G.R. No.

179337

April 30, 2008

JOSEPH SALUDAGA, petitioner,

vs.
FAR EASTERN UNIVERSITY and EDILBERTO C. DE JESUS in
his capacity as President of FEU, respondents.

for whatever would be adjudged in favor of petitioner, if any; and to

pay attorney's fees and cost of the suit. On the other hand, Galaxy
and Imperial filed a Fourth-Party Complaint against AFP General
Insurance.8
On November 10, 2004, the trial court rendered a decision in favor of
petitioner, the dispositive portion of which reads:

DECISION
YNARES-SANTIAGO, J.:

WHEREFORE, from the foregoing, judgment is hereby

rendered ordering:

This Petition for Review on Certiorari1 under Rule 45 of the Rules of

Court assails the June 29, 2007 Decision2 of the Court of Appeals in
CA-G.R. CV No. 87050, nullifying and setting aside the November
10, 2004 Decision3 of the Regional Trial Court of Manila, Branch 2, in
Civil Case No. 98-89483 and dismissing the complaint filed by
petitioner; as well as its August 23, 2007 Resolution 4 denying the
Motion for Reconsideration.5

1. FEU and Edilberto de Jesus, in his capacity as

president of FEU to pay jointly and severally Joseph
Saludaga the amount of P35,298.25 for actual
damages with 12% interest per annum from the filing
of the complaint until fully paid; moral damages of
P300,000.00, exemplary damages of P500,000.00,
attorney's fees of P100,000.00 and cost of the suit;

The antecedent facts are as follows:

2. Galaxy Management and Development Corp. and

its president, Col. Mariano Imperial to indemnify
jointly and severally 3rd party plaintiffs (FEU and
Edilberto de Jesus in his capacity as President of
FEU) for the above-mentioned amounts;

Petitioner Joseph Saludaga was a sophomore law student of

respondent Far Eastern University (FEU) when he was shot by
Alejandro Rosete (Rosete), one of the security guards on duty at the
school premises on August 18, 1996. Petitioner was rushed to FEUDr. Nicanor Reyes Medical Foundation (FEU-NRMF) due to the
wound he sustained.6Meanwhile, Rosete was brought to the police
station where he explained that the shooting was accidental. He was
eventually released considering that no formal complaint was filed
against him.
Petitioner thereafter filed a complaint for damages against
respondents on the ground that they breached their obligation to
provide students with a safe and secure environment and an
atmosphere conducive to learning. Respondents, in turn, filed a
Third-Party
Complaint7 against
Galaxy
Development
and
Management Corporation (Galaxy), the agency contracted by
respondent FEU to provide security services within its premises and
Mariano D. Imperial (Imperial), Galaxy's President, to indemnify them

3. And the 4th party complaint is dismissed for lack

of cause of action. No pronouncement as to costs.
SO ORDERED.9
Respondents appealed to the Court of Appeals which rendered the
assailed Decision, the decretal portion of which provides, viz:
WHEREFORE, the appeal is hereby GRANTED. The
Decision dated November 10, 2004 is hereby REVERSED
and SET ASIDE. The complaint filed by Joseph Saludaga
against appellant Far Eastern University and its President in
Civil Case No. 98-89483 is DISMISSED.

SO ORDERED.10
Petitioner filed a Motion for Reconsideration which was denied;
hence, the instant petition based on the following grounds:
THE COURT OF APPEALS SERIOUSLY ERRED IN
MANNER CONTRARY TO LAW AND JURISPRUDENCE IN
RULING THAT:
5.1. THE SHOOTING INCIDENT IS A FORTUITOUS
EVENT;
5.2. RESPONDENTS ARE NOT LIABLE FOR DAMAGES
FOR THE INJURY RESULTING FROM A GUNSHOT
WOUND SUFFERED BY THE PETITIONER FROM THE
HANDS OF NO LESS THAN THEIR OWN SECURITY
GUARD
IN
VIOLATION
OF
THEIR
BUILT-IN
CONTRACTUAL OBLIGATION TO PETITIONER, BEING
THEIR LAW STUDENT AT THAT TIME, TO PROVIDE HIM
WITH
A
SAFE
AND
SECURE
EDUCATIONAL
ENVIRONMENT;
5.3. SECURITY GAURD, ALEJANDRO ROSETE, WHO
SHOT PETITIONER WHILE HE WAS WALKING ON HIS
WAY TO THE LAW LIBRARY OF RESPONDENT FEU IS
NOT THEIR EMPLOYEE BY VIRTUE OF THE CONTRACT
FOR SECURITY SERVICES BETWEEN GALAXY AND FEU
NOTWITHSTANDING THE FACT THAT PETITIONER, NOT
BEING A PARTY TO IT, IS NOT BOUND BY THE SAME
UNDER
THE
PRINCIPLE
OF
RELATIVITY
OF
CONTRACTS; and
5.4. RESPONDENT EXERCISED DUE DILIGENCE IN
SELECTING GALAXY AS THE AGENCY WHICH WOULD
PROVIDE SECURITY SERVICES WITHIN THE PREMISES
OF RESPONDENT FEU.11

Petitioner is suing respondents for damages based on the alleged

breach of student-school contract for a safe learning environment.
The pertinent portions of petitioner's Complaint read:
6.0. At the time of plaintiff's confinement, the defendants or
any of their representative did not bother to visit and inquire
about his condition. This abject indifference on the part of the
defendants continued even after plaintiff was discharged
from the hospital when not even a word of consolation was
heard from them. Plaintiff waited for more than one (1) year
for the defendants to perform their moral obligation but the
wait was fruitless. This indifference and total lack of concern
of defendants served to exacerbate plaintiff's miserable
condition.
xxxx
11.0. Defendants are responsible for ensuring the safety of
its students while the latter are within the University
premises. And that should anything untoward happens to
any of its students while they are within the University's
premises shall be the responsibility of the defendants. In this
case, defendants, despite being legally and morally bound,
miserably failed to protect plaintiff from injury and thereafter,
to mitigate and compensate plaintiff for said injury;
12.0. When plaintiff enrolled with defendant FEU, a contract
was entered into between them. Under this contract,
defendants are supposed to ensure that adequate steps are
taken to provide an atmosphere conducive to study and
ensure the safety of the plaintiff while inside defendant
FEU's premises. In the instant case, the latter breached this
contract when defendant allowed harm to befall upon the
plaintiff when he was shot at by, of all people, their security
guard who was tasked to maintain peace inside the
campus.12
In Philippine School of Business Administration v. Court of
Appeals,13 we held that:

When an academic institution accepts students for

enrollment, there is established a contract between them,
resulting in bilateral obligations which both parties are bound
to comply with. For its part, the school undertakes to provide
the student with an education that would presumably suffice
to equip him with the necessary tools and skills to pursue
higher education or a profession. On the other hand, the
student covenants to abide by the school's academic
requirements and observe its rules and regulations.
Institutions of learning must also meet the implicit or "built-in"
obligation of providing their students with an atmosphere that
promotes or assists in attaining its primary undertaking of
imparting knowledge. Certainly, no student can absorb the
intricacies of physics or higher mathematics or explore the
realm of the arts and other sciences when bullets are flying
or grenades exploding in the air or where there looms
around the school premises a constant threat to life and
limb. Necessarily, the school must ensure that adequate
steps are taken to maintain peace and order within the
campus premises and to prevent the breakdown thereof. 14
It is undisputed that petitioner was enrolled as a sophomore law
student in respondent FEU. As such, there was created a contractual
obligation between the two parties. On petitioner's part, he was
obliged to comply with the rules and regulations of the school. On the
other hand, respondent FEU, as a learning institution is mandated to
impart knowledge and equip its students with the necessary skills to
pursue higher education or a profession. At the same time, it is
obliged to ensure and take adequate steps to maintain peace and
order within the campus.
It is settled that in culpa contractual, the mere proof of the existence
of the contract and the failure of its compliance justify, prima facie, a
corresponding right of relief.15 In the instant case, we find that, when
petitioner was shot inside the campus by no less the security guard
who was hired to maintain peace and secure the premises, there is a
prima facie showing that respondents failed to comply with its
obligation to provide a safe and secure environment to its students.

In order to avoid liability, however, respondents aver that the

shooting incident was a fortuitous event because they could not have
reasonably foreseen nor avoided the accident caused by Rosete as
he was not their employee; 16and that they complied with their
obligation to ensure a safe learning environment for their students by
having exercised due diligence in selecting the security services of
Galaxy.
After a thorough review of the records, we find that respondents
failed to discharge the burden of proving that they exercised due
diligence in providing a safe learning environment for their students.
They failed to prove that they ensured that the guards assigned in
the campus met the requirements stipulated in the Security Service
Agreement. Indeed, certain documents about Galaxy were presented
during trial; however, no evidence as to the qualifications of Rosete
as a security guard for the university was offered.
Respondents also failed to show that they undertook steps to
ascertain and confirm that the security guards assigned to them
actually possess the qualifications required in the Security Service
Agreement. It was not proven that they examined the clearances,
psychiatric test results, 201 files, and other vital documents
enumerated in its contract with Galaxy. Total reliance on the security
agency about these matters or failure to check the papers stating the
qualifications of the guards is negligence on the part of respondents.
A learning institution should not be allowed to completely relinquish
or abdicate security matters in its premises to the security agency it
hired. To do so would result to contracting away its inherent
obligation to ensure a safe learning environment for its students.
Consequently, respondents' defense of force majeure must fail. In
order for force majeure to be considered, respondents must show
that no negligence or misconduct was committed that may have
occasioned the loss. An act of God cannot be invoked to protect a
person who has failed to take steps to forestall the possible adverse
consequences of such a loss. One's negligence may have concurred
with an act of God in producing damage and injury to another;
nonetheless, showing that the immediate or proximate cause of the
damage or injury was a fortuitous event would not exempt one from
liability. When the effect is found to be partly the result of a person's

participation - whether by active intervention, neglect or failure to act

- the whole occurrence is humanized and removed from the rules
applicable to acts of God.17
Article 1170 of the Civil Code provides that those who are negligent
in the performance of their obligations are liable for damages.
Accordingly, for breach of contract due to negligence in providing a
safe learning environment, respondent FEU is liable to petitioner for
damages. It is essential in the award of damages that the claimant
must have satisfactorily proven during the trial the existence of the
factual basis of the damages and its causal connection to
defendant's acts.18
In the instant case, it was established that petitioner spent
P35,298.25
for
his
hospitalization
and
other
medical
expenses.19 While the trial court correctly imposed interest on said
amount, however, the case at bar involves an obligation arising from
a contract and not a loan or forbearance of money. As such, the
proper rate of legal interest is six percent (6%) per annum of the
amount demanded. Such interest shall continue to run from the filing
of the complaint until the finality of this Decision. 20 After this Decision
becomes final and executory, the applicable rate shall be twelve
percent (12%) per annum until its satisfaction.
The other expenses being claimed by petitioner, such as
transportation expenses and those incurred in hiring a personal
assistant while recuperating were however not duly supported by
receipts.21 In the absence thereof, no actual damages may be
awarded. Nonetheless, temperate damages under Art. 2224 of the
Civil Code may be recovered where it has been shown that the
claimant suffered some pecuniary loss but the amount thereof cannot
be proved with certainty. Hence, the amount of P20,000.00 as
temperate damages is awarded to petitioner.
As regards the award of moral damages, there is no hard and fast
rule in the determination of what would be a fair amount of moral
damages since each case must be governed by its own peculiar
circumstances.22 The testimony of petitioner about his physical
suffering, mental anguish, fright, serious anxiety, and moral shock
resulting from the shooting incident 23 justify the award of moral

damages. However, moral damages are in the category of an award

designed to compensate the claimant for actual injury suffered and
not to impose a penalty on the wrongdoer. The award is not meant to
enrich the complainant at the expense of the defendant, but to
enable the injured party to obtain means, diversion, or amusements
that will serve to obviate the moral suffering he has undergone. It is
aimed at the restoration, within the limits of the possible, of the
spiritual status quo ante, and should be proportionate to the suffering
inflicted. Trial courts must then guard against the award of exorbitant
damages; they should exercise balanced restrained and measured
objectivity to avoid suspicion that it was due to passion, prejudice, or
corruption on the part of the trial court. 24 We deem it just and
reasonable under the circumstances to award petitioner moral
damages in the amount of P100,000.00.
Likewise, attorney's fees and litigation expenses in the amount of
P50,000.00 as part of damages is reasonable in view of Article 2208
of the Civil Code.25 However, the award of exemplary damages is
deleted considering the absence of proof that respondents acted in a
wanton, fraudulent, reckless, oppressive, or malevolent manner.
We note that the trial court held respondent De Jesus solidarily liable
with respondent FEU. In Powton Conglomerate, Inc. v.
Agcolicol,26 we held that:
[A] corporation is invested by law with a personality separate
and distinct from those of the persons composing it, such
that, save for certain exceptions, corporate officers who
entered into contracts in behalf of the corporation cannot be
held personally liable for the liabilities of the latter. Personal
liability of a corporate director, trustee or officer along
(although not necessarily) with the corporation may so
validly attach, as a rule, only when - (1) he assents to a
patently unlawful act of the corporation, or when he is guilty
of bad faith or gross negligence in directing its affairs, or
when there is a conflict of interest resulting in damages to
the corporation, its stockholders or other persons; (2) he
consents to the issuance of watered down stocks or who,
having knowledge thereof, does not forthwith file with the
corporate secretary his written objection thereto; (3) he

agrees to hold himself personally and solidarily liable with

the corporation; or (4) he is made by a specific provision of
law personally answerable for his corporate action.27
None of the foregoing exceptions was established in the instant
case; hence, respondent De Jesus should not be held solidarily
liable with respondent FEU.
Incidentally, although the main cause of action in the instant case is
the breach of the school-student contract, petitioner, in the
alternative, also holds respondents vicariously liable under Article
2180 of the Civil Code, which provides:

As held in Mercury Drug Corporation v. Libunao:29

In Soliman, Jr. v. Tuazon,30 we held that where the security
agency recruits, hires and assigns the works of its watchmen
or security guards to a client, the employer of such guards or
watchmen is such agency, and not the client, since the latter
has no hand in selecting the security guards. Thus, the duty
to observe the diligence of a good father of a family cannot
be demanded from the said client:
[I]t is settled in our jurisdiction 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 or 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.

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.
xxxx
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.
xxxx
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.
We agree with the findings of the Court of Appeals that respondents
cannot be held liable for damages under Art. 2180 of the Civil Code
because respondents are not the employers of Rosete. The latter
was employed by Galaxy. The instructions issued by respondents'
Security Consultant to Galaxy and its security guards are ordinarily
no more than requests commonly envisaged in the contract for
services entered into by a principal and a security agency. They
cannot be construed as the element of control as to treat
respondents as the employers of Rosete.28

xxxx
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.31
We now come to respondents' Third Party Claim against Galaxy.
In Firestone Tire and Rubber Company of the Philippines v.
Tempengko,32 we held that:

The third-party complaint is, therefore, a procedural device

whereby a 'third party' who is neither a party nor privy to the
act or deed complained of by the plaintiff, may be brought
into the case with leave of court, by the defendant, who acts
as third-party plaintiff to enforce against such third-party
defendant a right for contribution, indemnity, subrogation or
any other relief, in respect of the plaintiff's claim. The thirdparty complaint is actually independent of and separate and
distinct from the plaintiff's complaint. Were it not for this
provision of the Rules of Court, it would have to be filed
independently and separately from the original complaint by
the defendant against the third-party. But the Rules permit
defendant to bring in a third-party defendant or so to speak,
to litigate his separate cause of action in respect of plaintiff's
claim against a third-party in the original and principal case
with the object of avoiding circuitry of action and
unnecessary proliferation of law suits and of disposing
expeditiously in one litigation the entire subject matter arising
from one particular set of facts.33
Respondents and Galaxy were able to litigate their respective claims
and defenses in the course of the trial of petitioner's complaint.
Evidence duly supports the findings of the trial court that Galaxy is
negligent not only in the selection of its employees but also in their
supervision. Indeed, no administrative sanction was imposed against
Rosete despite the shooting incident; moreover, he was even
allowed to go on leave of absence which led eventually to his
disappearance.34 Galaxy also failed to monitor petitioner's condition
or extend the necessary assistance, other than the P5,000.00 initially
given to petitioner. Galaxy and Imperial failed to make good their
pledge to reimburse petitioner's medical expenses.
For these acts of negligence and for having supplied respondent
FEU with an unqualified security guard, which resulted to the latter's
breach of obligation to petitioner, it is proper to hold Galaxy liable to
respondent FEU for such damages equivalent to the abovementioned amounts awarded to petitioner.
Unlike respondent De Jesus, we deem Imperial to be solidarily liable
with Galaxy for being grossly negligent in directing the affairs of the

security agency. It was Imperial who assured petitioner that his

medical expenses will be shouldered by Galaxy but said
representations were not fulfilled because they presumed that
petitioner and his family were no longer interested in filing a formal
complaint against them.35
WHEREFORE, the petition is GRANTED. The June 29, 2007
Decision of the Court of Appeals in CA-G.R. CV No. 87050 nullifying
the Decision of the trial court and dismissing the complaint as well as
the August 23, 2007 Resolution denying the Motion for
Reconsideration are REVERSED and SET ASIDE. The Decision of
the Regional Trial Court of Manila, Branch 2, in Civil Case No. 9889483 finding respondent FEU liable for damages for breach of its
obligation to provide students with a safe and secure learning
atmosphere, is AFFIRMED with the followingMODIFICATIONS:
a. respondent Far Eastern University (FEU) is ORDERED to pay
petitioner actual damages in the amount of P35,298.25, plus 6%
interest per annum from the filing of the complaint until the finality of
this Decision. After this decision becomes final and executory, the
applicable rate shall be twelve percent (12%) per annum until its
satisfaction;
b. respondent FEU is also ORDERED to pay petitioner temperate
damages in the amount of P20,000.00; moral damages in the
amount of P100,000.00; and attorney's fees and litigation expenses
in the amount of P50,000.00;
c. the award of exemplary damages is DELETED.
The Complaint against respondent Edilberto C. De Jesus
is DISMISSED.
The
counterclaims
of
respondents
are
likewise DISMISSED.
Galaxy Development and Management Corporation (Galaxy) and its
president, Mariano D. Imperial are ORDEREDto jointly and severally
pay respondent FEU damages equivalent to the above-mentioned
amounts awarded to petitioner. SO ORDERED.

G.R. No. 157658

October 15, 2007

PHILIPPINE
NATIONAL
RAILWAYS
and
VIRGILIO
J.
BORJA, Petitioners,
vs.
COURT OF APPEALS (Second Division), CORAZON C.
AMORES, MA. EMILIE A. MOJICA, CECILE C. SISON, DINO C.
AMORES, LARISA C. AMORES, ARMAND JINO C. AMORES and
JOHN C. AMORES, Respondents.
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of
the 1997 Rules of Civil Procedure, as amended, seeking to annul
and set aside the Decision1 of the Court of Appeals (CA) in CA-G.R.
CV No. 54906 which reversed the Decision 2 of the Regional Trial
Court (RTC) of Manila, Branch 28, in Civil Case No. 92-61987.
The factual antecedents are as follows:
In the early afternoon of April 27, 1992, Jose Amores (Amores) was
traversing the railroad tracks in Kahilum II Street, Pandacan, Manila.
Before crossing the railroad track, he stopped for a while then
proceeded accordingly.3Unfortunately, just as Amores was at the
intersection, a Philippine National Railways (PNR) train with
locomotive number T-517 turned up and collided with the car.4
At the time of the mishap, there was neither a signal nor a crossing
bar at the intersection to warn motorists of an approaching train.
Aside from the railroad track, the only visible warning sign at that
time was the defective standard signboard "STOP, LOOK and
LISTEN" wherein the sign "Listen" was lacking while that of "Look"
was bent.5 No whistle blow from the train was likewise heard before it
finally bumped the car of Amores. 6 After impact, the car was dragged
about ten (10) meters beyond the center of the crossing. 7 Amores
died as a consequence thereof.

On July 22, 1992, the heirs of Amores, consisting of his surviving

wife and six children, herein respondents, filed a Complaint for
Damages8 against petitioners PNR and Virgilio J. Borja (Borja),
PNRs locomotive driver at the time of the incident, before the RTC of
Manila. The case was raffled to Branch 28 and was docketed as Civil
Case No. 92-61987. In their complaint, respondents averred that the
trains speedometer was defective, and that the petitioners
negligence was the proximate cause of the mishap for their failure to
take precautions to prevent injury to persons and property despite
the dense population in the vicinity. They then prayed for actual and
moral damages, as well as attorneys fees.9
In their Answer,10 the petitioners denied the allegations, stating that
the train was railroad-worthy and without any defect. According to
them, the proximate cause of the death of Amores was his own
carelessness and negligence, and Amores wantonly disregarded
traffic rules and regulations in crossing the railroad tracks and trying
to beat the approaching train. They admitted that there was no
crossing bar at the site of the accident because it was merely a
barangay road.11 PNR stressed that it exercised the diligence of a
good father of a family in the selection and supervision of the
locomotive driver and train engineer, Borja, and that the latter
likewise used extraordinary diligence and caution to avoid the
accident. Petitioners further asserted that respondents had the last
clear chance to avoid the accident but recklessly failed to do so.
After trial on the merits, on August 22, 1996, the RTC rendered
judgment in favor of the petitioners, the dispositive portion of which
reads:
WHEREFORE, judgment is hereby rendered dismissing the
complaint of the plaintiffs and the defendants counterclaim.
The costs shall be halved and paid equally by the parties.
The counsel for the defendants is hereby ordered to inform this court
who is the legal representative of the deceased defendant, Virgilio
Borja, within ten (10) days from receipt of a copy of this decision.

SO ORDERED.12

The RTC rationalized that the proximate cause of the collision was
Amores fatal misjudgment and the reckless course of action he took
in crossing the railroad track even after seeing or hearing the
oncoming train.

THE COURT OF APPEALS COMMITTED GRAVE ABUSE

OF DISCRETION IN RENDERING ITS DECISION
REVERSING THE DECISION OF THE REGIONAL TRIAL
COURT OF MANILA BRANCH 28, IN NOT TAKING INTO
CONSIDERATION THE PROVISION OF SECTION 42, R.A.
4136 OF THE LAND TRANSPORTATION AND TRAFFIC
CODE.

On appeal, the CA reversed the RTC decision, as follows:

WHEREFORE, the assailed Decision of the Regional Trial Court of
Manila, Branch 28 is hereby REVERSED. The defendants PNR and
the estate of Virgilio J. Borja are jointly and severally liable to pay
plaintiffs the following:
1) The amount of P122,300.00 for the cost of damage to the
car; and,
2) The amount of P50,000 as moral damages.
For lack of official receipts for funeral expenses and specimen of the
last pay slip of the deceased, the claim for reimbursement of funeral
expenses and claim for payment of support is hereby DENIED for
lack of basis. Costs against Defendants.
SO ORDERED.13
In reversing the trial courts decision, the appellate court found the
petitioners negligent. The court based the petitioners negligence on
the failure of PNR to install a semaphore or at the very least, to post
a flagman, considering that the crossing is located in a thickly
populated area. Moreover, the signboard "Stop, Look and Listen"
was found insufficient because of its defective condition as described
above. Lastly, no negligence could be attributed to Amores as he
exercised reasonable diligence in crossing the railroad track.
Aggrieved by this reversal, the petitioners filed the present petition
for review on certiorari, raising the following grounds:

II
THE DECISION OF THE COURT OF APPEALS IS
CONTRARY TO THE EVIDENCE ON RECORD ADDUCED
IN THE TRIAL ON THE MERIT IN CIVIL CASE NO. 9261987.14
The petitioners insist that Amores must have heard the trains whistle
and heeded the warning but, noting that the train was still a distance
away and moving slowly, he must have calculated that he could beat
it to the other side of the track before the train would arrive at the
intersection. The petitioners likewise add that the train was railroadworthy and that its defective speedometer did not affect the trains
operation. Lastly, they insist that evidence showed sufficient warning
signs strategically installed at the crossing to alert both motorists and
pedestrians.
Respondents, on the other hand, argue that the cause of the
accident was petitioners carelessness, imprudence and laxity in
failing to provide a crossing bar and keeper at the Kahilum II railway
intersection. Considering that Kahilum II Street is in the middle of a
thickly populated squatters area, and many pedestrians cross the
railroad track, notwithstanding the fact that it is a public street and a
main thoroughfare utilized in going to Herran Street, the presence of
adequate warning signals would have prevented the untimely death
of Amores. Another crucial point raised by the respondents is the
manner in which Borja applied the brakes of the train only when the
locomotive was already very near Amores car, as admitted by
witness Querimit. Finally, respondents claim that Borjas failure to
blow the locomotives horn, pursuant to the usual practice of doing

the same 100 meters before reaching the Kahilum II crossing point is
an earmark of recklessness on the part of the petitioners.
The petition must fail.
The only issue to be resolved in the present case is whether the
appellate court was correct in ascribing negligence on the part of the
petitioners. It was ascertained beyond quandary that the proximate
cause of the collision is the negligence and imprudence of the
petitioner PNR and its locomotive driver, Borja, in operating the
passenger train.
As the action is predicated on negligence, the relevant provision is
Article 2176 of the New Civil Code, which states that:
Whoever by act or omission causes damage to another, there being
fault or negligence, is obliged to pay for the damage done. Such fault
or negligence, if there was no pre-existing contractual relation
between the parties, is called quasi-delict and is governed by the
provisions of this chapter.
We have thoroughly reviewed the records of the case and we find no
cogent reason to reverse the appellate courts decision. Negligence
has been defined as "the failure to observe for the protection of the
interests of another person that degree of care, precaution, and
vigilance which the circumstances justly demand, whereby such
other person suffers injury." 15 Using the aforementioned philosophy, it
may be reliably concluded that there is no hard and fast rule whereby
such degree of care and vigilance is calibrated; it is dependent upon
the circumstances in which a person finds himself. All that the law
requires is that it is perpetually compelling upon a person to use that
care and diligence expected of sensible men under comparable
circumstances.16
We hold that the petitioners were negligent when the collision took
place. The transcript of stenographic notes reveals that the train was
running at a fast speed because notwithstanding the application of
the ordinary and emergency brakes, the train still dragged the car
some distance away from the point of impact. Evidence likewise

unveils the inadequate precautions taken by petitioner PNR to

forewarn the public of the impending danger. Aside from not having
any crossing bar, no flagman or guard to man the intersection at all
times was posted on the day of the incident. A reliable signaling
device in good condition, not just a dilapidated "Stop, Look and
Listen" signage because of many years of neglect, is needed to give
notice to the public. It is the responsibility of the railroad company to
use reasonable care to keep the signal devices in working order.
Failure to do so would be an indication of negligence.
As held in the case of Philippine National Railway v. Brunty,17 it may
broadly be stated that railroad companies owe to the public a duty of
exercising a reasonable degree of care to avoid injury to persons
and property at railroad crossings, which duties pertain both to the
operation of trains and to the maintenance of the crossings.
Moreover, every corporation constructing or operating a railway shall
make and construct at all points where such railway crosses any
public road, good, sufficient, and safe crossings, and erect at such
points, at sufficient elevation from such road as to admit a free
passage of vehicles of every kind, a sign with large and distinct
letters placed thereon, to give notice of the proximity of the railway,
and warn persons of the necessity of looking out for trains. 18 The
failure of the PNR to put a cross bar, or signal light, flagman or
switchman, or semaphore is evidence of negligence and disregard of
the safety of the public, even if there is no law or ordinance requiring
it, because public safety demands that said device or equipment be
installed.
The petitioners insist that a train has a right-of-way in a railroad
crossing under the existing laws. They derive their theory from
Section 42 (d), Article III of R.A. 4136, otherwise known as the Land
Transportation and Traffic Code, which states that:
The driver of a vehicle upon a highway shall bring to a full stop such
vehicle before traversing any "through highway" or railroad crossing:
Provided, That when it is apparent that no hazard exists, the vehicle
may be slowed down to five miles per hour instead of bringing it to a
full stop.

They claim that motorists are enjoined by law to stop, look and listen
before crossing railroad tracks and that a heavier responsibility rests
upon the motorists in avoiding accidents at level crossings.
It is true that one driving an automobile must use his faculties of
seeing
and
hearing
when
nearing
a
railroad
crossing.1wphi1 However, the obligation to bring to a full stop
vehicles moving in public highways before traversing any "through
street" only accrues from the time the said "through street" or
crossing is so designated and sign-posted. From the records of the
case, it can be inferred that Amores exercised all the necessary
precautions required of him as to avoid injury to himself and to
others.1wphi1 The witnesses testimonies showed that Amores
slackened his speed, made a full stop, and then proceeded to cross
the tracks when he saw that there was no impending danger to his
life. Under these circumstances, we are convinced that Amores did
everything, with absolute care and caution, to avoid the collision.
It is settled that every person or motorist crossing a railroad track
should use ordinary prudence and alertness to determine the
proximity of a train before attempting to cross. We are persuaded
that the circumstances were beyond the control of Amores for no
person would sacrifice his precious life if he had the slightest
opportunity to evade the catastrophe. Besides, the authority in this
jurisdiction is that the failure of a railroad company to install a
semaphore or at the very least, to post a flagman or watchman to
warn the public of the passing train amounts to negligence. 191wphi1
In view of the foregoing, We will now discuss the liability of petitioner
PNR. Article 218020 of the New Civil Code discusses the liability of
the employer once negligence or fault on the part of the employee
has been established. The employer is actually liable on the
assumption of juris tantum that the employer failed to exercise
diligentissimi patris families in
the selection and supervision of its employees. The liability is primary
and can only be negated by showing due diligence in the selection
and supervision of the employee, a factual matter that has not been
demonstrated.21 Even the existence of hiring procedures and

supervisory employees cannot be incidentally invoked to overturn the

presumption of negligence on the part of the employer.22
WHEREFORE, the petition is DENIED. The Decision of the Court of
Appeals dated March 31, 2003 in CA-G.R. CV No. 54906 is hereby
AFFIRMED.
SO ORDERED.

G.R. Nos. 180880-81

September 25, 2009

KEPPEL CEBU SHIPYARD, INC., Petitioner,

vs.
PIONEER INSURANCE AND SURETY
CORPORATION, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. Nos. 180896-97
PIONEER INSURANCE AND SURETY CORPORATION, Petitioner,
vs.
KEPPEL CEBU SHIPYARD, INC., Respondent.
DECISION
NACHURA, J.:
Before us are the consolidated petitions filed by the partiesPioneer
Insurance and Surety Corporation1 (Pioneer) and Keppel Cebu
Shipyard, Inc.2 (KCSI)to review on certiorari the Decision 3 dated
December 17, 2004 and the Amended Decision 4 dated December
20, 2007 of the Court of Appeals (CA) in CA-G.R. SP Nos. 74018
and 73934.
On January 26, 2000, KCSI and WG&A Jebsens Shipmanagement,
Inc. (WG&A) executed a Shiprepair Agreement 5 wherein KCSI would
renovate and reconstruct WG&As M/V "Superferry 3" using its dry
docking facilities pursuant to its restrictive safety and security rules
and regulations. Prior to the execution of the Shiprepair Agreement,
"Superferry 3" was already insured by WG&A with Pioneer for
US$8,472,581.78. The Shiprepair Agreement reads
SHIPREPAIR AGREEMENT

Company: WG & A JEBSENS SHIPMANAGEMENT INC.

Address: Harbour Center II, Railroad & Chicago Sts.

Port Area, City of Manila

We, WG & A JEBSENS SHIPMGMT. Owner/Operator of
M/V "SUPERFERRY 3" and KEPPEL CEBU SHIPYARD, INC.
(KCSI) enter into an agreement that the Drydocking and Repair of
the above-named vessel ordered by the Owners Authorized
Representative shall be carried out under the Keppel Cebu Shipyard
Standard Conditions of Contract for Shiprepair, guidelines and
regulations on safety and security issued by Keppel Cebu Shipyard.
In addition, the following are mutually agreed upon by the parties:
1. The Owner shall inform its insurer of Clause
207 and 22 (a)8 (refer at the back hereof) and shall
include Keppel Cebu Shipyard as a co-assured in its
insurance policy.
2. The Owner shall waive its right to claim for any
loss of profit or loss of use or damages
consequential on such loss of use resulting from the
delay in the redelivery of the above vessel.
3. Owners sub-contractors or workers are not
permitted to work in the yard without the written
approval of the Vice President Operations.
4. In consideration of Keppel Cebu Shipyard
allowing Owner to carry out own repairs onboard the
vessel, the Owner shall indemnify and hold Keppel
Cebu Shipyard harmless from any or all claims,
damages, or liabilities arising from death or bodily
injuries to Owners workers, or damages to the
vessel or other property however caused.
5. On arrival, the Owner Representative, Captain,
Chief Officer and Chief Engineer will be invited to
attend a conference with our Production, Safety and
Security personnel whereby they will be briefed on,
and given copies of Shipyard safety regulations.

(Signed)
BARRY CHIA SOO HOCK

(Signed)

(Printed Name/Signature Above Name)

6. An adequate number of
officers and crew must remain
on board at all times to ensure
the safety of the vessel and
compliance of safety regulations
by crew and owner employed
workmen.

Vice
President

Keppel Cebu Shipyard, Inc.

Operations

(Printed Name/Signature Above Name)

Authorized
for
and
in
WG & A Jebsens Shipmgmt.

Representative
behalf
of:

JAN. 26, 2000.

Date

Date

7. The ships officers/crew or owner appointed

security personnel shall maintain watch against
pilferage and acts of sabotage.
8. The yard must be informed and instructed to
provide the necessary security arrangement
coverage should there be inadequate or no crew on
board to provide the expressed safety and security
enforcement.
9. The Owner shall be liable to Keppel Cebu
Shipyard for any death and/or bodily injuries for the
[K]eppel Cebu Shipyards employees and/or contract
workers; theft and/or damages to Keppel Cebu
Shipyards properties and other liabilities which are
caused by the workers of the Owner.
10. The invoice shall be based on quotation
reference 99-KCSI-211 dated December
20,
1999tariff dated March 15, 1998.
11. Payment term shall be as follows:
12. The Owner and Keppel Cebu Shipyard shall
endeavor to settle amicably any dispute that may
arise under this Agreement. Should all efforts for an
amicable settlement fail, the disputes shall be
submitted for arbitration in Metro Manila in
accordance with provisions of Executive Order No.
1008 under the auspices of the Philippine Arbitration
Commission.

On February 8, 2000, in the course of its repair, M/V "Superferry 3"

was gutted by fire. Claiming that the extent of the damage was
pervasive, WG&A declared the vessels damage as a "total
constructive loss" and, hence, filed an insurance claim with Pioneer.
On June 16, 2000, Pioneer paid the insurance claim of WG&A in the
amount of US$8,472,581.78. WG&A, in turn, executed a Loss and
Subrogation Receipt9 in favor of Pioneer, to wit:
LOSS AND SUBROGATION RECEIPT
16 June 2000
Our
Claim
Ref:
US$8,472,581.78
------------------------------------------------

MH-NIL-H0-99-00018

RECEIVED
from
PIONEER
INSURANCE
&
SURETY
CORPORATION the sum of U.S. DOLLARS EIGHT MILLION FOUR
HUNDRED SEVENTY-TWO THOUSAND FIVE HUNDRED EIGHTYONE & 78/100 (US$ 8,472,581.78) equivalent to PESOS THREE
HUNDRED SIXTY MILLION & 00/100 (Php 360,000,000.00), in full
satisfaction, compromise and discharge of all claims for loss and
expenses sustained to the vessel "SUPERFERRY 3" insured under
Policy Nos. MH-H0-99-0000168-00-D (H&M) and MH-H0-990000169 (I.V.) by reason as follows:
Fire
on
board
on 08 February 2000

at

Keppel

Cebu

Shipyard

and in consideration of which the undersigned hereby assigns and

transfers to the said company each and all claims and demands
against any person, persons, corporation or property arising from or

connected with such loss or damage and the said company is

subrogated in the place of and to the claims and demands of the
undersigned against said person, persons, corporation or property in
the premises to the extent of the amount above-mentioned.
WILLIAM, GOTHONG & ABOITIZ, INC.
&/OR
ABOITIZ
SHIPPING
CORP.
By:
(Signed)
______________________________________
Witnesses:
(Signed)
______________________________________
(Signed)
______________________________________
Armed with the subrogation receipt, Pioneer tried to collect from
KCSI, but the latter denied any responsibility for the loss of the
subject vessel. As KCSI continuously refused to pay despite
repeated demands, Pioneer, on August 7, 2000, filed a Request for
Arbitration before the Construction Industry Arbitration Commission
(CIAC) docketed as CIAC Case No. 21-2000, seeking the following
reliefs:
1. To pay to the claimant Pioneer Insurance and Surety
Corporation the sum of U.S.$8,472,581.78 or its equivalent
amount in Philippine Currency, plus interest thereon
computed from the date of the "Loss and Subrogation
Receipt" on 16 June 2000 or from the date of filing of [the]
"Request for Arbitration," as may be found proper;
2. To pay to claimant WG&A, INC. and/or Aboitiz Shipping
Corporation and WG&A Jebsens Shipmanagement, Inc. the
sum of P500,000,000.00 plus interest thereon from the date
of filing [of the] "Request for Arbitration" or date of the arbitral
award, as may be found proper;

3. To pay to the claimants herein the sum of P3,000,000.00

for and as attorneys fees; plus other damages as may be
established during the proceedings, including arbitration fees
and other litigation expenses, and the costs of suit.
It is likewise further prayed that Clauses 1 and 2 on the unsigned
page 1 of the "Shiprepair Agreement" (Annex "A") as well as the
hardly legible Clauses 20 and 22 (a) and other similar clauses
printed in very fine print on the unsigned dorsal page thereof, be all
declared illegal and void ab initio and without any legal effect
whatsoever.10
KCSI and WG&A reached an amicable settlement, leading the latter
to file a Notice of Withdrawal of Claim on April 17, 2001 with the
CIAC. The CIAC granted the withdrawal on October 22, 2001,
thereby dismissing the claim of WG&A against KCSI. Hence, the
arbitration proceeded with Pioneer as the remaining claimant.
In the course of the proceedings, Pioneer and KCSI stipulated,
among others, that: (1) on January 26, 2000, M/V "Superferry 3"
arrived at KCSI in Lapu-Lapu City, Cebu, for dry docking and repairs;
(2) on the same date, WG&A signed a ship repair agreement with
KCSI; and (3) a fire broke out on board M/V "Superferry 3" on
February 8, 2000, while still dry docked in KCSIs shipyard. 11
As regards the disputed facts, below are the respective positions of
the parties, viz.:
Pioneers Theory of the Case:
First, Pioneer (as Claimant) is the real party in interest in this case
and that Pioneer has been subrogated to the claim of its assured.
The Claimant claims that it has the preponderance of evidence over
that of the Respondent. Claimant cited documentary references on
the Statutory Source of the Principle of Subrogation. Claimant then
proceeded to explain that the Right of Subrogation:

Is
by
Operation
exists
in
Property
is not Dependent Upon Privity of Contract.

of

Law
Insurance

Claimant then argued that Payment Operates as Equitable

Assignment of Rights to Insurer and that the Right of Subrogation
Entitles Insurer to Recover from the Liable Party.

Fourth, the Respondent Yard is liable under the Doctrine of Res Ipsa
Loquitur. According to Claimant, the Yard is liable under the ruling
laid down by the Supreme Court in the "Manila City" case. Claimant
asserts that said ruling is applicable hereto as The Law of the Case.
Fifth, the liability of Respondent does not arise merely from the
application of the Doctrine of Res Ipsa Loquitur, but from its
negligence in this case.

Second, Respondent Keppel had custody of and control over the

M/V "Superferry 3" while said vessel was in Respondent Keppels
premises. In its Draft Decision, Claimant stated:

Sixth, the Respondent Yard was the employer responsible for the
negligent acts of the welder. According to Claimant;

A. The evidence presented during the hearings indubitably

proves that respondent not only took custody but assumed
responsibility and control over M/V Superferry 3 in carrying
out the dry-docking and repair of the vessel.

In contemplation of law, Sevillejo was not a loaned

servant/employee. The yard, being his employer, is solely and
exclusively liable for his negligent acts. Claimant proceeded to
enumerate its reasons:

B. The presence on board the M/V Superferry 3 of its officers

and crew does not relieve the respondent of its responsibility
for said vessel.

A. The "Control Test" The yard exercised control over

Sevillejo. The power of control is not diminished by the
failure to exercise control.

C. Respondent Keppel assumed responsibility over M/V

Superferry 3 when it brought the vessel inside its graving
dock and applied its own safety rules to the dry-docking and
repairs of the vessel.

B. There was no independent work contract between Joniga

and Sevillejo Joniga was not the employer of Sevillejo, as
Sevillejo remained an employee of the yard at the time the
loss occurred.

D. The practice of allowing a shipowner and its subcontractors to perform maintenance works while the vessel
was within respondents premises does not detract from the
fact that control and custody over M/V Superferry 3 was
transferred to the yard.

C. The mere fact that Dr. Joniga requested Sevillejo to

perform some of the Owners hot works under the 26
January 2000 work order did not make Dr. Joniga the
employer of Sevillejo.

From the preceding statements, Claimant claims that Keppel is

clearly liable for the loss of M/V Superferry 3.
Third, the Vessels Safety Manual cannot be relied upon as proof of
the Masters continuing control over the vessel.

Claimant proffers that Dr. Joniga was not a Contractor of the Hot
Work Done on Deck A. Claimant argued that:
A. The yard, not Dr. Joniga, gave the welders their marching
orders, and

B. Dr. Jonigas authority to request the execution of owners

hot works in the passenger areas was expressly recognized
by the Yard Project Superintendent Orcullo.

Finally, Claimant disputed the theories propounded by the

Respondent (The Yard). Claimant presented its case against:
(i) Non-removal of the life jackets theory.

Seventh, the shipowner had no legal duty to apply for a hotworks

permit since it was not required by the yard, and the owners
hotworks were conducted by welders who remained employees of
the yard. Claimant contends that the need, if any, for an owners
application for a hot work permit was canceled out by the yards
actual knowledge of Sevillejos whereabouts and the fact that he was
in deck A doing owners hotworks.
Eight[h], in supplying welders and equipment as per The Work Order
Dated 26 January 2000, the Yard did so at its own risk, and acted as
a Less Than Prudent Ship Repairer.1avvphi1
The Claimant then disputed the statements of Manuel Amagsila by
claiming that Amagsila was a disgruntled employee. Nevertheless,
Claimant claims that Amagsila affirmed that the five yard welders
never became employees of the owner so as to obligate the latter to
be responsible for their conduct and performance.

According to Claimant:
A. Yards water supply was inadequate.
Fighting

Efforts and

Equipment

Were

C. Yard Safety Practices and Procedures Were Unsafe or

Inadequate.
D. Yard Safety Assistants
Overworked.

and

Firewatch-Men

(iii) Need for a plan theory.

(iv) The unauthorized hot works theory.
(v) The Marina report theory.
The Claimant called the attention of the Tribunal (CIAC) on the nonappearance of the welder involved in the cause of the fire, Mr.
Severino Sevillejo. Claimant claims that this is suppression of
evidence by Respondent.
KCSIs Theory of the Case
1. The Claimant has no standing to file the Request for
Arbitration and the Tribunal has no jurisdiction over the case:

Claimant enumerated further badges of yard negligence.

B. Yard Fire
Inadequate.

(ii) Hole-in-the[-]floor theory.

were

(a) There is no valid arbitration agreement between

the Yard and the Vessel Owner. On January 26,
2000, when the ship repair agreement (which
includes the arbitration agreement) was signed by
WG&A Jebsens on behalf of the Vessel, the same
was still owned by Aboitiz Shipping. Consequently,
when another firm, WG&A, authorized WG&A
Jebsens to manage the MV Superferry 3, it had no
authority to do so. There is, as a result, no binding
arbitration agreement between the Vessel Owner
and the Yard to which the Claimant can claim to be
subrogated and which can support CIAC jurisdiction.
(b) The Claimant is not a real party in interest and
has no standing because it has not been subrogated

to the Vessel Owner. For the reason stated above,

the insurance policies on which the Claimant bases
its right of subrogation were not validly obtained. In
any event, the Claimant has not been subrogated to
any rights which the Vessel may have against the
Yard because:

the fire and the resulting damage to the

Vessel, then it derived no benefit from the
Claimants payment to the Vessel Owner.
Third, in any event, the Claimant has not
proved payment of the proceeds to the
Vessel Owner.

i. The Claimant has not proved payment of

the proceeds of the policies to any specific
party. As a consequence, it has also not
proved payment to the Vessel Owner.

2. The Ship [R]epair Agreement was not imposed upon the

Vessel. The Vessel knowingly and voluntarily accepted that
agreement. Moreover, there are no signing or other formal
defects that can invalidate the agreement.

ii. The Claimant had no legally demandable

obligation to pay under the policies and did
so only voluntarily. Under the policies, the
Claimant and the Vessel agreed that there is
no Constructive Total Loss "unless the
expense of recovering and repairing the
vessel would exceed the Agreed Value"
of P360 million assigned by the parties to
the Vessel, a threshold which the actual
repair cost for the Vessel did not reach.
Since the Claimant opted to pay contrary to
the provisions of the policies, its payment
was voluntary, and there was no resulting
subrogation to the Vessel.

