFFIRMFED.
SO ORDERED.

GILBERTO M. DUAVIT, petitioner, vs. THE HON. COURT OF APPEALS,

Acting through the Third Division, as Public Respondent, and
ANTONIO SARMIENTO, SR. & VIRGILIO CATUAR respondents.

GUTIERREZ, JR., J.:

This petition raises the sole issue of whether or not the owner of a private
vehicle which figured in an accident can be held liable under Article 2180 of
the Civil Code when the said vehicle was neither driven by an employee of
the owner nor taken with the consent of the latter.
The facts are summarized in the contested decision, as follows:
From the evidence adduced by the plaintiffs, consisting of the testimonies of
witnesses Virgilio Catuar, Antonio Sarmiento, Jr., Ruperto Catuar, Jr. and
Norberto Bernarte it appears that on July 28, 1971 plaintiffs Antonio
Sarmiento, Sr. and Virgilio Catuar were aboard a jeep with plate number 7799-F-I Manila, 1971, owned by plaintiff, Ruperto Catuar was driving the said
jeep on Ortigas Avenue, San Juan, Rizal; that plaintiff's jeep, at the time,
was running moderately at 20 to 35 kilometers per hour and while
approaching Roosevelt Avenue, Virgilio Catuar slowed down; that suddenly,
another jeep with plate number 99-97-F-J Manila 1971 driven by defendant
Oscar Sabiniano hit and bumped plaintiff's jeep on the portion near the left
rear wheel, and as a result of the impact plaintiff's jeep fell on its right and
skidded by about 30 yards; that as a result plaintiffs jeep was damaged,
particularly the windshield, the differential, the part near the left rear wheel
and the top cover of the jeep; that plaintiff Virgilio Catuar was thrown to the
middle of the road; his wrist was broken and he sustained contusions on the
head; that likewise plaintiff Antonio Sarmiento, Sr. was trapped inside the
fallen jeep, and one of his legs was fractured.
Evidence also shows that the plaintiff Virgilio Catuar spent a total of
P2,464.00 for repairs of the jeep, as shown by the receipts of payment of
labor and spare parts (Exhs. H to H-7 Plaintiffs likewise tried to prove that
plaintiff Virgilio Catuar, immediately after the accident was taken to
Immaculate Concepcion Hospital, and then was transferred to the National
Orthopedic Hospital; that while plaintiff Catuar was not confined in the
hospital, his wrist was in a plaster cast for a period of one month, and the
contusions on his head were under treatment for about two (2) weeks; that
for hospitalization, medicine and allied expenses, plaintiff Catuar spent
P5,000.00.
Evidence also shows that as a result of the incident, plaintiff Antonio
Sarmiento, Sr. sustained injuries on his leg; that at first, he was taken to the

National Orthopedic Hospital (Exh. K but later he was confined at the Makati
Medical Center from July 29, to August 29, 1971 and then from September
15 to 25, 1971; that his leg was in a plaster cast for a period of eight (8)
months; and that for hospitalization and medical attendance, plaintiff Antonio
Sarmiento, Sr. spent no less than P13,785.25 as evidenced by receipts in
his possession. (Exhs. N to N-1).
Proofs were adduced also to show that plaintiff Antonio sarmiento Sr. is
employed as Assistant Accountant of the Canlubang Sugar Estate with a
salary of P1,200.00 a month; that as sideline he also works as accountant of
United Haulers Inc. with a salary of P500.00 a month; and that as a result of
this incident, plaintiff Sarmiento was unable to perform his normal work for a
period of at least 8 months. On the other hand, evidence shows that the
other plaintiff Virgilio Catuar is a Chief Clerk in Canlubang Sugar Estate with
a salary of P500.00 a month, and as a result of the incident, he was
incapacitated to work for a period of one (1) month.
The plaintiffs have filed this case both against Oscar Sabiniano as driver,
and against Gualberto Duavit as owner of the jeep.
Defendant Gualberto Duavit, while admitting ownership of the other jeep
(Plate No. 99-07-F-J Manila, 1971), denied that the other defendant (Oscar
Sabiniano) was his employee. Duavit claimed that he has not been an
employer of defendant Oscar Sabiniano at any time up to the present.
On the other hand documentary and testimonial evidence show that
defendant Oscar Sabiniano was an employee of the Board of Liquidators
from November 14, 1966 up to January 4, 1973 (Annex A of Answer).
Defendant Sabiniano, in his testimony, categorically admitted that he took
the jeep from the garage of defendant Duavit without the consent or
authority of the latter (TSN, September 7, 1978, p. 8). He testified further,
that Duavit even filed charges against him for theft of the jeep, but which
Duavit did not push through as his (Sabiniano's) parents apologized to
Duavit on his behalf.