3. The proximate cause of the fire and damage to the Vessel

was not any negligence committed by Angelino Sevillejo in
cutting the bulkhead door or any other shortcoming by the
Yard. On the contrary, the proximate cause of the fire was
Dr. Jonigas and the Vessels deliberate decision to have
Angelino Sevillejo undertake cutting work in inherently
dangerous conditions created by them.

iii. There was also no subrogation under

Article 1236 of the Civil Code. First, if the
Claimant asserts a right of payment only by
virtue of Article 1236, then there is no legal
subrogation under Article 2207 and it
does not succeed to the Vessels rights
under the Ship [R]epair Agreement and the
arbitration agreement. It does not have a
right to demand arbitration and will have
only a purely civil law claim for
reimbursement to the extent that its payment
benefited the Yard which should be filed in
court. Second, since the Yard is not liable for

(a) The Claimants material witnesses lied on the

record and the Claimant presented no credible proof
of any negligence by Angelino Sevillejo.
(b) Uncontroverted evidence proved that Dr. Joniga
neglected or decided not to obtain a hot work permit
for the bulkhead cutting and also neglected or
refused to have the ceiling and the flammable
lifejackets removed from underneath the area where
he instructed Angelino Sevillejo to cut the bulkhead
door. These decisions or oversights guaranteed that
the cutting would be done in extremely hazardous
conditions and were the proximate cause of the fire
and the resulting damage to the Vessel.
(c) The Yards expert witness, Dr. Eric Mullen gave
the only credible account of the cause and the
mechanics of ignition of the fire. He established that:
i) the fire started when the cutting of the bulkhead
door resulted in sparks or hot molten slag which fell

through pre-existing holes on the deck floor and

came into contact with and ignited the flammable
lifejackets stored in the ceiling void directly below;
and ii) the bottom level of the bulkhead door was
immaterial, because the sparks and slag could have
come from the cutting of any of the sides of the door.
Consequently, the cutting itself of the bulkhead door
under the hazardous conditions created by Dr.
Joniga, rather than the positioning of the doors
bottom edge, was the proximate cause of the fire.
(d) The Manila City case is irrelevant to this dispute
and in any case, does not establish governing
precedent to the effect that when a ship is damaged
in dry dock, the shipyard is presumed at fault. Apart
from the differences in the factual setting of the two
cases, the Manila City pronouncements regarding
the res ipsa loquitur doctrine are obiter dicta without
value as binding precedent. Furthermore, even if the
principle were applied to create a presumption of
negligence by the Yard, however, that presumption
is conclusively rebutted by the evidence on record.
(e) The Vessels deliberate acts and its negligence
created the inherently hazardous conditions in which
the cutting work that could otherwise be done safely
ended up causing a fire and the damage to the
Vessel. The fire was a direct and logical
consequence of the Vessels decisions to: (1) take
Angelino Sevillejo away from his welding work at the
Promenade Deck restaurant and instead to require
him to do unauthorized cutting work in Deck A; and
(2) to have him do that without satisfying the
requirements for and obtaining a hot work permit in
violation of the Yards Safety Rules and without
removing the flammable ceiling and life jackets
below, contrary to the requirements not only of the
Yards Safety Rules but also of the demands of
standard safe practice and the Vessels own explicit
safety and hot work policies.

(f) The vessel has not presented any proof to show

that the Yard was remiss in its fire fighting
preparations or in the actual conduct of fighting the 8
February 2000 fire. The Yard had the necessary
equipment and trained personnel and employed all
those resources immediately and fully to putting out
the 8 February 2000 fire.
4. Even assuming that Angelino Sevillejo cut the bulkhead
door close to the deck floor, and that this circumstance
rather than the extremely hazardous conditions created by
Dr. Joniga and the Vessel for that activity caused the fire, the
Yard may still not be held liable for the resulting damage.
(a) The Yards only contractual obligation to the
Vessel in respect of the 26 January 2000 Work
Order was to supply welders for the Promenade
Deck restaurant who would then perform welding
work "per owner[s] instruction." Consequently, once
it had provided those welders, including Angelino
Sevillejo, its obligation to the Vessel was fully
discharged and no claim for contractual breach, or
for damages on account thereof, may be raised
against the Yard.
(b) The Yard is also not liable to the Vessel/Claimant
on the basis of quasi-delict.
i. The Vessel exercised supervision and
control over Angelino Sevillejo when he was
doing work at the Promenade Deck
restaurant and especially when he was
instructed by Dr. Joniga to cut the bulkhead
door. Consequently, the Vessel was the
party with actual control over his tasks and
is deemed his true and effective employer
for purposes of establishing Article 2180
employer liability.

ii. Even assuming that the Yard was

Angelino Sevillejos employer, the Yard may
nevertheless not be held liable under Article
2180 because Angelino Sevillejo was acting
beyond the scope of his tasks assigned by
the Yard (which was only to do welding for
the Promenade Deck restaurant) when he
cut the bulkhead door pursuant to
instructions given by the Vessel.
iii. The Yard is nonetheless not liable under
Article 2180 because it exercised due
diligence in the selection and supervision of
Angelino Sevillejo.
5. Assuming that the Yard is liable, it cannot be compelled to
pay the full amount of P360 million paid by the Claimant.
(a) Under the law, the Yard may not be held liable to
the Claimant, as subrogee, for an amount greater
than that which the Vessel could have recovered,
even if the Claimant may have paid a higher amount
under its policies. In turn, the right of the Vessel to
recover is limited to actual damage to the MV
Superferry 3, at the time of the fire.
(b) Under the Ship [R]epair Agreement, the liability of
the Yard is limited to P50 million a stipulation
which, under the law and decisions of the Supreme
Court, is valid, binding and enforceable.
(c) The Vessel breached its obligation under Clause
22 (a) of the Yards Standard Terms to name the
Yard as co-assured under the policies a breach
which makes the Vessel liable for damages. This
liability should in turn be set-off against the
Claimants claim for damages.

The Respondent listed what it believes the Claimant wanted to

impress upon the Tribunal. Respondent enumerated and disputed
these as follows:
1. Claimants counsel contends that the cutting of the
bulkhead door was covered by the 26 January 2000 Work
Order.
2. Claimants counsel contends that Dr. Joniga told Gerry
Orcullo about his intention to have Angelino Sevillejo do
cutting work at the Deck A bulkhead on the morning of 8
February 2000.
3. Claimants counsel contends that under Article 1727 of the
Civil Code, "The contractor is responsible for the work done
by persons employed by him."
4. Claimants counsel contends that "[t]he second reason
why there was no job spec or job order for this cutting work,
[is] the cutting work was known to the yard and coordinated
with Mr. Gerry Orcullo, the yard project superintendent."
5. Claimants counsel also contends, to make the Vessels
unauthorized hot works activities seem less likely, that they
could easily be detected because Mr. Avelino Aves, the Yard
Safety Superintendent, admitted that "No hot works could
really be hidden from the Yard, your Honors, because the
welding cables and the gas hoses emanating from the dock
will give these hotworks away apart from the assertion and
the fact that there were also safety assistants supposedly
going around the vessel."
Respondent disputed the above by presenting its own argument in
its Final Memorandum.12
On October 28, 2002, the CIAC rendered its Decision 13 declaring
both WG&A and KCSI guilty of negligence, with the following findings
and conclusions

The Tribunal agrees that the contractual obligation of the Yard is to

provide the welders and equipment to the promenade deck. [The]
Tribunal agrees that the cutting of the bulkhead door was not a
contractual obligation of the Yard. However, by requiring, according
to its own regulations, that only Yard welders are to undertake
hotworks, it follows that there are certain qualifications of Yard
welders that would be requisite of yard welders against those of the
vessel welders. To the Tribunal, this means that yard welders are
aware of the Yard safety rules and regulations on hotworks such as
applying for a hotwork permit, discussing the work in a production
meeting, and complying with the conditions of the hotwork permit
prior to implementation. By the requirement that all hotworks are to
be done by the Yard, the Tribunal finds that Sevillejo remains a yard
employee. The act of Sevillejo is however mitigated in that he was
not even a foreman, and that the instructions to him was (sic) by an
authorized person. The Tribunal notes that the hotworks permit
require[s] a request by at least a foreman. The fact that no foreman
was included in the five welders issued to the Vessel was never
raised in this dispute. As discussed earlier by the Tribunal, with the
fact that what was ask (sic) of Sevillejo was outside the work order,
the Vessel is considered equally negligent. This Tribunal finds the
concurrent negligence of the Yard through Sevillejo and the Vessel
through Dr. Joniga as both contributory to the cause of the fire that
damaged the vessel.14

WHEREFORE, premises considered, the Petition of Pioneer (CAG.R. SP No. 74018) is DISMISSED while the Petition of the Yard
(CA-G.R. SP No. 73934) is GRANTED, dismissing petitioners claims
in its entirety. No costs.

Holding that the liability for damages was limited to P50,000,000.00,

the CIAC ordered KCSI to pay Pioneer the amount
of P25,000,000.00, with interest at 6% per annum from the time of
the filing of the case up to the time the decision is promulgated, and
12% interest per annum added to the award, or any balance thereof,
after it becomes final and executory. The CIAC further ordered that
the arbitration costs be imposed on both parties on a pro rata basis. 15

1. Pioneers Motion for Reconsideration is PARTIALLY

GRANTED, ordering The Yard to pay Pioneer P25 Million,
without legal interest, within 15 days from the finality of this
Amended Decision, subject to the following modifications:

Pioneer appealed to the CA and its petition was docketed as CAG.R. SP No. 74018. KCSI likewise filed its own appeal and the same
was docketed as CA-G.R. SP No. 73934. The cases were
consolidated.
On December 17, 2004, the Former Fifteenth Division of the CA
rendered its Decision, disposing as follows:

The Yard and The WG&A are hereby ordered to pay the arbitration
costs pro-rata.
SO ORDERED.16
Aggrieved, Pioneer sought reconsideration of the December 17,
2004 Decision, insisting that it suffered from serious errors in the
appreciation of the evidence and from gross misapplication of the
law and jurisprudence on negligence. KCSI, for its part, filed a
motion for partial reconsideration of the same Decision.
On December 20, 2007, an Amended Decision was promulgated by
the Special Division of Five Former Fifteenth Division of the CA in
light of the dissent of Associate Justice Lucas P. Bersamin, 17 joined
by Associate Justice Japar B. Dimaampao. The fallo of the Amended
Decision reads
WHEREFORE, premises considered, the Court hereby decrees that:

1.1 Pioneers Petition (CA-G.R. SP No. 74018) is

PARTIALLY GRANTED as the Yard is hereby
ordered to pay Pioneer P25 Million without legal
interest;
2. The Yard is hereby declared as equally negligent, thus,
the total GRANTING of its Petition (CA-G.R. SP No. 73934)
is now reduced to PARTIALLY GRANTED, in so far as it is
ordered to pay Pioneer P25 Million, without legal interest,

within 15 days from the finality of this Amended Decision;

and

D. IT IS INIQUITOUS TO ALLOW THE YARD TO

LIMIT LIABILITY, IN THAT:

3. The rest of the disposition in the original Decision remains

the same.

(i) THE YARD HAD CUSTODY AND

CONTROL OVER THE VESSEL (M/V
"SUPERFERRY 3") ON 08 FEBRUARY
2000 WHEN IT WAS GUTTED BY FIRE;

SO ORDERED.18

(ii) THE DAMAGING FIRE INCIDENT

HAPPENED IN THE COURSE OF THE
REPAIRS EXCLUSIVELY PERFORMED BY
YARD WORKERS.

Hence, these petitions. Pioneer bases its petition on the following

grounds:
I
THE COURT OF APPEALS ERRED IN BASING ITS ORIGINAL
DECISION ON NON-FACTS LEADING IT TO MAKE FALSE LEGAL
CONCLUSIONS; NON-FACTS REMAIN TO INVALIDATE THE
AMENDED DECISION. THIS ALSO VIOLATES SECTION 14,
ARTICLE VIII OF THE CONSTITUTION.

III
THE COURT OF APPEALS ERRED IN ITS RULING THAT WG&A
WAS CONCURRENTLY NEGLIGENT, CONSIDERING THAT:
A. DR. JONIGA, THE VESSELS PASSAGE TEAM
LEADER, DID NOT SUPERVISE OR CONTROL
THE REPAIRS.

II
THE COURT OF APPEALS ERRED IN LIMITING THE LEGAL
LIABILITY OF THE YARD TO THE SUM OF P50,000,000.00, IN
THAT:
A. STARE DECISIS RENDERS INAPPLICABLE
ANY INVOCATION OF LIMITED LIABILITY BY THE
YARD.
B. THE LIMITATION CLAUSE IS CONTRARY TO
PUBLIC POLICY.
C. THE VESSEL OWNER DID NOT AGREE THAT
THE YARDS LIABILITY FOR LOSS OR DAMAGE
TO THE VESSEL ARISING FROM YARDS
NEGLIGENCE IS LIMITED TO THE SUM
OF P50,000,000.00 ONLY.

B. IT WAS THE YARD THROUGH ITS PROJECT

SUPERINTENDENT GERMINIANO ORCULLO
THAT SUPERVISED AND CONTROLLED THE
REPAIR WORKS.
C. SINCE ONLY YARD WELDERS COULD
PERFORM HOT WORKS IT FOLLOWS THAT
THEY ALONE
COULD
BE
GUILTY
OF
NEGLIGENCE IN DOING THE SAME.
D. THE YARD AUTHORIZED THE HOT WORK OF
YARD WELDER ANGELINO SEVILLEJO.
E. THE NEGLIGENCE OF ANGELINO SEVILLEJO
WAS THE PROXIMATE CAUSE OF THE LOSS.

F. WG&A WAS NOT GUILTY OF NEGLIGENCE, BE

IT DIRECT OR CONTRIBUTORY TO THE LOSS.

ITSELF EXPLAINED WHY THE VESSEL COULD NOT BE A

CONSTRUCTIVE TOTAL LOSS.

IV

3. FAILURE OR REFUSAL TO ADDRESS

THE COURT OF APPEALS CORRECTLY RULED THAT WG&A

SUFFERED A CONSTRUCTIVE TOTAL LOSS OF ITS VESSEL BUT
ERRED BY NOT HOLDING THAT THE YARD WAS LIABLE FOR
THE VALUE OF THE FULL CONSTRUCTIVE TOTAL LOSS.

KEPPELS MOTION FOR RECONSIDERATION

V
THE COURT OF APPEALS ERRED IN NOT HOLDING THE YARD
LIABLE FOR INTEREST.
VI
THE COURT OF APPEALS ERRED IN NOT HOLDING THE YARD
SOLELY LIABLE FOR ARBITRATION COSTS.19
On the other hand, KCSI cites the following grounds for the
allowance of its petition, to wit:
1. ABSENCE OF YARD RESPONSIBILITY
IT WAS GRIEVOUS ERROR FOR THE COURT OF APPEALS TO
ADOPT, WITHOUT EXPLANATION, THE CIACS RULING THAT
THE YARD WAS EQUALLY NEGLIGENT BECAUSE OF ITS
FAILURE TO REQUIRE A HOT WORKS PERMIT FOR THE
CUTTING WORK DONE BY ANGELINO SEVILLEJO, AFTER THE
COURT OF APPEALS ITSELF HAD SHOWN THAT RULING TO BE
COMPLETELY WRONG AND BASELESS.
2. NO CONSTRUCTIVE TOTAL LOSS
IT WAS EQUALLY GRIEVOUS ERROR FOR THE COURT OF
APPEALS TO RULE, WITHOUT EXPLANATION, THAT THE
VESSEL WAS A CONSTRUCTIVE TOTAL LOSS AFTER HAVING

FINALLY, IT WAS ALSO GRIEVOUS ERROR FOR THE COURT OF

APPEALS TO HAVE EFFECTIVELY DENIED, WITHOUT
ADDRESSING IT AND ALSO WITHOUT EXPLANATION, KEPPELS
PARTIAL MOTION FOR RECONSIDERATION OF THE ORIGINAL
DECISION WHICH SHOWED: 1) WHY PIONEER WAS NOT
SUBROGATED TO THE RIGHTS OF THE VESSEL OWNER AND
SO HAD NO STANDING TO SUE THE YARD; 2) WHY KEPPEL
MAY NOT BE REQUIRED TO REIMBURSE PIONEERS
PAYMENTS TO THE VESSEL OWNER IN VIEW OF THE COINSURANCE CLAUSE IN THE SHIPREPAIR AGREEMENT; AND 3)
WHY PIONEER ALONE SHOULD BEAR THE COSTS OF
ARBITRATION.
4. FAILURE TO CREDIT FOR SALVAGE RECOVERY
EVEN IF THE COURT OF APPEALS RULINGS ON ALL OF THE
FOREGOING ISSUES WERE CORRECT AND THE YARD MAY
PROPERLY BE HELD EQUALLY LIABLE FOR THE DAMAGE TO
THE VESSEL AND REQUIRED TO PAY HALF OF THE DAMAGES
AWARDED (P25 MILLION), THE COURT OF APPEALS STILL
ERRED IN NOT DEDUCTING THE SALVAGE VALUE OF THE
VESSEL RECOVERED AND RECEIVED BY THE INSURER,
PIONEER, TO REDUCE ANY LIABILITY ON THE PART OF THE
YARD TO P9.874 MILLION.20
To our minds, these errors assigned by both Pioneer and KCSI may
be summed up in the following core issues:
A. To whom may negligence over the fire that broke out on
board M/V "Superferry 3" be imputed?

B. Is subrogation proper? If proper, to what extent can

subrogation be made?

plywood partitions and foam mattresses on deck B (Exh. 1Mullen,23 pp. 7-8, 18; Exh. 2-Mullen, pp. 11-12).24

C. Should interest be imposed on the award of damages? If

so, how much?

To resolve these issues, it is imperative that we digress from the

general rule that in petitions for review under Rule 45 of the Rules of
Court, only questions of law shall be entertained. Considering the
disparate findings of fact of the CIAC and the CA which led them to
different conclusions, we are constrained to revisit the factual
circumstances surrounding this controversy.21

Pioneer contends that KCSI should be held liable because Sevillejo

was its employee who, at the time the fire broke out, was doing his
assigned task, and that KCSI was solely responsible for all the hot
works done on board the vessel. KCSI claims otherwise, stating that
the hot work done was beyond the scope of Sevillejos assigned
tasks, the same not having been authorized under the Work
Order25dated January 26, 2000 or under the Shiprepair Agreement.
KCSI further posits that WG&A was itself negligent, through its crew,
particularly Dr. Raymundo Joniga (Dr. Joniga), for failing to remove
the life jackets from the ceiling void, causing the immediate spread of
the fire to the other areas of the ship.

The Courts Ruling

We rule in favor of Pioneer.

A. The issue of negligence

First. The Shiprepair Agreement is clear that WG&A, as owner of

M/V "Superferry 3," entered into a contract for the dry docking and
repair of the vessel under KCSIs Standard Conditions of Contract for
Shiprepair, and its guidelines and regulations on safety and security.
Thus, the CA erred when it said that WG&A would renovate and
reconstruct its own vessel merely using the dry docking facilities of
KCSI.

D. Who should bear the cost of the arbitration?

Undeniably, the immediate cause of the fire was the hot work done
by Angelino Sevillejo (Sevillejo) on the accommodation area of the
vessel, specifically on Deck A. As established before the CIAC
The fire broke out shortly after 10:25 and an alarm was raised (Exh.
1-Ms. Aini Ling,22 p. 20). Angelino Sevillejo tried to put out the fire by
pouring the contents of a five-liter drinking water container on it and
as he did so, smoke came up from under Deck A. He got another
container of water which he also poured whence the smoke was
coming. In the meantime, other workers in the immediate vicinity
tried to fight the fire by using fire extinguishers and buckets of water.
But because the fire was inside the ceiling void, it was extremely
difficult to contain or extinguish; and it spread rapidly because it was
not possible to direct water jets or the fire extinguishers into the
space at the source. Fighting the fire was extremely difficult because
the life jackets and the construction materials of the Deck B ceiling
were combustible and permitted the fire to spread within the ceiling
void. From there, the fire dropped into the Deck B accommodation
areas at various locations, where there were combustible materials.
Respondent points to cans of paint and thinner, in addition to the

Second. Pursuant to KCSIs rules and regulations on safety and

security, only employees of KCSI may undertake hot works on the
vessel while it was in the graving dock in Lapu-Lapu City, Cebu. This
is supported by Clause 3 of the Shiprepair Agreement requiring the
prior written approval of KCSIs Vice President for Operations before
WG&A could effect any work performed by its own workers or subcontractors. In the exercise of this authority, KCSIs Vice-President
for Operations, in the letter dated January 2, 1997, banned any hot
works from being done except by KCSIs workers, viz.:
The Yard will restrict all hot works in the engine room,
accommodation cabin, and fuel oil tanks to be carried out only by
shipyard workers x x x.26

WG&A recognized and complied with this restrictive directive such

that, during the arrival conference on January 26, 2000, Dr. Joniga,
the vessels passage team leader in charge of its hotel department,
specifically requested KCSI to finish the hot works started by the
vessels contractors on the passenger accommodation decks. 27 This
was corroborated by the statements of the vessels hotel manager
Marcelo Rabe28 and the vessels quality control officer Joselito
Esteban.29 KCSI knew of the unfinished hot works in the passenger
accommodation areas. Its safety supervisor Esteban Cabalhug
confirmed that KCSI was aware "that the owners of this vessel (M/V
Superferry 3) had undertaken their own (hot) works prior to arrival
alongside (sic) on 26th January," and that no hot work permits could
thereafter be issued to WG&As own workers because "this was not
allowed for the Superferry 3." 30 This shows that Dr. Joniga had
authority only to request the performance of hot works by KCSIs
welders as needed in the repair of the vessel while on dry dock.

Fourth. At the time of the fire, Sevillejo was an employee of KCSI

and was subject to the latters direct control and supervision.

Third. KCSI welders covered by the Work Order performed hot works
on various areas of the M/V "Superferry 3," aside from its promenade
deck. This was a recognition of Dr. Jonigas authority to request the
conduct of hot works even on the passenger accommodation decks,
subject to the provision of the January 26, 2000 Work Order that
KCSI would supply welders for the promenade deck of the ship.

Fifth. There was a lapse in KCSIs supervision of Sevillejos work at

the time the fire broke out.

At the CIAC proceedings, it was adequately shown that between

February 4 and 6, 2000, the welders of KCSI: (a) did the welding
works on the ceiling hangers in the lobby of Deck A; (b) did the
welding and cutting works on the deck beam to access aircon ducts;
and (c) did the cutting and welding works on the protection bars at
the
tourist
dining
salon
of
Deck
B,31 at
a
rate
of P150.00/welder/hour.32 In fact, Orcullo, Project Superintendent of
KCSI, admitted that "as early as February 3, 2000 (five days before
the fire) [the Yard] had acknowledged Dr. Jonigas authority to order
such works or additional jobs."33
It is evident, therefore, that although the January 26, 2000 Work
Order was a special order for the supply of KCSI welders to the
promenade deck, it was not restricted to the promenade deck only.
The Work Order was only a special arrangement between KCSI and
WG&A that meant additional cost to the latter.

Indeed, KCSI was the employer of Sevillejopaying his salaries;

retaining the power and the right to discharge or substitute him with
another welder; providing him and the other welders with its
equipment; giving him and the other welders marching orders to
work on the vessel; and monitoring and keeping track of his and the
other welders activities on board, in view of the delicate nature of
their work.34 Thus, as such employee, aware of KCSIs Safety
Regulations on Vessels Afloat/Dry, which specifically provides that
"(n)o hotwork (welding/cutting works) shall be done on board [the]
vessel without [a] Safety Permit from KCSI Safety Section," 35 it was
incumbent upon Sevillejo to obtain the required hot work safety
permit before starting the work he did, including that done on Deck A
where the fire started.

It was established that no hot works could be hidden from or remain

undetected by KCSI because the welding cables and the gas hoses
emanating from the dock would give the hot works away. Moreover,
KCSI had roving fire watchmen and safety assistants who were
moving around the vessel.36 This was confirmed by Restituto Rebaca
(Rebaca), KCSIs Safety Supervisor, who actually spotted Sevillejo
on Deck A, two hours before the fire, doing his cutting work without a
hot work permit, a fire watchman, or a fire extinguisher. KCSI
contends that it did its duty when it prohibited Sevillejo from
continuing the hot work. However, it is noteworthy that, after
purportedly scolding Sevillejo for working without a permit and telling
him to stop until the permit was acquired and the other safety
measures were observed, Rebaca left without pulling Sevillejo out of
the work area or making sure that the latter did as he was told.
Unfortunately for KCSI, Sevillejo reluctantly proceeded with his
cutting of the bulkhead door at Deck A after Rebaca left, even
disregarding the 4-inch marking set, thus cutting the door level with
the deck, until the fire broke out.

This conclusion on the failure of supervision by KCSI was absolutely

supported by Dr. Eric Mullen of the Dr. J.H. Burgoyne & Partners
(International) Ltd., Singapore, KCSIs own fire expert, who observed
that
4.3. The foregoing would be compounded by Angelino Sevillejo
being an electric arc welder, not a cutter. The dangers of ignition
occurring as a result of the two processes are similar in that both
electric arc welding and hot cutting produce heat at the work area
and sparks and incendive material that can travel some distance
from the work area. Hence, the safety precautions that are expected
to be applied by the supervisor are the same for both types of work.
However, the quantity and incendivity of the spray from the hot
cutting are much greater than those of sparks from electric arc
welding, and it may well be that Angelino Sevillejo would not have a
full appreciation of the dangers involved. This made it all the more
important that the supervisor, who should have had such an
appreciation, ensured that the appropriate safety precautions were
carried out.37
In this light, therefore, Sevillejo, being one of the specially trained
welders specifically authorized by KCSI to do the hot works on M/V
"Superferry 3" to the exclusion of other workers, failed to comply with
the strict safety standards of KCSI, not only because he worked
without the required permit, fire watch, fire buckets, and
extinguishers, but also because he failed to undertake other
precautionary measures for preventing the fire. For instance, he
could have, at the very least, ensured that whatever combustible
material may have been in the vicinity would be protected from the
sparks caused by the welding torch. He could have easily removed
the life jackets from the ceiling void, as well as the foam mattresses,
and covered any holes where the sparks may enter.
Conjunctively, since Rebaca was already aware of the hazard, he
should have taken all possible precautionary measures, including
those above mentioned, before allowing Sevillejo to continue with his
hot work on Deck A. In addition to scolding Sevillejo, Rebaca merely
checked that no fire had started yet. Nothing more. Also, inasmuch
as KCSI had the power to substitute Sevillejo with another electric
arc welder, Rebaca should have replaced him.

There is negligence when an act is done without exercising the

competence that a reasonable person in the position of the actor
would recognize as necessary to prevent an unreasonable risk of
harm to another. Those who undertake any work calling for special
skills are required to exercise reasonable care in what they
do.38 Verily, there is an obligation all persons have to take due care
which, under ordinary circumstances of the case, a reasonable and
prudent man would take. The omission of that care constitutes
negligence. Generally, the degree of care required is graduated
according to the danger a person or property may be subjected to,
arising from the activity that the actor pursues or the instrumentality
that he uses. The greater the danger, the greater the degree of care
required. Extraordinary risk demands extraordinary care. Similarly,
the more imminent the danger, the higher degree of care
warranted.39 In this aspect,
KCSI failed to exercise the necessary degree of caution and
foresight called for by the circumstances.
We cannot subscribe to KCSIs position that WG&A, through Dr.
Joniga, was negligent.
On the one hand, as discussed above, Dr. Joniga had authority to
request the performance of hot works in the other areas of the
vessel. These hot works were deemed included in the January 26,
2000 Work Order and the Shiprepair Agreement. In the exercise of
this authority, Dr. Joniga asked Sevillejo to do the cutting of the
bulkhead door near the staircase of Deck A. KCSI was aware of what
Sevillejo was doing, but failed to supervise him with the degree of
care warranted by the attendant circumstances.
Neither can Dr. Joniga be faulted for not removing the life jackets
from the ceiling void for two reasons (1) the life jackets were not
even contributory to the occurrence of the fire; and (2) it was not
incumbent upon him to remove the same. It was shown during the
hearings before the CIAC that the removal of the life jackets would
not have made much of a difference. The fire would still have
occurred due to the presence of other combustible materials in the
area. This was the uniform conclusion of both WG&As 40 and
KCSIs41 fire experts. It was also proven during the CIAC

proceedings that KCSI did not see the life jackets as being in the
way of the hot works, thus, making their removal from storage
unnecessary.42
These circumstances, taken collectively, yield the inevitable
conclusion that Sevillejo was negligent in the performance of his
assigned task. His negligence was the proximate cause of the fire on
board M/V "Superferry 3." As he was then definitely engaged in the
performance of his assigned tasks as an employee of KCSI, his
negligence gave rise to the vicarious liability of his employer 43 under
Article 2180 of the Civil Code, which provides
Art. 2180. The obligation imposed by article 2176 is demandable not
only for ones own act or omission, but also for those of persons for
whom one is responsible.

B. The right of subrogation

Pioneer asseverates that there existed a total constructive loss so
that it had to pay WG&A the full amount of the insurance coverage
and, by operation of law, it was entitled to be subrogated to the rights
of WG&A to claim the amount of the loss. It further argues that the
limitation of liability clause found in the Shiprepair Agreement is null
and void for being iniquitous and against public policy.
KCSI counters that a total constructive loss was not adequately
proven by Pioneer, and that there is no proof of payment of the
insurance proceeds. KCSI insists on the validity of the limited-liability
clause up to P50,000,000.00, because WG&A acceded to the
provision when it executed the Shiprepair Agreement. KCSI also
claims that the salvage value of the vessel should be deducted from
whatever amount it will be made to pay to Pioneer.

xxxx
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.

We find in favor of Pioneer, subject to the claim of KCSI as to the

salvage value of M/V "Superferry 3."
In marine insurance, a constructive total loss occurs under any of the
conditions set forth in Section 139 of the Insurance Code, which
provides

xxxx
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.
KCSI failed to prove that it exercised the necessary diligence
incumbent upon it to rebut the legal presumption of its negligence in
supervising Sevillejo.44 Consequently, it is responsible for the
damages caused by the negligent act of its employee, and its liability
is primary and solidary. All that is needed is proof that the employee
has, by his negligence, caused damage to another in order to make
the employer responsible for the tortuous act of the former.45 From
the foregoing disquisition, there is ample proof of the employees
negligence.

Sec. 139. A person insured by a contract of marine insurance may

abandon the thing insured, or any particular portion hereof
separately valued by the policy, or otherwise separately insured, and
recover for a total loss thereof, when the cause of the loss is a peril
insured against:
(a) If more than three-fourths thereof in value is
actually lost, or would have to be expended to
recover it from the peril;
(b) If it is injured to such an extent as to reduce its
value more than three-fourths; x x x.
It appears, however, that in the execution of the insurance policies
over M/V "Superferry 3," WG&A and Pioneer incorporated by

reference the American Institute Hull Clauses 2/6/77, the Total Loss
Provision of which reads

US$3,800,000.00 or P170,611,260.00, the amount of repair expense

quoted by Simpson, Spence & Young.

Total Loss

In the face of this apparent conflict, we hold that Section 139 of the
Insurance Code should govern, because (1) Philippine law is
deemed incorporated in every locally executed contract; and (2) the
marine insurance policies in question expressly provided the
following:

In ascertaining whether the Vessel is a constructive Total Loss the

Agreed Value shall be taken as the repaired value and nothing in
respect of the damaged or break-up value of the Vessel or wreck
shall be taken into account.

I M PO R TAN T
There shall be no recovery for a constructive Total Loss hereunder
unless the expense of recovering and repairing the Vessel would
exceed the Agreed Value in policies on Hull and Machinery. In
making this determination, only expenses incurred or to be incurred
by reason of a single accident or a sequence of damages arising
from the same accident shall be taken into account, but expenses
incurred prior to tender of abandonment shall not be considered if
such are to be claimed separately under the Sue and Labor clause. x
x x.
In the course of the arbitration proceedings, Pioneer adduced in
evidence the estimates made by three (3) disinterested and qualified
shipyards for the cost of the repair of the vessel, specifically:
(a)P296,256,717.00, based on the Philippine currency equivalent of
the quotation dated April 17, 2000 turned in by Tsuneishi Heavy
Industries (Cebu) Inc.; (b) P309,780,384.15, based on the Philippine
currency equivalent of the quotation of Sembawang Shipyard Pte.
Ltd., Singapore; and (c)P301,839,974.00, based on the Philippine
currency equivalent of the quotation of Singapore Technologies
Marine Ltd. All the estimates showed that the repair expense would
exceedP270,000,000.00, the amount equivalent to of the vessels
insured value of P360,000,000.00. Thus, WG&A opted to abandon
M/V "Superferry 3" and claimed from Pioneer the full amount of the
policies. Pioneer paid WG&As claim, and now demands from KCSI
the
full
amount
of P360,000,000.00,
by
virtue
of
subrogation.1avvphi1
KCSI denies the liability because, aside from its claim that it cannot
be held culpable for negligence resulting in the destructive fire, there
was no constructive total loss, as the amount of damage was only

This insurance is subject to English jurisdiction, except in the event

that loss or losses are payable in the Philippines, in which case if the
said laws and customs of England shall be in conflict with the laws of
the Republic of the Philippines, then the laws of the Republic of the
Philippines shall govern.(Underscoring supplied.)
The CA held that Section 139 of the Insurance Code is merely
permissive on account of the word "may" in the provision. This is
incorrect. Properly considered, the word "may" in the provision is
intended to grant the insured (WG&A) the option or discretion to
choose the abandonment of the thing insured (M/V "Superferry 3"),
or any particular portion thereof separately valued by the policy, or
otherwise separately insured, and recover for a total loss when the
cause of the loss is a peril insured against. This option or discretion
is expressed as a right in Section 131 of the same Code, to wit:
Sec. 131. A constructive total loss is one which gives to a person
insured a right to abandon under Section one hundred thirty-nine.
It cannot be denied that M/V "Superferry 3" suffered widespread
damage from the fire that occurred on February 8, 2000, a covered
peril under the marine insurance policies obtained by WG&A from
Pioneer. The estimates given by the three disinterested and qualified
shipyards show that the damage to the ship would
exceed P270,000,000.00, or of the total value of the policies
P360,000,000.00. These estimates constituted credible and
acceptable proof of the extent of the damage sustained by the
vessel. It is significant that these estimates were confirmed by the

Adjustment Report dated June 5, 2000 submitted by Richards Hogg

Lindley (Phils.), Inc., the average adjuster that Pioneer had enlisted
to verify and confirm the extent of the damage. The Adjustment
Report verified and confirmed that the damage to the vessel
amounted to a constructive total loss and that the claim
for P360,000,000.00 under the policies was compensable. 46 It is also
noteworthy that KCSI did not cross-examine Henson Lim, Director of
Richards Hogg, whose affidavit-direct testimony submitted to the
CIAC confirmed that the vessel was a constructive total loss.
Considering the extent of the damage, WG&A opted to abandon the
ship and claimed the value of its policies. Pioneer, finding the claim
compensable, paid the claim, with WG&A issuing a Loss and
Subrogation Receipt evidencing receipt of the payment of the
insurance proceeds from Pioneer. On this note, we find as
unacceptable the claim of KCSI that there was no ample proof of
payment simply because the person who signed the Receipt
appeared to be an employee of Aboitiz Shipping Corporation. 47 The
Loss and Subrogation Receipt issued by WG&A to Pioneer is the
best evidence of payment of the insurance proceeds to the former,
and no controverting evidence was presented by KCSI to rebut the
presumed authority of the signatory to receive such payment.
On the matter of subrogation, Article 2207 of the Civil Code provides

Art. 2207. If the plaintiffs property has been insured and he has
received indemnity from the insurance company for the injury or loss
arising out of the wrong or breach of contract complained of, the
insurance company shall be subrogated to the rights of the insured
against the wrongdoer or the person who has violated the contract. If
the amount paid by the insurance company does not fully cover the
injury or loss, the aggrieved party shall be entitled to recover the
deficiency from the person causing the loss or injury.
Subrogation is the substitution of one person by another with
reference to a lawful claim or right, so that he who is substituted
succeeds to the rights of the other in relation to a debt or claim,
including its remedies or securities. The principle covers a situation
wherein an insurer has paid a loss under an insurance policy is

entitled to all the rights and remedies belonging to the insured

against a third party with respect to any loss covered by the policy. It
contemplates full substitution such that it places the party subrogated
in the shoes of the creditor, and he may use all means that the
creditor could employ to enforce payment.48
We have held that payment by the insurer to the insured operates as
an equitable assignment to the insurer of all the remedies that the
insured may have against the third party whose negligence or
wrongful act caused the loss. The right of subrogation is not
dependent upon, nor does it grow out of, any privity of contract. It
accrues simply upon payment by the insurance company of the
insurance claim. The doctrine of subrogation has its roots in equity. It
is designed to promote and to accomplish justice; and is the mode
that equity adopts to compel the ultimate payment of a debt by one
who, in justice, equity, and good conscience, ought to pay.49
We cannot accept KCSIs insistence on upholding the validity Clause
20, which provides that the limit of its liability is only up
to P50,000,000.00; nor of Clause 22(a), that KCSI stands as a coassured in the insurance policies, as found in the Shiprepair
Agreement.
Clauses 20 and 22(a) of the Shiprepair Agreement are without
factual and legal foundation. They are unfair and inequitable under
the premises. It was established during arbitration that WG&A did not
voluntarily and expressly agree to these provisions. Engr. Elvin F.
Bello, WG&As fleet manager, testified that he did not sign the fineprint portion of the Shiprepair Agreement where Clauses 20 and
22(a) were found, because he did not want WG&A to be bound by
them. However, considering that it was only KCSI that had shipyard
facilities large enough to accommodate the dry docking and repair of
big vessels owned by WG&A, such as M/V "Superferry 3," in Cebu,
he had to sign the front portion of the Shiprepair Agreement;
otherwise, the vessel would not be accepted for dry docking. 50
Indeed, the assailed clauses amount to a contract of adhesion
imposed on WG&A on a "take-it-or-leave-it" basis. A contract of
adhesion is so-called because its terms are prepared by only one
party, while the other party merely affixes his signature signifying his

adhesion thereto. Although not invalid, per se, a contract of adhesion

is void when the weaker party is imposed upon in dealing with the
dominant bargaining party, and its option is reduced to the alternative
of "taking it or leaving it," completely depriving such party of the
opportunity to bargain on equal footing.51
Clause 20 is also a void and ineffectual waiver of the right of WG&A
to be compensated for the full insured value of the vessel or, at the
very least, for its actual market value. There was clearly no intention
on the part of WG&A to relinquish such right. It is an elementary rule
that a waiver must be positively proved, since a waiver by implication
is not normally countenanced. The norm is that a waiver must not
only be voluntary, but must have been made knowingly, intelligently,
and with sufficient awareness of the relevant circumstances and
likely consequences. There must be persuasive evidence to show an
actual intention to relinquish the right. 52 This has not been
demonstrated in this case.

insurance policy. Otherwise, any claim for loss or damage under the
policy would be rendered nugatory. WG&A could not have intended
such a result.54
Nevertheless, we concur with the position of KCSI that the salvage
value of the damaged M/V "Superferry 3" should be taken into
account in the grant of any award. It was proven before the CIAC
that the machinery and the hull of the vessel were separately sold
for P25,290,000.00 (or US$468,333.33) and US$363,289.50,
respectively. WG&As claim for the upkeep of the wreck until the
same were sold amounts to P8,521,737.75 (or US$157,809.96), to
be deducted from the proceeds of the sale of the machinery and the
hull, for a net recovery of US$673,812.87, or equivalent
toP30,252,648.09, at P44.8977/$1, the prevailing exchange rate
when the Request for Arbitration was filed. Not considering this
salvage value in the award would amount to unjust enrichment on
the part of Pioneer.

Likewise, Clause 20 is a stipulation that may be considered contrary

to public policy. To allow KCSI to limit its liability to
only P50,000,000.00, notwithstanding the fact that there was a
constructive total loss in the amount of P360,000,000.00, would
sanction the exercise of a degree of diligence short of what is
ordinarily required. It would not be difficult for a negligent party to
escape liability by the simple expedient of paying an amount very
much lower than the actual damage or loss sustained by the other.53

C. On the imposition of interest

Along the same vein, Clause 22(a) cannot be upheld. The intention
of the parties to make each other a co-assured under an insurance
policy is to be gleaned principally from the insurance contract or
policy itself and not from any other contract or agreement, because
the insurance policy denominates the assured and the beneficiaries
of the insurance contract. Undeniably, the hull and machinery
insurance procured by WG&A from Pioneer named only the former
as the assured. There was no manifest intention on the part of
WG&A to constitute KCSI as a co-assured under the policies. To
have deemed KCSI as a co-assured under the policies would have
had the effect of nullifying any claim of WG&A from Pioneer for any
loss or damage caused by the negligence of KCSI. No ship owner
would agree to make a ship repairer a co-assured under such

D. On the payment for the cost of arbitration

Pursuant to our ruling in Eastern Shipping Lines, Inc. v. Court of

Appeals,55 the award in favor of Pioneer in the amount
of P350,146,786.89 should earn interest at 6% per annum from the
filing of the case until the award becomes final and executory.
Thereafter, the rate of interest shall be 12% per annum from the date
the award becomes final and executory until its full satisfaction.

It is only fitting that both parties should share in the burden of the
cost of arbitration, on a pro rata basis. We find that Pioneer had a
valid reason to institute a suit against KCSI, as it believed that it was
entitled to claim reimbursement of the amount it paid to WG&A.
However, we disagree with Pioneer that only KCSI should shoulder
the arbitration costs. KCSI cannot be faulted for defending itself for
perceived wrongful acts and conditions. Otherwise, we would be
putting a price on the right to litigate on the part of Pioneer.

WHEREFORE, the Petition of Pioneer Insurance and Surety

Corporation in G.R. No. 180896-97 and the Petition of Keppel Cebu
Shipyard, Inc. in G.R. No. 180880-81 are PARTIALLY GRANTED
and the Amended Decision dated December 20, 2007 of the Court of
Appeals is MODIFIED. Accordingly, KCSI is ordered to pay Pioneer
the amount of P360,000,000.00 less P30,252,648.09, equivalent to
the salvage value recovered by Pioneer from M/V "Superferry 3," or
the net total amount of P329,747,351.91, with six percent (6%)
interest per annum reckoned from the time the Request for
Arbitration was filed until this Decision becomes final and executory,
plus twelve percent (12%) interest per annum on the said amount or
any balance thereof from the finality of the Decision until the same
will have been fully paid. The arbitration costs shall be borne by both
parties on a pro rata basis. Costs against KCSI.
SO ORDERED.

G.R. No. 171636

April 7, 2009

NORMAN
A.
vs.
PEOPLE OF THE PHILIPPINES, Respondent.

GAID, Petitioner,

(Dayata), was seen by eyewitness Artman Bongolto (Bongolto)

sitting near a store on the left side of the road. From where he was at
the left side of the road, Dayata raised his left hand to flag down
petitioners jeepney7 which was traveling on the right lane of the
road.8 However, neither did petitioner nor the conductor, Dennis
Mellalos (Mellalos), saw anybody flagging down the jeepney to ride
at that point.9

Before the Court is a petition for review on certiorari 1 assailing the 12

July 2005 Decision2 of the Court of Appeals and its subsequent
Resolution3 denying petitioners motion for reconsideration.

The next thing Bongalto saw, Dayatas feet was pinned to the rear
wheel of the jeepney, after which, he laid flat on the ground behind
the jeepney.10 Another prosecution witness, Usaffe Actub (Actub),
who was also situated on the left side of the street but directly in front
of the school gate, heard "a strong impact coming from the jeep
sounding as if the driver forced to accelerate in order to hurdle an
obstacle."11 Dayata was then seen lying on the ground 12and caught in
between the rear tires.13 Petitioner felt that the left rear tire of the
jeepney had bounced and the vehicle tilted to the right side. 14

DECISION
TINGA, J.:

Petitioner Norman A. Gaid was charged with the crime of reckless

imprudence resulting in homicide in an information which reads as
follow:
That on or about 12:00 high noon of October 25, 2001, infront of the
Laguindingan National High School, Poblacion, Laguindingan,
Misamis Oriental, Philippines and within the jurisdiction of this
Honorable Court, the said accused mentioned above while driving a
passengers jeepney color white bearing plate no. KVG-771 owned
by barangay captain Levy Etom has no precautionary measure to
preempt the accident, did then and there willfully, unlawfully and
feloniously ran [sic] over Michael Dayata resulting of [sic] his
untimely death as pronounced by the attending physician of Northern
Mindanao Medical Center Hospital, Cagayan de Oro City.
CONTRARY TO LAW.4
Petitioner entered a not guilty plea. Thereafter, trial ensued.
The antecedent facts are undisputed.
At around 12:00 noon on 25 October 2001, petitioner was driving his
passenger jeepney along a two-lane road where the Laguindingan
National High School is located toward the direction of Moog in
Misamis Oriental. His jeepney was filled to seating capacity. 5 At the
time several students were coming out of the school
premises.6Meanwhile, a fourteen year-old student, Michael Dayata

Mellalos heard a shout that a boy was run over, prompting him to
jump off the jeepney to help the victim. Petitioner stopped and saw
Mellalos carrying the body of the victim. 15 Mellalos loaded the victim
on a motorcycle and brought him to the hospital. Dayata was first
brought to the Laguindingan Health Center, but it was closed.
Mellalos then proceeded to the El Salvador Hospital. Upon advice of
its doctors, however, Dayata was brought to the Northern Mindanao
Medical Center where he was pronounced dead on arrival. 16
Dr. Tammy Uy issued an autopsy report stating cranio-cerebral
injuries as the cause of death.17 She testified that the head injuries of
Dayata could have been caused by having run over by the jeepney.18
The Municipal Circuit Trial Court (MCTC) of Laguindingan 19 found
petitioner guilty beyond reasonable doubt of the crime charged. The
lower court held petitioner negligent in his driving considering that
the victim was dragged to a distance of 5.70 meters from the point of
impact. He was also scored for "not stopping his vehicle after
noticing that the jeepneys left rear tire jolted causing the vehicle to
tilt towards the right." 20 On appeal, the Regional Trial Court
(RTC)21 affirmed in toto the decision of the MCTC.

The Court of Appeals affirmed the trial courts judgment with

modification in that it found petitioner guilty only of simple negligence
resulting in homicide.1avvphi1.zw+
The Court of Appeals exonerated petitioner from the charge of
reckless imprudence resulting to homicide on the ground that he was
not driving recklessly at the time of the accident. However, the
appellate court still found him to be negligent when he failed "to
promptly stop his vehicle to check what caused the sudden jotting of
its rear tire."22
In its 6 February 2006 Resolution, the Court of Appeals denied
petitioners motion for reconsideration.23
Hence, the instant petition.
Petitioner submits that the Court of Appeals erred in finding that
"there is (sic) absolutely lack of precaution on the part of the
petitioner when he continued even after he had noticed that the left
rear tire and the jeep tilted to its right side." 24 Petitioner stressed that
he, in fact, stopped his jeep when its left rear tire bounced and upon
hearing that somebody had been ran over.
Moreover, petitioner asserts that the Court of Appeals committed a
grave abuse of discretion in convicting him of the offense of simple
negligence resulting in homicide. Assuming arguendo that he failed
to promptly stop his vehicle, petitioner maintains that no prudent man
placed in the same situation could have foreseen the vehicular
accident or could have stopped his vehicle in time when its left rear
tire bounced due to the following reasons: (1) the victim was only a
trespasser; (2) petitioners attention was focused on the road and the
students outside the schools gate; and (3) the jeepney was fully
loaded with passengers and cargoes and it was impossible for the
petitioner to promptly stop his vehicle.25
The Office of the Solicitor-General (OSG) maintained that petitioner
was negligent when he continued to run towards the direction of
Moog, Laguindingan, dragging the victim a few meters from the point
of impact, despite hearing that a child had been run over.26

The presence or absence of negligence on the part of petitioner is

determined by the operative events leading to the death of Dayata
which actually comprised of two phases or stages. The first stage
began when Dayata flagged down the jeepney while positioned on
the left side of the road and ended when he was run over by the
jeepney. The second stage covered the span between the moment
immediately after the victim was run over and the point when
petitioner put the jeepney to a halt.
During the first stage, petitioner was not shown to be negligent.
Reckless imprudence consists of voluntarily doing or failing to do,
without malice, an act from which material damage results by reason
of an inexcusable lack of precaution on the part of the person
performing or failing to perform such act.27
In Manzanares v. People,28 this Court convicted petitioner of the
crime of reckless imprudence resulting in multiple homicide and
serious physical injuries when he was found driving the Isuzu truck
very fast before it smashed into a jeepney.29 Likewise, in
Pangonorom v. People,30 a public utility driver, who was driving very
fast, failed to slow down and hit a swerving car. He was found
negligent by this Court.
In the instant case, petitioner was driving slowly at the time of the
accident, as testified to by two eyewitnesses. Prosecution witness
Actub affirmed this fact on cross-examination, thus:
ATTY. MACUA:
(to the witness)
Q Mr. Witness, when the passenger jeepney passed by the
gate of the Laguindingan National High School, is it running
slowly, am I correct?
A Yes, he was running slowly.31
The slow pace of the jeepney was seconded by Mellalos:

Q You testified that you heard somebody outside from the

vehicle shouting that a boy was ran over, am I correct?

when he noticed the bouncing of his vehicle. Verily, the appellate

court was referring to the second stage of the incident.

A Yes, Sir.

Negligence has been defined as the failure to observe for the

protection of the interests of another person that degree of care,
precaution, and vigilance which the circumstances justly demand,
whereby such other person suffers injury.34

Q Now, before you heard that shouting, did you observe any
motion from the vehicle?
A The jeep was moving slowly and I noticed that there was
something that [sic] the jeep a little bit bounced up as if a
hump thats the time I heard a shout from outside. 32
Petitioner stated that he was driving at no more than 15 kilometers
per hour.33
It appears from the evidence Dayata came from the left side of the
street. Petitioner, who was driving the jeepney on the right lane, did
not see the victim flag him down. He also failed to see him go near
the jeepney at the left side. Understandably, petitioner was focused
on the road ahead. In Dayatas haste to board the jeep which was
then running, his feet somehow got pinned to the left rear tire, as
narrated by Bongolto. Actub only saw Dayata after he heard a strong
impact coming from the jeep.
With the foregoing facts, petitioner can not be held liable during the
first stage. Specifically, he cannot be held liable for reckless
imprudence resulting in homicide, as found by the trial court. The
proximate cause of the accident and the death of the victim was
definitely his own negligence in trying to catch up with the moving
jeepney to get a ride.
In the instant case, petitioner had exercised extreme precaution as
he drove slowly upon reaching the vicinity of the school. He cannot
be faulted for not having seen the victim who came from behind on
the left side.
However, the Court of Appeals found petitioner guilty of simple
negligence resulting in homicide for failing to stop driving at the time

The elements of simple negligence: are (1) that there is lack of

precaution on the part of the offender; and (2) that the damage
impending to be caused is not immediate or the danger is not clearly
manifest.35
The standard test in determining whether a person is negligent in
doing an act whereby injury or damage results to the person or
property of another is this: could a prudent man, in the position of the
person to whom negligence is attributed, foresee harm to the person
injured as a reasonable consequence of the course actually
pursued? If so, the law imposes a duty on the actor to refrain from
that course or to take precautions to guard against its mischievous
results, and the failure to do so constitutes negligence. Reasonable
foresight of harm, followed by the ignoring of the admonition born of
this provision, is always necessary before negligence can be held to
exist.36
In Philippine National Construction Corporation v. Court of
Appeals,37 the petitioner was the franchisee that operates and
maintains the toll facilities in the North and South Luzon Toll
Expressways. It failed to exercise the requisite diligence in
maintaining the NLEX safe for motorists. The lighted cans and lane
dividers on the highway were removed even as flattened sugarcanes
lay scattered on the ground. The highway was still wet from the juice
and sap of the flattened sugarcanes. The petitioner should have
foreseen that the wet condition of the highway would endanger
motorists passing by at night or in the wee hours of the
morning.38 Consequently, it was held liable for damages.
In an American case, Hernandez v. Lukas,39 a motorist traveling
within the speed limit and did all was possible to avoid striking a child
who was then six years old only. The place of the incident was a

neighborhood where children were playing in the parkways on prior

occasions. The court ruled that it must be still proven that the driver
did not exercise due care. The evidence showed that the driver was
proceeding in lawful manner within the speed limit when the child ran
into the street and was struck by the drivers vehicle. Clearly, this
was an emergency situation thrust upon the driver too suddenly to
avoid.
In this case, the courts below zeroed in on the fact that petitioner did
not stop the jeepney when he felt the bouncing of his vehicle, a
circumstance which the appellate court equates with negligence.
Petitioner contends that he did not immediately stop because he did
not see anybody go near his vehicle at the time of the incident. 40
Assuming arguendo that petitioner had been negligent, it must be
shown that his negligence was the proximate cause of the accident.
Proximate cause is defined as that which, in the natural and
continuous sequence, unbroken by any efficient, intervening cause,
produces the injury, and without which the result would not have
occurred.41 In order to establish a motorist's liability for the negligent
operation of a vehicle, it must be shown that there was a direct
causal connection between such negligence and the injuries or
damages complained of. Thus, negligence that is not a substantial
contributing factor in the causation of the accident is not the
proximate cause of an injury.42
The head injuries sustained by Dayata at the point of impact proved
to be the immediate cause of his death, as indicated in the postmortem findings.43 His skull was crushed as a result of the accident.
Had petitioner immediately stopped the jeepney, it would still not
have saved the life of the victim as the injuries he suffered were fatal.
The evidence on record do not show that the jeepney dragged the
victim after he was hit and run over by the jeepney. Quite the
contrary, the evidence discloses that the victim was not dragged at
all. In fact, it is the other way around. Bongolto narrated that after the
impact, he saw Dayata left behind the jeepney.44 Actub saw Dayata
in a prone position and bleeding within seconds after impact. 45 Right
after the impact, Mellalos immediately jumped out of the jeepney and

saw the victim lying on the ground. 46 The distance of 5.70 meters is
the length of space between the spot where the victim fell to the
ground and the spot where the jeepney stopped as observed by the
trial judge during the ocular inspection at the scene of the accident. 47
Moreover, mere suspicions and speculations that the victim could
have lived had petitioner stopped can never be the basis of a
conviction in a criminal case.48 The Court must be satisfied that the
guilt of the accused had been proven beyond reasonable
doubt.49 Conviction must rest on nothing less than a moral certainty
of the guilt of the accused. The overriding consideration is not
whether the court doubts the innocence of the accused but whether it
entertains doubt as to his guilt.50
Clearly then, the prosecution was not able to establish that the
proximate cause of the victims death was petitioners alleged
negligence, if at all, even during the second stage of the incident.
If at all again, petitioners failure to render assistance to the victim
would constitute abandonment of ones victim punishable under
Article 275 of the Revised Penal Code. However, the omission is not
covered by the information. Thus, to hold petitioner criminally liable
under the provision would be tantamount to a denial of due process.
Therefore, petitioner must be acquitted at least on reasonable doubt.
The award of damages must also be deleted pursuant to Article 2179
of the Civil Code which states that when the plaintiffs own
negligence was the immediate and proximate cause of his injury, he
cannot recover damages.
WHEREFORE, the petition is GRANTED. The decision of the Court
of Appeals dated 12 July 2005 is REVERSED and SET ASIDE.
Petitioner Norman A. Gaid is ACQUITTED of the crime of Simple
Negligence Resulting in Homicide as found by the Court of Appeals
and of the charge of Reckless Imprudence Resulting in Homicide in
Criminal Case No. 1937 of the MCTC of Laguindingan, Misamis
Oriental.
SO ORDERED.

G.R. No. 173146

November 25, 2009

AGUSAN DEL NORTE ELECTRIC COOPERATIVE, INC. (ANECO),

represented by its Manager ROMEO O. DAGANI, Petitioner,
vs.
ANGELITA BALEN and SPOUSES HERCULES and RHEA
LARIOSA, Respondents.

DECISION
NACHURA, J.:
On appeal is the February 21, 2006 Decision 1 of the Court of
Appeals (CA) in CA-G.R. CV No. 66153, affirming the December 2,
1999 Decision2 of the Regional Trial Court (RTC) of Butuan City,
Branch 2, as well as its subsequent Resolution, 3 denying petitioners
motion for reconsideration.
Petitioner Agusan del Norte Electric Cooperative, Inc. (ANECO) is a
duly organized and registered consumers cooperative, engaged in
supplying electricity in the province of Agusan del Norte and in
Butuan City. In 1981, ANECO installed an electric post in Purok 4,
Ata-atahon, Nasipit, Agusan del Norte, with its main distribution line
of 13,000 kilovolts traversing Angelita Balens (Balens) residence.
Balens father, Miguel, protested the installation with the District
Engineers Office and with ANECO, but his protest just fell on deaf
ears.
On July 25, 1992, Balen, Hercules Lariosa (Lariosa) and Celestino
Exclamado (Exclamado) were electrocuted while removing the
television antenna (TV antenna) from Balens residence. The
antenna pole touched ANECOs main distribution line which resulted
in their electrocution. Exclamado died instantly, while Balen and
Lariosa suffered extensive third degree burns.
Balen and Lariosa (respondents) then lodged a complaint 4 for
damages against ANECO with the RTC of Butuan City.
ANECO filed its answer5 denying the material averments in the
complaint, and raising lack of cause of action as a defense. It posited
that the complaint did not allege any wrongful act on the part of
ANECO, and that respondents acted with gross negligence and
evident bad faith. ANECO, thus, prayed for the dismissal of the
complaint.

WHEREFORE, judgment is hereby rendered in favor of

[respondents] and against [ANECO], directing, ordaining and
ordering
a) That [ANECO] pay [respondent] Angelita E. Balen the sum
of One Hundred Thousand Pesos (PHP100,000.00) and
[respondent] Hercules A. Lariosa the sum of Seventy
Thousand Pesos (PHP70,000.00) as reimbursement of their
expenses
for
hospitalization,
medicines,
doctors
professional fees, transportation and miscellaneous
expenses;
b) That [ANECO] pay [respondent] Angelita E. Balen the sum
of Seventy Two Thousand Pesos (PHP72,000.00) for loss of
income for three (3) years;
c) That [ANECO] pay [respondent] Angelita E. Balen the sum
of Fifteen Thousand Pesos (PHP15,000.00) and another
Fifteen Thousand Pesos (PHP15,000.00) to [respondent]
Hercules A. Lariosa as moral damages, or a total of Thirty
Thousand Pesos (PHP30,000.00);
d) That [ANECO] pay [respondents] Angelita E. Balen and
Hercules A. Lariosa Two Thousand Pesos (PHP2,000.00)
each or a total of Four Thousand Pesos (PHP4,000.00) as
exemplary damages;
e) That [ANECO] pay [respondents] Angelita E. Balen and
Hercules A. Lariosa Eight Thousand Pesos (PHP8,000.00)
each or a total of Sixteen Thousand Pesos [(PHP
16,000.00)] as attorneys fees and the sum of Two Thousand
Pesos (PHP2,000.00) each or a total of Four Thousand
Pesos (PHP4,000.00) for expense of litigation;
f) That [ANECO] pay the costs of this suit;
g) The dismissal of [ANECOs] counterclaim; [and]

After trial, the RTC rendered a Decision,6 disposing that:

h) That the amount of Thirteen Thousand Pesos

(PHP13,000.00) given by ANECO to [respondent] Angelita E.
Balen and acknowledged by the latter to have been received
(pre-trial order, record[s,] pp. 36-37) must be deducted from
the herein judgment debt.

was respondents negligence in removing the TV antenna and in

allowing the pole to touch the high-tension wires. The findings of the
RTC, it argues, patently run counter to the facts clearly established
by the records. ANECO, thus, contends that the CA committed
reversible error in sustaining the findings of the RTC.

SO ORDERED.7

The argument lacks merit.

On appeal, the CA affirmed in toto the RTC ruling. It declared that the
proximate cause of the accident could not have been the act or
omission of respondents, who were not negligent in taking down the
antenna. The proximate cause of the injury sustained by respondents
was ANECOs negligence in installing its main distribution line over
Balens residence. ANECO should have exercised caution, care and
prudence in installing a high-voltage line over a populated area, or it
should have sought an unpopulated area for the said line to traverse.
The CA further noted that ANECO failed to put a precautionary sign
for installation of wires over 600 volts, which is required by the
Philippine Electrical Code.8

Negligence is defined as the failure to observe for the protection of

the interests of another person that degree of care, precaution, and
vigilance which the circumstances justly demand, by reason of which
such other person suffers injury. The test to determine the existence
of negligence in a particular case may be stated as follows: Did the
defendant in the performance of the alleged negligent act use
reasonable care and caution which an ordinary person would have
used in the same situation? If not, then he is guilty of negligence.
The existence of negligence in a given case is not determined by
reference to the personal judgment of the actor in the situation
before him. The law considers what would be reckless, blameworthy,
or negligent in the man of ordinary intelligence and prudence and
determines liability by that norm.11

The CA disposed, thus:

WHEREFORE, premises considered, the assailed Decision is
hereby AFFIRMED in toto.
SO ORDERED.9
ANECO filed a motion for reconsideration, but the CA denied it on
May 26, 2006.10
Hence, this appeal.
Indisputably, Exclamado died and respondents sustained injuries
from being electrocuted by ANECOs high-tension wire. These facts
are borne out by the records and conceded by the parties.
ANECO, however, denied liability, arguing that the mere presence of
the high-tension wires over Balens residence did not cause
respondents injuries. The proximate cause of the accident, it claims,

The issue of who, between the parties, was negligent is a factual

issue that this Court cannot pass upon, absent any whimsical or
capricious exercise of judgment by the lower courts or an ample
showing that they lacked any basis for their conclusions. 12 The
unanimity of the CA and the trial court in their factual ascertainment
that ANECOs negligence was the proximate cause of the injuries
sustained by respondents bars us from supplanting their findings and
substituting them with our own. The function of this Court is limited to
the review of the appellate courts alleged errors of law. We are not
required to weigh all over again the factual evidence already
considered in the proceedings below.13 ANECO has not shown that it
is entitled to be excepted from this rule. It has not sufficiently
demonstrated any special circumstances to justify a factual review.
That ANECOs negligence was the proximate cause of the injuries
sustained by respondents was aptly discussed by the CA, which we
quote:

The evidence extant in the record shows that the house of MIGUEL
BALEN already existed before the high voltage wires were installed
by ANECO above it. ANECO had to follow the minimum clearance
requirement of 3,050 under Part II of the Philippine Electrical Code
for the installation of its main distribution lines above the roofs of
buildings or houses. Although ANECO followed said clearance
requirement, the installed lines were high voltage, consisting of open
wires, i.e., not covered with insulators, like rubber, and charged with
13, 200 volts. Knowing that it was installing a main distribution line of
high voltage over a populated area, ANECO should have practiced
caution, care and prudence by installing insulated wires, or else
found an unpopulated area for the said line to traverse. The court a
quo correctly observed that ANECO failed to show any compelling
reason for the installation of the questioned wires over MIGUEL
BALENs house. That the clearance requirements for the installation
of said line were met by ANECO does not suffice to exonerate it from
liability. Besides, there is scarcity of evidence in the records showing
that ANECO put up the precautionary sign: "WARNING-HIGH
VOLTAGE-KEEP OUT" at or near the house of MIGUEL BALEN as
required by the Philippine Electrical Code for installation of wires
over 600 volts.1avvphi1

the time of his misconduct are legally caused by his breach of duty x
x x.

Contrary to its stance, it is in fact ANECO which provided the

proximate cause of the injuries of [respondents].

xxxx

One of the tests for determining the existence of proximate cause is

the foreseeability test, viz.:
x x x Where the particular harm was reasonably foreseeable at the
time of the defendants misconduct, his act or omission is the legal
cause thereof. Foreseeability is the fundamental test of the law of
negligence. To be negligent, the defendant must have acted or failed
to act in such a way that an ordinary reasonable man would have
realized that certain interests of certain persons were unreasonably
subjected to a general but definite class of risk which made the
actors conduct negligent, it is obviously the consequence for the
actor must be held legally responsible. Otherwise, the legal duty is
entirely defeated. Accordingly, the generalization may be formulated
that all particular consequences, that is, consequences which occur
in a manner which was reasonably foreseeable by the defendant at

Thus applying aforecited test, ANECO should have reasonably

foreseen that, even if it complied with the clearance requirements
under the Philippine Electrical Code in installing the subject high
tension wires above MIGUEL BALENs house, still a potential risk
existed that people would get electrocuted, considering that the wires
were not insulated.
Above conclusion is further strengthened by the verity that MIGUEL
BALEN had complained about the installation of said line, but
ANECO did not do anything about it. Moreover, there is scant
evidence showing that [respondents] knew beforehand that the lines
installed by ANECO were live wires.
Otherwise stated, the proximate cause of the electrocution of
[respondents] was ANECOs installation of its main distribution line of
high voltage over the house of MIGUEL BALEN, without which the
accident would not have occurred.

x x x the taking down by [respondents] of the antenna in MIGUEL

BALENs house would not have caused their electrocution were it not
for the negligence of ANECO in installing live wires over the roof of
the said house.14
Clearly, ANECOs act of leaving unprotected and uninsulated the
main distribution line over Balens residence was the proximate
cause of the incident which claimed Exclamados life and injured
respondents Balen and Lariosa. Proximate cause is defined as any
cause that produces injury in a natural and continuous sequence,
unbroken by any efficient intervening cause, such that the result
would not have occurred otherwise.15
ANECOs contention that the accident happened only eleven (11)
years after the installation of the high-voltage wire cannot serve to

absolve or mitigate ANECOs liability. As we held in Benguet Electric

Cooperative, Inc. v. Court of Appeals:16
[A]s an electric cooperative holding the exclusive franchise in
supplying electric power to the towns of Benguet province, its
primordial concern is not only to distribute electricity to its
subscribers but also to ensure the safety of the public by the proper
maintenance and upkeep of its facilities. It is clear to us then that
BENECO was grossly negligent in leaving unprotected and
uninsulated the splicing point between the service drop line and the
service entrance conductor, which connection was only eight (8) feet
from the ground level, in violation of the Philippine Electrical Code.
BENECO's contention that the accident happened only on January
14, 1985, around seven (7) years after the open wire was found
existing in 1978, far from mitigating its culpability, betrays its gross
neglect in performing its duty to the public. By leaving an open live
wire unattended for years, BENECO demonstrated its utter disregard
for the safety of the public. Indeed, Jose Bernardo's death was an
accident that was bound to happen in view of the gross negligence of
BENECO.
Indeed, both the trial and the appellate courts findings, which are
amply substantiated by the evidence on record, clearly point to
ANECOs negligence as the proximate cause of the damages
suffered by respondents Balen and Lariosa. No adequate reason has
been given to overturn this factual conclusion. In fine, the CA
committed no reversible error in sustaining the RTC.
WHEREFORE, the petition is DENIED. The assailed Decision and
Resolution of the Court of Appeals in CA-G.R. CV No. 66153 are
AFFIRMED. Costs against petitioner.
SO ORDERED.

G.R. No. 180440

December 5, 2012

DR. GENEVIEVE L. HUANG, Petitioner,

vs.
PHILIPPINE HOTELIERS, INC., DUSIT THANI PUBLIC CO., LTD.
And FIRST LEPANTO TAISHO INSURANCE
CORPORATION, Respondents.

DECISION
PEREZ, J.:
For this Courts resolution is a Petition for Review on Certiorari under
Rule 45 of the Rules of Court, assailing the Decision 1 of the Court of
Appeals in CA-G.R. CV No. 87065 dated 9 August 2007, affirming
the Decision2 of Branch 56 of the Regional Trial Court (RTC) of
Makati City in Civil Case No. 96-1367 dated 21 February 2006,
dismissing for lack of merit herein petitioner Dr. Genevieve L.
Huangs Complaint for Damages. Assailed as well is the Court of
Appeals Resolution3 dated 5 November 2007 denying for lack of
merit petitioners Motion for Reconsideration.
This case stemmed from a Complaint for Damages filed on 28
August 1996 by petitioner Dr. Genevieve L. Huang 4against herein
respondents Philippine Hoteliers, Inc. (PHI) 5 and Dusit Thani Public
Co., Ltd. (DTPCI),6 as owners of Dusit Thani Hotel Manila (Dusit
Hotel);7 and co-respondent First Lepanto Taisho Insurance
Corporation (First Lepanto),8 as insurer of the aforesaid hotel. The
said Complaint was premised on the alleged negligence of
respondents PHI and DTPCIs staff, in the untimely putting off all the
lights within the hotels swimming pool area, as well as the locking of
the main entrance door of the area, prompting petitioner to grope for
a way out. While doing so, a folding wooden counter top fell on her
head causing her serious brain injury. The negligence was allegedly
compounded by respondents PHI and DTPCIs failure to render
prompt and adequate medical assistance.

person around but the two of them. They carefully walked towards
the main door leading to the hotel but, to their surprise, the door was
locked.9
Petitioner and Delia waited for 10 more minutes near the door hoping
someone would come to their rescue but they waited in vain. Delia
became anxious about their situation so petitioner began to walk
around to look for a house phone. Delia followed petitioner. After
some time, petitioner saw a phone behind the lifeguards counter.
While slowly walking towards the phone, a hard and heavy object,
which later turned out to be the folding wooden counter top, fell on
petitioners head that knocked her down almost unconscious. 10
Delia immediately got hold of the house phone and notified the hotel
telephone operator of the incident. Not long after, the hotel staff
arrived at the main entrance door of the swimming pool area but it
took them at least 20 to 30 minutes to get inside. When the door was
finally opened, three hotel chambermaids assisted petitioner by
placing an ice pack and applying some ointment on her head. After
petitioner had slightly recovered, she requested to be assisted to the
hotels coffee shop to have some rest. Petitioner demanded the
services of the hotel physician.11
Dr. Violeta Dalumpines (Dr. Dalumpines) arrived. She approached
petitioner and introduced herself as the hotel physician. However,
instead of immediately providing the needed medical assistance, Dr.
Dalumpines presented a "Waiver" and demanded that it be signed by
petitioner, otherwise, the hotel management will not render her any
assistance. Petitioner refused to do so.12

Petitioners version of the antecedents of this case is as follows:

On 11 June 1995, Delia Goldberg (Delia), a registered guest of Dusit
Hotel, invited her friend, petitioner Dr. Genevieve L. Huang, for a
swim at the hotels swimming pool facility. They started bathing at
around 5:00 p.m. At around 7:00 p.m., the hotels swimming pool
attendant informed them that the swimming pool area was about to
be closed. The two subsequently proceeded to the shower room
adjacent to the swimming pool to take a shower and dress up.
However, when they came out of the bathroom, the entire swimming
pool area was already pitch black and there was no longer any

After eating her dinner and having rested for a while, petitioner left
the hotels coffee shop and went home. Thereupon, petitioner started
to feel extraordinary dizziness accompanied by an uncomfortable
feeling in her stomach, which lasted until the following day. Petitioner
was constrained to stay at home, thus, missing all her important
appointments with her patients. She also began experiencing "on"
and "off" severe headaches that caused her three (3) sleepless
nights.13

Petitioner, thus, decided to consult a certain Dr. Perry Noble (Dr.

Noble), a neurologist from Makati Medical Center, who required her
to have an X-ray and a Magnetic Resonance Imaging (MRI)
tests.14 The MRI Report15 dated 23 August 1995 revealed the
following findings:
CONSULTATION REPORT:
MRI examination of the brain shows scattered areas of
intraparenchymal contusions and involving mainly the left middle and
posterior temporal and slightly the right anterior temporal lobe.
Other small areas of contusions with suggestive pertechiae are seen
in the left fronto-parietal, left parieto-occipital and with deep frontal
periventricular subcortical and cortical regions. There is no mass
effect nor signs of localized hemorrhagic extravasation.
The ventricles are not enlarged, quite symmetrical without shifts or
deformities; the peripheral sulci are within normal limits.
The C-P angles, petromastoids, sella, extrasellar and retro orbital
areas appear normal.
The brainstem is unremarkable.
IMPRESSION: Scattered small intraparenchymal contusions mainly
involving the left middle-posterior temporal lobe and also right medial
anterior temporal, both deep frontal subcortical, left parieto-occipital
subcortical and cortical regions. Ischemic etiology not ruled out. No
localized intra - or extracerebral hemorrhage.16
Petitioner claimed that the aforesaid MRI result clearly showed that
her head was bruised. Based also on the same MRI result, Dr. Noble
told her that she has a very serious brain injury. In view thereof, Dr.
Noble prescribed the necessary medicine for her condition. 17
Petitioner likewise consulted a certain Dr. Ofelia Adapon, also a
neurologist from Makati Medical Center, who required her to undergo
an Electroencephalogram examination (EEG) to measure the

electrostatic in her brain.18Based on its result,19 Dr. Ofelia Adapon

informed her that she has a serious conditiona permanent one. Dr.
Ofelia Adapon similarly prescribed medicines for her brain injury.20
Petitioners condition did not get better. Hence, sometime in
September 1995, she consulted another neuro-surgeon by the name
of Dr. Renato Sibayan (Dr. Sibayan), who required her to have an Xray test.21 According to petitioner, Dr. Sibayans finding was the same
as those of the previous doctors that she had consultedshe has a
serious brain injury.22
By reason of the unfortunate 11 June 1995 incident inside the hotels
swimming pool area, petitioner also started to feel losing her
memory, which greatly affected and disrupted the practice of her
chosen profession.23 Thus, on 25 October 1995, petitioner, through
counsel, sent a demand letter 24 to respondents PHI and DTPCI
seeking payment of an amount not less than P100,000,000.00
representing loss of earnings on her remaining life span. But,
petitioners demand was unheeded.
In November 1995, petitioner went to the United States of America
(USA) for further medical treatment. She consulted a certain Dr.
Gerald Steinberg and a certain Dr. Joel Dokson 25 from Mount Sinai
Hospital who both found that she has "post traumatic-post
concussion/contusion cephalgias-vascular and neuralgia." 26 She was
then prescribed to take some medications for severe pain and to
undergo physical therapy. Her condition did not improve so she
returned to the Philippines.27
Petitioner, once again, consulted Dr. Sibayan, who simply told her to
just relax and to continue taking her medicines. Petitioner also
consulted other neurologists, who all advised her to just continue her
medications and to undergo physical therapy for her neck pain. 28
Sometime in 1996, petitioner consulted as well a certain Dr. Victor
Lopez (Dr. Lopez), an ophthalmologist from the Makati Medical
Center, because of her poor vision, which she has experienced for
several months.29 Petitioners Eye Report dated 5 March
199630 issued by Dr. Lopez stated: "IMPRESSION: Posterior vitreous
detachment, right eye of floaters." Dr. Lopez told petitioner that her

detached eye is permanent and very serious. Dr. Lopez then

prescribed an eye drop to petitioner.31
For petitioners frustration to dissipate and to regain her former
strength and physical well-being, she consulted another neurosurgeon from Makati Medical Center by the name of Dr. Leopoldo P.
Pardo, Jr. (Dr. Pardo, Jr.). 32She disclosed to Dr. Pardo, Jr. that at the
age of 18 she suffered a stroke due to mitral valve disease and that
she was given treatments, which also resulted in thrombocytopenia.
In Dr. Pardo, Jr.s medical evaluation of petitioner dated 15 May
1996,33 he made the following diagnosis and opinion:
DIAGNOSIS AND OPINION:
This patient sustained a severe head injury in (sic) 11 June 1995 and
as a result of which she developed the following injuries:
1. Cerebral Concussion and Contusion
2. Post-traumatic Epilepsy
3. Post-concussional Syndrome
4. Minimal Brain Dysfunction
5. Cervical Sprain, chronic recurrent
It is my opinion that the symptoms she complained of in the
foregoing history are all related to and a result of the injury sustained
on 11 June 1995.
It is further my opinion that the above diagnosis and complaints do
materially affect her duties and functions as a practicing physician
and dermatologist, and that she will require treatment for an
undetermined period of time.
The percentage of disability is not calculated at this time and will
require further evaluation and observation.34

Dr. Pardo, Jr. then advised petitioner to continue her medications. 35

Petitioner likewise consulted a certain Dr. Tenchavez36 for her followup EEG.37 He similarly prescribed medicine for petitioners deep
brain injury. He also gave her pain killer for her headache and
advised her to undergo physical therapy. Her symptoms, however,
persisted all the more.38
In 1999, petitioner consulted another neurologist at the Makati
Medical Center by the name of Dr. Martesio Perez (Dr. Perez)
because of severe fleeting pains in her head, arms and legs; difficulty
in concentration; and warm sensation of the legs, which symptoms
also occurred after the 11 June 1995 incident. Upon examination, Dr.
Perez observed that petitioner has been experiencing severe pains
and she has a slight difficulty in concentration. He likewise noted that
there was a slight spasm of petitioners neck muscle but, otherwise,
there was no objective neurologic finding. The rest of petitioners
neurologic examination was essentially normal.39
Dr. Perezs neurologic evaluation40 of petitioner reflected, among
others: (1) petitioners past medical history, which includes, among
others, mitral valve stenosis; (2) an interpretation of petitioners EEG
results in October 1995 and in January 1999, i.e., the first EEG
showed sharp waves seen bilaterally more on the left while the
second one was normal; and (3) interpretation of petitioners second
MRI result, i.e., petitioner has a permanent damage in the brain,
which can happen either after a head injury or after a stroke. Dr.
Perez concluded that petitioner has post-traumatic or post
concussion syndrome.41
Respondents, on the other hand, denied all the material allegations
of petitioner and, in turn, countered the latters statement of facts,
thus:
According to respondents PHI and DTPCI, a sufficient notice had
been posted on the glass door of the hotel leading to the swimming
pool area to apprise the people, especially the hotel guests, that the
swimming pool area is open only from 7:00 a.m. to 7:00
p.m.42 Though the hotels swimming pool area is open only between
the aforestated time, the lights thereon are kept on until 10:00 p.m.

for, (1) security reasons; (2) housekeeping personnel to do the

cleaning of the swimming pool surroundings; and (3) people doing
their exercise routine at the Slimmers World Gym adjacent to the
swimming pool area, which was then open until 10:00 p.m., to have a
good view of the hotels swimming pool. Even granting that the lights
in the hotels swimming pool area were turned off, it would not render
the area completely dark as the Slimmers World Gym near it was
well-illuminated.43

Afterwards, Dr. Dalumpines went back to petitioner and checked the

latters condition. Petitioner insisted that she was fine and that the
hirudoid cream was enough. Having been assured that everything
was fine, Dr. Dalumpines requested petitioner to execute a
handwritten certification47 regarding the incident that occurred that
night. Dr. Dalumpines then suggested to petitioner to have an X-ray
test. Petitioner replied that it was not necessary. Petitioner also
refused further medical attention.48

Further, on 11 June 1995, at round 7:00 p.m., the hotels swimming

pool attendant advised petitioner and Delia to take their showers as it
was already closing time. Afterwards, at around 7:40 p.m., Pearlie
Benedicto-Lipana (Ms. Pearlie), the hotel staff nurse, who was at the
hotel clinic located at the mezzanine floor, received a call from the
hotel telephone operator informing her that there was a guest
requiring medical assistance at the hotels swimming pool area
located one floor above the clinic.44

On 13 June 1995, petitioner called up Dr. Dalumpines. The call,

however, had nothing to do with the 11 June 1995 incident. Instead,
petitioner merely engaged in small talk with Dr. Dalumpines while
having her daily massage. The two talked about petitioners personal
matters, i.e., past medical history, differences with siblings and family
over inheritance and difficulty in practice. Petitioner even disclosed to
Dr. Dalumpines that she once fell from a horse; that she had a
stroke; had hysterectomy and is incapable of having children for her
uterus had already been removed; that she had blood disorder,
particularly lack of platelets, that can cause bleeding; and she had an
"on" and "off" headaches. Petitioner oftentimes called Dr.
Dalumpines at the hotel clinic to discuss topics similar to those
discussed during their 13 June 1995 conversation.49

Immediately, Ms. Pearlie got hold of her medical kit and hurriedly
went to the hotels swimming pool area. There she saw Delia and
petitioner, who told her that she was hit on the head by a folding
wooden counter top. Although petitioner looked normal as there was
no indication of any blood or bruise on her head, Ms. Pearlie still
asked her if she needed any medical attention to which petitioner
replied that she is a doctor, she was fine and she did not need any
medical attention. Petitioner, instead, requested for a hirudoid cream
to which Ms. Pearlie acceded.45
At about 8:00 p.m., after attending to petitioner, Ms. Pearlie went
back to the hotel clinic to inform Dr. Dalumpines of the incident at the
hotels swimming pool area. But before she could do that, Dr.
Dalumpines had already chanced upon Delia and petitioner at the
hotels coffee shop and the latter reported to Dr. Dalumpines that her
head was hit by a folding wooden counter top while she was inside
the hotels swimming pool area. When asked by Dr. Dalumpines how
she was, petitioner responded she is a doctor, she was fine and she
was already attended to by the hotel nurse, who went at the hotels
swimming pool area right after the accident. Dr. Dalumpines then
called Ms. Pearlie to verify the same, which the latter confirmed. 46

Also, during one of their telephone conversations, petitioner

requested for a certification regarding the 11 June 1995 incident
inside the hotels swimming pool area. Dr. Dalumpines accordingly
issued Certification dated 7 September 1995, which states that: 50
C E R T I F I C AT I O N
This is to certify that as per Clinic records, duty nurse Pearlie was
called to attend to an accident at the poolside at 7:45PM on 11 June
1995.
Same records show that there, she saw petitioner who claimed the
folding countertop fell on her head when she lifted it to enter the
lifeguards counter to use the phone. She asked for Hirudoid.

The same evening petitioner met Dr. Dalumpines at the Coffee Shop.
After narrating the poolside incident and declining Dr. Dalumpines
offer of assistance, she reiterated that the Hirudoid cream was
enough and that petitioner being a doctor herself, knew her condition
and she was all right.
This certification is given upon the request of petitioner for whatever
purpose it may serve, 7 September 1995 at Makati City.51 (Emphasis
supplied).
Petitioner personally picked up the afore-quoted Certification at the
hotel clinic without any objection as to its contents. 52
From 11 June 1995 until 7 September 1995, the hotel clinic never
received any complaint from petitioner regarding the latters
condition. The hotel itself neither received any written complaint from
petitioner.53
After trial, the court a quo in its Decision dated 21 February 2006
dismissed petitioners Complaint for lack of merit.
The trial court found petitioners testimony self-serving, thus, devoid
of credibility. Petitioner failed to present any evidence to substantiate
her allegation that the lights in the hotels swimming pool area were
shut off at the time of the incident. She did not even present her
friend, Delia, to corroborate her testimony. More so, petitioners
testimony was contradicted by one of the witnesses presented by the
respondents who positively declared that it has been a normal
practice of the hotel management not to put off the lights until 10:00
p.m. to allow the housekeepers to do the cleaning of the swimming
pool surroundings, including the toilets and counters. Also, the lights
were kept on for security reasons and for the people in the nearby
gym to have a good view of the swimming pool while doing their
exercise routine. Besides, there was a remote possibility that the
hotels swimming pool area was in complete darkness as the
aforesaid gym was then open until 10:00 p.m., and the lights radiate
to the hotels swimming pool area. As such, petitioner would not have
met the accident had she only acted with care and caution. 54

The trial court further struck down petitioners contention that the
hotel management did not extend medical assistance to her in the
aftermath of the accident. Records showed that the hotel
management immediately responded after being notified of the
accident. The hotel nurse and the two chambermaids placed an ice
pack on petitioners head. They were willing to extend further
emergency assistance but petitioner refused and merely asked for a
hirudoid cream. Petitioner even told them she is a doctor and she
was fine. Even the medical services offered by the hotel physician
were turned down by petitioner. Emphatically, petitioner cannot fault
the hotel for the injury she sustained as she herself did not heed the
warning that the swimming pool area is open only from 7:00 a.m. to
7:00 p.m. As such, since petitioners own negligence was the
immediate and proximate cause of her injury, she cannot recover
damages.55
The trial court similarly observed that the records revealed no
indication that the head injury complained of by petitioner was the
result of the alleged 11 June 1995 accident. Firstly, petitioner had a
past medical history which might have been the cause of her
recurring brain injury. Secondly, the findings of Dr. Perez did not
prove a causal relation between the 11 June 1995 accident and the
brain damage suffered by petitioner. Even Dr. Perez himself testified
that the symptoms being experienced by petitioner might have been
due to factors other than the head trauma she allegedly suffered. It
bears stressing that petitioner had been suffering from different kinds
of brain problems since she was 18 years old, which may have been
the cause of the recurring symptoms of head injury she is
experiencing at present. Absent, therefore, of any proof establishing
the causal relation between the injury she allegedly suffered on 11
June 1995 and the head pains she now suffers, her claim must fail.
Thirdly, Dr. Teresita Sanchezs (Dr. Sanchez) testimony cannot be
relied upon since she testified on the findings and conclusions of
persons who were never presented in court. Ergo, her testimony
thereon
was
hearsay.
Fourthly,
the
medical
reports/evaluations/certifications issued by myriads of doctors whom
petitioner sought for examination or treatment were neither identified
nor testified to by those who issued them. Being deemed as hearsay,
they cannot be given probative value. Even assuming that petitioner
suffered head injury as a consequence of the 11 June 1995 accident,

she cannot blame anyone but herself for staying at the hotels
swimming pool area beyond its closing hours and for lifting the
folding wooden counter top that eventually hit her head. 56

hotel. Since the circumstances of the present case do not evince a

contractual relation between petitioner and respondents, the rules on
quasi-delict , thus, govern.

For petitioners failure to prove that her serious and permanent injury
was the result of the 11 June 1995 accident, thus, her claim for
actual or compensatory damages, loss of income, moral damages,
exemplary damages and attorneys fees, must all fail. 57

The pertinent provision of Art. 2176 of the Civil Code which states:
"Whoever by act or omission causes damage to another, there being
fault or negligence, is obliged to pay for the damage done. Such fault
or negligence, if there is no pre-existing contractual relation between
the parties, is called quasi-delict."

With regard to respondent First Lepantos liability, the trial court ruled
that under the contract of insurance, suffice it to state that absent any
cause for any liability against respondents PHI and DTPCI,
respondent First Lepanto cannot be made liable thereon.
Dissatisfied, petitioner elevated the matter to the Court of Appeals
with the following assignment of errors: (1) the trial court erred in
finding that the testimony of petitioner is self-serving and thus void of
credibility; (2) the trial court erred in applying the doctrine of
proximate cause in cases of breach of contract and even assuming
arguendo that the doctrine is applicable, petitioner was able to prove
by sufficient evidence the causal connection between her injuries
and respondents PHI and DTPCIs negligent act; and (3) the trial
court erred in holding that petitioner is not entitled to damages. 58
On 9 August 2007, the Court of Appeals rendered a Decision
affirming the findings and conclusions of the trial court.
The Court of Appeals ratiocinated in this wise:
At the outset, it is necessary for our purpose to determine whether to
decide this case on the theory that herein respondents PHI and
DTPCI are liable for breach of contract or on the theory of quasidelict.
xxxx
It cannot be gainsaid that herein petitioners use of the hotels pool
was only upon the invitation of Delia, the hotels registered guest. As
such, she cannot claim contractual relationship between her and the

A perusal of Article 2176 shows that obligations arising from quasidelict or tort, also known as extra-contractual obligations, arise only
between parties not otherwise bound by contract, whether express or
implied. Thus, to sustain a claim liability under quasi-delict, the
following requisites must concur: (a) damages suffered by the
plaintiff; (b) fault or negligence of the defendant, or some other
person for whose acts he must respond; and (c) the connection of
cause and effect between the fault or negligence of the defendant
and the damages incurred by the plaintiff.
Viewed from the foregoing, the question now is whether respondents
PHI and DTPCI and its employees were negligent? We do not think
so. Several factors militate against petitioners contention.
One. Petitioner recognized the fact that the pool areas
closing time is 7:00 p.m.. She, herself, admitted during her
testimony that she was well aware of the sign when she and
Delia entered the pool area. Hence, upon knowing, at the
outset, of the pools closing time, she took the risk of
overstaying when she decided to take shower and leave the
area beyond the closing hour. In fact, it was only upon the
advise of the pool attendants that she thereafter took her
shower.
Two. She admitted, through her certification that she lifted
the wooden bar countertop, which then fell onto her head.
The admission in her certificate proves the circumstances
surrounding the occurrence that transpired on the night of 11
June 1995. This is contrary to her assertion in the complaint
and testimony that, while she was passing through the

counter door, she was suddenly knocked out by a hard and

heavy object. In view of the fact that she admitted having
lifted the counter top, it was her own doing, therefore, that
made the counter top fell on to her head.

Petitioners Motion for Reconsideration was denied for lack of merit

in a Resolution dated 5 November 2007.

Three. We cannot likewise subscribe to petitioners assertion

that the pool area was totally dark in that she herself
admitted that she saw a telephone at the counter after
searching for one. It must be noted that petitioner and Delia
had walked around the pool area with ease since they were
able to proceed to the glass entrance door from shower
room, and back to the counter area where the telephone was
located without encountering any untoward incident.
Otherwise, she could have easily stumbled over, or slid, or
bumped into something while searching for the telephone.
This negates her assertion that the pool area was completely
dark, thereby, totally impairing her vision.

(1) Whether or not the findings of fact of the trial court and of
the Court of Appeals are conclusive in this case.

xxxx
The aforementioned circumstances lead us to no other conclusion
than that the proximate and immediate cause of the injury of
petitioner was due to her own negligence.
Moreover, petitioner failed to sufficiently substantiate that the medical
symptoms she is currently experiencing are the direct result of the
head injury she sustained on 11 June 1995 as was aptly discussed in
the lower courts findings.
xxxx
It bears stressing that in civil cases, the law requires that the party
who alleges a fact and substantially asserts the affirmative of the
issue has the burden of proving it. Hence, for petitioner to be entitled
to damages, she must show that she had suffered an actionable
injury. Regrettably, petitioner failed in this regard. 59 (Emphasis
supplied).