Defendant Oscar Sabiniano, on the other hand in an attempt to exculpate

himself from liability, makes it appear that he was taking all necessary
precaution while driving and the accident occurred due to the negligence of
Virgilio Catuar. Sabiniano claims that it was plaintiffs vehicle which hit and
bumped their jeep. (Reno, pp. 21-23)
The trial court found Oscar Sabiniano negligent in driving the vehicle but
found no employer-employee relationship between him and the petitioner
because the latter was then a government employee and he took the vehicle
without the authority and consent of the owner. The petitioner was, thus,
absolved from liability under Article 2180 of the Civil Code.
The private respondents appealed the case.
On January 7, 1988, the Court of Appeals rendered the questioned decision
holding the petitioner jointly and severally liable with Sabiniano. The
appellate court in part ruled:
We cannot go along with appellee's argument. It will be seen that in Vargas
v. Langcay, supra, it was held that it is immaterial whether or not the driver
was actually employed by the operator of record or registered owner, and it
is even not necessary to prove who the actual owner of the vehicle and who
the employer of the driver is. When the Supreme Court ruled, thus: 'We must
hold and consider such owner-operator of record (registered owner) as the
employer in contemplation of law, of the driver,' it cannot be construed other
than that the registered owner is the employer of the driver in contemplation
of law. It is a conclusive presumption of fact and law, and is not subject to
rebuttal of proof to the contrary. Otherwise, as stated in the decision, we
quote:
The purpose of the principles evolved by the decisions in these matters will
be defeated and thwarted if we entertain the argument of petitioner that she
is not liable because the actual owner and employer was established by the
evidence. . . .
Along the same vein, the defendant-appellee Gualberto Duavit cannot be
allowed to prove that the driver Sabiniano was not his employee at the time
of the vehicular accident.

The ruling laid down in Amar V. Soberano (1966), 63 O.G. 6850, by this
Court to the effect that the burden of proving the non-existence of an
employer-employee relationship is upon the defendant and this he must do
by a satisfactory preponderance of evidence, has to defer to the doctrines
evolved by the Supreme Court in cases of damages arising from vehicular
mishaps involving registered motor vehicle. (See Tugade v. Court of
Appeals, 85 SCRA 226, 230). (Rollo, pp. 26-27)
The appellate court also denied the petitioner's motion for reconsideration.
Hence, this petition.
The petitioner contends that the respondent appellate court committed grave
abuse of discretion in holding him jointly and severally liable with Sabiniano
in spite of the absence of an employer-employee relationship between them
and despite the fact that the petitioner's jeep was taken out of his garage
and was driven by Sabiniano without his consent.
As early as in 1939, we have ruled that an owner of a vehicle cannot be held
liable for an accident involving the said vehicle if the same was driven
without his consent or knowledge and by a person not employed by him.
Thus, in Duquillo v. Bayot (67 Phil. 131-133-134) [1939] we said:
Under the facts established, the defendant cannot be held liable for
anything. At the time of the accident, James McGurk was driving the truck,
and he was not an employee of the defendant, nor did he have anything to
do with the latter's business; neither the defendant nor Father Ayson, who
was in charge of her business, consented to have any of her trucks driven
on the day of the accident, as it was a holy day, and much less by a
chauffeur who was not in charge of driving it; the use of the defendant's truck
in the circumstances indicated was done without her consent or knowledge;
it may, therefore, be said, that there was not the remotest contractual
relation between the deceased Pio Duquillo and the defendant. It necessarily
follows from all this that articles 1101 and following of the Civil Code, cited
by the appellant, have no application in this case, and, therefore, the errors
attributed to the inferior court are without basis.
The Court upholds the above ruling as still relevant and better applicable to
present day circumstances.

The respondent court's misplaced reliance on the cases of Erezo v.