Hence, this Petition raising the following issues:

(2) Whether or not herein respondents PHI and DTPCI are

responsible by implied contract to exercise due care for the
safety and welfare of the petitioner.
(3) Whether or not the cause of action of the petitioner can
be based on both breach of contract and tort.
(4) Whether or not it is respondents PHI and DTPCI and its
employees who are liable to the petitioner for negligence,
applying the well-established doctrines of res ipsa loquitur
and respondeat superior.
(5) Whether the petitioners debilitating and permanent
injuries were a result of the accident she suffered at the hotel
on 11 June 1995.
(6) Whether or not the petitioner is entitled to the payment of
damages, attorneys fees, interest, and the costs of suit.
(7) Whether or not the respondent insurance company is
liable, even directly, to the petitioner.
(8) Whether or not petitioners motion for reconsideration of
the decision of the Court of Appeals is pro forma.60
Petitioner argues that the rule that "findings of fact of the lower courts
are conclusive and must be respected on appeal" finds no
application herein because this case falls under the jurisprudentially
established exceptions. Moreover, since the rationale behind the
afore-mentioned rule is that "the trial judge is in a vantage point to

appreciate the conduct and behavior of the witnesses and has the
unexcelled opportunity to evaluate their testimony," one logical
exception to the rule that can be deduced therefrom is when the
judge who decided the case is not the same judge who heard and
tried the case.
Petitioner further faults the Court of Appeals in ruling that no
contractual relationship existed between her and respondents PHI
and DTPCI since her use of the hotels swimming pool facility was
only upon the invitation of the hotels registered guest. On the
contrary, petitioner maintains that an implied contract existed
between them in view of the fact that the hotel guest status extends
to all those who avail of its servicesits patrons and invitees. It
follows then that all those who patronize the hotel and its facilities,
including those who are invited to partake of those facilities, like
petitioner, are generally regarded as guests of the hotel. As such,
respondents PHI and DTPCI are responsible by implied contract for
the safety and welfare of petitioner while the latter was inside their
premises by exercising due care, which they failed to do.
Petitioner even asserts that the existence of a contract between the
parties does not bar any liability for tort since the act that breaks a
contract may also be a tort. Hence, the concept of change of theory
of cause of action pointed to by respondents is irrelevant.
Petitioner similarly avows that the doctrines of res ipsa loquitur and
respondeat superior are applicable in this case. She argues that a
person who goes in a hotel without a "bukol" or hematoma and
comes out of it with a "bukol" or hematoma is a clear case of res ipsa
loquitur. It was an accident caused by the fact that the hotel staff was
not present to lift the heavy counter top for petitioner as is normally
expected of them because they negligently locked the main entrance
door of the hotels swimming pool area. Following the doctrine of res
ipsa loquitur, respondents PHI and DTPCIs negligence is presumed
and it is incumbent upon them to prove otherwise but they failed to
do so. Further, respondents PHI and DTPCI failed to observe all the
diligence of a good father of a family in the selection and supervision
of their employees, hence, following the doctrine of respondeat
superior, they were liable for the negligent acts of their staff in not
verifying if there were still people inside the swimming pool area

before turning off the lights and locking the door. Had respondents
PHI and DTPCIs employees done so, petitioner would not have
been injured. Since respondents PHI and DTPCIs negligence need
not be proved, the lower courts erred in shifting the burden to
petitioner and, thereafter, holding the hotel and its employees not
negligent for petitioners failure to prove their negligence. Moreover,
petitioner alleges that there was no contributory negligence on her
part for she did not do anything that could have contributed to her
injury. And, even if there was, the same does not bar recovery.
Petitioner equally declares that the evidence on record, including the
objective medical findings, had firmly established that her permanent
debilitating injuries were the direct result of the 11 June 1995
accident inside the hotels swimming pool area. This fact has not
been totally disputed by the respondents. Further, the medical
experts who had been consulted by petitioner were in unison in their
diagnoses of her condition. Petitioner was also able to prove that the
falling of the folding wooden counter top on her head while she was
at the hotels swimming pool area was the cause of her head, eye
and neck injuries.
Petitioner reiterates her claim for an award of damages, to wit:
actual, including loss of income; moral, exemplary; as well as
attorneys fees, interest and costs of suit. She states that
respondents PHI and DTPCI are liable for quasi-delict under Articles
19, 2176 and 2180 of the New Civil Code. At the same time, they are
liable under an implied contract for they have a public duty to give
due courtesy, to exercise reasonable care and to provide safety to
hotel guests, patrons and invitees. Respondent First Lepanto, on the
other hand, is directly liable under the express contract of insurance.
Lastly, petitioner contends that her Motion for Reconsideration before
the Court of Appeals was not pro forma for it specifically pointed out
the alleged errors in the Court of Appeals Decision.
The instant Petition is devoid of merit.
Primarily, only errors of law and not of facts are reviewable by this
Court in a Petition for Review on Certiorari under Rule 45 of the
Rules of Court.61 This Court is not a trier of facts and it is beyond its

function to re-examine and weigh anew the respective evidence of

the parties.62 Besides, this Court adheres to the long standing
doctrine that the factual findings of the trial court, especially when
affirmed by the Court of Appeals, are conclusive on the parties and
this Court.63 Nonetheless, this Court has, at times, allowed
exceptions thereto, to wit:
(a) When the findings are grounded entirely on speculation,
surmises, or conjectures;
(b) When the inference made is manifestly mistaken, absurd,
or impossible;
(c) When there is grave abuse of discretion;
(d) When the judgment is based on a misapprehension of
facts;
(e) When the findings of facts are conflicting;
(f) When in making its findings the Court of Appeals went
beyond the issues of the case, or its findings are contrary to
the admissions of both the appellant and the appellee;
(g) When the Court of Appeals findings are contrary to those
by the trial court;
(h) When the findings are conclusions without citation of
specific evidence on which they are based;
(i) When the facts set forth in the petition as well as in the
petitioners main and reply briefs are not disputed by the
respondent;
(j) When the findings of fact are premised on the supposed
absence of evidence and contradicted by the evidence on
record; or

(k) When the Court of Appeals manifestly overlooked certain

relevant facts not disputed by the parties, which, if properly
considered, would justify a different conclusion.64
Upon meticulous perusal of the records, however, this Court finds
that none of these exceptions is obtaining in this case. No such
justifiable or compelling reasons exist for this Court to depart from
the general rule. This Court will not disturb the factual findings of the
trial court as affirmed by the Court of Appeals and adequately
supported by the evidence on record.
Also, this Court will not review the factual findings of the trial court
simply because the judge who heard and tried the case was not the
same judge who penned the decision. This fact alone does not
diminish the veracity and correctness of the factual findings of the
trial court.65 Indeed, "the efficacy of a decision is not necessarily
impaired by the fact that its writer only took over from a colleague
who had earlier presided at the trial, unless there is showing of grave
abuse of discretion in the factual findings reached by him." 66 In this
case, there was none.
It bears stressing that in this jurisdiction there is a disputable
presumption that the trial courts decision is rendered by the judge in
the regular performance of his official duties. While the said
presumption is only disputable, it is satisfactory unless contradicted
or overcame by other evidence. Encompassed in this presumption of
regularity is the presumption that the trial court judge, in resolving the
case and drafting the decision, reviewed, evaluated, and weighed all
the evidence on record. That the said trial court judge is not the
same judge who heard the case and received the evidence is of little
consequence when the records and transcripts of stenographic notes
(TSNs) are complete and available for consideration by the
former,67 just like in the present case.
Irrefragably, the fact that the judge who penned the trial courts
decision was not the same judge who heard the case and received
the evidence therein does not render the findings in the said decision
erroneous and unreliable. While the conduct and demeanor of
witnesses may sway a trial court judge in deciding a case, it is not,
and should not be, his only consideration. Even more vital for the trial

court judges decision are the contents and substance of the

witnesses testimonies, as borne out by the TSNs, as well as the
object and documentary evidence submitted and made part of the
records of the case.68
This Court examined the records, including the TSNs, and found no
reason to disturb the factual findings of both lower courts. This Court,
thus, upholds their conclusiveness.
In resolving the second and third issues, a determination of the
cause of action on which petitioners Complaint for Damages was
anchored upon is called for.
Initially, petitioner was suing respondents PHI and DTPCI mainly on
account of their negligence but not on any breach of contract.
Surprisingly, when the case was elevated on appeal to the Court of
Appeals, petitioner had a change of heart and later claimed that an
implied contract existed between her and respondents PHI and
DTPCI and that the latter were liable for breach of their obligation to
keep her safe and out of harm. This allegation was never an issue
before the trial court. It was not the cause of action relied upon by
the petitioner not until the case was before the Court of Appeals.
Presently, petitioner claims that her cause of action can be based
both on quasi-delict and breach of contract.
A perusal of petitioners Complaint evidently shows that her cause of
action was based solely on quasi-delict. Telling are the following
allegations in petitioners Complaint:
6. THAT, in the evening of 11 June 1995, between the hours
from 7:00 to 8:00 oclock, after herein petitioner and her
friend from New York, Delia, the latter being then a Hotel
guest, were taking their shower after having a dip in the
hotels swimming pool, without any notice or warning, the
Hotels staff put off all the lights within the pool area including
the lights on the hallway and also locked the main entrance
door of the pool area, x x x;

7. THAT, Hotel guest Delia started to panic while petitioner

pacified her by telling her not to worry as they would both
find their way out. Petitioner knowing that within the area
there is a house phone, started to look around while Delia
was following her, eventually petitioner saw a phone behind
the counter x x x, that while slowly moving on towards the
phone on a stooping manner due to the darkness CAUSED
BY UNTIMELY AND NEGLIGENTLY PUTTING OFF WITH
THE LIGHTS BY THE HEREIN RESPONDENTS PHI AND
DTPCIS EMPLOYEE while passing through the open
counter door with its Folding Counter Top also opened, x x x,
a hard and heavy object fell onto the head of the petitioner
that knocked her down almost unconscious which hard and
heavy object turned out to be the Folding Counter Top;
8. THAT, Delia immediately got hold of the house phone and
notified the Hotel Telephone Operator about the incident,
immediately the hotel staffs (sic) arrived but they were
stranded behind the main door of the pool entrance and it
too (sic) them more than twenty (20) minutes to locate the
hotel maintenance employee who holds the key of the said
main entrance door;
9. THAT, when the door was opened, two Hotel Chamber
Maids assisted the petitioner to get out of the counter door.
Petitioner being a Physician tried to control her feelings
although groggy and requested for a HURIDOID, a medicine
for HEMATOMA, as a huge lump developed on her head
while the two Chamber Maids assisted petitioner by holding
the bag of ice on her head and applying the medicine on the
huge lump;
10. THAT, petitioner after having recovered slightly from her
nightmare, though still feeling weak, asked to be assisted to
the Hotel Coffee Shop to take a rest but requested for the
hotels Physician. Despite her insistent requests, the Dusit
Hotel refused to lift a finger to assists petitioner who was
then in distress until a lady approached and introduced
herself as the Hotels house Doctor. Instead however of
assisting petitioner by asking her what kind of assistance the

Hotel could render, in a DISCOURTEOUS MANNER

presented instead a paper and demanding petitioner to affix
her signature telling her that the Hotel Management would
only assists and answer for all expenses incurred if petitioner
signs the paper presented, but she refused and petitioner
instead wrote a marginal note on the said paper stating her
reason therefore, said paper later on turned out to be a
WAIVER OF RIGHT or QUIT CLAIM;

main door, prompting her to look for a way out leading to the fall of
the folding wooden counter top on her head causing her serious
brain injury. The said negligence was allegedly compounded by
respondents PHI and DTPCIs failure to render prompt and adequate
medical assistance. These allegations in petitioners Complaint
constitute a cause of action for quasi-delict, which under the New
Civil Code is defined as an act, or omission which causes damage to
another, there being fault or negligence.70

xxxx

It is evident from petitioners Complaint and from her open court

testimony that the reliance was on the alleged tortious acts
committed against her by respondents PHI and DTPCI, through their
management and staff. It is now too late in the day to raise the said
argument for the first time before this Court.71

14. THAT, due to the unfortunate incident caused by

respondents PHI and DTPCIs gross negligence despite
medical assistance, petitioner started to feel losing her
memory that greatly affected and disrupted the practice of
her chosen profession x x x.
xxxx
19. THAT, due to respondents PHI and DTPCIs gross
negligence as being narrated which caused petitioner to
suffer sleepless nights, depression, mental anguish, serious
anxiety, wounded feelings, and embarrassment with her
Diplomate friends in the profession and industry, her social
standing in the community was greatly affected and hence,
respondents PHI and DTPCI must be imposed the
hereunder damages, prayed for x x x and Artile (sic) 2176
and 2199 of the New Civil Code of the Philippines x x x.
xxxx
22. THAT, as to Moral, Exemplary and Actual Damages, as
well as petitioners Loss of Income, the amounts are stated
in its prayer hereunder.69
It is clear from petitioners allegations that her Complaint for
Damages was predicated on the alleged negligence of respondents
PHI and DTPCIs staff in the untimely putting off of all the lights
within the hotels swimming pool area, as well as the locking of its

Petitioners belated reliance on breach of contract as her cause of

action cannot be sanctioned by this Court. Well-settled is the rule
that a party is not allowed to change the theory of the case or the
cause of action on appeal. Matters, theories or arguments not
submitted before the trial court cannot be considered for the first time
on appeal or certiorari.72 When a party adopts a certain theory in the
court below, he will not be permitted to change his theory on appeal
for to permit him to do so would not only be unfair to the other party
but it would also be offensive to the basic rules of fair play, justice
and due process.73 Hence, a party is bound by the theory he adopts
and by the cause of action he stands on and cannot be permitted
after having lost thereon to repudiate his theory and cause of action
and adopt another and seek to re-litigate the matter anew either in
the same forum or on appeal.74
In that regard, this Court finds it significant to take note of the
following differences between quasi-delict (culpa aquilina) and
breach of contract (culpa contractual). In quasi-delict, negligence is
direct, substantive and independent, while in breach of contract,
negligence is merely incidental to the performance of the contractual
obligation; there is a pre-existing contract or obligation. 75 In quasidelict, the defense of "good father of a family" is a complete and
proper defense insofar as parents, guardians and employers are
concerned, while in breach of contract, such is not a complete and
proper defense in the selection and supervision of employees. 76 In

quasi- delict , there is no presumption of negligence and it is

incumbent upon the injured party to prove the negligence of the
defendant, otherwise, the formers complaint will be dismissed, while
in breach of contract, negligence is presumed so long as it can be
proved that there was breach of the contract and the burden is on
the defendant to prove that there was no negligence in the carrying
out of the terms of the contract; the rule of respondeat superior is
followed.77
Viewed from the foregoing, petitioners change of theory or cause of
action from quasi-delict to breach of contract only on appeal would
necessarily cause injustice to respondents PHI and DTPCI. First, the
latter will have no more opportunity to present evidence to contradict
petitioners new argument. Second, the burden of proof will be
shifted from petitioner to respondents PHI and DTPCI. Petitioners
change of theory from quasi-delict to breach ofcontract must be
repudiated.
As petitioners cause of action is based on quasi-delict, it is
incumbent upon her to prove the presence of the following requisites
before respondents PHI and DTPCI can be held liable, to wit: (a)
damages suffered by the plaintiff; (b) fault or negligence of the
defendant, or some other person for whose acts he must respond;
and (c) the connection of cause and effect between the fault or
negligence of the defendant and the damages incurred by the
plaintiff.78 Further, since petitioners case is for quasi-delict , the
negligence or fault should be clearly established as it is the basis of
her action.79 The burden of proof is upon petitioner. Section 1, Rule
131 of the Rules of Court provides that "burden of proof is the duty of
a party to present evidence on the facts in issue necessary to
establish his claim or defense by the amount of evidence required by
law." It is then up for the plaintiff to establish his cause of action or
the defendant to establish his defense. Therefore, if the plaintiff
alleged in his complaint that he was damaged because of the
negligent acts of the defendant, he has the burden of proving such
negligence. It is even presumed that a person takes ordinary care of
his concerns. The quantum of proof required is preponderance of
evidence.80

In this case, as found by the trial court and affirmed by the Court of
Appeals, petitioner utterly failed to prove the alleged negligence of
respondents PHI and DTPCI. Other than petitioners self-serving
testimony that all the lights in the hotels swimming pool area were
shut off and the door was locked, which allegedly prompted her to
find a way out and in doing so a folding wooden counter top fell on
her head causing her injury, no other evidence was presented to
substantiate the same. Even her own companion during the night of
the accident inside the hotels swimming pool area was never
presented to corroborate her allegations. Moreover, petitioners
aforesaid allegations were successfully rebutted by respondents PHI
and DTPCI. Here, we quote with conformity the observation of the
trial court, thus:
x x x Besides not being backed up by other supporting evidence,
said statement is being contradicted by the testimony of Engineer
Dante L. Costas,81 who positively declared that it has been a normal
practice of the Hotel management not to put off the lights until
10:00P.M. in order to allow the housekeepers to do the cleaning of
the pools surrounding, the toilets and the counters. It was also
confirmed that the lights were kept on for security reasons and so
that the people exercising in the nearby gym may be able to have a
good view of the swimming pool. This Court also takes note that the
nearby gymnasium was normally open until 10:00 P.M. so that there
was a remote possibility the pool area was in complete darkness as
was alleged by herein petitioner, considering that the illumination
which reflected from the gym. Ergo, considering that the area were
sufficient (sic) illuminated when the alleged incident occurred, there
could have been no reason for the petitioner to have met said
accident, much less to have been injured as a consequence thereof,
if she only acted with care and caution, which every ordinary person
is expected to do.82
More telling is the ratiocination of the Court of Appeals, to wit:
Viewed from the foregoing, the question now is whether respondents
PHI and DTPCI and its employees were negligent? We do not think
so. Several factors militate against petitioners contention.

One. Petitioner recognized the fact that the pool areas closing time
is 7:00 p.m.. She, herself, admitted during her testimony that she
was well aware of the sign when she and Delia entered the pool
area. Hence, upon knowing, at the outset, of the pools closing time,
she took the risk of overstaying when she decided to take shower
and leave the area beyond the closing hour. In fact, it was only upon
the advise of the pool attendants that she thereafter took her shower.
Two. She admitted, through her certification, that she lifted the
wooden bar countertop, which then fell on to her head. The
admission in her certificate proves the circumstances surrounding
the occurrence that transpired on the night of 11 June 1995. This is
contrary to her assertion in the complaint and testimony that, while
she was passing through the counter door, she was suddenly
knocked out by a hard and heavy object. In view of the fact that she
admitted having lifted the countertop, it was her own doing,
therefore, that made the counter top fell on to her head.
Three. We cannot likewise subscribe to petitioners assertion that the
pool area was totally dark in that she herself admitted that she saw a
telephone at the counter after searching for one. It must be noted
that petitioner and Delia had walked around the pool area with ease
since they were able to proceed to the glass entrance door from the
shower room, and back to the counter area where the telephone was
located without encountering any untoward incident. Otherwise, she
could have easily stumbled over, or slid, or bumped into something
while searching for the telephone. This negates her assertion that the
pool area was completely dark, thereby, totally impairing her vision.
xxxx
The aforementioned circumstances lead us to no other conclusion
than that the proximate and immediate cause of the injury of
petitioner was due to her own negligence.83 (Emphasis supplied).
Even petitioners assertion of negligence on the part of respondents
PHI and DTPCI in not rendering medical assistance to her is
preposterous. Her own Complaint affirmed that respondents PHI and
DTPCI afforded medical assistance to her after she met the
unfortunate accident inside the hotels swimming pool facility. Below

is the portion of petitioners Complaint that would contradict her very

own statement, thus:
14. THAT, due to the unfortunate incident caused by respondents
PHI and DTPCIs gross negligence despite medical assistance,
petitioner started to feel losing her memory that greatly affected and
disrupted the practice of her chosen profession. x x x. 84 (Emphasis
supplied).
Also, as observed by the trial court, respondents PHI and DTPCI,
indeed, extended medical assistance to petitioner but it was
petitioner who refused the same. The trial court stated, thus:
Further, herein petitioners asseverations that the Hotel Management
did not extend medical assistance to her in the aftermath of the
alleged accident is not true. Again, this statement was not supported
by any evidence other that the sole and self-serving testimony of
petitioner. Thus, this Court cannot take petitioners statement as a
gospel truth. It bears stressing that the Hotel Management
immediately responded after it received notice of the incident. As a
matter of fact, Ms. Pearlie, the Hotel nurse, with two chambermaids
holding an ice bag placed on petitioners head came to the petitioner
to extend emergency assistance when she was notified of the
incident, but petitioner merely asked for Hirudoid, saying she was
fine, and that she was a doctor and know how to take care of herself.
Also, the Hotel, through its in-house physician, Dr. Dalumpines
offered its medical services to petitioner when they met at the Hotels
coffee shop, but again petitioner declined the offer. Moreover, the
Hotel as a show of concern for the petitioners welfare, shouldered
the expenses for the MRI services performed on petitioner at the
Makati Medical Center. Emphatically, petitioner herself cannot fault
the Hotel for the injury she allegedly suffered because she herself did
not heed the warning at the pool to the effect that it was only open
from 7:00 to 7:00 P.M. Thus, when the petitioners own negligence
was the immediate and proximate cause of his injury, shecannot
recover damages x x x.85
With the foregoing, the following were clearly established, to wit: (1)
petitioner stayed in the hotels swimming pool facility beyond its
closing hours; (2) she lifted the folding wooden counter top that

eventually hit her head; and (3) respondents PHI and DTPCI
extended medical assistance to her. As such, no negligence can be
attributed either to respondents PHI and DTPCI or to their staff
and/or management. Since the question of negligence is one of fact,
this Court is bound by the said factual findings made by the lower
courts. It has been repeatedly held that the trial court's factual
findings, when affirmed by the Court of Appeals, are conclusive and
binding upon this Court, if they are not tainted with arbitrariness or
oversight of some fact or circumstance of significance and influence.
Petitioner has not presented sufficient ground to warrant a deviation
from this rule.86
With regard to petitioners contention that the principles of res ipsa
loquitur and respondeat superior are applicable in this case, this
Court holds otherwise.
Res ipsa loquitur is a Latin phrase which literally means "the thing or
the transaction speaks for itself." It relates to the fact of an injury that
sets out an inference to the cause thereof or establishes the
plaintiffs prima facie case. The doctrine rests on inference and not
on presumption. The facts of the occurrence warrant the supposition
of negligence and they furnish circumstantial evidence of negligence
when direct evidence is lacking.87 Simply stated, this doctrine finds
no application if there is direct proof of absence or presence of
negligence. If there is sufficient proof showing the conditions and
circumstances under which the injury occurred, then the creative
reason for the said doctrine disappears.88
Further, the doctrine of res ipsa loquitur applies where, (1) the
accident was of such character as to warrant an inference that it
would not have happened except for the defendants negligence; (2)
the accident must have been caused by an agency or instrumentality
within the exclusive management or control of the person charged
with the negligence complained of; and (3) the accident must not
have been due to any voluntary action or contribution on the part of
the person injured.89
In the case at bench, even granting that respondents PHI and
DTPCIs staff negligently turned off the lights and locked the door,
the folding wooden counter top would still not fall on petitioners head

had she not lifted the same. Although the folding wooden counter top
is within the exclusive management or control of respondents PHI
and DTPCI, the falling of the same and hitting the head of petitioner
was not due to the negligence of the former. As found by both lower
courts, the folding wooden counter top did not fall on petitioners
head without any human intervention. Records showed that
petitioner lifted the said folding wooden counter top that eventually
fell and hit her head. The same was evidenced by the, (1) 11 June
1995 handwritten certification of petitioner herself; (2) her Letter
dated 30 August 1995 addressed to Mr. Yoshikazu Masuda (Mr.
Masuda), General Manager of Dusit Hotel; and, (3) Certification
dated 7 September 1995 issued to her by Dr. Dalumpines upon her
request, which contents she never questioned.
Here, we, respectively, quote the 11 June 1995 handwritten
certification of petitioner; her letter to Mr. Masuda dated 30 August
1995; and Dr. Dalumpines Certification dated 7 September 1995, to
wit:
Petitioners 11 June 1995 Handwritten Certification:
I was requested by Dr. Dalumpines to write that I was assured of
assistance should it be necessary with regard an accident at the
pool. x x x The phone was in an enclosed area on a chair I lifted
the wooden bar counter top which then fell on my head producing a
large hematoma x x x.90
Petitioners Letter addressed to Mr. Masuda dated 30 August 1995:
Dear Mr. Masuda,
x x x We searched and saw a phone on a chair behind a towel
counter. However, in order to get behind the counter I had to lift a
hinged massive wooden section of the counter which subsequently
fell and knocked me on my head x x x.91
Dr. Dalumpines Certification dated 7 September 1995:
C E R T I F I C AT I O N

This is to certify that as per Clinic records, duty nurse Pearlie was
called to attend to an accident at the poolside at 7:45PM on 11 June
1995.
Same records show that there, she saw petitioner who claimed the
folding countertop fell on her head when she lifted it to enter the
lifeguards counter to use the phone. She asked for Hirudoid.
The same evening petitioner met Dr. Dalumpnes at the Coffee Shop.
After narrating the poolside incident and declining Dr. Dalumpines
offer of assistance, she reiterated that the Hirudoid cream was
enough and that petitioner]being a doctor herself, knew her condition
and she was all right.
This certification is given upon the request of petitioner for whatever
purpose it may serve, 7 September 1995 at Makati City.92 (Emphasis
supplied).
This Court is not unaware that in petitioners Complaint and in her
open court testimony, her assertion was, "while she was passing
through the counter door, she was suddenly knocked out by a hard
and heavy object, which turned out to be the folding wooden counter
top." However, in her open court testimony, particularly during crossexamination, petitioner confirmed that she made such statement that
"she lifted the hinge massive wooden section of the counter near the
swimming pool."93 In view thereof, this Court cannot acquiesce
petitioners theory that her case is one of res ipsa loquitur as it was
sufficiently established how petitioner obtained that "bukol" or
"hematoma."
The doctrine of respondeat superior finds no application in the
absence of any showing that the employees of respondents PHI and
DTPCI were negligent. Since in this case, the trial court and the
appellate court found no negligence on the part of the employees of
respondents PHI and DTPCI, thus, the latter cannot also be held
liable for negligence and be made to pay the millions of pesos
damages prayed for by petitioner.

The issue on whether petitioners debilitating and permanent injuries

were the result of the accident she suffered at the hotels swimming
pool area on 11 June 1995 is another question of fact, which is
beyond the function of this Court to resolve. More so, this issue has
already been properly passed upon by the trial court and the Court of
Appeals. To repeat, this Court is bound by the factual findings of the
lower courts and there is no cogent reason to depart from the said
rule.
The following observations of the trial court are controlling on this
matter:
Firstly, petitioner had a past medical history which might have been
the cause of her recurring brain injury.
Secondly, the findings of Dr. Perez did not prove a causal relation
between the 11 June 1995 accident and the brain damage suffered
by petitioner. Dr. Perez himself testified that the symptoms being
experienced by petitioner might have been due to factors other than
the head trauma she allegedly suffered. Emphasis must be given to
the fact that petitioner had been suffering from different kinds of brain
problems since she was 18 years old, which may have been the
cause of the recurring symptoms of head injury she is experiencing
at present.
Thirdly, Dr. Sanchezs testimony cannot be relied upon since she
testified on the findings and conclusions of persons who were never
presented in court. Ergo, her testimony thereon was hearsay. A
witness can testify only with regard to facts of which they have
personal knowledge. Testimonial or documentary evidence is
hearsay if it is based, not on the personal knowledge of the witness,
but on the knowledge of some other person not on the witness stand.
Consequently, hearsay evidence -- whether objected to or not -- has
no probative value.94
Fourthly, the medical reports/evaluations/certifications issued by
myriads of doctors whom petitioner sought for examination or
treatment were neither identified nor testified to by those who issued
them. Being deemed as hearsay, they cannot be given probative
value.1wphi1

The aforesaid medical reports/evaluations/certifications of different

doctors in favor of petitioner cannot be given probative value and
their contents cannot be deemed to constitute proof of the facts
stated therein. It must be stressed that a document or writing which
is admitted not as independent evidence but merely as part of the
testimony of a witness does not constitute proof of the facts related
therein.95 In the same vein, the medical certificate which was
identified and interpreted in court by another doctor was not
accorded probative value because the doctor who prepared it was
not presented for its identification. Similarly, in this case, since the
doctors who examined petitioner were not presented to testify on
their findings, the medical certificates issued on their behalf and
identified by another doctor cannot be admitted as evidence. Since a
medical certificate involves an opinion of one who must first be
established as an expert witness, it cannot be given weight or credit
unless the doctor who issued it is presented in court to show his
qualifications.96 Thus, an unverified and unidentified private
document cannot be accorded probative value. It is precluded
because the party against whom it is presented is deprived of the
right and opportunity to cross-examine the person to whom the
statements or writings are attributed. Its executor or author should be
presented as a witness to provide the other party to the litigation the
opportunity to question its contents. Being mere hearsay evidence,
failure to present the author of the letter renders its contents suspect
and of no probative value.97
All told, in the absence of negligence on the part of respondents PHI
and DTPCI, as well as their management and staff, they cannot be
made Iiable to pay for the millions of damages prayed for by the
petitioner. Since respondents PHI and DTPCI arc not liable, it
necessarily follows that respondent First Lepanto cannot also be
made liable under the contract or Insurance.
WHEREFORE, premises considered, the Decision and Resolution or
the Court of Appeals in CA-G.R. CV No. 87065 dated 9 August 2007
and 5 November 2007, respectively, are hereby AFFIRMED. Costs
against petitioner.
SO ORDERED.

G.R. No. 162987

May 21, 2009

SOFIA M. GUILLANG, represented by SUSAN GUILLANGCABATBAT, REYNALDO, GERARDO, BIENVENIDO, DAWNA, and
NELLIE, all surnamed GUILLANG, GENARO GUILLANG, JOSE
DIGNADICE,
and
ALVIN
LLANILLO, Petitioners,
vs.
RODOLFO BEDANIA and RODOLFO DE SILVA, Respondents.

DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the 3 June 2003 Decision2 and the 23
March 2004 Resolution3 of the Court of Appeals in CA-G.R. CV No.
69289. The 3 June 2003 Decision set aside the 5 December 2000
Decision4 of the Regional Trial Court, Branch 30, Manila (trial court).
The 23 March 2004 Resolution denied the motion for
reconsideration.
The Facts
On 25 October 1994, at about 5:45 in the afternoon, petitioner
Genaro M. Guillang (Genaro) was driving his brand new Toyota
Corolla GLI sedan with conduction sticker no. 54-DFT (car) along
Emilio Aguinaldo Highway (highway) in Cavite. Genaro, Antero
Guillang (Antero), Felipe Jurilla, Jose Dignadice (Dignadice), and
Alvin Llanillo (Llanillo) had all just left from Golden City, Dasmarias,
Cavite, and were on their way to Manila. At the other side of the
highway, respondent Rodolfo A. Bedania (Bedania) was driving a
ten-wheeler Isuzu cargo truck with plate no. CAC-923 (truck) towards
Tagaytay City. The truck was owned by respondent Rodolfo de Silva
(de Silva).

On 24 April 1995, petitioners Genaro, Llanillo, Dignadice, and the

heirs of Antero5 instituted a complaint for damages based on quasidelict against respondents Bedania and de Silva.
On 5 December 2000, the trial court rendered a decision in favor of
petitioners. The trial court found Bedania grossly negligent for
recklessly maneuvering the truck by making a sudden U-turn in the
highway without due regard to traffic rules and the safety of other
motorists. The trial court also declared de Silva grossly negligent in
the selection and supervision of his driver, Bedania. The dispositive
portion of the decision provides:
WHEREFORE, judgment is hereby rendered ordering defendants
Rodolfo A. Bedania and Rodolfo de Silva, jointly and severally, to pay
plaintiffs, as follows:
1. The sum of P508,566.03 representing the damage/repair
costs of the Toyota to plaintiff Genaro M. Guillang.
2. The sum of P50,000.00 for the death of Antero Guillang
plus P185,000.00 for his burial expenses, to the heirs of
Antero Guillang.
3. For hospital and medical expenses as reflected in Exhibits
E, E-1 to E-30 to plaintiffs Genaro M. Guillang, Jose
Dignadice and Alvin Llanillo.

Along the highway and the road leading to the Orchard Golf Course,
Bedania negotiated a U-turn. When the truck entered the opposite
lane of the highway, Genaros car hit the right portion of the truck.
The truck dragged Genaros car some five meters to the right of the
road.

4. The sum of P50,000.00 as moral damages for the heirs of

the deceased Antero Guillang.

As a consequence, all the passengers of the car were rushed to the

De La Salle University Medical Center in Dasmarias, Cavite for
treatment. Because of severe injuries, Antero was later transferred to
the Philippine General Hospital. However, on 3 November 1994,
Antero died due to the injuries he sustained from the collision. The
car was a total wreck while the truck sustained minor damage.

6. The sum of P50,000.00 as exemplary damages.

5. The sum of P50,000.00 as moral damages each to

plaintiffs Jose Dignadice, Alvin Llanillo and Genaro Guillang.

7. The sum of P100,000.00 as and for attorneys fess.

8. The costs of the suit.

SO ORDERED.6
Respondents appealed to the Court of Appeals.
On 3 June 2003, the Court of Appeals rendered its decision in favor
of respondents. The dispositive portion of the decision provides:
IN VIEW OF ALL THE FOREGOING, the appealed decision
is REVERSED and SET ASIDE. The complaint of the herein
appellees in Civil Case No. 95-73666 is DISMISSED, for lack of
merit. The appellants counterclaims in the instant case are
likewise DISMISSED. No pronouncement as to cost.
SO ORDERED.7
Petitioners filed a motion for reconsideration. On 23 March 2004, the
Court of Appeals denied the motion.
Hence, this petition.
The Ruling of the Regional Trial Court
According to the trial court, there is a presumption that a person
driving a motor vehicle has been negligent if at the time of the
mishap, he was violating any traffic regulation. 8 In this case, the trial
court found that the Traffic Accident Investigation Report
(report),9 corroborated by the testimonies of the witnesses, showed
that the truck committed a traffic violation by executing a U-turn
without signal lights. The trial court also declared that Bedania
violated Sections 45(b),10 48,11 and 5412 of Republic Act No.
413613 when he executed the sudden U-turn. The trial court added
that Bedania violated another traffic rule when he abandoned the
victims after the collision.14 The trial court concluded that Bedania
was grossly negligent in his driving and held him liable for damages.
Moreover, the trial court found that Bedania did not make the U-turn
at an intersection. According to the trial court, vehicles trying to
maneuver to change directions must seek an intersection where it is
safer to maneuver and not recklessly make a U-turn in a highway.

The trial court said Bedania should have observed extreme caution
in making a U-turn because it was unexpected that a long cargo
truck would execute a U-turn along the highway.
The trial court also said that Bedanias gross negligence raised the
legal presumption that de Silva, as Bedanias employer, was
negligent in the selection and supervision of his employees. The trial
court said that, under Articles 2176 15 and 218016 of the Civil Code, de
Silvas liability was based on culpa aquiliana which holds the
employer primarily liable for tortious acts of his employees, subject to
the defense that he exercised all the diligence of a good father of a
family in the selection and supervision of his employees. The trial
court ruled that de Silva failed to prove this defense and,
consequently, held him liable for damages.
The Ruling of the Court of Appeals
The Court of Appeals reversed the trial courts decision and said that
the trial court overlooked substantial facts and circumstances which,
if properly considered, would justify a different conclusion and alter
the results of the case.
The Court of Appeals dismissed the testimonies of the witnesses and
declared that they were "contrary to human observation, knowledge
and experience." The Court of Appeals also said that the following
were the physical evidences in the case:
1. It was not yet dark when the incident transpired;
2. The four-lane highway the appellees were cruising on was
wide, straight, dry, relatively plain and with no obstructions to
the drivers vision;
3. The point of impact of the collision is on the lane where
the car was cruising and the car hit the gas tank of the truck
located at its right middle portion, which indicates that the
truck had already properly positioned itself and had already
executed the U-turn before the impact occurred;

4. Genaro Guillang was not able to stop the car in time and
the cars front portion was totally wrecked. This negates
appellees contention that they were traveling at a moderate
speed; and
5. The sheer size of the truck makes it improbable for the
said vehicle to negotiate a U-turn at a sudden and fast speed
as appellees vigorously suggest without toppling over on
its side.17 (Citations omitted)
The Court of Appeals concluded that the collision was caused by
Genaros negligence. The Court of Appeals declared that the truck
arrived at the intersection way ahead of the car and had already
executed the U-turn when the car, traveling at a fast speed, hit the
trucks side. The Court of Appeals added that considering the time
and the favorable visibility of the road and the road conditions,
Genaro, if he was alert, had ample time to react to the changing
conditions of the road. The Court of Appeals found no reason for
Genaro not to be prudent because he was approaching an
intersection and there was a great possibility that vehicles would be
traversing the intersection either going to or from Orchard Golf
Course. The Court of Appeals said Genaro should have slowed down
upon reaching the intersection. The Court of Appeals concluded that
Genaros failure to observe the necessary precautions was the
proximate cause of Anteros death and the injuries of the petitioners.
The Court of Appeals also relied on the testimony of Police Traffic
Investigator Efren Videna (Videna) that the car was running at a fast
speed and overtook another vehicle just before the collision
occurred.18 The Court of Appeals concluded that Genaro did not see
the truck as the other vehicle temporarily blocked his view of the
intersection. The Court of Appeals also gave weight to Videnas
testimony that it was normal for a ten-wheeler truck to make a U-turn
on that part of the highway because the entrance to Orchard Golf
Course was spacious.19
The Issues
Petitioners raise the following issues:

1. Did the Court of Appeals decide a question of substance

in this case in a way probably not in accord with law or with
the applicable decisions of the Honorable Supreme Court?
2. Did the Court of Appeals depart from the accepted and
usual course of judicial proceedings particularly when it
revised, and recast the findings of facts of the trial court
pertaining to credibility of witnesses of which the trial court
was at the vantage point to evaluate?
3. Did the Court of Appeals act with grave abuse of
discretion amounting to lack of jurisdiction when it rendered
the palpably questionable Court of Appeals Decision that
tampered with the findings of fact of the trial court for no
justifiable reason?
4. Is the Court of Appeals judgment and resolution reversing
the decision of the trial court supported by the evidence and
the law and jurisprudence applicable?20
The issue in this case is who is liable for the damages suffered by
petitioners. The trial court held Bedania and de Silva, as Bedanias
employer, liable because the proximate cause of the collision was
the sudden U-turn executed by Bedania without any signal lights. On
the other hand, the Court of Appeals reversed the trial courts
decision and held Genaro liable because the proximate cause of the
collision was Genaros failure to stop the car despite seeing that
Bedania was making a U-turn.
The Ruling of the Court
The principle is well-established that this Court is not a trier of facts.
Therefore, in an appeal by certiorari under Rule 45 of the Rules of
Court, only questions of law may be raised. The resolution of factual
issues is the function of the lower courts whose findings on these
matters are received with respect and are, as a rule, binding on this
Court.21

However, this rule is subject to certain exceptions. One of these is

when the findings of the appellate court are contrary to those of the
trial court.22 Findings of fact of the trial court and the Court of Appeals
may also be set aside when such findings are not supported by the
evidence or where the lower courts conclusions are based on a
misapprehension of facts.23 Such is the situation in this case and we
shall re-examine the facts and evidence presented before the lower
courts.
Article 2176 of the Civil Code provides that whoever by act or
omission causes damage to another, there being fault or negligence,
is obliged to pay for the damage done. Such fault or negligence, if
there is no pre-existing contractual relations between the parties, is
called a quasi-delict. To sustain a claim based on quasi-delict, the
following requisites must concur: (a) damage suffered by the plaintiff;
(b) fault or negligence of defendant; and (c) connection of cause and
effect between the fault or negligence of defendant and the damage
incurred by the plaintiff.24
There is no dispute that petitioners suffered damages because of the
collision. However, the issues on negligence and proximate cause
are disputed.
On the Presumption of Negligence and Proximate Cause
Negligence is defined as the failure to observe for the protection of
the interest of another person that degree of care, precaution, and
vigilance which the circumstances justly demand, whereby such
other person suffers injury. InPicart v. Smith,25 we held that the test of
negligence is whether the defendant in doing the alleged negligent
act used that reasonable care and caution which an ordinary person
would have used in the same situation.
The conclusion of the Court of Appeals that Genaro was negligent is
not supported by the evidence on record. In ruling that Genaro was
negligent, the Court of Appeals gave weight and credence to
Videnas testimony. However, we find that Videnas testimony was
inconsistent with the police records and report that he made on the
day of the collision. First, Videna testified that the car was running
fast and overtook another vehicle that already gave way to the

truck.26 But this was not indicated in either the report or the police
records. Moreover, if the car was speeding, there should have been
skid marks on the road when Genaro stepped on the brakes to avoid
the collision. But the sketch of the accident showed no skid marks
made by the car.27 Second, Videna testified that the petitioners came
from a drinking spree because he was able to smell liquor. 28 But in
the report,29 Videna indicated that the condition of Genaro was
"normal." Videna did not indicate in the report that Genaro "had been
drinking liquor" or that Genaro "was obviously drunk." Third, Videna
testified that when he arrived at the scene, Bedania was inside his
truck.30This contradicts the police records where Videna stated that
after the collision Bedania escaped and abandoned the
victims.31 The police records also showed that Bedania was arrested
by the police at his barracks in Anabu, Imus, Cavite and was turned
over to the police only on 26 October 1994.32
Under Article 2185 of the Civil Code, unless there is proof to the
contrary, a person driving a vehicle is presumed negligent if at the
time of the mishap, he was violating any traffic regulation.
In this case, the report33 showed that the truck, while making the Uturn, failed to signal, a violation of traffic rules. The police records
also stated that, after the collision, Bedania escaped and abandoned
the petitioners and his truck. 34 This is another violation of a traffic
regulation.35 Therefore, the presumption arises that Bedania was
negligent at the time of the mishap.
The evidence presented in this case also does not support the
conclusion of the Court of Appeals that the truck had already
executed the U-turn before the impact occurred. If the truck had fully
made the U-turn, it should have been hit on its rear.36 If the truck had
already negotiated even half of the turn and is almost on the other
side of the highway, then the truck should have been hit in the middle
portion of the trailer or cargo compartment. But the evidence clearly
shows, and the Court of Appeals even declared, that the car hit the
trucks gas tank, located at the trucks right middle portion, which
disproves the conclusion of the Court of Appeals that the truck had
already executed the U-turn when it was hit by the car.

Moreover, the Court of Appeals said that the point of impact was on
the lane where the car was cruising. Therefore, the car had every
right to be on that road and the car had the right of way over the
truck that was making a U-turn. Clearly, the truck encroached upon
the cars lane when it suddenly made the U-turn.

U-turn of the truck without signal lights posed a serious risk to

oncoming motorists. Bedania failed to prevent or minimize that risk.
The trucks sudden U-turn triggered a series of events that led to the
collision and, ultimately, to the death of Antero and the injuries of
petitioners.

The Court of Appeals also concluded that Bedania made the U-turn
at an intersection. Again, this is not supported by the evidence on
record. The police sketch37 does not indicate an intersection and only
shows that there was a road leading to the Orchard Golf Course near
the place of the collision. Furthermore, U-turns are generally not
advisable particularly on major streets.38 Contrary to Videnas
testimony, it is not normal for a truck to make a U-turn on a highway.
We agree with the trial court that if Bedania wanted to change
direction, he should seek an intersection where it is safer to
maneuver the truck. Bedania should have also turned on his signal
lights and made sure that the highway was clear of vehicles from the
opposite direction before executing the U-turn.

We agree with the trial court that de Silva, as Bedanias employer, is

also liable for the damages suffered by petitioners. De Silva failed to
prove that he exercised all the diligence of a good father of a family
in the selection and supervision of his employees.

The finding of the Court of Appeals that it was not yet dark when the
collision occurred is also not supported by the evidence on record.
The report stated that the daylight condition at the time of the
collision was "darkness."39
Contrary to the conclusion of the Court of Appeals, the sheer size of
the truck does not make it improbable for the truck to execute a
sudden U-turn. The trial courts decision did not state that the truck
was traveling at a fast speed when it made the U-turn. The trial court
said the truck made a "sudden" U-turn, meaning the U-turn was
made unexpectedly and with no warning, as shown by the fact that
the trucks signal lights were not turned on.
Clearly, Bedanias negligence was the proximate cause of the
collision which claimed the life of Antero and injured the petitioners.
Proximate cause is that which, in the natural and continuous
sequence, unbroken by any efficient, intervening cause, produces
the injury, and without which the result would not have
occurred.40 The cause of the collision is traceable to the negligent act
of Bedania for if the U-turn was executed with the proper precaution,
the mishap in all probability would not have happened. The sudden

On the Award of Damages and Attorneys Fees

According to prevailing jurisprudence, civil indemnity for death
caused by a quasi-delict is pegged at P50,000.41Moral damages in
the amount of P50,000 is also awarded to the heirs of the deceased
taking into consideration the pain and anguish they
suffered.42 Bienvenido Guillang (Bienvenido), Anteros son, testified
that Sofia, Anteros wife and his mother, became depressed after
Anteros death and that Sofia died a year after.43 Bienvenido also
testified on the pain and anguish their family suffered as a
consequence of their fathers death.44 We sustain the trial courts
award of P50,000 as indemnity for death and P50,000 as moral
damages to the heirs of Antero.
As to funeral and burial expenses, the court can only award such
amount as are supported by proper receipts. 45 In this case,
petitioners proved funeral and burial expenses of P55,000 as
evidenced by Receipt No. 1082, 46 P65,000 as evidenced by Receipt
No. 114647 and P15,000 as evidenced by Receipt No. 1064, 48 all
issued by the Manila South Cemetery Association, Inc.,
aggregating P135,000. We reduce the trial courts award of funeral
and burial expenses from P185,000 to P135,000.
As to hospitalization expenses, only substantiated and proven
expenses, or those that appear to have been genuinely incurred in
connection with the hospitalization of the victims will be recognized in
court.49 In this case, the trial court did not specify the amount of
hospitalization expenses to be awarded to the petitioners. Since
petitioners presented receipts for hospitalization expenses during the

trial, we will determine the proper amounts to be awarded to each of

them. We award hospitalization expenses of P27,000.98 to the heirs
of
Antero,50 P10,881.60
to
Llanillo,51 P5,436.77
to
Dignadice,52 and P300 to Genaro53 because these are the amounts
duly substantiated by receipts.
We affirm the trial courts award of P508,566.03 for the repair of the
car. The Court notes that there is no dispute that Genaro was driving
a brand new Toyota Corolla GLI sedan and that, after the collision,
the car was a total wreck. In this case, the repair order presented by
Genaro is sufficient proof of the damages sustained by the
car.541avvphi1.zw+

1. Funeral and Burial Expenses of P135,000 to the heirs of

Antero Guillang;
2. Hospitalization Expenses of P27,000.98 to the heirs of
Antero Guillang, P10,881.60 to Alvin Llanillo,P5,436.77 to
Jose Dignadice, and P300 to Genaro Guillang; and
3. Moral damages of P30,000 each to Alvin Llanillo, Jose
Dignadice, and Genaro Guillang.
SO ORDERED.

Moral damages may be recovered in quasi-delicts causing physical

injuries.55 However, in accordance with prevailing jurisprudence, we
reduce the award of moral damages from P50,000 to P30,000 each
to Llanillo, Dignadice, and Genaro since they only suffered physical
injuries brought about by the collision.56
In quasi-delicts, exemplary damages may be granted if the
defendant acted with gross negligence. 57 While the amount of
exemplary damages need not be proved, the plaintiff must show that
he is entitled to moral, temperate or compensatory damages before
the court may consider the question of whether or not exemplary
damages should be awarded.58 In this case, Bedania was grossly
negligent in suddenly making a U-turn in the highway without signal
lights. To serve as an example for the public good, we affirm the trial
courts award of exemplary damages in the amount of P50,000.
Finally, we affirm the trial courts award of attorneys fees in the
amount of P100,000. Under Article 2208 of the Civil Code, attorneys
fees may be recovered when, as in this case, exemplary damages
are awarded.
WHEREFORE, we REVERSE the 3 June 2003 Decision and 23
March 2004 Resolution of the Court of Appeals in CA-G.R. CV No.
69289. We REINSTATE with MODIFICATIONS the 5 December
2000 Decision of the Regional Trial Court, Branch 30, Manila.
We ORDER Rodolfo Bedania and Rodolfo de Silva, jointly and
severally, to pay the following amounts:

G.R. No. 157917

August 29, 2012

SPOUSES TEODORO1 and NANETTE PERENA, Petitioners,

vs.
SPOUSES TERESITA PHILIPPINE NICOLAS and L. ZARATE,
NATIONAL RAILWAYS, and the COURT OF
APPEALS Respondents.
DECISION

BERSAMIN, J.:
The operator of a. school bus service is a common carrier in the
eyes of the law. He is bound to observe extraordinary diligence in the
conduct of his business. He is presumed to be negligent when death
occurs to a passenger. His liability may include indemnity for loss of
earning capacity even if the deceased passenger may only be an
unemployed high school student at the time of the accident.
The Case
By petition for review on certiorari, Spouses Teodoro and Nanette
Perefia (Perefias) appeal the adverse decision promulgated on
November 13, 2002, by which the Court of Appeals (CA) affirmed
with modification the decision rendered on December 3, 1999 by the
Regional Trial Court (RTC), Branch 260, in Paraaque City that had
decreed them jointly and severally liable with Philippine National
Railways (PNR), their co-defendant, to Spouses Nicolas and Teresita
Zarate (Zarates) for the death of their 15-year old son, Aaron John L.
Zarate (Aaron), then a high school student of Don Bosco Technical
Institute (Don Bosco).
Antecedents
The Pereas were engaged in the business of transporting students
from their respective residences in Paraaque City to Don Bosco in
Pasong Tamo, Makati City, and back. In their business, the Pereas
used a KIA Ceres Van (van) with Plate No. PYA 896, which had the
capacity to transport 14 students at a time, two of whom would be
seated in the front beside the driver, and the others in the rear, with
six students on either side. They employed Clemente Alfaro (Alfaro)
as driver of the van.
In June 1996, the Zarates contracted the Pereas to transport Aaron
to and from Don Bosco. On August 22, 1996, as on previous school
days, the van picked Aaron up around 6:00 a.m. from the Zarates
residence. Aaron took his place on the left side of the van near the
rear door. The van, with its air-conditioning unit turned on and the
stereo playing loudly, ultimately carried all the 14 student riders on

their way to Don Bosco. Considering that the students were due at
Don Bosco by 7:15 a.m., and that they were already running late
because of the heavy vehicular traffic on the South Superhighway,
Alfaro took the van to an alternate route at about 6:45 a.m. by
traversing the narrow path underneath the Magallanes Interchange
that was then commonly used by Makati-bound vehicles as a short
cut into Makati. At the time, the narrow path was marked by piles of
construction materials and parked passenger jeepneys, and the
railroad crossing in the narrow path had no railroad warning signs, or
watchmen, or other responsible persons manning the crossing. In
fact, the bamboo barandilla was up, leaving the railroad crossing
open to traversing motorists.
At about the time the van was to traverse the railroad crossing, PNR
Commuter No. 302 (train), operated by Jhonny Alano (Alano), was in
the vicinity of the Magallanes Interchange travelling northbound. As
the train neared the railroad crossing, Alfaro drove the van eastward
across the railroad tracks, closely tailing a large passenger bus. His
view of the oncoming train was blocked because he overtook the
passenger bus on its left side. The train blew its horn to warn
motorists of its approach. When the train was about 50 meters away
from the passenger bus and the van, Alano applied the ordinary
brakes of the train. He applied the emergency brakes only when he
saw that a collision was imminent. The passenger bus successfully
crossed the railroad tracks, but the van driven by Alfaro did not. The
train hit the rear end of the van, and the impact threw nine of the 12
students in the rear, including Aaron, out of the van. Aaron landed in
the path of the train, which dragged his body and severed his head,
instantaneously killing him. Alano fled the scene on board the train,
and did not wait for the police investigator to arrive.
Devastated by the early and unexpected death of Aaron, the Zarates
commenced this action for damages against Alfaro, the Pereas,
PNR and Alano. The Pereas and PNR filed their respective
answers, with cross-claims against each other, but Alfaro could not
be served with summons.
At the pre-trial, the parties stipulated on the facts and issues, viz:
A. FACTS:

(1) That spouses Zarate were the legitimate parents of

Aaron John L. Zarate;
(2) Spouses Zarate engaged the services of spouses
Perea for the adequate and safe transportation carriage of
the former spouses' son from their residence in Paraaque
to his school at the Don Bosco Technical Institute in Makati
City;
(3) During the effectivity of the contract of carriage and in
the implementation thereof, Aaron, the minor son of spouses
Zarate died in connection with a vehicular/train collision
which occurred while Aaron was riding the contracted carrier
Kia Ceres van of spouses Perea, then driven and operated
by the latter's employee/authorized driver Clemente Alfaro,
which van collided with the train of PNR, at around 6:45 A.M.
of August 22, 1996, within the vicinity of the Magallanes
Interchange in Makati City, Metro Manila, Philippines;
(4) At the time of the vehicular/train collision, the subject site
of the vehicular/train collision was a railroad crossing used
by motorists for crossing the railroad tracks;
(5) During the said time of the vehicular/train collision, there
were no appropriate and safety warning signs and railings at
the site commonly used for railroad crossing;
(6) At the material time, countless number of Makati bound
public utility and private vehicles used on a daily basis the
site of the collision as an alternative route and short-cut to
Makati;
(7) The train driver or operator left the scene of the incident
on board the commuter train involved without waiting for the
police investigator;

(8) The site commonly used for railroad crossing by

motorists was not in fact intended by the railroad operator for
railroad crossing at the time of the vehicular collision;
(9) PNR received the demand letter of the spouses Zarate;
(10) PNR refused to acknowledge any liability for the
vehicular/train collision;
(11) The eventual closure of the railroad crossing alleged by
PNR was an internal arrangement between the former and
its project contractor; and
(12) The site of the vehicular/train collision was within the
vicinity or less than 100 meters from the Magallanes station
of PNR.
B. ISSUES
(1) Whether or not defendant-driver of the van is, in the
performance of his functions, liable for negligence
constituting the proximate cause of the vehicular collision,
which resulted in the death of plaintiff spouses' son;
(2) Whether or not the defendant spouses Perea being the
employer of defendant Alfaro are liable for any negligence
which may be attributed to defendant Alfaro;
(3) Whether or not defendant Philippine National Railways
being the operator of the railroad system is liable for
negligence in failing to provide adequate safety warning
signs and railings in the area commonly used by motorists
for railroad crossings, constituting the proximate cause of the
vehicular collision which resulted in the death of the plaintiff
spouses' son;
(4) Whether or not defendant spouses Perea are liable for
breach of the contract of carriage with plaintiff-spouses in

failing to provide adequate and safe transportation for the

latter's son;
(5) Whether or not defendants spouses are liable for actual,
moral damages, exemplary damages, and attorney's fees;

been issued a drivers license and had not been involved in any
vehicular accident prior to the collision; that their own son had taken
the van daily; and that Teodoro Perea had sometimes accompanied
Alfaro in the vans trips transporting the students to school.

(6) Whether or not defendants spouses Teodorico and

Nanette Perea observed the diligence of employers and
school bus operators;

For its part, PNR tended to show that the proximate cause of the
collision had been the reckless crossing of the van whose driver had
not first stopped, looked and listened; and that the narrow path
traversed by the van had not been intended to be a railroad crossing
for motorists.

(7) Whether or not defendant-spouses are civilly liable for

the accidental death of Aaron John Zarate;

Ruling of the RTC

(8) Whether or not defendant PNR was grossly negligent in

operating the commuter train involved in the accident, in
allowing or tolerating the motoring public to cross, and its
failure to install safety devices or equipment at the site of the
accident for the protection of the public;
(9) Whether or not defendant PNR should be made to
reimburse defendant spouses for any and whatever amount
the latter may be held answerable or which they may be
ordered to pay in favor of plaintiffs by reason of the action;
(10) Whether or not defendant PNR should pay plaintiffs
directly and fully on the amounts claimed by the latter in their
Complaint by reason of its gross negligence;
(11) Whether or not defendant PNR is liable to defendants
spouses for actual, moral and exemplary damages and
attorney's fees.2
The Zarates claim against the Pereas was upon breach of the
contract of carriage for the safe transport of Aaron; but that against
PNR was based on quasi-delict under Article 2176, Civil Code.
In their defense, the Pereas adduced evidence to show that they
had exercised the diligence of a good father of the family in the
selection and supervision of Alfaro, by making sure that Alfaro had

On December 3, 1999, the RTC rendered its decision,3 disposing:

WHEREFORE, premises considered, judgment is hereby rendered
in favor of the plaintiff and against the defendants ordering them to
jointly and severally pay the plaintiffs as follows:
(1) (for) the death of Aaron- Php50,000.00;
(2) Actual damages in the amount of Php100,000.00;
(3) For the loss of earning capacity- Php2,109,071.00;
(4) Moral damages in the amount of Php4,000,000.00;
(5) Exemplary damages in the amount of Php1,000,000.00;
(6) Attorneys fees in the amount of Php200,000.00; and
(7) Cost of suit.
SO ORDERED.
On June 29, 2000, the RTC denied the Pereas motion for
reconsideration,4 reiterating that the cooperative gross negligence of
the Pereas and PNR had caused the collision that led to the death

of Aaron; and that the damages awarded to the Zarates were not
excessive, but based on the established circumstances.
The CAs Ruling
Both the Pereas and PNR appealed (C.A.-G.R. CV No. 68916).
PNR assigned the following errors, to wit: 5
The Court a quo erred in:
1. In finding the defendant-appellant Philippine National
Railways jointly and severally liable together with defendantappellants spouses Teodorico and Nanette Perea and
defendant-appellant Clemente Alfaro to pay plaintiffsappellees for the death of Aaron Zarate and damages.
2. In giving full faith and merit to the oral testimonies of
plaintiffs-appellees
witnesses
despite
overwhelming
documentary evidence on record, supporting the case of
defendants-appellants Philippine National Railways.
The Pereas ascribed the following errors to the RTC, namely:
The trial court erred in finding defendants-appellants jointly and
severally liable for actual, moral and exemplary damages and
attorneys fees with the other defendants.
The trial court erred in dismissing the cross-claim of the appellants
Pereas against the Philippine National Railways and in not holding
the latter and its train driver primarily responsible for the incident.
The trial court erred in awarding excessive damages and attorneys
fees.
The trial court erred in awarding damages in the form of deceaseds
loss of earning capacity in the absence of sufficient basis for such an
award.

On November 13, 2002, the CA promulgated its decision, affirming

the findings of the RTC, but limited the moral damages
to P 2,500,000.00; and deleted the attorneys fees because the RTC
did not state the factual and legal bases, to wit: 6
WHEREFORE, premises considered, the assailed Decision of the
Regional Trial Court, Branch 260 of Paraaque City is AFFIRMED
with the modification that the award of Actual Damages is reduced
to P59,502.76; Moral Damages is reduced to P 2,500,000.00; and
the award for Attorneys Fees is Deleted.
SO ORDERED.
The CA upheld the award for the loss of Aarons earning capacity,
taking cognizance of the ruling in Cariaga v. Laguna Tayabas Bus
Company and Manila Railroad Company,7 wherein the Court gave
the heirs of Cariaga a sum representing the loss of the deceaseds
earning capacity despite Cariaga being only a medical student at the
time of the fatal incident. Applying the formula adopted in the
American Expectancy Table of Mortality:
2/3 x (80 - age at the time of death) = life expectancy
the CA determined the life expectancy of Aaron to be 39.3 years
upon reckoning his life expectancy from age of 21 (the age when he
would have graduated from college and started working for his own
livelihood) instead of 15 years (his age when he died). Considering
that the nature of his work and his salary at the time of Aarons death
were unknown, it used the prevailing minimum wage of P 280.00/day
to compute Aarons gross annual salary to be P110,716.65, inclusive
of the thirteenth month pay. Multiplying this annual salary by Aarons
life expectancy of 39.3 years, his gross income would aggregate
to P 4,351,164.30, from which his estimated expenses in the sum
of P2,189,664.30 was deducted to finally arrive at P 2,161,500.00 as
net income. Due to Aarons computed net income turning out to be
higher than the amount claimed by the Zarates, only P 2,109,071.00,
the amount expressly prayed for by them, was granted.

On April 4, 2003, the CA denied the Pereas motion for

reconsideration.8
Issues
In this appeal, the Pereas list the following as the errors committed
by the CA, to wit:
I. The lower court erred when it upheld the trial courts decision
holding the petitioners jointly and severally liable to pay damages
with Philippine National Railways and dismissing their cross-claim
against the latter.
II. The lower court erred in affirming the trial courts decision
awarding damages for loss of earning capacity of a minor who was
only a high school student at the time of his death in the absence of
sufficient basis for such an award.
III. The lower court erred in not reducing further the amount of
damages awarded, assuming petitioners are liable at all.
Ruling
The petition has no merit.
1.
Were the Pereas and PNR jointly
and severally liable for damages?
The Zarates brought this action for recovery of damages against
both the Pereas and the PNR, basing their claim against the
Pereas on breach of contract of carriage and against the PNR on
quasi-delict.
The RTC found the Pereas and the PNR negligent. The CA affirmed
the findings.
We concur with the CA.

To start with, the Pereas defense was that they exercised the
diligence of a good father of the family in the selection and
supervision of Alfaro, the van driver, by seeing to it that Alfaro had a
drivers license and that he had not been involved in any vehicular
accident prior to the fatal collision with the train; that they even had
their own son travel to and from school on a daily basis; and that
Teodoro Perea himself sometimes accompanied Alfaro in
transporting the passengers to and from school. The RTC gave scant
consideration to such defense by regarding such defense as
inappropriate in an action for breach of contract of carriage.
We find no adequate cause to differ from the conclusions of the
lower courts that the Pereas operated as a common carrier; and
that their standard of care was extraordinary diligence, not the
ordinary diligence of a good father of a family.
Although in this jurisdiction the operator of a school bus service has
been usually regarded as a private carrier,9primarily because he only
caters to some specific or privileged individuals, and his operation is
neither open to the indefinite public nor for public use, the exact
nature of the operation of a school bus service has not been finally
settled. This is the occasion to lay the matter to rest.
A carrier is a person or corporation who undertakes to transport or
convey goods or persons from one place to another, gratuitously or
for hire. The carrier is classified either as a private/special carrier or
as a common/public carrier.10 A private carrier is one who, without
making the activity a vocation, or without holding himself or itself out
to the public as ready to act for all who may desire his or its services,
undertakes, by special agreement in a particular instance only, to
transport goods or persons from one place to another either
gratuitously or for hire.11The provisions on ordinary contracts of the
Civil Code govern the contract of private carriage.The diligence
required of a private carrier is only ordinary, that is, the diligence of a
good father of the family. In contrast, a common carrier is a person,
corporation, firm or association engaged in the business of carrying
or transporting passengers or goods or both, by land, water, or air,
for compensation, offering such services to the public. 12 Contracts of
common carriage are governed by the provisions on common
carriers of the Civil Code, the Public Service Act, 13 and other special

laws relating to transportation. A common carrier is required to

observe extraordinary diligence, and is presumed to be at fault or to
have acted negligently in case of the loss of the effects of
passengers, or the death or injuries to passengers. 14
In relation to common carriers, the Court defined public use in the
following terms in United States v. Tan Piaco,15viz:
"Public use" is the same as "use by the public". The essential feature
of the public use is not confined to privileged individuals, but is open
to the indefinite public. It is this indefinite or unrestricted quality that
gives it its public character. In determining whether a use is public,
we must look not only to the character of the business to be done,
but also to the proposed mode of doing it. If the use is merely
optional with the owners, or the public benefit is merely incidental, it
is not a public use, authorizing the exercise of the jurisdiction of the
public utility commission. There must be, in general, a right which the
law compels the owner to give to the general public. It is not enough
that the general prosperity of the public is promoted. Public use is
not synonymous with public interest. The true criterion by which to
judge the character of the use is whether the public may enjoy it by
right or only by permission.
In De Guzman v. Court of Appeals,16 the Court noted that Article
1732 of the Civil Code avoided any distinction between a person or
an enterprise offering transportation on a regular or an isolated basis;
and has not distinguished a carrier offering his services to the
general public, that is, the general community or population, from
one offering his services only to a narrow segment of the general
population.
Nonetheless, the concept of a common carrier embodied in Article
1732 of the Civil Code coincides neatly with the notion of public
service under the Public Service Act, which supplements the law on
common carriers found in the Civil Code. Public service, according to
Section 13, paragraph (b) of the Public Service Act, includes:
x x x every person that now or hereafter may own, operate, manage,
or control in the Philippines, for hire or compensation, with general or
limited clientle, whether permanent or occasional, and done for the

general business purposes, any common carrier, railroad, street

railway, traction railway, subway motor vehicle, either for freight or
passenger, or both, with or without fixed route and whatever may be
its classification, freight or carrier service of any class, express
service, steamboat, or steamship line, pontines, ferries and water
craft, engaged in the transportation of passengers or freight or both,
shipyard, marine repair shop, ice-refrigeration plant, canal, irrigation
system, gas, electric light, heat and power, water supply and power
petroleum, sewerage system, wire or wireless communications
systems, wire or wireless broadcasting stations and other similar
public services. x x x.17
Given the breadth of the aforequoted characterization of a common
carrier, the Court has considered as common carriers pipeline
operators,18 custom brokers and warehousemen,19 and barge
operators20 even if they had limited clientle.
As all the foregoing indicate, the true test for a common carrier is not
the quantity or extent of the business actually transacted, or the
number and character of the conveyances used in the activity, but
whether the undertaking is a part of the activity engaged in by the
carrier that he has held out to the general public as his business or
occupation. If the undertaking is a single transaction, not a part of the
general business or occupation engaged in, as advertised and held
out to the general public, the individual or the entity rendering such
service is a private, not a common, carrier. The question must be
determined by the character of the business actually carried on by
the carrier, not by any secret intention or mental reservation it may
entertain or assert when charged with the duties and obligations that
the law imposes.21
Applying these considerations to the case before us, there is no
question that the Pereas as the operators of a school bus service
were: (a) engaged in transporting passengers generally as a
business, not just as a casual occupation; (b) undertaking to carry
passengers over established roads by the method by which the
business was conducted; and (c) transporting students for a fee.
Despite catering to a limited clientle, the Pereas operated as a
common carrier because they held themselves out as a ready

transportation indiscriminately to the students of a particular school

living within or near where they operated the service and for a fee.
The common carriers standard of care and vigilance as to the safety
of the passengers is defined by law. Given the nature of the business
and for reasons of public policy, the common carrier is bound "to
observe extraordinary diligence in the vigilance over the goods and
for the safety of the passengers transported by them, according to all
the circumstances of each case." 22 Article 1755 of the Civil Code
specifies that the common carrier should "carry the passengers
safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with a due regard for all
the circumstances." To successfully fend off liability in an action upon
the death or injury to a passenger, the common carrier must prove
his or its observance of that extraordinary diligence; otherwise, the
legal presumption that he or it was at fault or acted negligently would
stand.23 No device, whether by stipulation, posting of notices,
statements on tickets, or otherwise, may dispense with or lessen the
responsibility of the common carrier as defined under Article 1755 of
the Civil Code. 24
And, secondly, the Pereas have not presented any compelling
defense or reason by which the Court might now reverse the CAs
findings on their liability. On the contrary, an examination of the
records shows that the evidence fully supported the findings of the
CA.
As earlier stated, the Pereas, acting as a common carrier, were
already presumed to be negligent at the time of the accident
because death had occurred to their passenger.25 The presumption
of negligence, being a presumption of law, laid the burden of
evidence on their shoulders to establish that they had not been
negligent.26 It was the law no less that required them to prove their
observance of extraordinary diligence in seeing to the safe and
secure carriage of the passengers to their destination. Until they did
so in a credible manner, they stood to be held legally responsible for
the death of Aaron and thus to be held liable for all the natural
consequences of such death.

There is no question that the Pereas did not overturn the

presumption of their negligence by credible evidence. Their defense
of having observed the diligence of a good father of a family in the
selection and supervision of their driver was not legally sufficient.
According to Article 1759 of the Civil Code, their liability as a
common carrier did not cease upon proof that they exercised all the
diligence of a good father of a family in the selection and supervision
of their employee. This was the reason why the RTC treated this
defense of the Pereas as inappropriate in this action for breach of
contract of carriage.
The Pereas were liable for the death of Aaron despite the fact that
their driver might have acted beyond the scope of his authority or
even in violation of the orders of the common carrier. 27 In this
connection, the records showed their drivers actual negligence.
There was a showing, to begin with, that their driver traversed the
railroad tracks at a point at which the PNR did not permit motorists
going into the Makati area to cross the railroad tracks. Although that
point had been used by motorists as a shortcut into the Makati area,
that fact alone did not excuse their driver into taking that route. On
the other hand, with his familiarity with that shortcut, their driver was
fully aware of the risks to his passengers but he still disregarded the
risks. Compounding his lack of care was that loud music was playing
inside the air-conditioned van at the time of the accident. The
loudness most probably reduced his ability to hear the warning horns
of the oncoming train to allow him to correctly appreciate the lurking
dangers on the railroad tracks. Also, he sought to overtake a
passenger bus on the left side as both vehicles traversed the railroad
tracks. In so doing, he lost his view of the train that was then coming
from the opposite side of the passenger bus, leading him to
miscalculate his chances of beating the bus in their race, and of
getting clear of the train. As a result, the bus avoided a collision with
the train but the van got slammed at its rear, causing the fatality.
Lastly, he did not slow down or go to a full stop before traversing the
railroad tracks despite knowing that his slackening of speed and
going to a full stop were in observance of the right of way at railroad
tracks as defined by the traffic laws and regulations. 28He thereby
violated a specific traffic regulation on right of way, by virtue of which
he was immediately presumed to be negligent.29

The omissions of care on the part of the van driver constituted

negligence,30 which, according to Layugan v. Intermediate Appellate
Court,31 is "the omission to do something which a reasonable man,
guided by those considerations which ordinarily regulate the conduct
of human affairs, would do, or the doing of something which a
prudent and reasonable man would not do, 32 or as Judge Cooley
defines it, (t)he failure to observe for the protection of the interests of
another person, that degree of care, precaution, and vigilance which
the circumstances justly demand, whereby such other person suffers
injury."33
The test by which to determine the existence of negligence in a
particular case has been aptly stated in the leading case of Picart v.
Smith,34 thuswise:
The test by which to determine the existence of negligence in a
particular case may be stated as follows: Did the defendant in doing
the alleged negligent act use that reasonable care and caution which
an ordinarily prudent person would have used in the same situation?
If not, then he is guilty of negligence. The law here in effect adopts
the standard supposed to be supplied by the imaginary conduct of
the discreet paterfamilias of the Roman law. The existence of
negligence in a given case is not determined by reference to the
personal judgment of the actor in the situation before him. The law
considers what would be reckless, blameworthy, or negligent in the
man of ordinary intelligence and prudence and determines liability by
that.
The question as to what would constitute the conduct of a prudent
man in a given situation must of course be always determined in the
light of human experience and in view of the facts involved in the
particular case. Abstract speculation cannot here be of much value
but this much can be profitably said: Reasonable men govern their
conduct by the circumstances which are before them or known to
them. They are not, and are not supposed to be, omniscient of the
future. Hence they can be expected to take care only when there is
something before them to suggest or warn of danger. Could a
prudent man, in the case under consideration, foresee harm as a
result of the course actually pursued? If so, it was the duty of the
actor to take precautions to guard against that harm. Reasonable

foresight of harm, followed by the ignoring of the suggestion born of

this prevision, is always necessary before negligence can be held to
exist. Stated in these terms, the proper criterion for determining the
existence of negligence in a given case is this: Conduct is said to be
negligent when a prudent man in the position of the tortfeasor would
have foreseen that an effect harmful to another was sufficiently
probable to warrant his foregoing the conduct or guarding against its
consequences. (Emphasis supplied)
Pursuant to the Picart v. Smith test of negligence, the Pereas driver
was entirely negligent when he traversed the railroad tracks at a
point not allowed for a motorists crossing despite being fully aware
of the grave harm to be thereby caused to his passengers; and when
he disregarded the foresight of harm to his passengers by overtaking
the bus on the left side as to leave himself blind to the approach of
the oncoming train that he knew was on the opposite side of the bus.
Unrelenting, the Pereas cite Phil. National Railways v. Intermediate
Appellate Court,35 where the Court held the PNR solely liable for the
damages caused to a passenger bus and its passengers when its
train hit the rear end of the bus that was then traversing the railroad
crossing. But the circumstances of that case and this one share no
similarities. In Philippine National Railways v. Intermediate Appellate
Court, no evidence of contributory negligence was adduced against
the owner of the bus. Instead, it was the owner of the bus who
proved the exercise of extraordinary diligence by preponderant
evidence. Also, the records are replete with the showing of
negligence on the part of both the Pereas and the PNR. Another
distinction is that the passenger bus in Philippine National Railways
v. Intermediate Appellate Court was traversing the dedicated railroad
crossing when it was hit by the train, but the Pereas school van
traversed the railroad tracks at a point not intended for that purpose.
At any rate, the lower courts correctly held both the Pereas and the
PNR "jointly and severally" liable for damages arising from the death
of Aaron. They had been impleaded in the same complaint as
defendants against whom the Zarates had the right to relief, whether
jointly, severally, or in the alternative, in respect to or arising out of
the accident, and questions of fact and of law were common as to
the Zarates.36 Although the basis of the right to relief of the Zarates

(i.e., breach of contract of carriage) against the Pereas was distinct

from the basis of the Zarates right to relief against the PNR (i.e.,
quasi-delict under Article 2176, Civil Code), they nonetheless could
be held jointly and severally liable by virtue of their respective
negligence combining to cause the death of Aaron. As to the PNR,
the RTC rightly found the PNR also guilty of negligence despite the
school van of the Pereas traversing the railroad tracks at a point not
dedicated by the PNR as a railroad crossing for pedestrians and
motorists, because the PNR did not ensure the safety of others
through the placing of crossbars, signal lights, warning signs, and
other permanent safety barriers to prevent vehicles or pedestrians
from crossing there. The RTC observed that the fact that a crossing
guard had been assigned to man that point from 7 a.m. to 5 p.m. was
a good indicium that the PNR was aware of the risks to others as
well as the need to control the vehicular and other traffic there. Verily,
the Pereas and the PNR were joint tortfeasors.
2.
Was the indemnity for loss of
Aarons earning capacity proper?
The RTC awarded indemnity for loss of Aarons earning capacity.
Although agreeing with the RTC on the liability, the CA modified the
amount. Both lower courts took into consideration that Aaron, while
only a high school student, had been enrolled in one of the reputable
schools in the Philippines and that he had been a normal and ablebodied child prior to his death. The basis for the computation of
Aarons earning capacity was not what he would have become or
what he would have wanted to be if not for his untimely death, but
the minimum wage in effect at the time of his death. Moreover, the
RTCs computation of Aarons life expectancy rate was not reckoned
from his age of 15 years at the time of his death, but on 21 years, his
age when he would have graduated from college.
We find the considerations taken into account by the lower courts to
be reasonable and fully warranted.
Yet, the Pereas submit that the indemnity for loss of earning
capacity was speculative and unfounded.1wphi1 They cited People
v. Teehankee, Jr.,37 where the Court deleted the indemnity for victim

Jussi Leinos loss of earning capacity as a pilot for being speculative

due to his having graduated from high school at the International
School in Manila only two years before the shooting, and was at the
time of the shooting only enrolled in the first semester at the Manila
Aero Club to pursue his ambition to become a professional pilot. That
meant, according to the Court, that he was for all intents and
purposes only a high school graduate.
We reject the Pereas submission.
First of all, a careful perusal of the Teehankee, Jr. case shows that
the situation there of Jussi Leino was not akin to that of Aaron here.
The CA and the RTC were not speculating that Aaron would be some
highly-paid professional, like a pilot (or, for that matter, an engineer, a
physician, or a lawyer). Instead, the computation of Aarons earning
capacity was premised on him being a lowly minimum wage earner
despite his being then enrolled at a prestigious high school like Don
Bosco in Makati, a fact that would have likely ensured his success in
his later years in life and at work.
And, secondly, the fact that Aaron was then without a history of
earnings should not be taken against his parents and in favor of the
defendants whose negligence not only cost Aaron his life and his
right to work and earn money, but also deprived his parents of their
right to his presence and his services as well. Our law itself states
that the loss of the earning capacity of the deceased shall be the
liability of the guilty party in favor of the heirs of the deceased, and
shall in every case be assessed and awarded by the court "unless
the deceased on account of permanent physical disability not caused
by the defendant, had no earning capacity at the time of his
death."38 Accordingly, we emphatically hold in favor of the
indemnification for Aarons loss of earning capacity despite him
having been unemployed, because compensation of this nature is
awarded not for loss of time or earnings but for loss of the
deceaseds power or ability to earn money.39
This favorable treatment of the Zarates claim is not unprecedented.
In Cariaga v. Laguna Tayabas Bus Company and Manila Railroad
Company,40 fourth-year medical student Edgardo Carriagas earning
capacity, although he survived the accident but his injuries rendered

him permanently incapacitated, was computed to be that of the

physician that he dreamed to become. The Court considered his
scholastic record sufficient to justify the assumption that he could
have finished the medical course and would have passed the
medical board examinations in due time, and that he could have
possibly earned a modest income as a medical practitioner. Also, in
People v. Sanchez,41the Court opined that murder and rape victim
Eileen Sarmienta and murder victim Allan Gomez could have easily
landed good-paying jobs had they graduated in due time, and that
their jobs would probably pay them high monthly salaries
from P 10,000.00 to P 15,000.00 upon their graduation. Their
earning capacities were computed at rates higher than the minimum
wage at the time of their deaths due to their being already senior
agriculture students of the University of the Philippines in Los Baos,
the countrys leading educational institution in agriculture.

example for the public good. As a common carrier, the Pereas

needed to be vigorously reminded to observe their duty to exercise
extraordinary diligence to prevent a similarly senseless accident from
happening again. Only by an award of exemplary damages in that
amount would suffice to instill in them and others similarly situated
like them the ever-present need for greater and constant vigilance in
the conduct of a business imbued with public interest.
WHEREFORE,
we DENY the
petition
for
review
on certiorari; AFFIRM the decision promulgated on November 13,
2002; and ORDER the petitioners to pay the costs of suit.
SO ORDERED.

3.
Were the amounts of damages excessive?
The Pereas plead for the reduction of the moral and exemplary
damages awarded to the Zarates in the respective amounts
of P 2,500,000.00 and P 1,000,000.00 on the ground that such
amounts were excessive.
The plea is unwarranted.
The moral damages of P 2,500,000.00 were really just and
reasonable under the established circumstances of this case
because they were intended by the law to assuage the Zarates deep
mental anguish over their sons unexpected and violent death, and
their moral shock over the senseless accident. That amount would
not be too much, considering that it would help the Zarates obtain
the means, diversions or amusements that would alleviate their
suffering for the loss of their child. At any rate, reducing the amount
as excessive might prove to be an injustice, given the passage of a
long time from when their mental anguish was inflicted on them on
August 22, 1996.
Anent the P 1,000,000.00 allowed as exemplary damages, we
should not reduce the amount if only to render effective the desired

G.R. No. 126297

January 31, 2007

PROFESSIONAL SERVICES, INC., Petitioner,

vs.
NATIVIDAD and ENRIQUE AGANA, Respondents.
x-----------------------x
G.R. No. 126467

January 31, 2007

NATIVIDAD (Substituted by her children MARCELINO AGANA III,

ENRIQUE AGANA, JR., EMMA AGANA ANDAYA, JESUS AGANA,
and RAYMUND AGANA) and ENRIQUE AGANA, Petitioners,
vs.
JUAN FUENTES, Respondent.
x- - - - - - - - - - - - - - - - - - - -- - - - x
G.R. No. 127590

January 31, 2007

MIGUEL AMPIL, Petitioner,

vs.
NATIVIDAD AGANA and ENRIQUE AGANA, Respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:

medical examinations, Dr. Miguel Ampil, petitioner in G.R. No.

127590, diagnosed her to be suffering from "cancer of the sigmoid."
On April 11, 1984, Dr. Ampil, assisted by the medical staff4 of the
Medical City Hospital, performed an anterior resection surgery on
Natividad. He found that the malignancy in her sigmoid area had
spread on her left ovary, necessitating the removal of certain portions
of it. Thus, Dr. Ampil obtained the consent of Natividads husband,
Enrique Agana, to permit Dr. Juan Fuentes, respondent in G.R. No.
126467, to perform hysterectomy on her.
After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took
over, completed the operation and closed the incision.
However, the operation appeared to be flawed. In the corresponding
Record of Operation dated April 11, 1984, the attending nurses
entered these remarks:

Hospitals, having undertaken one of mankinds most important and

delicate endeavors, must assume the grave responsibility of
pursuing it with appropriate care. The care and service dispensed
through this high trust, however technical, complex and esoteric its
character may be, must meet standards of responsibility
commensurate with the undertaking to preserve and protect the
health, and indeed, the very lives of those placed in the hospitals
keeping.1

"sponge count lacking 2

Assailed in these three consolidated petitions for review on certiorari

is the Court of Appeals Decision2 dated September 6, 1996 in CAG.R. CV No. 42062 and CA-G.R. SP No. 32198 affirming with
modification the Decision3dated March 17, 1993 of the Regional Trial
Court (RTC), Branch 96, Quezon City in Civil Case No. Q-43322 and
nullifying its Order dated September 21, 1993.

After a couple of days, Natividad complained of excruciating pain in

her anal region. She consulted both Dr. Ampil and Dr. Fuentes about
it. They told her that the pain was the natural consequence of the
surgery. Dr. Ampil then recommended that she consult an oncologist
to examine the cancerous nodes which were not removed during the
operation.

The facts, as culled from the records, are:

On May 9, 1984, Natividad, accompanied by her husband, went to

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

On April 4, 1984, Natividad Agana was rushed to the Medical City

General Hospital (Medical City Hospital) because of difficulty of
bowel movement and bloody anal discharge. After a series of

"announced to surgeon searched (sic) done but to no avail continue

for closure."
On April 24, 1984, Natividad was released from the hospital. Her
hospital and medical bills, including the doctors fees, amounted to
P60,000.00.

On August 31, 1984, Natividad flew back to the Philippines, still

suffering from pains. Two weeks thereafter, her daughter found a
piece of gauze protruding from her vagina. Upon being informed
about it, Dr. Ampil proceeded to her house where he managed to
extract by hand a piece of gauze measuring 1.5 inches in width. He
then assured her that the pains would soon vanish.
Dr. Ampils assurance did not come true. Instead, the pains
intensified, prompting Natividad to seek treatment at the Polymedic
General Hospital. While confined there, Dr. Ramon Gutierrez
detected the presence of another foreign object in her vagina -- a
foul-smelling gauze measuring 1.5 inches in width which badly
infected her vaginal vault. A recto-vaginal fistula had formed in her
reproductive organs which forced stool to excrete through the
vagina. Another surgical operation was needed to remedy the
damage. Thus, in October 1984, Natividad underwent another
surgery.

On March 17, 1993, the RTC rendered its Decision in favor of the
Aganas, finding PSI, Dr. Ampil and Dr. Fuentes liable for negligence
and malpractice, the decretal part of which reads:
WHEREFORE, judgment is hereby rendered for the plaintiffs
ordering the defendants PROFESSIONAL SERVICES, INC., DR.
MIGUEL AMPIL and DR. JUAN FUENTES to pay to the plaintiffs,
jointly and severally, except in respect of the award for exemplary
damages and the interest thereon which are the liabilities of
defendants Dr. Ampil and Dr. Fuentes only, as follows:
1. As actual damages, the following amounts:
a. The equivalent in Philippine Currency of the total
of US$19,900.00 at the rate of P21.60-US$1.00, as
reimbursement of actual expenses incurred in the
United States of America;

On November 12, 1984, Natividad and her husband filed with the
RTC, Branch 96, Quezon City a complaint for damages against the
Professional Services, Inc. (PSI), owner of the Medical City Hospital,
Dr. Ampil, and Dr. Fuentes, docketed as Civil Case No. Q-43322.
They alleged that the latter are liable for negligence for leaving two
pieces of gauze inside Natividads body and malpractice for
concealing their acts of negligence.
Meanwhile, Enrique Agana also filed with the Professional
Regulation Commission (PRC) an administrative complaint for gross
negligence and malpractice against Dr. Ampil and Dr. Fuentes,
docketed as Administrative Case No. 1690. The PRC Board of
Medicine heard the case only with respect to Dr. Fuentes because it
failed to acquire jurisdiction over Dr. Ampil who was then in the
United States.
On February 16, 1986, pending the outcome of the above cases,
Natividad died and was duly substituted by her above-named
children (the Aganas).

b. The sum of P4,800.00 as travel taxes of plaintiffs

and their physician daughter;
c. The total sum of P45,802.50, representing the
cost of hospitalization at Polymedic Hospital,
medical fees, and cost of the saline solution;
2. As moral damages, the sum of P2,000,000.00;
3. As exemplary damages, the sum of P300,000.00;
4. As attorneys fees, the sum of P250,000.00;
5. Legal interest on items 1 (a), (b), and (c); 2; and 3
hereinabove, from date of filing of the complaint until full
payment; and
6. Costs of suit.
SO ORDERED.

Aggrieved, PSI, Dr. Fuentes and Dr. Ampil interposed an appeal to

the Court of Appeals, docketed as CA-G.R. CV No. 42062.
Incidentally, on April 3, 1993, the Aganas filed with the RTC a motion
for a partial execution of its Decision, which was granted in an Order
dated May 11, 1993. Thereafter, the sheriff levied upon certain
properties of Dr. Ampil and sold them for P451,275.00 and delivered
the amount to the Aganas.
Following their receipt of the money, the Aganas entered into an
agreement with PSI and Dr. Fuentes to indefinitely suspend any
further execution of the RTC Decision. However, not long thereafter,
the Aganas again filed a motion for an alias writ of execution against
the properties of PSI and Dr. Fuentes. On September 21, 1993, the
RTC granted the motion and issued the corresponding writ,
prompting Dr. Fuentes to file with the Court of Appeals a petition for
certiorari and prohibition, with prayer for preliminary injunction,
docketed as CA-G.R. SP No. 32198. During its pendency, the Court
of Appeals issued a Resolution5 dated October 29, 1993 granting Dr.
Fuentes prayer for injunctive relief.

whatever amount the latter will pay or had paid to the plaintiffsappellees, the decision appealed from is hereby AFFIRMED and the
instant appeal DISMISSED.
Concomitant with the above, the petition for certiorari and prohibition
filed by herein defendant-appellant Dr. Juan Fuentes in CA-G.R. SP
No. 32198 is hereby GRANTED and the challenged order of the
respondent judge dated September 21, 1993, as well as the alias
writ of execution issued pursuant thereto are hereby NULLIFIED and
SET ASIDE. The bond posted by the petitioner in connection with the
writ of preliminary injunction issued by this Court on November 29,
1993 is hereby cancelled.
Costs against defendants-appellants
Professional Services, Inc.

Dr.

Miguel

Ampil

and

SO ORDERED.
Only Dr. Ampil filed a motion for reconsideration, but it was denied in
a Resolution7 dated December 19, 1996.

On January 24, 1994, CA-G.R. SP No. 32198 was consolidated with

CA-G.R. CV No. 42062.

Hence, the instant consolidated petitions.

Meanwhile, on January 23, 1995, the PRC Board of Medicine

rendered its Decision6 in Administrative Case No. 1690 dismissing
the case against Dr. Fuentes. The Board held that the prosecution
failed to show that Dr. Fuentes was the one who left the two pieces
of gauze inside Natividads body; and that he concealed such fact
from Natividad.

In G.R. No. 126297, PSI alleged in its petition that the Court of
Appeals erred in holding that: (1) it is estopped from raising the
defense that Dr. Ampil is not its employee; (2) it is solidarily liable
with Dr. Ampil; and (3) it is not entitled to its counterclaim against the
Aganas. PSI contends that Dr. Ampil is not its employee, but a mere
consultant or independent contractor. As such, he alone should
answer for his negligence.

On September 6, 1996, the Court of Appeals rendered its Decision

jointly disposing of CA-G.R. CV No. 42062 and CA-G.R. SP No.
32198, thus:
WHEREFORE, except for the modification that the case against
defendant-appellant Dr. Juan Fuentes is hereby DISMISSED, and
with the pronouncement that defendant-appellant Dr. Miguel Ampil is
liable to reimburse defendant-appellant Professional Services, Inc.,

In G.R. No. 126467, the Aganas maintain that the Court of Appeals
erred in finding that Dr. Fuentes is not guilty of negligence or medical
malpractice, invoking the doctrine of res ipsa loquitur. They contend
that the pieces of gauze are prima facie proofs that the operating
surgeons have been negligent.
Finally, in G.R. No. 127590, Dr. Ampil asserts that the Court of
Appeals erred in finding him liable for negligence and malpractice

sans evidence that he left the two pieces of gauze in Natividads

vagina. He pointed to other probable causes, such as: (1) it was Dr.
Fuentes who used gauzes in performing the hysterectomy; (2) the
attending nurses failure to properly count the gauzes used during
surgery; and (3) the medical intervention of the American doctors
who examined Natividad in the United States of America.
For our resolution are these three vital issues: first, whether the
Court of Appeals erred in holding Dr. Ampil liable for negligence and
malpractice; second, whether the Court of Appeals erred in absolving
Dr. Fuentes of any liability; and third, whether PSI may be held
solidarily liable for the negligence of Dr. Ampil.

First, it is not disputed that the surgeons used gauzes as

sponges to control the bleeding of the patient during the
surgical operation.
Second, immediately after the operation, the nurses who
assisted in the surgery noted in their report that the sponge
count (was) lacking 2; that such anomaly was announced to
surgeon and that a search was done but to no avail
prompting Dr. Ampil to continue for closure x x x.
Third, after the operation, two (2) gauzes were extracted
from the same spot of the body of Mrs. Agana where the
surgery was performed.

I - G.R. No. 127590

Whether the Court of Appeals Erred in Holding Dr. Ampil
Liable for Negligence and Malpractice.
Dr. Ampil, in an attempt to absolve himself, gears the Courts
attention to other possible causes of Natividads detriment. He
argues that the Court should not discount either of the following
possibilities: first, Dr. Fuentes left the gauzes in Natividads body
after performing hysterectomy; second, the attending nurses erred in
counting the gauzes; and third, the American doctors were the ones
who placed the gauzes in Natividads body.
Dr. Ampils arguments are purely conjectural and without basis.
Records show that he did not present any evidence to prove that the
American doctors were the ones who put or left the gauzes in
Natividads body. Neither did he submit evidence to rebut the
correctness of the record of operation, particularly the number of
gauzes used. As to the alleged negligence of Dr. Fuentes, we are
mindful that Dr. Ampil examined his (Dr. Fuentes) work and found it
in order.
The glaring truth is that all the major circumstances, taken together,
as specified by the Court of Appeals, directly point to Dr. Ampil as the
negligent party, thus:

An operation requiring the placing of sponges in the incision is not

complete until the sponges are properly removed, and it is settled
that the leaving of sponges or other foreign substances in the wound
after the incision has been closed is at least prima facie negligence
by the operating surgeon.8 To put it simply, such act is considered so
inconsistent with due care as to raise an inference of negligence.
There are even legions of authorities to the effect that such act is
negligence per se.9
Of course, the Court is not blind to the reality that there are times
when danger to a patients life precludes a surgeon from further
searching missing sponges or foreign objects left in the body. But this
does not leave him free from any obligation. Even if it has been
shown that a surgeon was required by the urgent necessities of the
case to leave a sponge in his patients abdomen, because of the
dangers attendant upon delay, still, it is his legal duty to so inform his
patient within a reasonable time thereafter by advising her of what he
had been compelled to do. This is in order that she might seek relief
from the effects of the foreign object left in her body as her condition
might permit. The ruling in Smith v. Zeagler10 is explicit, thus:
The removal of all sponges used is part of a surgical operation, and
when a physician or surgeon fails to remove a sponge he has placed
in his patients body that should be removed as part of the operation,
he thereby leaves his operation uncompleted and creates a new
condition which imposes upon him the legal duty of calling the new

condition to his patients attention, and endeavoring with the means

he has at hand to minimize and avoid untoward results likely to
ensue therefrom.
Here, Dr. Ampil did not inform Natividad about the missing two
pieces of gauze. Worse, he even misled her that the pain she was
experiencing was the ordinary consequence of her operation. Had he
been more candid, Natividad could have taken the immediate and
appropriate medical remedy to remove the gauzes from her body. To
our mind, what was initially an act of negligence by Dr. Ampil has
ripened into a deliberate wrongful act of deceiving his patient.
This is a clear case of medical malpractice or more appropriately,
medical negligence. To successfully pursue this kind of case, a
patient must only prove that a health care provider either failed to do
something which a reasonably prudent health care provider would
have done, or that he did something that a reasonably prudent
provider would not have done; and that failure or action caused injury
to the patient.11 Simply put, the elements are duty, breach, injury and
proximate causation. Dr, Ampil, as the lead surgeon, had the duty to
remove all foreign objects, such as gauzes, from Natividads body
before closure of the incision. When he failed to do so, it was his
duty to inform Natividad about it. Dr. Ampil breached both duties.
Such breach caused injury to Natividad, necessitating her further
examination by American doctors and another surgery. That Dr.
Ampils negligence is the proximate cause 12 of Natividads injury
could be traced from his act of closing the incision despite the
information given by the attending nurses that two pieces of gauze
were still missing. That they were later on extracted from Natividads
vagina established the causal link between Dr. Ampils negligence
and the injury. And what further aggravated such injury was his
deliberate concealment of the missing gauzes from the knowledge of
Natividad and her family.
II - G.R. No. 126467
Whether the Court of Appeals Erred in Absolving
Dr. Fuentes of any Liability

The Aganas assailed the dismissal by the trial court of the case
against Dr. Fuentes on the ground that it is contrary to the doctrine of
res ipsa loquitur. According to them, the fact that the two pieces of
gauze were left inside Natividads body is a prima facie evidence of
Dr. Fuentes negligence.
We are not convinced.
Literally, res ipsa loquitur means "the thing speaks for itself." It is the
rule that the fact of the occurrence of an injury, taken with the
surrounding circumstances, may permit an inference or raise a
presumption of negligence, or make out a plaintiffs prima facie case,
and present a question of fact for defendant to meet with an
explanation.13 Stated differently, where the thing which caused the
injury, without the fault of the injured, is under the exclusive control of
the defendant and the injury is such that it should not have occurred
if he, having such control used proper care, it affords reasonable
evidence, in the absence of explanation that the injury arose from the
defendants want of care, and the burden of proof is shifted to him to
establish that he has observed due care and diligence. 14
From the foregoing statements of the rule, the requisites for the
applicability of the doctrine of res ipsa loquitur are: (1) the
occurrence of an injury; (2) the thing which caused the injury was
under the control and management of the defendant; (3) the
occurrence was such that in the ordinary course of things, would not
have happened if those who had control or management used
proper care; and (4) the absence of explanation by the defendant. Of
the foregoing requisites, the most instrumental is the "control and
management of the thing which caused the injury." 15
We find the element of "control and management of the thing which
caused the injury" to be wanting. Hence, the doctrine of res ipsa
loquitur will not lie.
It was duly established that Dr. Ampil was the lead surgeon during
the operation of Natividad. He requested the assistance of Dr.
Fuentes only to perform hysterectomy when he (Dr. Ampil) found that
the malignancy in her sigmoid area had spread to her left ovary. Dr.
Fuentes performed the surgery and thereafter reported and showed

his work to Dr. Ampil. The latter examined it and finding everything to
be in order, allowed Dr. Fuentes to leave the operating room. Dr.
Ampil then resumed operating on Natividad. He was about to finish
the procedure when the attending nurses informed him that two
pieces of gauze were missing. A "diligent search" was conducted, but
the misplaced gauzes were not found. Dr. Ampil then directed that
the incision be closed. During this entire period, Dr. Fuentes was no
longer in the operating room and had, in fact, left the hospital.
Under the "Captain of the Ship" rule, the operating surgeon is the
person in complete charge of the surgery room and all personnel
connected with the operation. Their duty is to obey his orders. 16 As
stated before, Dr. Ampil was the lead surgeon. In other words, he
was the "Captain of the Ship." That he discharged such role is
evident from his following conduct: (1) calling Dr. Fuentes to perform
a hysterectomy; (2) examining the work of Dr. Fuentes and finding it
in order; (3) granting Dr. Fuentes permission to leave; and (4)
ordering the closure of the incision. To our mind, it was this act of
ordering the closure of the incision notwithstanding that two pieces of
gauze remained unaccounted for, that caused injury to Natividads
body. Clearly, the control and management of the thing which caused
the injury was in the hands of Dr. Ampil, not Dr. Fuentes.
In this jurisdiction, res ipsa loquitur is not a rule of substantive law,
hence, does not per se create or constitute an independent or
separate ground of liability, being a mere evidentiary rule. 17 In other
words, mere invocation and application of the doctrine does not
dispense with the requirement of proof of negligence. Here, the
negligence was proven to have been committed by Dr. Ampil and not
by Dr. Fuentes.
III - G.R. No. 126297
Whether PSI Is Liable for the Negligence of Dr. Ampil
The third issue necessitates a glimpse at the historical development
of hospitals and the resulting theories concerning their liability for the
negligence of physicians.