Jepte (102 Phil. 103 [1957] and Vargas v. Langcay (6 SCRA 174 [1962])
cannot be sustained. In the Erezo case, Jepte, the registered owner of the
truck which collided with a taxicab, and which resulted in the killing of Erezo,
claimed that at the time of the accident, the truck belonged to the Port
Brokerage in an arrangement with the corporation but the same was not
known to the Motor Vehicles Office. This Court sustained the trial court's
ruling that since Jepte represented himself to be the owner of the truck and
the Motor Vehicles Office, relying on his representation, registered the
vehicle in his name, the Government and all persons affected by the
representation had the right to rely on his declaration of ownership and
registration. Thus, even if Jepte were not the owner of the truck at the time
of the accident, he was still held liable for the death of Erezo significantly, the
driver of the truck was fully authorized to drive it.
Likewise, in the Vargas case, just before the accident occurred Vargas had
sold her jeepney to a third person, so that at the time of the accident she
was no longer the owner of the jeepney. This court, nevertheless, affirmed
Vargas' liability since she failed to surrender to the Motor Vehicles Office the
corresponding AC plates in violation of the Revised Motor Vehicle Law and
Commonwealth Act No. 146. We further ruled that the operator of record
continues to be the operator of the vehicle in contemplation of law, as
regards the public and third persons, and as such is responsible for the
consequences incident to its operator. The vehicle involved was a public
utility jeepney for hire. In such cases, the law does not only require the
surrender of the AC plates but orders the vendor operator to stop the
operation of the jeepney as a form of public transportation until the matter is
reported to the authorities.
As can be seen, the circumstances of the above cases are entirely different
from those in the present case. Herein petitioner does not deny ownership of
the vehicle involved in tire mishap but completely denies having employed
the driver Sabiniano or even having authorized the latter to drive his jeep.
The jeep was virtually stolen from the petitioner's garage. To hold, therefore,
the petitioner liable for the accident caused by the negligence of Sabiniano
who was neither his driver nor employee would be absurd as it would be like
holding liable the owner of a stolen vehicle for an accident caused by the
person who stole such vehicle. In this regard, we cannot ignore the many
cases of vehicles forcibly taken from their owners at gunpoint or stolen from

garages and parking areas and the instances of service station attendants or
mechanics of auto repair shops using, without the owner's consent, vehicles
entrusted to them for servicing or repair.
We cannot blindly apply absolute rules based on precedents whose facts do
not jibe four square with pending cases. Every case must be determined on
its own peculiar factual circumstances. Where, as in this case, the records of
the petition fail to indicate the slightest indicia of an employer-employee
relationship between the owner and the erring driver or any consent given by
the owner for the vehicle's use, we cannot hold the owner liable.
We, therefore, find that the respondent appellate court committed reversible
error in holding the petitioner jointly and severally liable with Sabiniano to the
private respondent.
WHEREFORE, the petition is GRANTED and the decision and resolution
appealed from are hereby ANNULLED and SET ASIDE. The decision of the
then Court of First Instance (now Regional Trial Court) of Laguna, 8th
Judicial District, Branch 6, dated July 30, 1981 is REINSTATED.
SO ORDERED.
Fernan, C.J., (Chairman), Feliciano, Bidin and Cortes JJ., concur.

EQUITABLE LEASING CORPORATION, petitioner, vs. LUCITA SUYOM,

MARISSA ENANO, MYRNA TAMAYO and FELIX OLEDAN, respondents.
DECISION
PANGANIBAN, J.:
In an action based on quasi delict, the registered owner of a motor vehicle is
solidarily liable for the injuries and damages caused by the negligence of the
driver, in spite of the fact that the vehicle may have already been the subject
of an unregistered Deed of Sale in favor of another person. Unless
registered with the Land Transportation Office, the sale -- while valid and
binding between the parties -- does not affect third parties, especially the
victims of accidents involving the said transport equipment. Thus, in the
present case, petitioner, which is the registered owner, is liable for the acts
of the driver employed by its former lessee who has become the owner of
that vehicle by virtue of an unregistered Deed of Sale.
Statement of the Case
Before us is a Petition for Review under Rule 45 of the Rules of Court,
assailing the May 12, 2000 Decision[1] of the Court of Appeals[2] (CA) in CAGR CV No. 55474. The decretal portion of the Decision reads as follows:
WHEREFORE,
premises
considered,
the
instant
appeal
is
hereby DISMISSED for lack of merit. The assailed decision, dated May 5,
1997, of the Regional Trial Court of Manila, Branch 14, in Civil Case No. 9573522, is hereby AFFIRMED with MODIFICATION that the award of
attorneys fees is DELETED.[3]
On the other hand, in Civil Case No. 95-73522, the Regional Trial Court
(RTC) of Manila (Branch 14) had earlier disposed in this wise:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and
against the defendant Equitable Leasing Corporation ordering said
defendant to pay to the plaintiffs the following:
A. TO MYRNA TAMAYO
1. the sum of P50,000.00 for the death of Reniel Tamayo;