Until the mid-nineteenth century, hospitals were generally charitable

institutions, providing medical services to the lowest classes of
society, without regard for a patients ability to pay.18 Those who
could afford medical treatment were usually treated at home by their
doctors.19 However, the days of house calls and philanthropic health
care are over. The modern health care industry continues to distance
itself from its charitable past and has experienced a significant
conversion from a not-for-profit health care to for-profit hospital
businesses. Consequently, significant changes in health law have
accompanied the business-related changes in the hospital industry.
One important legal change is an increase in hospital liability for
medical malpractice. Many courts now allow claims for hospital
vicarious liability under the theories of respondeat superior, apparent
authority, ostensible authority, or agency by estoppel. 20
In this jurisdiction, the statute governing liability for negligent acts is
Article 2176 of the Civil Code, which reads:
Art. 2176. Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage
done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed
by the provisions of this Chapter.
A derivative of this provision is Article 2180, the rule governing
vicarious liability under the doctrine of respondeat superior, thus:
ART. 2180. The obligation imposed by Article 2176 is demandable
not only for ones own acts or omissions, but also for those of
persons for whom one is responsible.
x x x

x x x

The owners and managers of an establishment or enterprise are

likewise responsible for damages caused by their employees in the
service of the branches in which the latter are employed or on the
occasion of their functions.

Employers shall be liable for the damages caused by their

employees and household helpers acting within the scope of their
assigned tasks even though the former are not engaged in any
business or industry.
x x x

The responsibility treated of in this article shall cease when the

persons herein mentioned prove that they observed all the diligence
of a good father of a family to prevent damage.
A prominent civilist commented that professionals engaged by an
employer, such as physicians, dentists, and pharmacists, are not
"employees" under this article because the manner in which they
perform their work is not within the control of the latter (employer). In
other words, professionals are considered personally liable for the
fault or negligence they commit in the discharge of their duties, and
their employer cannot be held liable for such fault or negligence. In
the context of the present case, "a hospital cannot be held liable for
the fault or negligence of a physician or surgeon in the treatment or
operation of patients."21
The foregoing view is grounded on the traditional notion that the
professional status and the very nature of the physicians calling
preclude him from being classed as an agent or employee of a
hospital, whenever he acts in a professional capacity.22 It has been
said that medical practice strictly involves highly developed and
specialized knowledge,23 such that physicians are generally free to
exercise their own skill and judgment in rendering medical services
sans interference.24 Hence, when a doctor practices medicine in a
hospital setting, the hospital and its employees are deemed to
subserve him in his ministrations to the patient and his actions are of
his own responsibility.25
26

The case of Schloendorff v. Society of New York Hospital was then

considered an authority for this view. The "Schloendorff doctrine"
regards a physician, even if employed by a hospital, as an
independent contractor because of the skill he exercises and the lack
of control exerted over his work. Under this doctrine, hospitals are
exempt from the application of the respondeat superior principle for

fault or negligence committed by physicians in the discharge of their

profession.
However, the efficacy of the foregoing doctrine has weakened with
the significant developments in medical care. Courts came to realize
that modern hospitals are increasingly taking active role in supplying
and regulating medical care to patients. No longer were a hospitals
functions limited to furnishing room, food, facilities for treatment and
operation, and attendants for its patients. Thus, in Bing v.
Thunig,27 the New York Court of Appeals deviated from the
Schloendorff doctrine, noting that modern hospitals actually do far
more than provide facilities for treatment. Rather, they regularly
employ, on a salaried basis, a large staff of physicians, interns,
nurses, administrative and manual workers. They charge patients for
medical care and treatment, even collecting for such services
through legal action, if necessary. The court then concluded that
there is no reason to exempt hospitals from the universal rule of
respondeat superior.
In our shores, the nature of the relationship between the hospital and
the physicians is rendered inconsequential in view of our categorical
pronouncement in Ramos v. Court of Appeals 28 that for purposes of
apportioning responsibility in medical negligence cases, an
employer-employee relationship in effect exists between hospitals
and their attending and visiting physicians. This Court held:
"We now discuss the responsibility of the hospital in this particular
incident. The unique practice (among private hospitals) of filling up
specialist staff with attending and visiting "consultants," who are
allegedly not hospital employees, presents problems in apportioning
responsibility for negligence in medical malpractice cases. However,
the difficulty is more apparent than real.
In the first place, hospitals exercise significant control in the hiring
and firing of consultants and in the conduct of their work within the
hospital premises. Doctors who apply for consultant slots, visiting or
attending, are required to submit proof of completion of residency,
their educational qualifications, generally, evidence of accreditation
by the appropriate board (diplomate), evidence of fellowship in most
cases, and references. These requirements are carefully scrutinized

by members of the hospital administration or by a review committee

set up by the hospital who either accept or reject the application. x x
x.
After a physician is accepted, either as a visiting or attending
consultant, he is normally required to attend clinico-pathological
conferences, conduct bedside rounds for clerks, interns and
residents, moderate grand rounds and patient audits and perform
other tasks and responsibilities, for the privilege of being able to
maintain a clinic in the hospital, and/or for the privilege of admitting
patients into the hospital. In addition to these, the physicians
performance as a specialist is generally evaluated by a peer review
committee on the basis of mortality and morbidity statistics, and
feedback from patients, nurses, interns and residents. A consultant
remiss in his duties, or a consultant who regularly falls short of the
minimum standards acceptable to the hospital or its peer review
committee, is normally politely terminated.
In other words, private hospitals, hire, fire and exercise real control
over their attending and visiting consultant staff. While consultants
are not, technically employees, x x x, the control exercised, the
hiring, and the right to terminate consultants all fulfill the important
hallmarks of an employer-employee relationship, with the exception
of the payment of wages. In assessing whether such a relationship in
fact exists, the control test is determining. Accordingly, on the basis
of the foregoing, we rule that for the purpose of allocating
responsibility in medical negligence cases, an employer-employee
relationship in effect exists between hospitals and their attending and
visiting physicians. "
But the Ramos pronouncement is not our only basis in sustaining
PSIs liability. Its liability is also anchored upon the agency principle
of apparent authority or agency by estoppel and the doctrine of
corporate negligence which have gained acceptance in the
determination of a hospitals liability for negligent acts of health
professionals. The present case serves as a perfect platform to test
the applicability of these doctrines, thus, enriching our jurisprudence.
Apparent authority, or what is sometimes referred to as the "holding

out" theory, or doctrine of ostensible agency or agency by

estoppel,29 has its origin from the law of agency. It imposes liability,
not as the result of the reality of a contractual relationship, but rather
because of the actions of a principal or an employer in somehow
misleading the public into believing that the relationship or the
authority exists.30 The concept is essentially one of estoppel and has
been explained in this manner:
"The principal is bound by the acts of his agent with the apparent
authority which he knowingly permits the agent to assume, or which
he holds the agent out to the public as possessing. The question in
every case is whether the principal has by his voluntary act placed
the agent in such a situation that a person of ordinary prudence,
conversant with business usages and the nature of the particular
business, is justified in presuming that such agent has authority to
perform the particular act in question.31
The applicability of apparent authority in the field of hospital liability
was upheld long time ago in Irving v. Doctor Hospital of Lake Worth,
Inc.32 There, it was explicitly stated that "there does not appear to be
any rational basis for excluding the concept of apparent authority
from the field of hospital liability." Thus, in cases where it can be
shown that a hospital, by its actions, has held out a particular
physician as its agent and/or employee and that a patient has
accepted treatment from that physician in the reasonable belief that it
is being rendered in behalf of the hospital, then the hospital will be
liable for the physicians negligence.
Our jurisdiction recognizes the concept of an agency by implication
or estoppel. Article 1869 of the Civil Code reads:
ART. 1869. Agency may be express, or implied from the acts of the
principal, from his silence or lack of action, or his failure to repudiate
the agency, knowing that another person is acting on his behalf
without authority.
In this case, PSI publicly displays in the lobby of the Medical City
Hospital the names and specializations of the physicians associated
or accredited by it, including those of Dr. Ampil and Dr. Fuentes. We
concur with the Court of Appeals conclusion that it "is now estopped

from passing all the blame to the physicians whose names it proudly
paraded in the public directory leading the public to believe that it
vouched for their skill and competence." Indeed, PSIs act is
tantamount to holding out to the public that Medical City Hospital,
through its accredited physicians, offers quality health care services.
By accrediting Dr. Ampil and Dr. Fuentes and publicly advertising
their qualifications, the hospital created the impression that they
were its agents, authorized to perform medical or surgical services
for its patients. As expected, these patients, Natividad being one of
them, accepted the services on the reasonable belief that such were
being rendered by the hospital or its employees, agents, or servants.
The trial court correctly pointed out:
x x x regardless of the education and status in life of the patient, he
ought not be burdened with the defense of absence of employeremployee relationship between the hospital and the independent
physician whose name and competence are certainly certified to the
general public by the hospitals act of listing him and his specialty in
its lobby directory, as in the case herein. The high costs of todays
medical and health care should at least exact on the hospital greater,
if not broader, legal responsibility for the conduct of treatment and
surgery within its facility by its accredited physician or surgeon,
regardless of whether he is independent or employed." 33
The wisdom of the foregoing ratiocination is easy to discern.
Corporate entities, like PSI, are capable of acting only through other
individuals, such as physicians. If these accredited physicians do
their job well, the hospital succeeds in its mission of offering quality
medical services and thus profits financially. Logically, where
negligence mars the quality of its services, the hospital should not be
allowed to escape liability for the acts of its ostensible agents.
We now proceed to the doctrine of corporate negligence or corporate
responsibility.
One allegation in the complaint in Civil Case No. Q-43332 for
negligence and malpractice is that PSI as owner, operator and
manager of Medical City Hospital, "did not perform the necessary
supervision nor exercise diligent efforts in the supervision of Drs.
Ampil and Fuentes and its nursing staff, resident doctors, and

medical interns who assisted Drs. Ampil and Fuentes in the

performance of their duties as surgeons." 34 Premised on the doctrine
of corporate negligence, the trial court held that PSI is directly liable
for such breach of duty.
We agree with the trial court.
Recent years have seen the doctrine of corporate negligence as the
judicial answer to the problem of allocating hospitals liability for the
negligent acts of health practitioners, absent facts to support the
application of respondeat superior or apparent authority. Its
formulation proceeds from the judiciarys acknowledgment that in
these modern times, the duty of providing quality medical service is
no longer the sole prerogative and responsibility of the physician.
The modern hospitals have changed structure. Hospitals now tend to
organize a highly professional medical staff whose competence and
performance need to be monitored by the hospitals commensurate
with their inherent responsibility to provide quality medical care. 35
The doctrine has its genesis in Darling v. Charleston Community
Hospital.36 There, the Supreme Court of Illinois held that "the jury
could have found a hospital negligent, inter alia, in failing to have a
sufficient number of trained nurses attending the patient; failing to
require a consultation with or examination by members of the
hospital staff; and failing to review the treatment rendered to the
patient." On the basis of Darling, other jurisdictions held that a
hospitals corporate negligence extends to permitting a physician
known to be incompetent to practice at the hospital. 37 With the
passage of time, more duties were expected from hospitals, among
them: (1) the use of reasonable care in the maintenance of safe and
adequate facilities and equipment; (2) the selection and retention of
competent physicians; (3) the overseeing or supervision of all
persons who practice medicine within its walls; and (4) the
formulation, adoption and enforcement of adequate rules and
policies that ensure quality care for its patients. 38 Thus, in Tucson
Medical Center, Inc. v. Misevich, 39 it was held that a hospital,
following the doctrine of corporate responsibility, has the duty to see
that it meets the standards of responsibilities for the care of patients.
Such duty includes the proper supervision of the members of its
medical staff. And in Bost v. Riley,40 the court concluded that a patient

who enters a hospital does so with the reasonable expectation that it

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

attending nurses report, to investigate and inform Natividad

regarding the missing gauzes amounts to callous negligence. Not
only did PSI breach its duties to oversee or supervise all persons
who practice medicine within its walls, it also failed to take an active
step in fixing the negligence committed. This renders PSI, not only
vicariously liable for the negligence of Dr. Ampil under Article 2180 of
the Civil Code, but also directly liable for its own negligence under
Article 2176. In Fridena, the Supreme Court of Arizona held:
x x x In recent years, however, the duty of care owed to the patient
by the hospital has expanded. The emerging trend is to hold the
hospital responsible where the hospital has failed to monitor and
review medical services being provided within its walls. See Kahn
Hospital Malpractice Prevention, 27 De Paul . Rev. 23 (1977).
Among the cases indicative of the emerging trend is Purcell v.
Zimbelman, 18 Ariz. App. 75,500 P. 2d 335 (1972). In Purcell, the
hospital argued that it could not be held liable for the malpractice of a
medical practitioner because he was an independent contractor
within the hospital. The Court of Appeals pointed out that the hospital
had created a professional staff whose competence and
performance was to be monitored and reviewed by the governing
body of the hospital, and the court held that a hospital would be
negligent where it had knowledge or reason to believe that a doctor
using the facilities was employing a method of treatment or care
which fell below the recognized standard of care.
Subsequent to the Purcell decision, the Arizona Court of Appeals
held that a hospital has certain inherent responsibilities regarding the
quality of medical care furnished to patients within its walls and it
must meet the standards of responsibility commensurate with this
undertaking. Beeck v. Tucson General Hospital, 18 Ariz. App. 165,
500 P. 2d 1153 (1972). This court has confirmed the rulings of the
Court of Appeals that a hospital has the duty of supervising the
competence of the doctors on its staff. x x x.
x

In the amended complaint, the plaintiffs did plead that the operation
was performed at the hospital with its knowledge, aid, and

assistance, and that the negligence of the defendants was the

proximate cause of the patients injuries. We find that such general
allegations of negligence, along with the evidence produced at the
trial of this case, are sufficient to support the hospitals liability based
on the theory of negligent supervision."
Anent the corollary issue of whether PSI is solidarily liable with Dr.
Ampil for damages, let it be emphasized that PSI, apart from a
general denial of its responsibility, failed to adduce evidence showing
that it exercised the diligence of a good father of a family in the
accreditation and supervision of the latter. In neglecting to offer such
proof, PSI failed to discharge its burden under the last paragraph of
Article 2180 cited earlier, and, therefore, must be adjudged solidarily
liable with Dr. Ampil. Moreover, as we have discussed, PSI is also
directly liable to the Aganas.
One final word. Once a physician undertakes the treatment and care
of a patient, the law imposes on him certain obligations. In order to
escape liability, he must possess that reasonable degree of learning,
skill and experience required by his profession. At the same time, he
must apply reasonable care and diligence in the exercise of his skill
and the application of his knowledge, and exert his best judgment.
WHEREFORE, we DENY all the petitions and AFFIRM the
challenged Decision of the Court of Appeals in CA-G.R. CV No.
42062 and CA-G.R. SP No. 32198.
Costs against petitioners PSI and Dr. Miguel Ampil.
SO ORDERED.

G.R. No. 126297

January 31, 2007

PROFESSIONAL SERVICES, INC., Petitioner,

vs.
NATIVIDAD and ENRIQUE AGANA, Respondents.
x-----------------------x
G.R. No. 126467

January 31, 2007

NATIVIDAD (Substituted by her children MARCELINO AGANA III,

ENRIQUE AGANA, JR., EMMA AGANA ANDAYA, JESUS AGANA,
and RAYMUND AGANA) and ENRIQUE AGANA, Petitioners,
vs.
JUAN FUENTES, Respondent.

x- - - - - - - - - - - - - - - - - - - -- - - - x
G.R. No. 127590

January 31, 2007

MIGUEL AMPIL, Petitioner,

vs.
NATIVIDAD AGANA and ENRIQUE AGANA, Respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:

spread on her left ovary, necessitating the removal of certain portions

of it. Thus, Dr. Ampil obtained the consent of Natividads husband,
Enrique Agana, to permit Dr. Juan Fuentes, respondent in G.R. No.
126467, to perform hysterectomy on her.
After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took
over, completed the operation and closed the incision.
However, the operation appeared to be flawed. In the corresponding
Record of Operation dated April 11, 1984, the attending nurses
entered these remarks:

Hospitals, having undertaken one of mankinds most important and

delicate endeavors, must assume the grave responsibility of
pursuing it with appropriate care. The care and service dispensed
through this high trust, however technical, complex and esoteric its
character may be, must meet standards of responsibility
commensurate with the undertaking to preserve and protect the
health, and indeed, the very lives of those placed in the hospitals
keeping.1

"sponge count lacking 2

Assailed in these three consolidated petitions for review on certiorari

is the Court of Appeals Decision2 dated September 6, 1996 in CAG.R. CV No. 42062 and CA-G.R. SP No. 32198 affirming with
modification the Decision3dated March 17, 1993 of the Regional Trial
Court (RTC), Branch 96, Quezon City in Civil Case No. Q-43322 and
nullifying its Order dated September 21, 1993.

After a couple of days, Natividad complained of excruciating pain in

her anal region. She consulted both Dr. Ampil and Dr. Fuentes about
it. They told her that the pain was the natural consequence of the
surgery. Dr. Ampil then recommended that she consult an oncologist
to examine the cancerous nodes which were not removed during the
operation.

The facts, as culled from the records, are:

On May 9, 1984, Natividad, accompanied by her husband, went to

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

On April 4, 1984, Natividad Agana was rushed to the Medical City

General Hospital (Medical City Hospital) because of difficulty of
bowel movement and bloody anal discharge. After a series of
medical examinations, Dr. Miguel Ampil, petitioner in G.R. No.
127590, diagnosed her to be suffering from "cancer of the sigmoid."
On April 11, 1984, Dr. Ampil, assisted by the medical staff4 of the
Medical City Hospital, performed an anterior resection surgery on
Natividad. He found that the malignancy in her sigmoid area had

"announced to surgeon searched (sic) done but to no avail continue

for closure."
On April 24, 1984, Natividad was released from the hospital. Her
hospital and medical bills, including the doctors fees, amounted to
P60,000.00.

On August 31, 1984, Natividad flew back to the Philippines, still

suffering from pains. Two weeks thereafter, her daughter found a
piece of gauze protruding from her vagina. Upon being informed
about it, Dr. Ampil proceeded to her house where he managed to

extract by hand a piece of gauze measuring 1.5 inches in width. He

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

WHEREFORE, judgment is hereby rendered for the plaintiffs

ordering the defendants PROFESSIONAL SERVICES, INC., DR.
MIGUEL AMPIL and DR. JUAN FUENTES to pay to the plaintiffs,
jointly and severally, except in respect of the award for exemplary
damages and the interest thereon which are the liabilities of
defendants Dr. Ampil and Dr. Fuentes only, as follows:
1. As actual damages, the following amounts:
a. The equivalent in Philippine Currency of the total
of US$19,900.00 at the rate of P21.60-US$1.00, as
reimbursement of actual expenses incurred in the
United States of America;

On November 12, 1984, Natividad and her husband filed with the
RTC, Branch 96, Quezon City a complaint for damages against the
Professional Services, Inc. (PSI), owner of the Medical City Hospital,
Dr. Ampil, and Dr. Fuentes, docketed as Civil Case No. Q-43322.
They alleged that the latter are liable for negligence for leaving two
pieces of gauze inside Natividads body and malpractice for
concealing their acts of negligence.
Meanwhile, Enrique Agana also filed with the Professional
Regulation Commission (PRC) an administrative complaint for gross
negligence and malpractice against Dr. Ampil and Dr. Fuentes,
docketed as Administrative Case No. 1690. The PRC Board of
Medicine heard the case only with respect to Dr. Fuentes because it
failed to acquire jurisdiction over Dr. Ampil who was then in the
United States.
On February 16, 1986, pending the outcome of the above cases,
Natividad died and was duly substituted by her above-named
children (the Aganas).
On March 17, 1993, the RTC rendered its Decision in favor of the
Aganas, finding PSI, Dr. Ampil and Dr. Fuentes liable for negligence
and malpractice, the decretal part of which reads:

b. The sum of P4,800.00 as travel taxes of plaintiffs

and their physician daughter;
c. The total sum of P45,802.50, representing the
cost of hospitalization at Polymedic Hospital,
medical fees, and cost of the saline solution;
2. As moral damages, the sum of P2,000,000.00;
3. As exemplary damages, the sum of P300,000.00;
4. As attorneys fees, the sum of P250,000.00;
5. Legal interest on items 1 (a), (b), and (c); 2; and 3
hereinabove, from date of filing of the complaint until full
payment; and
6. Costs of suit.
SO ORDERED.
Aggrieved, PSI, Dr. Fuentes and Dr. Ampil interposed an appeal to
the Court of Appeals, docketed as CA-G.R. CV No. 42062.

Incidentally, on April 3, 1993, the Aganas filed with the RTC a motion
for a partial execution of its Decision, which was granted in an Order
dated May 11, 1993. Thereafter, the sheriff levied upon certain
properties of Dr. Ampil and sold them for P451,275.00 and delivered
the amount to the Aganas.
Following their receipt of the money, the Aganas entered into an
agreement with PSI and Dr. Fuentes to indefinitely suspend any
further execution of the RTC Decision. However, not long thereafter,
the Aganas again filed a motion for an alias writ of execution against
the properties of PSI and Dr. Fuentes. On September 21, 1993, the
RTC granted the motion and issued the corresponding writ,
prompting Dr. Fuentes to file with the Court of Appeals a petition for
certiorari and prohibition, with prayer for preliminary injunction,
docketed as CA-G.R. SP No. 32198. During its pendency, the Court
of Appeals issued a Resolution5 dated October 29, 1993 granting Dr.
Fuentes prayer for injunctive relief.
On January 24, 1994, CA-G.R. SP No. 32198 was consolidated with
CA-G.R. CV No. 42062.
Meanwhile, on January 23, 1995, the PRC Board of Medicine
rendered its Decision6 in Administrative Case No. 1690 dismissing
the case against Dr. Fuentes. The Board held that the prosecution
failed to show that Dr. Fuentes was the one who left the two pieces
of gauze inside Natividads body; and that he concealed such fact
from Natividad.
On September 6, 1996, the Court of Appeals rendered its Decision
jointly disposing of CA-G.R. CV No. 42062 and CA-G.R. SP No.
32198, thus:
WHEREFORE, except for the modification that the case against
defendant-appellant Dr. Juan Fuentes is hereby DISMISSED, and
with the pronouncement that defendant-appellant Dr. Miguel Ampil is
liable to reimburse defendant-appellant Professional Services, Inc.,
whatever amount the latter will pay or had paid to the plaintiffsappellees, the decision appealed from is hereby AFFIRMED and the
instant appeal DISMISSED.

Concomitant with the above, the petition for certiorari and prohibition
filed by herein defendant-appellant Dr. Juan Fuentes in CA-G.R. SP
No. 32198 is hereby GRANTED and the challenged order of the
respondent judge dated September 21, 1993, as well as the alias
writ of execution issued pursuant thereto are hereby NULLIFIED and
SET ASIDE. The bond posted by the petitioner in connection with the
writ of preliminary injunction issued by this Court on November 29,
1993 is hereby cancelled.
Costs against defendants-appellants
Professional Services, Inc.

Dr.

Miguel

Ampil

and

SO ORDERED.
Only Dr. Ampil filed a motion for reconsideration, but it was denied in
a Resolution7 dated December 19, 1996.
Hence, the instant consolidated petitions.
In G.R. No. 126297, PSI alleged in its petition that the Court of
Appeals erred in holding that: (1) it is estopped from raising the
defense that Dr. Ampil is not its employee; (2) it is solidarily liable
with Dr. Ampil; and (3) it is not entitled to its counterclaim against the
Aganas. PSI contends that Dr. Ampil is not its employee, but a mere
consultant or independent contractor. As such, he alone should
answer for his negligence.
In G.R. No. 126467, the Aganas maintain that the Court of Appeals
erred in finding that Dr. Fuentes is not guilty of negligence or medical
malpractice, invoking the doctrine of res ipsa loquitur. They contend
that the pieces of gauze are prima facie proofs that the operating
surgeons have been negligent.
Finally, in G.R. No. 127590, Dr. Ampil asserts that the Court of
Appeals erred in finding him liable for negligence and malpractice
sans evidence that he left the two pieces of gauze in Natividads
vagina. He pointed to other probable causes, such as: (1) it was Dr.
Fuentes who used gauzes in performing the hysterectomy; (2) the
attending nurses failure to properly count the gauzes used during

surgery; and (3) the medical intervention of the American doctors

who examined Natividad in the United States of America.
For our resolution are these three vital issues: first, whether the
Court of Appeals erred in holding Dr. Ampil liable for negligence and
malpractice; second, whether the Court of Appeals erred in absolving
Dr. Fuentes of any liability; and third, whether PSI may be held
solidarily liable for the negligence of Dr. Ampil.

Second, immediately after the operation, the nurses who

assisted in the surgery noted in their report that the sponge
count (was) lacking 2; that such anomaly was announced to
surgeon and that a search was done but to no avail
prompting Dr. Ampil to continue for closure x x x.
Third, after the operation, two (2) gauzes were extracted
from the same spot of the body of Mrs. Agana where the
surgery was performed.

I - G.R. No. 127590

Whether the Court of Appeals Erred in Holding Dr. Ampil
Liable for Negligence and Malpractice.
Dr. Ampil, in an attempt to absolve himself, gears the Courts
attention to other possible causes of Natividads detriment. He
argues that the Court should not discount either of the following
possibilities: first, Dr. Fuentes left the gauzes in Natividads body
after performing hysterectomy; second, the attending nurses erred in
counting the gauzes; and third, the American doctors were the ones
who placed the gauzes in Natividads body.
Dr. Ampils arguments are purely conjectural and without basis.
Records show that he did not present any evidence to prove that the
American doctors were the ones who put or left the gauzes in
Natividads body. Neither did he submit evidence to rebut the
correctness of the record of operation, particularly the number of
gauzes used. As to the alleged negligence of Dr. Fuentes, we are
mindful that Dr. Ampil examined his (Dr. Fuentes) work and found it
in order.
The glaring truth is that all the major circumstances, taken together,
as specified by the Court of Appeals, directly point to Dr. Ampil as the
negligent party, thus:
First, it is not disputed that the surgeons used gauzes as
sponges to control the bleeding of the patient during the
surgical operation.

An operation requiring the placing of sponges in the incision is not

complete until the sponges are properly removed, and it is settled
that the leaving of sponges or other foreign substances in the wound
after the incision has been closed is at least prima facie negligence
by the operating surgeon.8 To put it simply, such act is considered so
inconsistent with due care as to raise an inference of negligence.
There are even legions of authorities to the effect that such act is
negligence per se.9
Of course, the Court is not blind to the reality that there are times
when danger to a patients life precludes a surgeon from further
searching missing sponges or foreign objects left in the body. But this
does not leave him free from any obligation. Even if it has been
shown that a surgeon was required by the urgent necessities of the
case to leave a sponge in his patients abdomen, because of the
dangers attendant upon delay, still, it is his legal duty to so inform his
patient within a reasonable time thereafter by advising her of what he
had been compelled to do. This is in order that she might seek relief
from the effects of the foreign object left in her body as her condition
might permit. The ruling in Smith v. Zeagler10 is explicit, thus:
The removal of all sponges used is part of a surgical operation, and
when a physician or surgeon fails to remove a sponge he has placed
in his patients body that should be removed as part of the operation,
he thereby leaves his operation uncompleted and creates a new
condition which imposes upon him the legal duty of calling the new
condition to his patients attention, and endeavoring with the means
he has at hand to minimize and avoid untoward results likely to
ensue therefrom.

Here, Dr. Ampil did not inform Natividad about the missing two
pieces of gauze. Worse, he even misled her that the pain she was
experiencing was the ordinary consequence of her operation. Had he
been more candid, Natividad could have taken the immediate and
appropriate medical remedy to remove the gauzes from her body. To
our mind, what was initially an act of negligence by Dr. Ampil has
ripened into a deliberate wrongful act of deceiving his patient.
This is a clear case of medical malpractice or more appropriately,
medical negligence. To successfully pursue this kind of case, a
patient must only prove that a health care provider either failed to do
something which a reasonably prudent health care provider would
have done, or that he did something that a reasonably prudent
provider would not have done; and that failure or action caused injury
to the patient.11 Simply put, the elements are duty, breach, injury and
proximate causation. Dr, Ampil, as the lead surgeon, had the duty to
remove all foreign objects, such as gauzes, from Natividads body
before closure of the incision. When he failed to do so, it was his
duty to inform Natividad about it. Dr. Ampil breached both duties.
Such breach caused injury to Natividad, necessitating her further
examination by American doctors and another surgery. That Dr.
Ampils negligence is the proximate cause 12 of Natividads injury
could be traced from his act of closing the incision despite the
information given by the attending nurses that two pieces of gauze
were still missing. That they were later on extracted from Natividads
vagina established the causal link between Dr. Ampils negligence
and the injury. And what further aggravated such injury was his
deliberate concealment of the missing gauzes from the knowledge of
Natividad and her family.
II - G.R. No. 126467
Whether the Court of Appeals Erred in Absolving
Dr. Fuentes of any Liability
The Aganas assailed the dismissal by the trial court of the case
against Dr. Fuentes on the ground that it is contrary to the doctrine of
res ipsa loquitur. According to them, the fact that the two pieces of

gauze were left inside Natividads body is a prima facie evidence of

Dr. Fuentes negligence.
We are not convinced.
Literally, res ipsa loquitur means "the thing speaks for itself." It is the
rule that the fact of the occurrence of an injury, taken with the
surrounding circumstances, may permit an inference or raise a
presumption of negligence, or make out a plaintiffs prima facie case,
and present a question of fact for defendant to meet with an
explanation.13 Stated differently, where the thing which caused the
injury, without the fault of the injured, is under the exclusive control of
the defendant and the injury is such that it should not have occurred
if he, having such control used proper care, it affords reasonable
evidence, in the absence of explanation that the injury arose from the
defendants want of care, and the burden of proof is shifted to him to
establish that he has observed due care and diligence. 14
From the foregoing statements of the rule, the requisites for the
applicability of the doctrine of res ipsa loquitur are: (1) the
occurrence of an injury; (2) the thing which caused the injury was
under the control and management of the defendant; (3) the
occurrence was such that in the ordinary course of things, would not
have happened if those who had control or management used
proper care; and (4) the absence of explanation by the defendant. Of
the foregoing requisites, the most instrumental is the "control and
management of the thing which caused the injury." 15
We find the element of "control and management of the thing which
caused the injury" to be wanting. Hence, the doctrine of res ipsa
loquitur will not lie.
It was duly established that Dr. Ampil was the lead surgeon during
the operation of Natividad. He requested the assistance of Dr.
Fuentes only to perform hysterectomy when he (Dr. Ampil) found that
the malignancy in her sigmoid area had spread to her left ovary. Dr.
Fuentes performed the surgery and thereafter reported and showed
his work to Dr. Ampil. The latter examined it and finding everything to
be in order, allowed Dr. Fuentes to leave the operating room. Dr.
Ampil then resumed operating on Natividad. He was about to finish

the procedure when the attending nurses informed him that two
pieces of gauze were missing. A "diligent search" was conducted, but
the misplaced gauzes were not found. Dr. Ampil then directed that
the incision be closed. During this entire period, Dr. Fuentes was no
longer in the operating room and had, in fact, left the hospital.
Under the "Captain of the Ship" rule, the operating surgeon is the
person in complete charge of the surgery room and all personnel
connected with the operation. Their duty is to obey his orders. 16 As
stated before, Dr. Ampil was the lead surgeon. In other words, he
was the "Captain of the Ship." That he discharged such role is
evident from his following conduct: (1) calling Dr. Fuentes to perform
a hysterectomy; (2) examining the work of Dr. Fuentes and finding it
in order; (3) granting Dr. Fuentes permission to leave; and (4)
ordering the closure of the incision. To our mind, it was this act of
ordering the closure of the incision notwithstanding that two pieces of
gauze remained unaccounted for, that caused injury to Natividads
body. Clearly, the control and management of the thing which caused
the injury was in the hands of Dr. Ampil, not Dr. Fuentes.
In this jurisdiction, res ipsa loquitur is not a rule of substantive law,
hence, does not per se create or constitute an independent or
separate ground of liability, being a mere evidentiary rule. 17 In other
words, mere invocation and application of the doctrine does not
dispense with the requirement of proof of negligence. Here, the
negligence was proven to have been committed by Dr. Ampil and not
by Dr. Fuentes.
III - G.R. No. 126297
Whether PSI Is Liable for the Negligence of Dr. Ampil
The third issue necessitates a glimpse at the historical development
of hospitals and the resulting theories concerning their liability for the
negligence of physicians.
Until the mid-nineteenth century, hospitals were generally charitable
institutions, providing medical services to the lowest classes of
society, without regard for a patients ability to pay.18 Those who

could afford medical treatment were usually treated at home by their

doctors.19 However, the days of house calls and philanthropic health
care are over. The modern health care industry continues to distance
itself from its charitable past and has experienced a significant
conversion from a not-for-profit health care to for-profit hospital
businesses. Consequently, significant changes in health law have
accompanied the business-related changes in the hospital industry.
One important legal change is an increase in hospital liability for
medical malpractice. Many courts now allow claims for hospital
vicarious liability under the theories of respondeat superior, apparent
authority, ostensible authority, or agency by estoppel. 20
In this jurisdiction, the statute governing liability for negligent acts is
Article 2176 of the Civil Code, which reads:
Art. 2176. Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage
done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed
by the provisions of this Chapter.
A derivative of this provision is Article 2180, the rule governing
vicarious liability under the doctrine of respondeat superior, thus:
ART. 2180. The obligation imposed by Article 2176 is demandable
not only for ones own acts or omissions, but also for those of
persons for whom one is responsible.
x x x

x x x

The owners and managers of an establishment or enterprise are

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

x x x

The responsibility treated of in this article shall cease when the

persons herein mentioned prove that they observed all the diligence
of a good father of a family to prevent damage.
A prominent civilist commented that professionals engaged by an
employer, such as physicians, dentists, and pharmacists, are not
"employees" under this article because the manner in which they
perform their work is not within the control of the latter (employer). In
other words, professionals are considered personally liable for the
fault or negligence they commit in the discharge of their duties, and
their employer cannot be held liable for such fault or negligence. In
the context of the present case, "a hospital cannot be held liable for
the fault or negligence of a physician or surgeon in the treatment or
operation of patients."21
The foregoing view is grounded on the traditional notion that the
professional status and the very nature of the physicians calling
preclude him from being classed as an agent or employee of a
hospital, whenever he acts in a professional capacity.22 It has been
said that medical practice strictly involves highly developed and
specialized knowledge,23 such that physicians are generally free to
exercise their own skill and judgment in rendering medical services
sans interference.24 Hence, when a doctor practices medicine in a
hospital setting, the hospital and its employees are deemed to
subserve him in his ministrations to the patient and his actions are of
his own responsibility.25
26

The case of Schloendorff v. Society of New York Hospital was then

considered an authority for this view. The "Schloendorff doctrine"
regards a physician, even if employed by a hospital, as an
independent contractor because of the skill he exercises and the lack
of control exerted over his work. Under this doctrine, hospitals are
exempt from the application of the respondeat superior principle for
fault or negligence committed by physicians in the discharge of their
profession.
However, the efficacy of the foregoing doctrine has weakened with
the significant developments in medical care. Courts came to realize

that modern hospitals are increasingly taking active role in supplying

and regulating medical care to patients. No longer were a hospitals
functions limited to furnishing room, food, facilities for treatment and
operation, and attendants for its patients. Thus, in Bing v.
Thunig,27 the New York Court of Appeals deviated from the
Schloendorff doctrine, noting that modern hospitals actually do far
more than provide facilities for treatment. Rather, they regularly
employ, on a salaried basis, a large staff of physicians, interns,
nurses, administrative and manual workers. They charge patients for
medical care and treatment, even collecting for such services
through legal action, if necessary. The court then concluded that
there is no reason to exempt hospitals from the universal rule of
respondeat superior.
In our shores, the nature of the relationship between the hospital and
the physicians is rendered inconsequential in view of our categorical
pronouncement in Ramos v. Court of Appeals 28 that for purposes of
apportioning responsibility in medical negligence cases, an
employer-employee relationship in effect exists between hospitals
and their attending and visiting physicians. This Court held:
"We now discuss the responsibility of the hospital in this particular
incident. The unique practice (among private hospitals) of filling up
specialist staff with attending and visiting "consultants," who are
allegedly not hospital employees, presents problems in apportioning
responsibility for negligence in medical malpractice cases. However,
the difficulty is more apparent than real.
In the first place, hospitals exercise significant control in the hiring
and firing of consultants and in the conduct of their work within the
hospital premises. Doctors who apply for consultant slots, visiting or
attending, are required to submit proof of completion of residency,
their educational qualifications, generally, evidence of accreditation
by the appropriate board (diplomate), evidence of fellowship in most
cases, and references. These requirements are carefully scrutinized
by members of the hospital administration or by a review committee
set up by the hospital who either accept or reject the application. x x
x.

After a physician is accepted, either as a visiting or attending

consultant, he is normally required to attend clinico-pathological
conferences, conduct bedside rounds for clerks, interns and
residents, moderate grand rounds and patient audits and perform
other tasks and responsibilities, for the privilege of being able to
maintain a clinic in the hospital, and/or for the privilege of admitting
patients into the hospital. In addition to these, the physicians
performance as a specialist is generally evaluated by a peer review
committee on the basis of mortality and morbidity statistics, and
feedback from patients, nurses, interns and residents. A consultant
remiss in his duties, or a consultant who regularly falls short of the
minimum standards acceptable to the hospital or its peer review
committee, is normally politely terminated.
In other words, private hospitals, hire, fire and exercise real control
over their attending and visiting consultant staff. While consultants
are not, technically employees, x x x, the control exercised, the
hiring, and the right to terminate consultants all fulfill the important
hallmarks of an employer-employee relationship, with the exception
of the payment of wages. In assessing whether such a relationship in
fact exists, the control test is determining. Accordingly, on the basis
of the foregoing, we rule that for the purpose of allocating
responsibility in medical negligence cases, an employer-employee
relationship in effect exists between hospitals and their attending and
visiting physicians. "
But the Ramos pronouncement is not our only basis in sustaining
PSIs liability. Its liability is also anchored upon the agency principle
of apparent authority or agency by estoppel and the doctrine of
corporate negligence which have gained acceptance in the
determination of a hospitals liability for negligent acts of health
professionals. The present case serves as a perfect platform to test
the applicability of these doctrines, thus, enriching our jurisprudence.
Apparent authority, or what is sometimes referred to as the "holding
out" theory, or doctrine of ostensible agency or agency by
estoppel,29 has its origin from the law of agency. It imposes liability,
not as the result of the reality of a contractual relationship, but rather
because of the actions of a principal or an employer in somehow

misleading the public into believing that the relationship or the

authority exists.30 The concept is essentially one of estoppel and has
been explained in this manner:
"The principal is bound by the acts of his agent with the apparent
authority which he knowingly permits the agent to assume, or which
he holds the agent out to the public as possessing. The question in
every case is whether the principal has by his voluntary act placed
the agent in such a situation that a person of ordinary prudence,
conversant with business usages and the nature of the particular
business, is justified in presuming that such agent has authority to
perform the particular act in question.31
The applicability of apparent authority in the field of hospital liability
was upheld long time ago in Irving v. Doctor Hospital of Lake Worth,
Inc.32 There, it was explicitly stated that "there does not appear to be
any rational basis for excluding the concept of apparent authority
from the field of hospital liability." Thus, in cases where it can be
shown that a hospital, by its actions, has held out a particular
physician as its agent and/or employee and that a patient has
accepted treatment from that physician in the reasonable belief that it
is being rendered in behalf of the hospital, then the hospital will be
liable for the physicians negligence.
Our jurisdiction recognizes the concept of an agency by implication
or estoppel. Article 1869 of the Civil Code reads:
ART. 1869. Agency may be express, or implied from the acts of the
principal, from his silence or lack of action, or his failure to repudiate
the agency, knowing that another person is acting on his behalf
without authority.
In this case, PSI publicly displays in the lobby of the Medical City
Hospital the names and specializations of the physicians associated
or accredited by it, including those of Dr. Ampil and Dr. Fuentes. We
concur with the Court of Appeals conclusion that it "is now estopped
from passing all the blame to the physicians whose names it proudly
paraded in the public directory leading the public to believe that it
vouched for their skill and competence." Indeed, PSIs act is
tantamount to holding out to the public that Medical City Hospital,

through its accredited physicians, offers quality health care services.

By accrediting Dr. Ampil and Dr. Fuentes and publicly advertising
their qualifications, the hospital created the impression that they
were its agents, authorized to perform medical or surgical services
for its patients. As expected, these patients, Natividad being one of
them, accepted the services on the reasonable belief that such were
being rendered by the hospital or its employees, agents, or servants.
The trial court correctly pointed out:
x x x regardless of the education and status in life of the patient, he
ought not be burdened with the defense of absence of employeremployee relationship between the hospital and the independent
physician whose name and competence are certainly certified to the
general public by the hospitals act of listing him and his specialty in
its lobby directory, as in the case herein. The high costs of todays
medical and health care should at least exact on the hospital greater,
if not broader, legal responsibility for the conduct of treatment and
surgery within its facility by its accredited physician or surgeon,
regardless of whether he is independent or employed." 33
The wisdom of the foregoing ratiocination is easy to discern.
Corporate entities, like PSI, are capable of acting only through other
individuals, such as physicians. If these accredited physicians do
their job well, the hospital succeeds in its mission of offering quality
medical services and thus profits financially. Logically, where
negligence mars the quality of its services, the hospital should not be
allowed to escape liability for the acts of its ostensible agents.
We now proceed to the doctrine of corporate negligence or corporate
responsibility.
One allegation in the complaint in Civil Case No. Q-43332 for
negligence and malpractice is that PSI as owner, operator and
manager of Medical City Hospital, "did not perform the necessary
supervision nor exercise diligent efforts in the supervision of Drs.
Ampil and Fuentes and its nursing staff, resident doctors, and
medical interns who assisted Drs. Ampil and Fuentes in the
performance of their duties as surgeons." 34 Premised on the doctrine
of corporate negligence, the trial court held that PSI is directly liable
for such breach of duty.

We agree with the trial court.

Recent years have seen the doctrine of corporate negligence as the
judicial answer to the problem of allocating hospitals liability for the
negligent acts of health practitioners, absent facts to support the
application of respondeat superior or apparent authority. Its
formulation proceeds from the judiciarys acknowledgment that in
these modern times, the duty of providing quality medical service is
no longer the sole prerogative and responsibility of the physician.
The modern hospitals have changed structure. Hospitals now tend to
organize a highly professional medical staff whose competence and
performance need to be monitored by the hospitals commensurate
with their inherent responsibility to provide quality medical care. 35
The doctrine has its genesis in Darling v. Charleston Community
Hospital.36 There, the Supreme Court of Illinois held that "the jury
could have found a hospital negligent, inter alia, in failing to have a
sufficient number of trained nurses attending the patient; failing to
require a consultation with or examination by members of the
hospital staff; and failing to review the treatment rendered to the
patient." On the basis of Darling, other jurisdictions held that a
hospitals corporate negligence extends to permitting a physician
known to be incompetent to practice at the hospital. 37 With the
passage of time, more duties were expected from hospitals, among
them: (1) the use of reasonable care in the maintenance of safe and
adequate facilities and equipment; (2) the selection and retention of
competent physicians; (3) the overseeing or supervision of all
persons who practice medicine within its walls; and (4) the
formulation, adoption and enforcement of adequate rules and
policies that ensure quality care for its patients. 38 Thus, in Tucson
Medical Center, Inc. v. Misevich, 39 it was held that a hospital,
following the doctrine of corporate responsibility, has the duty to see
that it meets the standards of responsibilities for the care of patients.
Such duty includes the proper supervision of the members of its
medical staff. And in Bost v. Riley,40 the court concluded that a patient
who enters a hospital does so with the reasonable expectation that it
will attempt to cure him. The hospital accordingly has the duty to
make a reasonable effort to monitor and oversee the treatment
prescribed and administered by the physicians practicing in its
premises.

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

the Civil Code, but also directly liable for its own negligence under
Article 2176. In Fridena, the Supreme Court of Arizona held:
x x x In recent years, however, the duty of care owed to the patient
by the hospital has expanded. The emerging trend is to hold the
hospital responsible where the hospital has failed to monitor and
review medical services being provided within its walls. See Kahn
Hospital Malpractice Prevention, 27 De Paul . Rev. 23 (1977).
Among the cases indicative of the emerging trend is Purcell v.
Zimbelman, 18 Ariz. App. 75,500 P. 2d 335 (1972). In Purcell, the
hospital argued that it could not be held liable for the malpractice of a
medical practitioner because he was an independent contractor
within the hospital. The Court of Appeals pointed out that the hospital
had created a professional staff whose competence and
performance was to be monitored and reviewed by the governing
body of the hospital, and the court held that a hospital would be
negligent where it had knowledge or reason to believe that a doctor
using the facilities was employing a method of treatment or care
which fell below the recognized standard of care.
Subsequent to the Purcell decision, the Arizona Court of Appeals
held that a hospital has certain inherent responsibilities regarding the
quality of medical care furnished to patients within its walls and it
must meet the standards of responsibility commensurate with this
undertaking. Beeck v. Tucson General Hospital, 18 Ariz. App. 165,
500 P. 2d 1153 (1972). This court has confirmed the rulings of the
Court of Appeals that a hospital has the duty of supervising the
competence of the doctors on its staff. x x x.
x

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

Anent the corollary issue of whether PSI is solidarily liable with Dr.
Ampil for damages, let it be emphasized that PSI, apart from a
general denial of its responsibility, failed to adduce evidence showing
that it exercised the diligence of a good father of a family in the
accreditation and supervision of the latter. In neglecting to offer such
proof, PSI failed to discharge its burden under the last paragraph of
Article 2180 cited earlier, and, therefore, must be adjudged solidarily
liable with Dr. Ampil. Moreover, as we have discussed, PSI is also
directly liable to the Aganas.
One final word. Once a physician undertakes the treatment and care
of a patient, the law imposes on him certain obligations. In order to
escape liability, he must possess that reasonable degree of learning,
skill and experience required by his profession. At the same time, he
must apply reasonable care and diligence in the exercise of his skill
and the application of his knowledge, and exert his best judgment.
WHEREFORE, we DENY all the petitions and AFFIRM the
challenged Decision of the Court of Appeals in CA-G.R. CV No.
42062 and CA-G.R. SP No. 32198.
Costs against petitioners PSI and Dr. Miguel Ampil.
SO ORDERED.

G.R. No. 173870

April 25, 2012

OSCAR DEL CARMEN, JR., Petitioner,

vs.
GERONIMO BACOY, Guardian and representing the children,
namely: MARY MARJORIE B. MONSALUD, ERIC B. MONSALUD,
METZIE ANN B. MONSALUD, KAREEN B. MONSALUD,
LEONARDO B. MONSALUD, JR., and CRISTINA B.
MONSALUD, Respondents.
DECISION
DEL CASTILLO, J.:
In this Petition for Review on Certiorari, 1 the registered owner of a
motor vehicle challenges the Decision 2 dated July 11, 2006 of the
Court of Appeals (CA) in CA-G.R. CV No. 67764 which held him
liable for damages to the heirs of the victims who were run over by
the said vehicle.
Factual Antecedents

At dawn on New Years Day of 1993, Emilia Bacoy Monsalud

(Emilia), along with her spouse Leonardo Monsalud, Sr. and their
daughter Glenda Monsalud, were on their way home from a
Christmas party they attended in Poblacion, Sominot, Zamboanga
Del Sur. Upon reaching Purok Paglaom in Sominot, they were run
over by a Fuso passenger jeep bearing plate number UV-PEK-600
that was being driven by Allan Maglasang (Allan). The jeep was
registered in the name of petitioner Oscar del Carmen, Jr. (Oscar Jr.)
and used as a public utility vehicle plying the Molave, Zamboanga
del Sur to Sominot, Zamboanga del Sur and vice versa route.

without any headlights on.10 And implying that this was the manner
by which the vehicle was illegally taken, Oscar Jr. submitted as part
of his documentary evidence the statements11 of Jemar Alarcon
(Jemar) and Benjamin Andujar (Benjamin). The two, who were with
Allan in the jeep at the time of the accident, declared before the
investigating officer that during said time, the vehicles headlights
were off. Because of this allegation, Oscar Jr. even filed before the
same trial court a carnapping case against Allan and his companions
docketed as Criminal Case No. 93-10380.12 The case was, however,
dismissed for insufficiency of evidence.13

Because of the unfortunate incident, Criminal Case No. 93103473 for Reckless Imprudence Resulting in Multiple Homicide was
filed against Allan before the Regional Trial Court of Molave,
Zamboanga del Sur, Branch 23. In a Decision dated March 13, 1997,
said court declared Allan guilty beyond reasonable doubt of the crime
charged.4

Oscar Jr. clarified that Allan was his jeep conductor and that it was
the latters brother, Rodrigo Maglasang (Rodrigo), who was
employed as the driver.14 In any event, Allans employment as
conductor was already severed before the mishap occurred on
January 1, 1993 since he served as such conductor only from the
first week of December until December 14, 1992. 15 In support of this,
Oscar Jr. presented as witnesses Faustino Sismundo (Faustino) and
Cresencio "Junior" Baobao (Cresencio). Faustino, a resident of
Molave, testified that when he boarded the jeep heading to Sominot
on December 31, 1992, it was Cresencio who was the conductor. He
also believed that Crecencio started to work as such at around
December 15 or 16, 1992.16 Cresencio, for his part, testified that he
worked as Oscar Jr.s conductor from December 15, 1992 to January
1, 1993 and that Rodrigo was his driver. 17 He stated that upon
learning that the jeep figured in an accident, he never bothered to
verify the news. Instead, he went to Midsalip to work there as a
conductor for his brothers vehicle, thereby terminating his
employment with Oscar Jr.18

During the pendency of said criminal case, Emilias father, Geronimo

Bacoy (Geronimo), in behalf of the six minor children 5 of the
Monsaluds, filed Civil Case No. 96-20219, 6 an independent civil
action for damages based on culpa aquiliana. Aside from Allan, also
impleaded therein were his alleged employers, namely, the spouses
Oscar del Carmen, Sr. (Oscar Sr.) and Norma del Carmen (Spouses
del Carmen) and the registered owner of the jeep, their son Oscar Jr.
Geronimo prayed for the reimbursement of funeral and burial
expenses, as well as the award of attorneys fees, moral and
exemplary damages resulting from the death of the three victims,
and loss of net income earnings of Emilia who was employed as a
public school teacher at the time of her death.7
Defendants refused to assume civil liability for the victims deaths.
Oscar Sr. averred that the Monsaluds have no cause of action
against them because he and his wife do not own the jeep and that
they were never the employers of Allan. 8 For his part, Oscar Jr.
claimed to be a victim himself. He alleged that Allan and his
friends9 stole his jeep while it was parked beside his drivers rented
house to take it for a joyride. Both he and a vehicle mechanic
testified that the subject jeep can easily be started by mere
pushing sans the ignition key. The vehicles engine shall then run but

Oscar Jr. likewise testified that it was routinary that after a days trip,
the jeep would be parked beside Rodrigos rented house 19 for the
next early-morning operation.
Geronimo, on the other hand, averred that Allan was still Oscar Jr.s
employee subsequent to December 14, 1992. To prove this, he
presented as witnesses Saturnino Jumawan (Saturnino) and Jose
Navarro (Jose). Saturnino testified that he would pay his fare to Allan
every time he would board the jeep in going to Molave and that the
last time he rode the subject vehicle was on December 23, 1992. He

also claimed that immediately before January 1, 1993, Rodrigo and

Allan used to park the jeep at the yard of his house. 20 Jose likewise
attested that Allan was still the jeep conductor during the said period
as he had ridden the jeep many times in mid-December of 1992. 21

b. P1,000,000.00 moral damages for the death of

the late Emilia Monsalud;
c. P250,000.00 moral damages for the death of the
late Leonardo Monsalud, Sr.;

Ruling of the Regional Trial Court

In its Decision22 dated April 17, 2000, the RTC exculpated the
spouses del Carmen from civil liability for insufficiency of evidence.
However, their son Oscar Jr. was held civilly liable in a subsidiary
capacity. The RTC anchored its ruling primarily on the principle of res
ipsa loquitur, i.e., that a presumption of negligence on the part of a
defendant may be inferred if the thing that caused an injury is shown
to be under his management and that in the ordinary course of
things, the accident would not have happened had there been an
exercise of care. Said court ratiocinated that Oscar Jr., as the
registered owner of the jeep, managed and controlled the same
through his driver Rodrigo, in whose house the jeep was usually
parked. Since both Oscar Jr. and Rodrigo were well aware that the
jeep could easily be started by a mere push even without the ignition
key, they should have taken the necessary precaution to prevent the
vehicle from being used by unauthorized persons like Allan. The RTC
thus concluded that such lack of proper precaution, due care and
foresight constitute negligence making the registered owner of the
vehicle civilly liable for the damage caused by the same.
The RTC disposed of the case as follows:
Wherefore, judgment is hereby entered in favor of the plaintiffs and
against the defendants Allan Maglasang and Oscar del Carmen, Jr.
ordering
1. Defendant ALLAN MAGLASANG to pay the plaintiffs, and
in case of insolvency, for defendant OSCAR DEL CARMEN,
JR., to pay the plaintiffs, the following sums:
a. P73,112.00 for their funeral and burial expenses;

d. P250,000.00 moral damages for the death of the

late Glenda Monsalud;
e. P40, 000.00, for exemplary damages;
f. P20,000.00 attorneys fees; and
g. The cost of this proceedings.
2. The dismissal of the complaint as against the spouses
OSCAR DEL CARMEN SR. and NORMA DEL CARMEN.
SO ORDERED.23
Oscar Jr. moved for reconsideration24 contending that the provision
on vicarious liability of the employer under Article 2180 of the Civil
Code25 requires the existence of employer-employee relationship and
that the employee was acting within the scope of his employment
when the tort occurred. He stressed that even assuming that Allan
was his employee, he was hired not as a driver but as a conductor.
Hence, Allan acted beyond the scope of his employment when he
drove the jeep.
Oscar Jr. also stressed that the fact that the jeep was running without
its headlights on at the time of the accident indubitably shows that
the same was stolen. He further alleged that the jeep could not have
been taken by only one person. As Rodrigo declared in Criminal
Case No. 93-10380 (carnapping case), based on his experience, the
jeep cannot be pushed by only one person but by at least five people
in order for it to start. This was due to the vehicles mass and the
deep canal which separates the parking area from the curved road
that was obstructed by a house.26

Setting aside its earlier decision, the lower court in its Order 27 dated
June 21, 2000 granted the Motion for Reconsideration and absolved
Oscar Jr. from civil liability. It cited Article 103 of the Revised Penal
Code which provides that for an employer to be subsidiarily liable for
the criminal acts of his employee, the latter should have committed
the same in the discharge of his duties. The court agreed with Oscar
Jr. that this condition is wanting in Allans case as he was not acting
in the discharge of his duties as a conductor when he drove the jeep.

appellate court found it puzzling why he appeared to have acted

uninterested upon learning that the jeep was the subject of an
accident when it was his bread and butter. Said court likewise
considered questionable Oscar Jr.s asseveration that Cresencio
replaced Allan as conductor when Cresencio testified that he
replaced a certain Sumagang Jr.31

IT IS SO ORDERED.28

With regard to the main issue, the CA adjudged Oscar Jr. liable to
the heirs of the victims based on the principle that the registered
owner of a vehicle is directly and primarily responsible for the injuries
or death of third parties caused by the operation of such vehicle. It
disbelieved Oscar Jr.s defense that the jeep was stolen not only
because the carnapping case filed against Allan and his companions
was dismissed but also because, given the circumstances, Oscar Jr.
is deemed to have given Allan the implied permission to use the
subject vehicle. To support its conclusion, the CA cited the following
circumstances: siblings Rodrigo and Allan were both employees
assigned to the said jeep; after a days work, said vehicle would be
parked just beside Rodrigos house where Allan also lived; the jeep
could easily be started even without the use of an ignition key; the
said parking area was not fenced or secured to prevent the
unauthorized use of the vehicle which can be started even without
the ignition key.

Geronimo appealed.

The dispositive portion of the CA Decision reads:

Ruling of the Court of Appeals

WHEREFORE, premises considered, the instant appeal is

GRANTED. The assailed Order dated 21 June 2000 of the Regional
Trial Court (Branch 23), Molave, Zamboanga del Sur, in Civil Case
No. 96-20,219 is SET ASIDE and a new one is hereby entered.
OSCAR DEL CARMEN, Jr. and ALLAN MAGLASANG are held
primarily liable, jointly and severally, to pay plaintiffs-appellants:

The court also declared the doctrine of res ipsa loquitur inapplicable
since the property owner cannot be made responsible for the
damages caused by his property by reason of the criminal acts of
another. It then adjudged that only Allan should bear the
consequences of his criminal acts. Thus:
WHEREFORE, premises considered, the MOTION FOR
RECONSIDERATION is granted, and defendant OSCAR DEL
CARMEN JR. is hereby absolved from all civil liability arising from
the felonious acts of convicted accused ALLAN MAGLASANG.

In its July 11, 2006 Decision,29 the CA granted the appeal.

In resolving the case, the CA first determined the preliminary issue of
whether there was an employer-employee relationship between
Oscar Jr. and Allan at the time of the accident. It ruled in the
affirmative and gave more credence to the testimonies of Geronimos
witnesses than to those of Oscar Jr.s witnesses, Faustino and
Cresencio. The CA ratiocinated that unlike the witness presented by
Geronimo, Faustino never resided in Poblacion and thus has limited
knowledge of the place. His testimony was also unreliable
considering that he only rode the subject jeep twice 30 during the last
two weeks of December 1992. As regards Cresencios testimony, the

1. Civil indemnity for the death of Emilia Bacoy Monsalud,

Leonardo Monsalud Sr., and Glenda Monsalud in the
amount of Fifty thousand pesos (P50,000.00) each or for the
total amount of One hundred fifty thousand pesos
(P150,000.00);

2. Temperate damages in the amount of Twenty-five

Thousand Pesos (P25,000.00) each for the death of Emilia
Monsalud, Leonardo Monsalud Sr., and Glenda Monsalud
(collectively the Monsaluds) or for the total amount of
Seventy-five thousand pesos (P75,000.00);
3. Moral damages in the amount of Fifty Thousand Pesos
(P50,000.00) each for the death of the Monsaluds or for a
total amount of One Hundred Fifty Thousand Pesos
(P150,000.00);
4. Exemplary
(P40,000.00).

damages

of

Forty

Thousand

Pesos

No pronouncement as to costs.
SO ORDERED.

32

Issues
As a result of the adverse judgment, Oscar Jr. filed this Petition for
Review on Certiorari alleging that the CA erred in:
1. x x x basing its conclusions and findings on speculations,
surmises and conjectures; misapprehension of facts which
are in conflict with the findings of the trial court;
2. x x x declaring a question of substance not in accord with
law and with the applicable decisions of the Supreme Court;
3. x x x departing from the regular course of the judicial
proceedings in the disposition of the appeal and [in going]
beyond the issues of the case.33
Oscar Jr. points out that the CA failed to consider the RTCs ruling in
its June 21, 2000 Order which was in accord with Article 2180 of the
Civil Code, i.e., that the tort committed by an employee should have
been done within the scope of his assigned tasks for an employer to

be held liable under culpa aquiliana. However, the CA never touched

upon this matter even if it was glaring that Allans driving the subject
vehicle was not within the scope of his previous employment as
conductor. Moreover, Oscar Jr. insists that his jeep was stolen and
stresses that the liability of a registered owner of a vehicle as to third
persons, as well as the doctrine of res ipsa loquitur, should not apply
to him. He asserts that although Allan and his companions were not
found to have committed the crime of carnapping beyond reasonable
doubt, it was nevertheless established that the jeep was illicitly taken
by them from a well secured area. This is considering that the vehicle
was running without its headlights on at the time of the accident, a
proof that it was started without the ignition key.
Our Ruling
Petitioners own evidence casts doubt on his claim that his jeep was
stolen by Allan and his alleged cohorts. Negligence is presumed
under the doctrine of res ipsa loquitur.
Oscar Jr.s core defense to release him from responsibility for the
death of the Monsaluds is that his jeep was stolen. He highlights that
the unauthorized taking of the jeep from the parking area was indeed
carried out by the clandestine and concerted efforts of Allan and his
five companions, notwithstanding the obstacles surrounding the
parking area and the weight of the jeep.
Notably, the carnapping case filed against Allan and his group was
already dismissed by the RTC for insufficiency of evidence. But even
in this civil case and as correctly concluded by the CA, the
evidentiary standard of preponderance of evidence required was
likewise not met to support Oscar Jr.s claim that his jeep was
unlawfully taken.
Two of Allans co-accused in the carnapping case, Jemar and
Benjamin, declared before the police that when Allan invited them to
ride with him, he was already driving the jeep:
04. Q- On that night, on or about 11:30 oclock on December
31, 1992, where were you?

A- I went to the disco near [the] Public Market[,] Sominot,

Zamboanga del Sur.
05. Q- While you were in disco place, do you know if there
was an incident [that] happened?
A- No sir but when I was in the disco place, at about 3:30 at
dawn more or less[,] January 1, 1993, Allan Maglasang
arrived driving the jeep and he invited me to ride together
with Benjamin Andujar, Dioscoro Sol, Arniel Rezada and
Joven Orot.34
xxxx
04. Q- On that night, on or about 9:00 oclock in the evening
more or less on December 31, 1992, where were you?
A- I went to the disco at [the] Public Market[,] Sominot,
Zamboanga del Sur.
05. Q- While you were in the disco place, do you know if
there was an incident [that] happened?
A- No, sir, but when I was in the disco place, at about 3:30 at
dawn more or less[,] January 1, 1993, Allan Maglasang
arrive[d] driving the jeep and he invited me to ride together
with Jemar Alarcon, Dioscoro Sol, Arniel Rizada and Joven
Orot.35
There were six accused in the carnapping case. If Jemar and
Benjamin were fetched by Allan who was driving the jeep, this would
mean that only three men pushed the jeep contrary to Rodrigos
testimony in Criminal Case No. 93-10380 that it has to be pushed by
at least five people so that it could start without the ignition key.
On direct examination,36 Oscar Jr. was asked as to what Rodrigo, his
driver who had informed him about the accident on January 1, 1993
at around 7:00 a.m., turned over to him after the incident, viz:

Q: When Rodrigo Maglasang, your driver informed you

about the accident, what did he carry with him if any and
turned over to you?
A: The OR (Official Receipt) and the CR (Certificate of
Registration) Sir.
Q: How about the key of the vehicle?
A: It was not turned over, Sir.37
Assuming arguendo that Allan stole the jeep by having the same
pushed by a group, the ignition key should then be with Rodrigo as
he was entrusted with the jeeps possession. Thus, at the time
Rodrigo faced his employer hours after the incident, it is reasonable
to expect that the driver should have also returned the key to the
operator together with the Official Receipt and Certificate of
Registration. Notably, Rodrigo did not do so and instead, the key was
allegedly handed over to the police for reasons unexplained and not
available from the records. Interestingly, Oscar Jr. never presented
Rodrigo as his witness. Neither was he able to attest on crossexamination that Allan really stole the jeep by pushing or that the key
was handed over to him by Rodrigo:
Q: On December 31, 1992, you did not know that it was
Rodrigo Maglasang who gave the key to Allan Maglasang. Is
that correct?
A: I was not there. So, I do not know but he had an affidavit
to show that he turned it over to the police.
Q: What I was asking you is that, [o]n the night of December
31, 1992, when it was driven by Allan Maglasang, you did
not know that the key was voluntarily given by Rodrigo
Maglasang to Allan Maglasang?
A: I was not there.
Q: So, you could not testify on that, is that correct?

A: Yes Sir, I was not there.38

Furthermore, Oscar Jr. acknowledged
carnapping case, thus:

Q: Because there was no sufficient evidence to establish that

the jeep was carnapped, is that correct?
the

dismissal of the

Q: Now, there was a case filed against Allan Maglasang and

[his] x x x co-accused x x x [n]amely: Benjamin Andojar,
Dioscoro Sol, Joven Orot, [Jemar Azarcon] and [Arniel]
Rizada, for carnapping. Is that correct?
A: Yes Sir.
Q: That case was filed by you because you alleged that on
December 31, 1992, your jeep was carnapped by Allan
Maglasang and his co-accused, the said mentioned, is that
correct?
A: Yes Sir.
Q: You testified on the case in Aurora, is that correct?
A: Yes, Sir.
Q: And you could well remember that this representation is
the counsel of the co-accused of Allan Maglasang, is that
correct?
A: Yes Sir.
Q: And that case for carnapping was dismissed, is that
correct?
A: Yes Sir.
Q: Even the case of Allan Maglasang, was also dismissed, is
that correct
A: Yes Sir.

A: Yes Sir.39
While Oscar Jr. highlights that the headlights were not on to support
his claim that his jeep was stolen, this circumstance by itself will not
prove that it really was stolen. The reason why the headlights were
not on at the time of the accident was not sufficiently established
during the trial. Besides, the fact that the headlights were not on
cannot be exclusively attributed to the lack of ignition key in starting
the jeep as there may be other possibilities such as electrical
problems, broken headlights, or that they were simply turned off.
Hence, sans the testimony of witnesses and other relevant evidence
to support the defense of unauthorized taking, we cannot subscribe
to Oscar Jr.s claim that his jeep was stolen. The evidence on record
brings forth more questions than clear-cut answers.
Oscar Jr. alleges that the presumption of negligence under the
doctrine of res ipsa loquitur (literally, the thing speaks for itself)
should not have been applied because he was vigilant in securing
his vehicle. He claims that the jeep was parked in a well secured
area not remote to the watchful senses of its driver Rodrigo.
Under the doctrine of res ipsa loquitur, "[w]here the thing that caused
the injury complained of is shown to be under the management of
the defendant or his servants; and the accident, in the ordinary
course of things, would not happen if those who had management or
control used proper care, it affords reasonable evidence in the
absence of a sufficient, reasonable and logical explanation by
defendant that the accident arose from or was caused by the
defendants want of care." 40 Res ipsa loquitur is "merely evidentiary,
a mode of proof, or a mere procedural convenience, since it
furnishes a substitute for, and relieves a plaintiff of, the burden of
producing a specific proof of negligence." 41 It "recognizes that parties
may establish prima facie negligence without direct proof, thus, it
allows the principle to substitute for specific proof of negligence. It
permits the plaintiff to present along with proof of the accident,
enough of the attending circumstances to invoke the doctrine, create

an inference or presumption of negligence and thereby place on the

defendant the burden of proving that there was no negligence on his
part."42The doctrine is based partly on "the theory that the defendant
in charge of the instrumentality which causes the injury either knows
the cause of the accident or has the best opportunity of ascertaining
it while the plaintiff has no such knowledge, and is therefore
compelled to allege negligence in general terms."43
The requisites of the doctrine of res ipsa loquitur as established by
jurisprudence are as follows:
1) the accident is of a kind which does not ordinarily occur
unless someone is negligent;

What this Court instead finds worthy of credence is the CAs

conclusion that Oscar Jr. gave his implied permission for Allan to use
the jeep. This is in view of Oscar Jr.s failure to provide solid proof
that he ensured that the parking area is well secured and that he had
expressly imposed restrictions as to the use of the jeep when he
entrusted the same to his driver Rodrigo. As fittingly inferred by the
CA, the jeep could have been endorsed to Allan by his brother
Rodrigo since as already mentioned, Oscar Jr. did not give Rodrigo
any specific and strict instructions on matters regarding its use.
Rodrigo therefore is deemed to have been given the absolute
discretion as to the vehicles operation, including the discretion to
allow his brother Allan to use it.

2) the cause of the injury was under the exclusive control of

the person in charge and

The operator on record of a vehicle is primarily responsible to third

persons for the deaths or injuries consequent to its operation,
regardless of whether the employee drove the registered owners
vehicle in connection with his employment.

3) the injury suffered must not have been due to any

voluntary action or contribution on the part of the person
injured.44

Without disputing the factual finding of the CA that Allan was still his

The above requisites are all present in this case. First, no person just
walking along the road would suddenly be sideswiped and run over
by an on-rushing vehicle unless the one in charge of the said vehicle
had been negligent. Second, the jeep which caused the injury was
under the exclusive control of Oscar Jr. as its owner. When Oscar Jr.
entrusted the ignition key to Rodrigo, he had the power to instruct
him with regard to the specific restrictions of the jeeps use, including
who or who may not drive it. As he is aware that the jeep may run
without the ignition key, he also has the responsibility to park it safely
and securely and to instruct his driver Rodrigo to observe the same
precaution. Lastly, there was no showing that the death of the victims
was due to any voluntary action or contribution on their part.
The aforementioned requisites having been met, there now arises a
presumption of negligence against Oscar Jr. which he could have
overcome by evidence that he exercised due care and diligence in
preventing strangers from using his jeep. Unfortunately, he failed to
do so.

employee at the time of the accident, a finding which we see no

reason to disturb, Oscar Jr. contends that Allan drove the jeep in his
private capacity and thus, an employers vicarious liability for the
employees fault under Article 2180 of the Civil Code cannot apply to
him.
The contention is no longer novel. In Aguilar Sr. v. Commercial
Savings Bank,45 the car of therein respondent bank caused the death
of Conrado Aguilar, Jr. while being driven by its assistant vice
president. Despite Article 2180, we still held the bank liable for
damages for the accident as said provision should defer to the
settled doctrine concerning accidents involving registered motor
vehicles, i.e., that the registered owner of any vehicle, even if not
used for public service, would primarily be responsible to the public
or to third persons for injuries caused the latter while the vehicle was
being driven on the highways or streets. 46 We have already
ratiocinated that:
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. 47
Absent the circumstance of unauthorized use 48 or that the subject
vehicle was stolen49 which are valid defenses available to a
registered owner, Oscar Jr. cannot escape liability for quasi-delict
resulting from his jeeps use.1wphi1
All told and considering that the amounts of damages awarded are in
accordance with prevailing jurisprudence, the Court concurs with the
findings of the CA and sustains the awards made. In addition,
pursuant to Eastern Shipping Lines, Inc. v. Court of Appeals, 50 an
interest of six percent (6%) per annum on the amounts awarded shall
be imposed, computed from the time the judgment of the RTC is
rendered on April 17, 2000 and twelve percent (12%) per annum on
such amount upon finality of this Decision until the payment thereof.
WHEREFORE, premises considered, the instant petition is DENIED.
The Decision dated July 11, 2006 of the Court of Appeals in CA-G.R.
CV No. 67764 is hereby AFFIRMED with further MODIFICATION that
an interest of six percent (6%) per annum on the amounts awarded
shall be imposed, computed from the time the judgment of the
Regional Trial Court, Branch 23, Molave, Zamboanga del Sur is
rendered on April 17, 2000 and twelve percent (12%) per annum on
such amount upon finality of this Decision until the payment thereof.
SO ORDERED.

G.R. No. 194320

February 1, 2012

MALAYAN INSURANCE CO., INC., Petitioner,

vs.
RODELIO ALBERTO and ENRICO ALBERTO
REYES, Respondents.
DECISION
VELASCO, JR., J.:
The Case
Before Us is a Petition for Review on Certiorari under Rule 45,
seeking to reverse and set aside the July 28, 2010 Decision 1 of the
Court of Appeals (CA) and its October 29, 2010 Resolution 2 denying
the motion for reconsideration filed by petitioner Malayan Insurance
Co., Inc. (Malayan Insurance). The July 28, 2010 CA Decision
reversed and set aside the Decision 3 dated February 2, 2009 of the
Regional Trial Court, Branch 51 in Manila.
The Facts
At around 5 oclock in the morning of December 17, 1995, an
accident occurred at the corner of EDSA and Ayala Avenue, Makati
City, involving four (4) vehicles, to wit: (1) a Nissan Bus operated by
Aladdin Transit with plate number NYS 381; (2) an Isuzu Tanker with

plate number PLR 684; (3) a Fuzo Cargo Truck with plate number
PDL 297; and (4) a Mitsubishi Galant with plate number TLM 732. 4
Based on the Police Report issued by the on-the-spot investigator,
Senior Police Officer 1 Alfredo M. Dungga (SPO1 Dungga), the Isuzu
Tanker was in front of the Mitsubishi Galant with the Nissan Bus on
their right side shortly before the vehicular incident. All three (3)
vehicles were at a halt along EDSA facing the south direction when
the Fuzo Cargo Truck simultaneously bumped the rear portion of the
Mitsubishi Galant and the rear left portion of the Nissan Bus. Due to
the strong impact, these two vehicles were shoved forward and the
front left portion of the Mitsubishi Galant rammed into the rear right
portion of the Isuzu Tanker.5
Previously, particularly on December 15, 1994, Malayan Insurance
issued Car Insurance Policy No. PV-025-00220 in favor of First
Malayan Leasing and Finance Corporation (the assured), insuring
the aforementioned Mitsubishi Galant against third party liability, own
damage and theft, among others. Having insured the vehicle against
such risks, Malayan Insurance claimed in its Complaint dated
October 18, 1999 that it paid the damages sustained by the assured
amounting to PhP 700,000.6
Maintaining that it has been subrogated to the rights and interests of
the assured by operation of law upon its payment to the latter,
Malayan Insurance sent several demand letters to respondents
Rodelio Alberto (Alberto) and Enrico Alberto Reyes (Reyes), the
registered owner and the driver, respectively, of the Fuzo Cargo
Truck, requiring them to pay the amount it had paid to the assured.
When respondents refused to settle their liability, Malayan Insurance
was constrained to file a complaint for damages for gross negligence
against respondents.7
In their Answer, respondents asserted that they cannot be held liable
for the vehicular accident, since its proximate cause was the reckless
driving of the Nissan Bus driver. They alleged that the speeding bus,
coming from the service road of EDSA, maneuvered its way towards
the middle lane without due regard to Reyes right of way. When the
Nissan Bus abruptly stopped, Reyes stepped hard on the brakes but
the braking action could not cope with the inertia and failed to gain

sufficient traction. As a consequence, the Fuzo Cargo Truck hit the

rear end of the Mitsubishi Galant, which, in turn, hit the rear end of
the vehicle in front of it. The Nissan Bus, on the other hand,
sideswiped the Fuzo Cargo Truck, causing damage to the latter in
the amount of PhP 20,000. Respondents also controverted the
results of the Police Report, asserting that it was based solely on the
biased narration of the Nissan Bus driver.8
After the termination of the pre-trial proceedings, trial ensued.
Malayan Insurance presented the testimony of its lone witness, a
motor car claim adjuster, who attested that he processed the
insurance claim of the assured and verified the documents submitted
to him. Respondents, on the other hand, failed to present any
evidence.
In its Decision dated February 2, 2009, the trial court, in Civil Case
No. 99-95885, ruled in favor of Malayan Insurance and declared
respondents liable for damages. The dispositive portion reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff
against defendants jointly and severally to pay plaintiff the following:
1. The amount of P700,000.00 with legal interest from the
time of the filing of the complaint;
2. Attorneys fees of P10,000.00 and;
3. Cost of suit.
SO ORDERED.9
Dissatisfied, respondents filed an appeal with the CA, docketed as
CA-G.R. CV No. 93112. In its Decision dated July 28, 2010, the CA
reversed and set aside the Decision of the trial court and ruled in
favor of respondents, disposing:
WHEREFORE, the foregoing considered, the instant appeal is
hereby GRANTED and the assailed Decision dated 2 February 2009

REVERSED and SET ASIDE. The Complaint dated 18 October 1999

is hereby DISMISSED for lack of merit. No costs.

II
WHETHER
THE
SUBROGATION
OF
MALAYAN
INSURANCE IS IMPAIRED AND/OR DEFICIENT.

SO ORDERED.10
The CA held that the evidence on record has failed to establish not
only negligence on the part of respondents, but also compliance with
the other requisites and the consequent right of Malayan Insurance
to subrogation.11 It noted that the police report, which has been made
part of the records of the trial court, was not properly identified by the
police officer who conducted the on-the-spot investigation of the
subject collision. It, thus, held that an appellate court, as a reviewing
body, cannot rightly appreciate firsthand the genuineness of an
unverified and unidentified document, much less accord it evidentiary
value.12
Subsequently,
Malayan
Insurance
filed
its
Motion
for
Reconsideration, arguing that a police report is a prima facie
evidence of the facts stated in it. And inasmuch as they never
questioned the presentation of the report in evidence, respondents
are deemed to have waived their right to question its authenticity and
due execution.13
In its Resolution dated October 29, 2010, the CA denied the motion
for reconsideration. Hence, Malayan Insurance filed the instant
petition.
The Issues
14

In its Memorandum dated June 27, 2011, Malayan Insurance raises

the following issues for Our consideration:
I
WHETHER THE CA ERRED IN REFUSING ADMISSIBILITY
OF THE POLICE REPORT SINCE THE POLICE
INVESTIGATOR WHO PREPARED THE SAME DID NOT
ACTUALLY TESTIFY IN COURT THEREON.

On the other hand, respondents submit the following issues in its

Memorandum15 dated July 7, 2011:
I
WHETHER THE CA IS CORRECT IN DISMISSING THE
COMPLAINT FOR FAILURE OF MALAYAN INSURANCE
TO OVERCOME THE BURDEN OF PROOF REQUIRED TO
ESTABLISH THE NEGLIGENCE OF RESPONDENTS.
II
WHETHER THE PIECES OF EVIDENCE PRESENTED BY
MALAYAN INSURANCE ARE SUFFICIENT TO CLAIM FOR
THE AMOUNT OF DAMAGES.
III
WHETHER
THE
SUBROGATION
OF
MALAYAN
INSURANCE
HAS
PASSED
COMPLIANCE
AND
REQUISITES AS PROVIDED UNDER PERTINENT LAWS.
Essentially, the issues boil down to the following: (1) the admissibility
of the police report; (2) the sufficiency of the evidence to support a
claim for gross negligence; and (3) the validity of subrogation in the
instant case.
Our Ruling
The petition has merit.
Admissibility of the Police Report

Malayan Insurance contends that, even without the presentation of

the police investigator who prepared the police report, said report is
still admissible in evidence, especially since respondents failed to
make
a
timely
objection
to
its
presentation
in
evidence.16 Respondents counter that since the police report was
never confirmed by the investigating police officer, it cannot be
considered as part of the evidence on record.17
Indeed, under the rules of evidence, a witness can testify only to
those facts which the witness knows of his or her personal
knowledge, that is, which are derived from the witness own
perception.18 Concomitantly, a witness may not testify on matters
which he or she merely learned from others either because said
witness was told or read or heard those matters. 19 Such testimony is
considered hearsay and may not be received as proof of the truth of
what the witness has learned. This is known as the hearsay rule. 20
As discussed in D.M. Consunji, Inc. v. CA,21 "Hearsay is not limited to
oral testimony or statements; the general rule that excludes hearsay
as evidence applies to written, as well as oral statements."
There are several exceptions to the hearsay rule under the Rules of
Court, among which are entries in official records. 22 Section 44, Rule
130 provides:
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.
In Alvarez v. PICOP Resources,23 this Court reiterated the requisites
for the admissibility in evidence, as an exception to the hearsay rule
of entries in official records, thus: (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 or
her 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 or her stated,
which must have been acquired by the public officer or other person
personally or through official information.

Notably, the presentation of the police report itself is admissible as

an exception to the hearsay rule even if the police investigator who
prepared it was not presented in court, as long as the above
requisites could be adequately proved.24
Here, there is no dispute that SPO1 Dungga, the on-the-spot
investigator, prepared the report, and he did so in the performance of
his duty. However, what is not clear is whether SPO1 Dungga had
sufficient personal knowledge of the facts contained in his report.
Thus, the third requisite is lacking.
Respondents failed to make a timely objection to the police reports
presentation in evidence; thus, they are deemed to have waived their
right to do so.25 As a result, the police report is still admissible in
evidence.
Sufficiency of Evidence
Malayan Insurance contends that since Reyes, the driver of the Fuzo
Cargo truck, bumped the rear of the Mitsubishi Galant, he is
presumed to be negligent unless proved otherwise. It further
contends that respondents failed to present any evidence to overturn
the presumption of negligence.26 Contrarily, respondents claim that
since Malayan Insurance did not present any witness who shall
affirm any negligent act of Reyes in driving the Fuzo Cargo truck
before and after the incident, there is no evidence which would show
negligence on the part of respondents.27
We agree with Malayan Insurance. Even if We consider the
inadmissibility of the police report in evidence, still, respondents
cannot evade liability by virtue of the res ipsa loquitur doctrine. The
D.M. Consunji, Inc. case is quite elucidating:
Petitioners contention, however, loses relevance in the face of the
application of res ipsa loquitur by the CA. The effect of the doctrine is
to warrant a presumption or inference that the mere fall of the
elevator was a result of the person having charge of the
instrumentality was negligent. As a rule of evidence, the doctrine of
res ipsa loquitur is peculiar to the law of negligence which recognizes

that prima facie negligence may be established without direct proof

and furnishes a substitute for specific proof of negligence.
The concept of res ipsa loquitur has been explained in this wise:
While negligence is not ordinarily inferred or presumed, and while
the mere happening of an accident or injury will not generally give
rise to an inference or presumption that it was due to negligence on
defendants part, under the doctrine of res ipsa loquitur, which
means, literally, the thing or transaction speaks for itself, or in one
jurisdiction, that the thing or instrumentality speaks for itself, the facts
or circumstances accompanying an injury may be such as to raise a
presumption, or at least permit an inference of negligence on the part
of the defendant, or some other person who is charged with
negligence.
x x x where it is shown that the thing or instrumentality which caused
the injury complained of was under the control or management of the
defendant, and that the occurrence resulting in the injury was such
as in the ordinary course of things would not happen if those who
had its control or management used proper care, there is sufficient
evidence, or, as sometimes stated, reasonable evidence, in the
absence of explanation by the defendant, that the injury arose from
or was caused by the defendants want of care.
One of the theoretical bases for the doctrine is its necessity, i.e., that
necessary evidence is absent or not available.
The res ipsa loquitur doctrine is based in part upon the theory that
the defendant in charge of the instrumentality which causes the
injury either knows the cause of the accident or has the best
opportunity of ascertaining it and that the plaintiff has no such
knowledge, and therefore is compelled to allege negligence in
general terms and to rely upon the proof of the happening of the
accident in order to establish negligence. The inference which the
doctrine permits is grounded upon the fact that the chief evidence of
the true cause, whether culpable or innocent, is practically
accessible to the defendant but inaccessible to the injured person.

It has been said that the doctrine of res ipsa loquitur furnishes a
bridge by which a plaintiff, without knowledge of the cause, reaches
over to defendant who knows or should know the cause, for any
explanation of care exercised by the defendant in respect of the
matter of which the plaintiff complains. The res ipsa loquitur doctrine,
another court has said, is a rule of necessity, in that it proceeds on
the theory that under the peculiar circumstances in which the
doctrine is applicable, it is within the power of the defendant to show
that there was no negligence on his part, and direct proof of
defendants negligence is beyond plaintiffs power. Accordingly, some
courts add to the three prerequisites for the application of the res
ipsa loquitur doctrine the further requirement that for the res ipsa
loquitur doctrine to apply, it must appear that the injured party had no
knowledge or means of knowledge as to the cause of the accident,
or that the party to be charged with negligence has superior
knowledge or opportunity for explanation of the accident.
The CA held that all the requisites of res ipsa loquitur are present in
the case at bar:
There is no dispute that appellees husband fell down from the 14th
floor of a building to the basement while he was working with
appellants construction project, resulting to his death. The
construction site is within the exclusive control and management of
appellant. It has a safety engineer, a project superintendent, a
carpenter leadman and others who are in complete control of the
situation therein. The circumstances of any accident that would occur
therein are peculiarly within the knowledge of the appellant or its
employees. On the other hand, the appellee is not in a position to
know what caused the accident. Res ipsa loquitur is a rule of
necessity and it applies where evidence is absent or not readily
available, provided the following requisites are present: (1) the
accident was of a kind which does not ordinarily occur unless
someone is negligent; (2) the instrumentality or agency which
caused the injury was under the exclusive control of the person
charged with negligence; and (3) the injury suffered must not have
been due to any voluntary action or contribution on the part of the
person injured. x x x.

No worker is going to fall from the 14th floor of a building to the

basement while performing work in a construction site unless
someone is negligent[;] thus, the first requisite for the application of
the rule of res ipsa loquitur is present. As explained earlier, the
construction site with all its paraphernalia and human resources that
likely caused the injury is under the exclusive control and
management of appellant[;] thus[,] the second requisite is also
present. No contributory negligence was attributed to the appellees
deceased husband[;] thus[,] the last requisite is also present. All the
requisites for the application of the rule of res ipsa loquitur are
present, thus a reasonable presumption or inference of appellants
negligence arises. x x x.
Petitioner does not dispute the existence of the requisites for the
application of res ipsa loquitur, but argues that the presumption or
inference that it was negligent did not arise since it "proved that it
exercised due care to avoid the accident which befell respondents
husband."
Petitioner apparently misapprehends the procedural effect of the
doctrine. As stated earlier, the defendants negligence is presumed
or inferred when the plaintiff establishes the requisites for the
application of res ipsa loquitur. Once the plaintiff makes out a prima
facie case of all the elements, the burden then shifts to defendant to
explain. The presumption or inference may be rebutted or overcome
by other evidence and, under appropriate circumstances a
disputable presumption, such as that of due care or innocence, may
outweigh the inference. It is not for the defendant to explain or prove
its defense to prevent the presumption or inference from arising.
Evidence by the defendant of say, due care, comes into play only
after the circumstances for the application of the doctrine has been
established.28
In the case at bar, aside from the statement in the police report, none
of the parties disputes the fact that the Fuzo Cargo Truck hit the rear
end of the Mitsubishi Galant, which, in turn, hit the rear end of the
vehicle in front of it. Respondents, however, point to the reckless
driving of the Nissan Bus driver as the proximate cause of the
collision, which allegation is totally unsupported by any evidence on
record. And assuming that this allegation is, indeed, true, it is

astonishing that respondents never even bothered to file a crossclaim against the owner or driver of the Nissan Bus.
What is at once evident from the instant case, however, is the
presence of all the requisites for the application of the rule of res ipsa
loquitur. To reiterate, res ipsa loquitur is a rule of necessity which
applies where evidence is absent or not readily available. As
explained in D.M. Consunji, Inc., it is partly based upon the theory
that the defendant in charge of the instrumentality which causes the
injury either knows the cause of the accident or has the best
opportunity of ascertaining it and that the plaintiff has no such
knowledge, and, therefore, is compelled to allege negligence in
general terms and to rely upon the proof of the happening of the
accident in order to establish negligence.
As mentioned above, the requisites for the application of the res ipsa
loquitur rule are the following: (1) the accident was of a kind which
does not ordinarily occur unless someone is negligent; (2) the
instrumentality or agency which caused the injury was under the
exclusive control of the person charged with negligence; and (3) the
injury suffered must not have been due to any voluntary action or
contribution on the part of the person injured. 29
In the instant case, the Fuzo Cargo Truck would not have had hit the
rear end of the Mitsubishi Galant unless someone is negligent. Also,
the Fuzo Cargo Truck was under the exclusive control of its driver,
Reyes. Even if respondents avert liability by putting the blame on the
Nissan Bus driver, still, this allegation was self-serving and totally
unfounded. Finally, no contributory negligence was attributed to the
driver of the Mitsubishi Galant. Consequently, all the requisites for
the application of the doctrine of res ipsa loquitur are present,
thereby creating a reasonable presumption of negligence on the part
of respondents.
It is worth mentioning that just like any other disputable presumptions
or inferences, the presumption of negligence may be rebutted or
overcome by other evidence to the contrary. It is unfortunate,
however, that respondents failed to present any evidence before the
trial court. Thus, the presumption of negligence remains.
Consequently, the CA erred in dismissing the complaint for Malayan

Insurances adverted failure to prove negligence on the part of

respondents.
Validity of Subrogation
Malayan Insurance contends that there was a valid subrogation in
the instant case, as evidenced by the claim check voucher 30 and the
Release of Claim and Subrogation Receipt 31 presented by it before
the trial court. Respondents, however, claim that the documents
presented by Malayan Insurance do not indicate certain important
details that would show proper subrogation.
As noted by Malayan Insurance, respondents had all the opportunity,
but failed to object to the presentation of its evidence. Thus, and as
We have mentioned earlier, respondents are deemed to have waived
their right to make an objection. As this Court held in Asian
Construction and Development Corporation v. COMFAC Corporation:
The rule is that failure to object to the offered evidence renders
it admissible, and the court cannot, on its own, disregard such
evidence. We note that ASIAKONSTRUCTs counsel of record
before the trial court, Atty. Bernard Dy, who actively participated in
the initial stages of the case stopped attending the hearings when
COMFAC was about to end its presentation. Thus,
ASIAKONSTRUCT could not object to COMFACs offer of evidence
nor present evidence in its defense; ASIAKONSTRUCT was deemed
by the trial court to have waived its chance to do so.

already part of the evidence on record, and since it is not disputed

that the insurance company, indeed, paid PhP 700,000 to the
assured, then there is a valid subrogation in the case at bar. As
explained in Keppel Cebu Shipyard, Inc. v. Pioneer Insurance and
Surety Corporation:
Subrogation is the substitution of one person by another with
reference to a lawful claim or right, so that he who is substituted
succeeds to the rights of the other in relation to a debt or claim,
including its remedies or securities. The principle covers a situation
wherein an insurer has paid a loss under an insurance policy is
entitled to all the rights and remedies belonging to the insured
against a third party with respect to any loss covered by the policy. It
contemplates full substitution such that it places the party subrogated
in the shoes of the creditor, and he may use all means that the
creditor could employ to enforce payment.1wphi1
We have held that payment by the insurer to the insured operates as
an equitable assignment to the insurer of all the remedies that the
insured may have against the third party whose negligence or
wrongful act caused the loss. The right of subrogation is not
dependent upon, nor does it grow out of, any privity of contract. It
accrues simply upon payment by the insurance company of the
insurance claim. The doctrine of subrogation has its roots in equity. It
is designed to promote and to accomplish justice; and is the mode
that equity adopts to compel the ultimate payment of a debt by one
who, in justice, equity, and good conscience, ought to pay.33

Note also that when a party desires the court to reject the
evidence offered, it must so state in the form of a timely
objection and it cannot raise the objection to the evidence for
the first time on appeal. Because of a partys failure to timely
object, the evidence becomes part of the evidence in the case.
Thereafter, all the parties are considered bound by any outcome
arising
from
the
offer
of
evidence
properly
presented.32(Emphasis supplied.)

Considering the above ruling, it is only but proper that Malayan

Insurance be subrogated to the rights of the assured.

Bearing in mind that the claim check voucher and the Release of
Claim and Subrogation Receipt presented by Malayan Insurance are

No pronouncement as to cost.

WHEREFORE, the petition is hereby GRANTED. The CAs July 28,

2010 Decision and October 29, 2010 Resolution in CA-G.R. CV No.
93112 are hereby REVERSED and SET ASIDE. The Decision dated
February 2, 2009 issued by the trial court in Civil Case No. 99-95885
is hereby REINSTATED.

SO ORDERED.

G.R. No. 160889

April 27, 2007

DR. MILAGROS L. CANTRE, Petitioner,

vs.
SPS. JOHN DAVID Z. GO and NORA S. GO, Respondents.
DECISION
QUISUMBING, J.:
For review on certiorari are the Decision 1 dated October 3, 2002 and
Resolution2 dated November 19, 2003 of the Court of Appeals in CAG.R. CV No. 58184, which affirmed with modification the
Decision3 dated March 3, 1997 of the Regional Trial Court of Quezon
City, Branch 98, in Civil Case No. Q-93-16562.
The facts, culled from the records, are as follows:
Petitioner Dr. Milagros L. Cantre is a specialist in Obstetrics and
Gynecology at the Dr. Jesus Delgado Memorial Hospital. She was
the attending physician of respondent Nora S. Go, who was admitted
at the said hospital on April 19, 1992.
At 1:30 a.m. of April 20, 1992, Nora gave birth to her fourth child, a
baby boy. However, at around 3:30 a.m., Nora suffered profuse
bleeding inside her womb due to some parts of the placenta which
were not completely expelled from her womb after delivery.
Consequently, Nora suffered hypovolemic shock, resulting in a drop

in her blood pressure to "40" over "0." Petitioner and the assisting
resident physician performed various medical procedures to stop the
bleeding and to restore Noras blood pressure. Her blood pressure
was frequently monitored with the use of a sphygmomanometer.
While petitioner was massaging Noras uterus for it to contract and
stop bleeding, she ordered a droplight to warm Nora and her
baby.4 Nora remained unconscious until she recovered.