2. P50,000.00 as moral damages; and

3. P56,000.00 for the damage to the store and its contents, and funeral
expenses.
B. TO FELIX OLEDAN
1. the sum of P50,000.00 for the death of Felmarie Oledan;
2. P50,000.00 as moral damages; and
3. P30,000.00 for medical expenses, and funeral expenses.
C. TO MARISSA ENANO
1. P7,000.00 as actual damages
D. TO LUCITA SUYOM

15, 1995, respondents filed against Raul Tutor, Ecatine Corporation

(Ecatine) and Equitable Leasing Corporation (Equitable) a Complaint[8] for
damages docketed as Civil Case No. 95-73522 in the RTC of Manila,
Branch 14.
The trial court, upon motion of plaintiffs counsel, issued an Order dropping
Raul Tutor, Ecatine and Edwin Lim from the Complaint, because they could
not be located and served with summonses.[9] On the other hand, in its
Answer with Counterclaim,[10] petitioner alleged that the vehicle had already
been sold to Ecatine and that the former was no longer in possession and
control thereof at the time of the incident. It also claimed that Tutor was an
employee, not of Equitable, but of Ecatine.
After trial on the merits, the RTC rendered its Decision ordering petitioner to
pay actual and moral damages and attorneys fees to respondents. It held
that since the Deed of Sale between petitioner and Ecatine had not been
registered with the Land Transportation Office (LTO), the legal owner was
still Equitable.[11] Thus, petitioner was liable to respondents.[12]

1. The sum of P5,000.00 for the medical treatment of her two sons.
Ruling of the Court of Appeals
The sum of P120,000.00 as and for attorneys fees.[4]
The Facts
On July 17, 1994, a Fuso Road Tractor driven by Raul Tutor rammed into the
house cum store of Myrna Tamayo located at Pier 18, Vitas, Tondo,
Manila. A portion of the house was destroyed. Pinned to death under the
engine of the tractor were Respondent Myrna Tamayos son, Reniel Tamayo,
and Respondent Felix Oledans daughter, Felmarie Oledan. Injured were
Respondent Oledan himself, Respondent Marissa Enano, and two sons of
Respondent Lucita Suyom.
Tutor was charged with and later convicted of reckless imprudence resulting
in multiple homicide and multiple physical injuries in Criminal Case No.
296094-SA, Metropolitan Trial Court of Manila, Branch 12.[5]

Sustaining the RTC, the CA held that petitioner was still to be legally
deemed the owner/operator of the tractor, even if that vehicle had been the
subject of a Deed of Sale in favor of Ecatine on December 9, 1992. The
reason cited by the CA was that the Certificate of Registration on file with the
LTO still remained in petitioners name. [13] In order that a transfer of
ownership of a motor vehicle can bind third persons, it must be duly
recorded in the LTO.[14]
The CA likewise upheld respondents claim for moral damages against
petitioner because the appellate court considered Tutor, the driver of the
tractor, to be an agent of the registered owner/operator.[15]
Hence, this Petition.[16]
Issues

Upon verification with the Land Transportation Office, respondents were

furnished a copy of Official Receipt No. 62204139 [6] and Certificate of
Registration No. 08262797,[7] showing that the registered owner of the
tractor was Equitable Leasing Corporation/leased to Edwin Lim. On April

In its Memorandum, petitioner raises the following issues for the Courts
consideration:

I
Whether or not the Court of Appeals and the trial court gravely erred when
they decided and held that petitioner [was] liable for damages suffered by
private respondents in an action based on quasi delict for the negligent acts
of a driver who [was] not the employee of the petitioner.
II
Whether or not the Court of Appeals and the trial court gravely erred when
they awarded moral damages to private respondents despite their failure to
prove that the injuries they suffered were brought by petitioners wrongful
act.[17]
This Courts Ruling
The Petition has no merit.
First Issue:
Liability for Wrongful Acts
Petitioner contends that it should not be held liable for the damages
sustained by respondents and that arose from the negligence of the driver of
the Fuso Road Tractor, which it had already sold to Ecatine at the time of the
accident. Not having employed Raul Tutor, the driver of the vehicle, it could
not have controlled or supervised him.[18]
We are not persuaded. In negligence cases, the aggrieved party may sue
the negligent party under (1) Article 100[19] of the Revised Penal Code, for
civil liability ex delicto; or (2) under Article 2176[20] of the Civil Code, for civil
liability ex quasi delicto.[21]
Furthermore, under Article 103 of the Revised Penal Code, employers may
be held subsidiarily liable for felonies committed by their employees in the
discharge of the latters duties.[22]This liability attaches when the employees
who are convicted of crimes committed in the performance of their work are
found to be insolvent and are thus unable to satisfy the civil liability
adjudged.[23]

On the other hand, under Article 2176 in relation to Article 2180 [24] of the Civil
Code, an action predicated on quasi delict may be instituted against the
employer for an employees act or omission. The liability for the negligent
conduct of the subordinate is direct and primary, but is subject to the
defense of due diligence in the selection and supervision of the employee.
[25]
The enforcement of the judgment against the employer for an action
based on Article 2176 does not require the employee to be insolvent, since
the liability of the former is solidary -- the latter being statutorily considered a
joint tortfeasor.[26] To sustain a claim based on quasi delict, the following
requisites must be proven: (a) damage suffered by the plaintiff, (b) fault or
negligence of the defendant, and (c) connection of cause and effect between
the fault or negligence of the defendant and the damage incurred by the
plaintiff.[27]
These two causes of action (ex delicto or ex quasi delicto) may be availed
of, subject to the caveat[28] that the offended party cannot recover damages
twice for the same act or omission or under both causes. [29] Since these two
civil liabilities are distinct and independent of each other, the failure to
recover in one will not necessarily preclude recovery in the other.[30]
In the instant case, respondents -- having failed to recover anything in the
criminal case -- elected to file a separate civil action for damages, based on
quasi delict under Article 2176 of the Civil Code. [31] The evidence is clear that
the deaths and the injuries suffered by respondents and their kins were due
to the fault of the driver of the Fuso tractor.
Dated June 4, 1991, the Lease Agreement [32] between petitioner and Edwin
Lim stipulated that it is the intention of the parties to enter into a FINANCE
LEASE AGREEMENT.[33]Under such scheme, ownership of the subject
tractor was to be registered in the name of petitioner, until the value of the
vehicle has been fully paid by Edwin Lim. [34] Further, in the Lease
Schedule,[35] the monthly rental for the tractor was stipulated, and the term
of the Lease was scheduled to expire on December 4, 1992. After a few
months, Lim completed the payments to cover the full price of the tractor.
[36]
Thus, on December 9, 1992, a Deed of Sale [37] over the tractor was
executed by petitioner in favor of Ecatine represented by Edwin
Lim. However, the Deed was not registered with the LTO.
We hold petitioner liable for the deaths and the injuries complained of,
because it was the registered owner of the tractor at the time of the accident

on July 17, 1994.[38] The Court has consistently ruled that, regardless of
sales made of a motor vehicle, the registered owner is the lawful operator
insofar as the public and third persons are concerned; consequently, it is
directly and primarily responsible for the consequences of its operation.[39] In
contemplation of law, the owner/operator of record is the employer of the
driver, the actual operator and employer being considered as merely
its agent.[40] The same principle applies even if the registered owner of any
vehicle does not use it for public service.[41]
Since Equitable remained the registered owner of the tractor, it could not
escape primary liability for the deaths and the injuries arising from the
negligence of the driver.[42]
The finance-lease agreement between Equitable on the one hand and Lim
or Ecatine on the other has already been superseded by the sale. In any
event, it does not bind third persons. The rationale for this rule has been
aptly explained in Erezo v. Jepte,[43] which we quote hereunder:
x x x. The main aim of motor vehicle registration is to identify the owner so
that if any accident happens, or that any damage or injury is caused by the
vehicle on the public highways, responsibility therefor can be fixed on a
definite individual, the registered owner. Instances are numerous where
vehicles running on public highways caused accidents or injuries to
pedestrians or other vehicles without positive identification of the owner or
drivers, or with very scant means of identification. It is to forestall these
circumstances, so inconvenient or prejudicial to the public, that the motor
vehicle registration is primarily ordained, in the interest of the determination
of persons responsible for damages or injuries caused on public
highways.[44]
Further, petitioners insistence on FGU Insurance Corp. v. Court of
Appeals is misplaced.[45] First, in FGU Insurance, the registered vehicle
owner, which was engaged in a rent-a-car business, rented out the car. In
this case, the registered owner of the truck, which is engaged in the
business of financing motor vehicle acquisitions, has actually sold the truck
to Ecatine, which in turn employed Tutor. Second, in FGU Insurance, the
registered owner of the vehicle was not held responsible for the negligent
acts of the person who rented one of its cars, because Article 2180 of the
Civil Code was not applicable. We held that no vinculum juris as employer
and employee existed between the owner and the driver.[46] In this case, the

registered owner of the tractor is considered under the law to be the

employer of the driver, while the actual operator is deemed to be its agent.
[47]
Thus, Equitable, the registered owner of the tractor, is -- for purposes of
the law on quasi delict -- the employer of Raul Tutor, the driver of the
tractor. Ecatine, Tutors actual employer, is deemed as merely an agent of
Equitable.[48]
True, the LTO Certificate of Registration, dated 5/31/91, qualifies the name
of the registered owner as EQUITABLE LEASING CORPORATION/Leased
to Edwin Lim. But the lease agreement between Equitable and Lim has
been overtaken by the Deed of Sale on December 9, 1992, between
petitioner and Ecatine. While this Deed does not affect respondents in this
quasi delict suit, it definitely binds petitioner because, unlike them, it is a
party to it.
We must stress that the failure of Equitable and/or Ecatine to register the
sale with the LTO should not prejudice respondents, who have the legal right
to rely on the legal principle that the registered vehicle owner is liable for the
damages caused by the negligence of the driver. Petitioner cannot hide
behind its allegation that Tutor was the employee of Ecatine. This will
effectively prevent respondents from recovering their losses on the basis of
the inaction or fault of petitioner in failing to register the sale. The nonregistration is the fault of petitioner, which should thus face the legal
consequences thereof.
Second Issue:
Moral Damages
Petitioner further claims that it is not liable for moral damages, because
respondents failed to establish or show the causal connection or relation
between the factual basis of their claim and their wrongful act or omission, if
any. [49]
Moral damages are not punitive in nature, but are designed to
compensate[50] 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.
[51]
Although incapable of pecuniary computation, moral damages must
nevertheless be somehow proportional to and in approximation of the

suffering inflicted.[52] This is so because moral damages are in the category

of an award designed to compensate the claimant for actual injury suffered,
not to impose a penalty on the wrongdoer.[53]
Viewed as an action for quasi delict, the present case falls squarely within
the purview of Article 2219 (2), [54] which provides for the payment of moral
damages in cases of quasi delict.[55] Having established the liability of
petitioner as the registered owner of the vehicle,[56] respondents have
satisfactorily shown the existence of the factual basis for the award [57] and its
causal connection to the acts of Raul Tutor, who is deemed as petitioners
employee.[58] Indeed, the damages and injuries suffered by respondents
were the proximate result of petitioners tortious act or omission.[59]
Further, no proof of pecuniary loss is necessary in order that moral damages
may be awarded, the amount of indemnity being left to the discretion of the

court.[60] The evidence gives no ground for doubt that such discretion was
properly and judiciously exercised by the trial court.[61] The award is in fact
consistent with the rule that moral damages are not intended to enrich the
injured party, but to alleviate the moral suffering undergone by that party by
reason of the defendants culpable action.[62]
WHEREFORE, the
Petition
is DENIED and
Decision AFFIRMED. Costs against petitioner.

the

SO ORDERED.
Puno, (Chairman), Corona, and Carpio-Morales, JJ., concur.
Sandoval-Gutierrez, J., on leave.

assailed