Her movements now are also restricted. Her children cannot play
with the left side of her body as they might accidentally bump the
injured arm, which aches at the slightest touch.

While in the recovery room, her husband, respondent John David Z.

Go noticed a fresh gaping wound two and a half (2 ) by three and a
half (3 ) inches in the inner portion of her left arm, close to the
armpit.5 He asked the nurses what caused the injury. He was
informed it was a burn. Forthwith, on April 22, 1992, John David filed
a request for investigation.6 In response, Dr. Rainerio S. Abad, the
medical director of the hospital, called petitioner and the assisting
resident physician to explain what happened. Petitioner said the
blood pressure cuff caused the injury.

In view of the foregoing consideration, judgment is hereby rendered

in favor of the plaintiffs and against the defendants, directing the
latters, (sic) jointly and severally

On May 7, 1992, John David brought Nora to the National Bureau of

Investigation for a physical examination, which was conducted by
medico-legal officer Dr. Floresto Arizala, Jr.7 The medico-legal officer
later testified that Noras injury appeared to be a burn and that a
droplight when placed near the skin for about 10 minutes could
cause such burn.8 He dismissed the likelihood that the wound was
caused by a blood pressure cuff as the scar was not around the arm,
but just on one side of the arm.9
On May 22, 1992, Noras injury was referred to a plastic surgeon at
the Dr. Jesus Delgado Memorial Hospital for skin grafting. 10 Her
wound was covered with skin sourced from her abdomen, which
consequently bore a scar as well. About a year after, on April 30,
1993, scar revision had to be performed at the same hospital. 11 The
surgical operation left a healed linear scar in Noras left arm about
three inches in length, the thickest portion rising about one-fourth
(1/4) of an inch from the surface of the skin. The costs of the skin
grafting and the scar revision were shouldered by the hospital. 12
Unfortunately,
Noras
arm
would
never
be
the
same.1a\^/phi1.net Aside from the unsightly mark, the pain in her left
arm remains. When sleeping, she has to cradle her wounded arm.

Thus, on June 21, 1993, respondent spouses filed a complaint 13 for

damages against petitioner, Dr. Abad, and the hospital. Finding in
favor of respondent spouses, the trial court decreed:

(a) to pay the sum of Five Hundred Thousand Pesos

(P500,000.00) in moral damages;
(b) to pay the sum of One Hundred Fifty Thousand Pesos
(P150,000.00) exemplary damages;
(c) to pay the sum of Eighty Thousand Pesos (P80,000.00)
nominal damages;
(d) to pay Fifty Thousand Pesos (P50,000.00) for and as
attorneys fees; and
(e) to pay Six Thousand Pesos (P6,000.00) litigation
expenses.
SO ORDERED.14
Petitioner, Dr. Abad, and the hospital all appealed to the Court of
Appeals, which affirmed with modification the trial court decision,
thus:
WHEREFORE, in view of all the foregoing, and finding no reversible
error in the appealed Decision dated March 3, 1997 of Branch 98 of
the Regional Trial Court of Quezon City in Civil Case No. Q-9316562, the same is hereby AFFIRMED, with the following
MODIFICATIONS:

1. Ordering defendant-appellant Dra. Milagros [L.] Cantre

only to pay plaintiffs-appellees John David Go and Nora S.
Go the sum of P200,000.00 as moral damages;
2. Deleting the award [of] exemplary damages, attorneys
fees and expenses of litigation;1awphi1.nt
3. Dismissing the complaint with respect to defendantsappellants Dr. Rainerio S. Abad and Delgado Clinic, Inc.;
4. Dismissing the counterclaims of defendants-appellants for
lack of merit; and
5. Ordering defendant-appellant Dra. Milagros [L.] Cantre
only to pay the costs.
SO ORDERED.15
Petitioners motion for reconsideration was denied by the Court of
Appeals. Hence, the instant petition assigning the following as errors
and issues:
I.
WHETHER OR NOT, THE LOWER COURT, AND THE COURT OF
APPEALS COMMITTED GRAVE ABUSE OF THEIR DISCRETION
WHEN, NOTWITHSTANDING THAT BOTH PARTIES HAVE
RESTED THEIR RESPECTIVE CASES, THE LOWER COURT
ADMITTED THE ADDITIONAL EXHIBITS FURTHER OFFERED BY
RESPONDENTS NOT TESTIFIED TO BY ANY WITNESS AND THIS
DECISION OF THE LOWER COURT WAS UPHELD BY THE
COURT OF APPEALS LIKEWISE COMMITTING GRAVE ABUSE
OF DISCRETION;
II.
WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE
ABUSE OF ITS DISCRETION WHEN, CONTRARY TO

PREPONDERANCE OF EVIDENCE PRESENTED BY THE

PETITIONER, IT RULED THAT THE PETITIONER HAS NOT
AMPLY SHOWED THAT THE DROPLIGHT DID NOT TOUCH THE
BODY OF MRS. NORA GO, AND THIS DECISION OF THE LOWER
COURT WAS UPHELD BY THE COURT OF APPEALS LIKEWISE
COMMITTING GRAVE ABUSE OF DISCRETION;
III.
WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE
ABUSE OF ITS DISCRETION WHEN, CONTRARY TO
PREPONDERANCE OF EVIDENCE PRESENTED BY THE
PETITIONER, IT RULED THAT PETITIONER DRA. CANTRE WAS
NOT ABLE TO AMPLY EXPLAIN HOW THE INJURY (BLISTERS) IN
THE LEFT INNER ARM OF RESPONDENT MRS. GO CAME
ABOUT;
IV.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF ITS DISCRETION WHEN IT MADE A RULING
ON THE RESPONDENTS INJURY QUOTING THE TESTIMONY
OF SOMEONE WHO WAS NOT PRESENT AND HAS NOT SEEN
THE ORIGINAL, FRESH INJURY OF RESPONDENT MRS. NORA
GO;
V.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY
ABUSING ITS DISCRETION RULED THAT PETITIONER DRA.
CANTRE SHOULD HAVE INTENDED TO INFLICT THE INJURY TO
SAVE THE LIFE OF RESPONDENT MRS. GO;
VI.
WHETHER OR NOT THE LOWER COURT AND THE COURT [OF]
APPEALS COMMITTED GRAVE ABUSE OF DISCRETION WHEN,
CONTRARY TO THE DETAILED PROCEDURES DONE BY

PETITIONER, BOTH RULED THAT THE RESPONDENT WAS LEFT

TO THE CARE OF THE NURSING STAFF;

about by the blood pressure cuff, petitioner was still negligent in her
duties as Noras attending physician.

VII.

Simply put, the threshold issues for resolution are: (1) Are the
questioned additional exhibits admissible in evidence? (2) Is
petitioner liable for the injury suffered by respondent Nora Go?
Thereafter, the inquiry is whether the appellate court committed
grave abuse of discretion in its assailed issuances.

WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE

ABUSE OF DISCRETION WHEN, CONTRARY TO THE MEDICAL
PURPOSES OF COSMETIC SURGERY, IT RULED THAT THE
COSMETIC SURGERY MADE THE SCARS EVEN MORE UGLY
AND DECLARED THE COSMETIC SURGERY A FAILURE;
VIII.
WHETHER OR NOT THE LOWER COURT GRAVELY ABUSE OF
(SIC) DISCRETION WHEN, CONTRARY TO RESPONDENTS
CONTRARY TESTIMONIES AND THE ABSENCE OF ANY
TESTIMONY, IT RULED THAT THEY ARE ENTITLED TO
DAMAGES AND WHICH WAS UPHELD, ALTHOUGH MODIFIED,
BY THE COURT OF APPEALS LIKEWISE ABUSING ITS
DISCRETION.16
Petitioner contends that additional documentary exhibits not testified
to by any witness are inadmissible in evidence because they
deprived her of her constitutional right to confront the witnesses
against her. Petitioner insists the droplight could not have touched
Noras body. She maintains the injury was due to the constant taking
of Noras blood pressure. Petitioner also insinuates the Court of
Appeals was misled by the testimony of the medico-legal officer who
never saw the original injury before plastic surgery was performed.
Finally, petitioner stresses that plastic surgery was not intended to
restore respondents injury to its original state but rather to prevent
further complication.
Respondents, however, counter that the genuineness and due
execution of the additional documentary exhibits were duly admitted
by petitioners counsel. Respondents point out that petitioners blood
pressure cuff theory is highly improbable, being unprecedented in
medical history and that the injury was definitely caused by the
droplight. At any rate, they argue, even if the injury was brought

As to the first issue, we agree with the Court of Appeals that said
exhibits are admissible in evidence. We note that the questioned
exhibits consist mostly of Noras medical records, which were
produced by the hospital during trial pursuant to a subpoena duces
tecum. Petitioners counsel admitted the existence of the same when
they were formally offered for admission by the trial court. In any
case, given the particular circumstances of this case, a ruling on the
negligence of petitioner may be made based on the res ipsa
loquitur doctrine even in the absence of such additional exhibits.
Petitioners contention that the medico-legal officer who conducted
Noras physical examination never saw her original injury before
plastic surgery was performed is without basis and contradicted by
the records. Records show that the medico-legal officer conducted
the physical examination on May 7, 1992, while the skin grafting and
the scar revision were performed on Nora on May 22, 1992 and April
30, 1993, respectively.
Coming now to the substantive matter, is petitioner liable for the
injury suffered by respondent Nora Go?
The Hippocratic Oath mandates physicians to give primordial
consideration to the well-being of their patients. If a doctor fails to live
up to this precept, he is accountable for his acts. This
notwithstanding, courts face a unique restraint in adjudicating
medical negligence cases because physicians are not guarantors of
care and, they never set out to intentionally cause injury to their
patients. However, intent is immaterial in negligence cases because
where negligence exists and is proven, it automatically gives the
injured a right to reparation for the damage caused. 17

In cases involving medical negligence, the doctrine of res ipsa

loquitur allows the mere existence of an injury to justify a
presumption of negligence on the part of the person who controls the
instrument causing the injury, provided that the following requisites
concur:
1. The accident is of a kind which ordinarily does not occur in
the absence of someones negligence;
2. It is caused by an instrumentality within the exclusive
control of the defendant or defendants; and
3. The possibility of contributing conduct which would make
the plaintiff responsible is eliminated.18
As to the first requirement, the gaping wound on Noras arm is
certainly not an ordinary occurrence in the act of delivering a baby,
far removed as the arm is from the organs involved in the process of
giving birth. Such injury could not have happened unless negligence
had set in somewhere.
Second, whether the injury was caused by the droplight or by the
blood pressure cuff is of no moment. Both instruments are deemed
within the exclusive control of the physician in charge under the
"captain of the ship" doctrine. This doctrine holds the surgeon in
charge of an operation liable for the negligence of his assistants
during the time when those assistants are under the surgeons
control.19 In this particular case, it can be logically inferred that
petitioner, the senior consultant in charge during the delivery of
Noras baby, exercised control over the assistants assigned to both
the use of the droplight and the taking of Noras blood pressure.
Hence, the use of the droplight and the blood pressure cuff is also
within petitioners exclusive control.
Third, the gaping wound on Noras left arm, by its very nature and
considering her condition, could only be caused by something
external to her and outside her control as she was unconscious while
in hypovolemic shock. Hence, Nora could not, by any stretch of the
imagination, have contributed to her own injury.

Petitioners defense that Noras wound was caused not by the

droplight but by the constant taking of her blood pressure, even if the
latter was necessary given her condition, does not absolve her from
liability. As testified to by the medico-legal officer, Dr. Arizala, Jr., the
medical practice is to deflate the blood pressure cuff immediately
after each use. Otherwise, the inflated band can cause injury to the
patient similar to what could have happened in this case. Thus, if
Noras wound was caused by the blood pressure cuff, then the taking
of Noras blood pressure must have been done so negligently as to
have inflicted a gaping wound on her arm, 20 for which petitioner
cannot escape liability under the "captain of the ship" doctrine.
Further, petitioners argument that the failed plastic surgery was not
intended as a cosmetic procedure, but rather as a measure to
prevent complication does not help her case. It does not negate
negligence on her part.
Based on the foregoing, the presumption that petitioner was
negligent in the exercise of her profession stands unrebutted. In this
connection, the Civil Code provides:
ART. 2176. Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage
done.
ART. 2217. Moral damages include physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury. Though
incapable of pecuniary computation, moral damages may be
recovered if they are the proximate result of the defendants wrongful
act or omission.
Clearly, under the law, petitioner is obliged to pay Nora for moral
damages suffered by the latter as a proximate result of petitioners
negligence.
We note, however, that petitioner has served well as Noras
obstetrician for her past three successful deliveries. This is the first
time petitioner is being held liable for damages due to negligence in

the practice of her profession. The fact that petitioner promptly took
care of Noras wound before infection and other complications set in
is also indicative of petitioners good intentions. We also take note of
the fact that Nora was suffering from a critical condition when the
injury happened, such that saving her life became petitioners
elemental concern. Nonetheless, it should be stressed that all these
could not justify negligence on the part of petitioner.
Hence, considering the specific circumstances in the instant case,
we find no grave abuse of discretion in the assailed decision and
resolution of the Court of Appeals. Further, we rule that the Court of
Appeals award of Two Hundred Thousand Pesos (P200,000) as
moral damages in favor of respondents and against petitioner is just
and equitable.21
WHEREFORE, the petition is DENIED. The Decision dated October
3, 2002 and Resolution dated November 19, 2003 of the Court of
Appeals in CA-G.R. CV No. 58184 are AFFIRMED.
as to costs.
SO ORDERED.

G.R. No. 126297

February 11, 2008

PROFESSIONAL SERVICES, INC., petitioner,

vs.
THE COURT OF APPEALS and NATIVIDAD and ENRIQUE
AGANA, respondents,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - x
G.R. No. 126467

February 11, 2008

NATIVIDAD (Substituted by her children MARCELINO AGANA III,

ENRIQUE AGANA, JR., EMMA AGANA ANDAYA, JESUS AGANA,
and RAYMUND AGANA) and ENRIQUE AGANA, petitioners,
vs.
THE COURT OF APPEALS and JUAN FUENTES, respondents,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - x
G.R. No. 127590

February 11, 2008

MIGUEL AMPIL, petitioner,

vs.
THE COURT OF APPEALS and NATIVIDAD AGANA and
ENRIQUE AGANA, respondents.

RESOLUTION

announced to surgeon searched done (sic) but to no avail

continue for closure.

SANDOVAL-GUTIERREZ, J.:
As the hospital industry changes, so must the laws and
jurisprudence governing hospital liability. The immunity from medical
malpractice traditionally accorded to hospitals has to be eroded if we
are to balance the interest of the patients and hospitals under the
present setting.

After a couple of days, Natividad complained of excruciating pain in

her anal region. She consulted both Dr. Ampil and Dr. Fuentes about
it. They told her that the pain was the natural consequence of the
surgical operation performed upon her. Dr. Ampil recommended that
Natividad consult an oncologist to treat the cancerous nodes which
were not removed during the operation.

Before this Court is a motion for reconsideration filed by Professional

Services, Inc. (PSI), petitioner in G.R. No. 126297, assailing the
Courts First Division Decision dated January 31, 2007, finding PSI
and Dr. Miguel Ampil, petitioner in G.R. No. 127590, jointly and
severally liable for medical negligence.

On May 9, 1984, Natividad, accompanied by her husband, went to

the United States to seek further treatment. After four (4) months of
consultations and laboratory examinations, Natividad was told that
she was free of cancer. Hence, she was advised to return to the
Philippines.

A brief revisit of the antecedent facts is imperative.

On August 31, 1984, Natividad flew back to the Philippines, still

suffering from pains. Two (2) weeks thereafter, her daughter found a
piece of gauze protruding from her vagina. Dr. Ampil was
immediately informed. He proceeded to Natividads house where he
managed to extract by hand a piece of gauze measuring 1.5 inches
in width. Dr. Ampil then assured Natividad that the pains would soon
vanish.

On April 4, 1984, Natividad Agana was admitted at the Medical City

General Hospital (Medical City) because of difficulty of bowel
movement and bloody anal discharge. Dr. Ampil diagnosed her to be
suffering from "cancer of the sigmoid." Thus, on April 11, 1984, Dr.
Ampil, assisted by the medical staff1 of Medical City, performed an
anterior resection surgery upon her. During the surgery, he found that
the malignancy in her sigmoid area had spread to her left ovary,
necessitating the removal of certain portions of it. Thus, Dr. Ampil
obtained the consent of Atty. Enrique Agana, Natividads husband, to
permit Dr. Juan Fuentes, respondent in G.R. No. 126467, to perform
hysterectomy upon Natividad.
Dr. Fuentes performed and completed the hysterectomy. Afterwards,
Dr. Ampil took over, completed the operation and closed the incision.
However, the operation appeared to be flawed. In the corresponding
Record of Operation dated April 11, 1984, the attending nurses
entered these remarks:
sponge count lacking 2

Despite Dr. Ampils assurance, the pains intensified, prompting

Natividad to seek treatment at the Polymedic General Hospital.
While confined thereat, Dr. Ramon Gutierrez detected the presence
of a foreign object in her vagina -- a foul-smelling gauze measuring
1.5 inches in width. The gauze had badly infected her vaginal vault. A
recto-vaginal fistula had formed in her reproductive organ which
forced stool to excrete through the vagina. Another surgical operation
was needed to remedy the situation. Thus, in October 1984,
Natividad underwent another surgery.
On November 12, 1984, Natividad and her husband filed with the
Regional Trial Court, Branch 96, Quezon City a complaint for
damages against PSI (owner of Medical City), Dr. Ampil and Dr.
Fuentes.

On February 16, 1986, pending the outcome of the above case,

Natividad died. She was duly substituted by her above-named
children (the Aganas).

services of Dr. Ampil. And lastly, PSI maintains that the doctrine of
corporate negligence is misplaced because the proximate cause of
Natividads injury was Dr. Ampils negligence.

On March 17, 1993, the trial court rendered judgment in favor of

spouses Agana finding PSI, Dr. Ampil and Dr. Fuentes jointly and
severally liable. On appeal, the Court of Appeals, in its Decision
dated September 6, 1996, affirmed the assailed judgment with
modification in the sense that the complaint against Dr. Fuentes was
dismissed.

The motion lacks merit.

PSI, Dr. Ampil and the Aganas filed with this Court separate petitions
for review on certiorari. On January 31, 2007, the Court, through its
First Division, rendered a Decision holding that PSI is jointly and
severally liable with Dr. Ampil for the following reasons: first, there is
an employer-employee relationship between Medical City and Dr.
Ampil. The Court relied on Ramos v. Court of Appeals,2 holding that
for the purpose of apportioning responsibility in medical negligence
cases, an employer-employee relationship in effect exists between
hospitals and their attending and visiting physicians; second, PSIs
act of publicly displaying in the lobby of the Medical City the names
and specializations of its accredited physicians, including Dr. Ampil,
estopped it from denying the existence of an employer-employee
relationship between them under the doctrine of ostensible agency
or agency by estoppel;and third, PSIs failure to supervise Dr. Ampil
and its resident physicians and nurses and to take an active step in
order to remedy their negligence rendered it directly liable under
the doctrine of corporate negligence.
In its motion for reconsideration, PSI contends that the Court erred in
finding it liable under Article 2180 of the Civil Code, there being no
employer-employee relationship between it and its consultant, Dr.
Ampil. PSI stressed that the Courts Decision in Ramos holding that
"an employer-employee relationship in effect exists between
hospitals and their attending and visiting physicians for the purpose
of apportioning responsibility" had been reversed in a subsequent
Resolution.3 Further, PSI argues that the doctrine of ostensible
agency or agency by estoppelcannot apply because spouses
Agana failed to establish one requisite of the doctrine, i.e., that
Natividad relied on the representation of the hospital in engaging the

As earlier mentioned, the First Division, in its assailed Decision, ruled

that an employer-employee relationship "in effect" exists between
the Medical City and Dr. Ampil. Consequently, both are jointly and
severally liable to the Aganas. This ruling proceeds from the following
ratiocination in Ramos:
We now discuss the responsibility of the hospital in this
particular incident. The unique practice (among private
hospitals) of filling up specialist staff with attending and
visiting "consultants," who are allegedly not hospital
employees, presents problems in apportioning responsibility
for negligence in medical malpractice cases. However, the
difficulty is only more apparent than real.
In the first place, hospitals exercise significant control in
the hiring and firing of consultants and in the conduct of
their work within the hospital premises. Doctors who
apply for "consultant" slots, visiting or attending, are required
to submit proof of completion of residency, their educational
qualifications; generally, evidence of accreditation by the
appropriate board (diplomate), evidence of fellowship in
most cases, and references. These requirements are
carefully scrutinized by members of the hospital
administration or by a review committee set up by the
hospital who either accept or reject the application. This is
particularly true with respondent hospital.
After a physician is accepted, either as a visiting or
attending consultant, he is normally required to attend
clinico-pathological conferences, conduct bedside
rounds for clerks, interns and residents, moderate grand
rounds and patient audits and perform other tasks and
responsibilities, for the privilege of being able to
maintain a clinic in the hospital, and/or for the privilege

of admitting patients into the hospital. In addition to

these, the physicians performance as a specialist is
generally evaluated by a peer review committee on the
basis of mortality and morbidity statistics, and feedback
from patients, nurses, interns and residents. A
consultant remiss in his duties, or a consultant who
regularly falls short of the minimum standards
acceptable to the hospital or its peer review committee,
is normally politely terminated.
In other words, private hospitals hire, fire and exercise real
control over their attending and visiting "consultant" staff.
While "consultants" are not, technically employees, a
point which respondent hospital asserts in denying all
responsibility for the patients condition, the control
exercised, the hiring, and the right to terminate
consultants all fulfill the important hallmarks of an
employer-employee relationship, with the exception of
the payment of wages. In assessing whether such a
relationship in fact exists, the control test is
determining. Accordingly, on the basis of the foregoing,
we rule that for the purpose of allocating responsibility
in medical negligence cases, an employer-employee
relationship in effect exists between hospitals and their
attending and visiting physicians.This being the case, the
question now arises as to whether or not respondent hospital
is solidarily liable with respondent doctors for petitioners
condition.
The basis for holding an employer solidarily responsible for
the negligence of its employee is found in Article 2180 of the
Civil Code which considers a person accountable not only
for his own acts but also for those of others based on the
formers responsibility under a relationship of partia ptetas.
Clearly, in Ramos, the Court considered the peculiar relationship
between a hospital and its consultants on the bases of certain
factors. One such factor is the "control test" wherein the hospital
exercises control in the hiring and firing of consultants, like Dr. Ampil,
and in the conduct of their work.

Actually, contrary to PSIs contention, the Court did not reverse its
ruling in Ramos. What it clarified was that the De Los Santos Medical
Clinic did not exercise control over its consultant, hence, there is no
employer-employee relationship between them. Thus, despite the
granting of the said hospitals motion for reconsideration, the doctrine
in Ramos stays, i.e., for the purpose of allocating responsibility in
medical negligence cases, an employer-employee relationship exists
between hospitals and their consultants.
In the instant cases, PSI merely offered a general denial of
responsibility, maintaining that consultants, like Dr. Ampil, are
"independent contractors," not employees of the hospital. Even
assuming that Dr. Ampil is not an employee of Medical City, but an
independent contractor, still the said hospital is liable to the Aganas.
In Nograles, et al. v. Capitol Medical Center, et al.,4 through Mr.
Justice Antonio T. Carpio, the Court held:
The question now is whether CMC is automatically exempt
from liability considering that Dr. Estrada is an independent
contractor-physician.
In general, a hospital is not liable for the negligence of an
independent contractor-physician. There is, however, an
exception to this principle. The hospital may be liable if the
physician is the "ostensible" agent of the hospital. (Jones v.
Philpott, 702 F. Supp. 1210 [1988]) This exception is also
known as the "doctrine of apparent authority." (Sometimes
referred to as the apparent or ostensible agency theory.
[King v. Mitchell, 31 A.D.3rd 958, 819 N.Y. S.2d 169 (2006)].
xxx
The doctrine of apparent authority essentially involves two
factors to determine the liability of an independent
contractor-physician.
The first factor focuses on the hospitals manifestations and
is sometimes described as an inquiry whether the hospital

acted in a manner which would lead a reasonable person to

conclude that the individual who was alleged to be negligent
was an employee or agent of the hospital. (Diggs v. Novant
Health, Inc., 628 S.E.2d 851 (2006) citing Hylton v.
Koontz, 138 N.C. App. 629 (2000). In this regard, the
hospital need not make express representations to the
patient that the treating physician is an employee of the
hospital; rather a representation may be general and
implied. (Id.)
The doctrine of apparent authority is a specie of the doctrine
of estoppel. Article 1431 of the Civil Code provides that
"[t]hrough estoppel, an admission or representation is
rendered conclusive upon the person making it, and cannot
be denied or disproved as against the person relying
thereon." Estoppel rests on this rule: "Whether a party has,
by his own declaration, act, or omission, intentionally and
deliberately led another to believe a particular thing true, and
to act upon such belief, he cannot, in any litigation arising
out of such declaration, act or omission, be permitted to
falsify it. (De Castro v. Ginete, 137 Phil. 453 [1969], citing
Sec. 3, par. A, Rule 131 of the Rules of Court. See also King
v. Mitchell, 31 A.D.3rd 958, 819 N.Y.S.2d 169 [2006]).
xxx
The second factor focuses on the patients reliance. It is
sometimes characterized as an inquiry on whether the
plaintiff acted in reliance upon the conduct of the hospital or
its agent, consistent with ordinary care and prudence.
(Diggs v. Novant Health, Inc.)
PSI argues that the doctrine of apparent authority cannot apply to
these cases because spouses Agana failed to establish proof of their
reliance on the representation of Medical City that Dr. Ampil is its
employee.
The argument lacks merit.

Atty. Agana categorically testified that one of the reasons why he

chose Dr. Ampil was that he knew him to be a staff member of
Medical City, a prominent and known hospital.
Q

Will you tell us what transpired in your visit to Dr. Ampil?

A Well, I saw Dr. Ampil at the Medical City, I know him to

be a staff member there, and I told him about the case of
my wife and he asked me to bring my wife over so she could
be examined. Prior to that, I have known Dr. Ampil, first, he
was staying in front of our house, he was a neighbor,
second, my daughter was his student in the University of the
East School of Medicine at Ramon Magsaysay; and when
my daughter opted to establish a hospital or a clinic, Dr.
Ampil was one of our consultants on how to establish that
hospital. And from there, I have known that he was a
specialist when it comes to that illness.
Atty. Agcaoili
On that particular occasion, April 2, 1984, what was your
reason for choosing to contact Dr. Ampil in connection with
your wifes illness?
A First, before that, I have known him to be a specialist on
that part of the body as a surgeon; second, I have known
him to be a staff member of the Medical City which is a
prominent and known hospital. And third, because he is a
neighbor, I expect more than the usual medical service to be
given to us, than his ordinary patients.5
Clearly, PSI is estopped from passing the blame solely to Dr. Ampil.
Its act of displaying his name and those of the other physicians in the
public directory at the lobby of the hospital amounts to holding out to
the public that it offers quality medical service through the listed
physicians. This justifies Atty. Aganas belief that Dr. Ampil was a
member of the hospitals staff. It must be stressed that under the
doctrine of apparent authority, the question in every case is
whether the principal has by his voluntary act placed the agent

in such a situation that a person of ordinary prudence,

conversant with business usages and the nature of the
particular business, is justified in presuming that such agent
has authority to perform the particular act in question. 6 In these
cases, the circumstances yield a positive answer to the question.

report to the hospital because you are under the control

and direction of the hospital?

The challenged Decision also anchors its ruling on the doctrine of

corporate responsibility.7 The duty of providing quality medical
service is no longer the sole prerogative and responsibility of the
physician. This is because the modern hospital now tends to
organize a highly-professional medical staff whose competence
and performance need also to be monitored by the hospital
commensurate with its inherent responsibility to provide quality
medical care.8 Such responsibility includes the proper
supervision of the members of its medical staff. Accordingly,
the hospital has the duty to make a reasonable effort to monitor
and oversee the treatment prescribed and administered by the
physicians practicing in its premises.

Q
If you place yourself in the position of the hospital,
how will you recover.

Unfortunately, PSI had been remiss in its duty. It did not conduct
an immediate investigation on the reported missing gauzes to the
great prejudice and agony of its patient. Dr. Jocson, a member of
PSIs medical staff, who testified on whether the hospital conducted
an investigation, was evasive, thus:

Q
Did the hospital investigate the surgeon who did
the operation?

Q
We go back to the operative technique, this was
signed by Dr. Puruganan, was this submitted to the
hospital?
A
Yes, sir, this was submitted to the hospital with the
record of the patient.
Q
Was the hospital immediately informed about the
missing sponges?
A

That is the duty of the surgeon, sir.

Q
As a witness to an untoward incident in the
operating room, was it not your obligation, Dr., to also

A
The hospital already had the record of the two OS
missing, sir.

A
You do not answer my question with another
question.
Q
Did the hospital do anything about the missing
gauzes?
A The hospital left it up to the surgeon who was doing
the operation, sir.

I am not in the position to answer that, sir.

Q
You never did hear the hospital investigating the
doctors involved in this case of those missing sponges,
or did you hear something?
xxxxxx
A
I think we already made a report by just saying that
two sponges were missing, it is up to the hospital to
make the move.
Atty. Agana
Precisely, I am asking you if the hospital did a move, if
the hospital did a move.

I cannot answer that.

entries of the dates, but not the operating procedure and

operative report.10

Court
In sum, we find no merit in the motion for reconsideration.
By that answer, would you mean to tell the Court that
you were aware if there was such a move done by the
hospital?
A
I cannot answer that, your honor, because I did not
have any more follow-up of the case that happened until
now.9
The above testimony obviously shows Dr. Jocsons lack of concern
for the patients. Such conduct is reflective of the hospitals
manner of supervision. Not only did PSI breach its duty to
oversee or supervise all persons who practice medicine within
its walls, it also failed to take an active step in fixing the
negligence committed. This renders PSI, not only vicariously liable
for the negligence of Dr. Ampil under Article 2180 of the Civil Code,
but also directly liable for its own negligence under Article 2176.
Moreover, there is merit in the trial courts finding that the failure of
PSI to conduct an investigation "established PSIs part in the dark
conspiracy of silence and concealment about the gauzes." The
following testimony of Atty. Agana supports such findings, thus:
Q
You said you relied on the promise of Dr. Ampil and
despite the promise you were not able to obtain the said
record. Did you go back to the record custodian?

WHEREFORE, we DENY PSIs motion for reconsideration with

finality. SO ORDERED.
G.R. No. 126297

February 2, 2010

PROFESSIONAL SERVICES, INC., Petitioner,

vs.
THE COURT OF APPEALS and NATIVIDAD and ENRIQUE
AGANA, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 126467
NATIVIDAD [substituted by her children Marcelino Agana III,
Enrique Agana, Jr., Emma Agana-Andaya, Jesus Agana and
Raymund Agana] and ENRIQUE AGANA, Petitioners,
vs.
THE COURT OF APPEALS and JUAN FUENTES, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 127590

A
I did not because I was talking to Dr. Ampil. He
promised me.

MIGUEL AMPIL, Petitioner,

vs.
NATIVIDAD and ENRIQUE AGANA, Respondents.

Q
After your talk to Dr. Ampil, you went to the record
custodian?

RESOLUTION

A
I went to the record custodian to get the clinical
record of my wife, and I was given a portion of the
records consisting of the findings, among them, the

CORONA, J.:

With prior leave of court,1 petitioner Professional Services, Inc. (PSI)

filed a second motion for reconsideration 2urging referral thereof to
the Court en banc and seeking modification of the decision dated
January 31, 2007 and resolution dated February 11, 2008 which
affirmed its vicarious and direct liability for damages to respondents
Enrique Agana and the heirs of Natividad Agana (Aganas).
Manila Medical Services, Inc. (MMSI), 3 Asian Hospital, Inc.
(AHI),4 and Private Hospital Association of the Philippines
(PHAP)5 all sought to intervene in these cases invoking the common
ground that, unless modified, the assailed decision and resolution
will jeopardize the financial viability of private hospitals and jack up
the cost of health care.
The Special First Division of the Court granted the motions for
intervention of MMSI, AHI and PHAP (hereafter intervenors), 6 and
referred en consulta to the Court en banc the motion for prior leave
of court and the second motion for reconsideration of PSI. 7
Due to paramount public interest, the Court en banc accepted the
referral8 and heard the parties on oral arguments on one particular
issue: whether a hospital may be held liable for the negligence of
physicians-consultants allowed to practice in its premises. 9
To recall the salient facts, PSI, together with Dr. Miguel Ampil (Dr.
Ampil) and Dr. Juan Fuentes (Dr. Fuentes), was impleaded by
Enrique Agana and Natividad Agana (later substituted by her heirs),
in a complaint10 for damages filed in the Regional Trial Court (RTC)
of Quezon City, Branch 96, for the injuries suffered by Natividad
when Dr. Ampil and Dr. Fuentes neglected to remove from her body
two gauzes11 which were used in the surgery they performed on her
on April 11, 1984 at the Medical City General Hospital. PSI was
impleaded as owner, operator and manager of the hospital.
In a decision12 dated March 17, 1993, the RTC held PSI solidarily
liable with Dr. Ampil and Dr. Fuentes for damages. 13 On appeal, the
Court of Appeals (CA), absolved Dr. Fuentes but affirmed the liability
of Dr. Ampil and PSI, subject to the right of PSI to claim
reimbursement from Dr. Ampil.141avvphi1

On petition for review, this Court, in its January 31, 2007 decision,
affirmed
the
CA
decision.15 PSI
filed
a
motion
for
16
reconsideration but the Court denied it in a resolution dated
February 11, 2008.17
The Court premised the direct liability of PSI to the Aganas on the
following facts and law:
First, there existed between PSI and Dr. Ampil an employeremployee relationship as contemplated in the December 29, 1999
decision in Ramos v. Court of Appeals 18 that "for purposes of
allocating responsibility in medical negligence cases, an employeremployee relationship exists between hospitals and their
consultants."19Although the Court in Ramos later issued a Resolution
dated April 11, 200220 reversing its earlier finding on the existence of
an employment relationship between hospital and doctor, a similar
reversal was not warranted in the present case because the defense
raised by PSI consisted of a mere general denial of control or
responsibility over the actions of Dr. Ampil.21
Second, by accrediting Dr. Ampil and advertising his qualifications,
PSI created the public impression that he was its agent. 22 Enrique
testified that it was on account of Dr. Ampil's accreditation with PSI
that he conferred with said doctor about his wife's (Natividad's)
condition.23 After his meeting with Dr. Ampil, Enrique asked Natividad
to personally consult Dr. Ampil. 24 In effect, when Enrigue and
Natividad engaged the services of Dr. Ampil, at the back of their
minds was that the latter was a staff member of a prestigious
hospital. Thus, under the doctrine of apparent authority applied
in Nogales, et al. v. Capitol Medical Center, et al.,25 PSI was liable for
the negligence of Dr. Ampil.
Finally, as owner and operator of Medical City General Hospital, PSI
was bound by its duty to provide comprehensive medical services to
Natividad Agana, to exercise reasonable care to protect her from
harm,26 to oversee or supervise all persons who practiced medicine
within its walls, and to take active steps in fixing any form of
negligence committed within its premises. 27 PSI committed a serious
breach of its corporate duty when it failed to conduct an immediate
investigation into the reported missing gauzes.28

PSI is now asking this Court to reconsider the foregoing rulings for
these reasons:

burdensome operational and financial consequences and adverse

effects on all three parties.30

The Aganas comment that the arguments of PSI need no longer be

entertained for they have all been traversed in the assailed decision
and resolution.31

The declaration in the 31 January 2007 Decision vis-a-vis the 11

February 2009 Resolution that the ruling in Ramos vs. Court of
Appeals (G.R. No. 134354, December 29, 1999) that "an employeremployee relations exists between hospital and their consultants"
stays should be set aside for being inconsistent with or contrary to
the import of the resolution granting the hospital's motion for
reconsideration in Ramos vs. Court of Appeals (G.R. No. 134354,
April 11, 2002), which is applicable to PSI since the Aganas failed to
prove an employer-employee relationship between PSI and Dr. Ampil
and PSI proved that it has no control over Dr. Ampil. In fact, the trial
court has found that there is no employer-employee relationship in
this case and that the doctor's are independent contractors.
II
Respondents Aganas engaged Dr. Miguel Ampil as their doctor and
did not primarily and specifically look to the Medical City Hospital
(PSI) for medical care and support; otherwise stated, respondents
Aganas did not select Medical City Hospital (PSI) to provide medical
care because of any apparent authority of Dr. Miguel Ampil as its
agent since the latter was chosen primarily and specifically based on
his qualifications and being friend and neighbor.
III
PSI cannot be liable under doctrine of corporate negligence since the
proximate cause of Mrs. Agana's injury was the negligence of Dr.
Ampil, which is an element of the principle of corporate negligence. 29
In their respective memoranda, intervenors raise parallel arguments
that the Court's ruling on the existence of an employer-employee
relationship between private hospitals and consultants will force a
drastic and complex alteration in the long-established and currently
prevailing relationships among patient, physician and hospital, with

After gathering its thoughts on the issues, this Court holds that PSI is
liable to the Aganas, not under the principle ofrespondeat
superior for lack of evidence of an employment relationship with Dr.
Ampil but under the principle of ostensible agency for the negligence
of Dr. Ampil and, pro hac vice, under the principle of corporate
negligence for its failure to perform its duties as a hospital.
While in theory a hospital as a juridical entity cannot practice
medicine,32 in reality it utilizes doctors, surgeons and medical
practitioners in the conduct of its business of facilitating medical and
surgical treatment.33 Within that reality, three legal relationships
crisscross: (1) between the hospital and the doctor practicing within
its premises; (2) between the hospital and the patient being treated
or examined within its premises and (3) between the patient and the
doctor. The exact nature of each relationship determines the basis
and extent of the liability of the hospital for the negligence of the
doctor.
Where an employment relationship exists, the hospital may be held
vicariously liable under Article 2176 34 in relation to Article 218035 of
the Civil Code or the principle of respondeat superior. Even when no
employment relationship exists but it is shown that the hospital holds
out to the patient that the doctor is its agent, the hospital may still be
vicariously liable under Article 2176 in relation to Article 143136 and
Article 186937 of the Civil Code or the principle of apparent
authority.38 Moreover, regardless of its relationship with the doctor,
the hospital may be held directly liable to the patient for its own
negligence or failure to follow established standard of conduct to
which it should conform as a corporation.39
This Court still employs the "control test" to determine the existence
of an employer-employee relationship between hospital and doctor.

In Calamba Medical Center, Inc. v. National Labor Relations

Commission, et al.40 it held:
Under the "control test", an employment relationship exists between
a physician and a hospital if the hospital controls both the means and
the details of the process by which the physician is to accomplish his
task.
xxx

xxx

xxx

As priorly stated, private respondents maintained specific workschedules, as determined by petitioner through its medical director,
which consisted of 24-hour shifts totaling forty-eight hours each week
and which were strictly to be observed under pain of administrative
sanctions.
That petitioner exercised control over respondents gains light
from the undisputed fact that in the emergency room, the
operating room, or any department or ward for that matter,
respondents' work is monitored through its nursing
supervisors, charge nurses and orderlies. Without the approval
or consent of petitioner or its medical director, no operations
can be undertaken in those areas. For control test to apply, it is
not essential for the employer to actually supervise the
performance of duties of the employee, it being enough that it
has the right to wield the power. (emphasis supplied)
Even in its December 29, 1999 decision 41 and April 11, 2002
resolution42 in Ramos, the Court found the control test decisive.
In the present case, it appears to have escaped the Court's attention
that both the RTC and the CA found no employment relationship
between PSI and Dr. Ampil, and that the Aganas did not question
such finding. In its March 17, 1993 decision, the RTC found "that
defendant doctors were not employees of PSI in its hospital, they
being merely consultants without any employer-employee
relationship and in the capacity of independent contractors." 43 The
Aganas never questioned such finding.

PSI, Dr. Ampil and Dr. Fuentes appealed 44 from the RTC decision but
only on the issues of negligence, agency and corporate liability. In its
September 6, 1996 decision, the CA mistakenly referred to PSI and
Dr. Ampil as employer-employee, but it was clear in its discussion on
the matter that it viewed their relationship as one of mere apparent
agency.45
The Aganas appealed from the CA decision, but only to question the
exoneration of Dr. Fuentes.46 PSI also appealed from the CA
decision, and it was then that the issue of employment, though long
settled, was unwittingly resurrected.
In fine, as there was no dispute over the RTC finding that PSI and Dr.
Ampil had no employer-employee relationship, such finding became
final and conclusive even to this Court. 47 There was no reason for
PSI to have raised it as an issue in its petition. Thus, whatever
discussion on the matter that may have ensued was purely
academic.
Nonetheless, to allay the anxiety of the intervenors, the Court holds
that, in this particular instance, the concurrent finding of the RTC and
the CA that PSI was not the employer of Dr. Ampil is correct. Control
as a determinative factor in testing the employer-employee
relationship between doctor and hospital under which the hospital
could be held vicariously liable to a patient in medical negligence
cases is a requisite fact to be established by preponderance of
evidence. Here, there was insufficient evidence that PSI exercised
the power of control or wielded such power over the means and the
details of the specific process by which Dr. Ampil applied his skills in
the treatment of Natividad. Consequently, PSI cannot be held
vicariously liable for the negligence of Dr. Ampil under the principle
ofrespondeat superior.
There is, however, ample evidence that the hospital (PSI) held out to
the patient (Natividad)48 that the doctor (Dr. Ampil) was its agent.
Present are the two factors that determine apparent authority: first,
the hospital's implied manifestation to the patient which led the latter
to conclude that the doctor was the hospital's agent; and second, the
patients reliance upon the conduct of the hospital and the doctor,
consistent with ordinary care and prudence.49

Enrique testified that on April 2, 1984, he consulted Dr. Ampil

regarding the condition of his wife; that after the meeting and as
advised by Dr. Ampil, he "asked [his] wife to go to Medical City to be
examined by [Dr. Ampil]"; and that the next day, April 3, he told his
daughter to take her mother to Dr. Ampil. 50 This timeline indicates
that it was Enrique who actually made the decision on whom
Natividad should consult and where, and that the latter merely
acceded to it. It explains the testimony of Natividad that she
consulted Dr. Ampil at the instigation of her daughter.51
Moreover, when asked what impelled him to choose Dr. Ampil,
Enrique testified:
Atty. Agcaoili
On that particular occasion, April 2, 1984, what was your reason for
choosing Dr. Ampil to contact with in connection with your wife's
illness?
A. First, before that, I have known him to be a specialist on that part
of the body as a surgeon, second, I have known him to be a staff
member of the Medical City which is a prominent and
known hospital. And third, because he is a neighbor, I expect more
than the usual medical service to be given to us, than his ordinary
patients.52 (emphasis supplied)

procedures and to administer such medications and treatments as

may be deemed necessary or advisable by the physicians of
this hospital for and during the confinement of xxx. (emphasis
supplied)
By such statement, PSI virtually reinforced the public impression that
Dr. Ampil was a physician of its hospital, rather than one
independently practicing in it; that the medications and treatments he
prescribed were necessary and desirable; and that the hospital staff
was prepared to carry them out.1avvphi1
PSI pointed out in its memorandum that Dr. Ampil's hospital affiliation
was not the exclusive basis of the Aganas decision to have
Natividad treated in Medical City General Hospital, meaning that,
had Dr. Ampil been affiliated with another hospital, he would still have
been chosen by the Aganas as Natividad's surgeon.54
The Court cannot speculate on what could have been behind the
Aganas decision but would rather adhere strictly to the fact that,
under the circumstances at that time, Enrique decided to consult Dr.
Ampil for he believed him to be a staff member of a prominent and
known hospital. After his meeting with Dr. Ampil, Enrique advised his
wife Natividad to go to the Medical City General Hospital to be
examined by said doctor, and the hospital acted in a way that fortified
Enrique's belief.

Clearly, the decision made by Enrique for Natividad to consult Dr.

Ampil was significantly influenced by the impression that Dr. Ampil
was a staff member of Medical City General Hospital, and that said
hospital was well known and prominent. Enrique looked upon Dr.
Ampil not as independent of but as integrally related to Medical City.

This Court must therefore maintain the ruling that PSI is vicariously
liable for the negligence of Dr. Ampil as its ostensible agent.

PSI's acts tended to confirm and reinforce, rather than negate,

Enrique's view. It is of record that PSI required a "consent for
hospital care"53 to be signed preparatory to the surgery of Natividad.
The form reads:

51. Clearly, not being an agent or employee of petitioner PSI, PSI

[sic] is not liable for Dr. Ampil's acts during the operation.
Considering further that Dr. Ampil was personally engaged as a
doctor by Mrs. Agana, it is incumbent upon Dr. Ampil, as "Captain of
the Ship", and as the Agana's doctor to advise her on what to do with
her situation vis-a-vis the two missing gauzes. In addition to noting
the missing gauzes, regular check-ups were made and no signs

Permission is hereby given to the medical, nursing and laboratory

staff of the Medical City General Hospital to perform such diagnostic

Moving on to the next issue, the Court notes that PSI made the
following admission in its Motion for Reconsideration:

of complications were exhibited during her stay at the hospital,

which could have alerted petitioner PSI's hospital to render and
provide post-operation services to and tread on Dr. Ampil's role
as the doctor of Mrs. Agana. The absence of negligence of PSI
from the patient's admission up to her discharge is borne by the
finding of facts in this case. Likewise evident therefrom is the
absence of any complaint from Mrs. Agana after her discharge
from the hospital which had she brought to the hospital's
attention, could have alerted petitioner PSI to act accordingly
and bring the matter to Dr. Ampil's attention. But this was not
the case. Ms. Agana complained ONLY to Drs. Ampil and
Fuentes, not the hospital. How then could PSI possibly do
something to fix the negligence committed by Dr. Ampil when it
was not informed about it at all.55 (emphasis supplied)
PSI reiterated its admission when it stated that had Natividad Agana
"informed the hospital of her discomfort and pain, the hospital would
have been obliged to act on it."56
The significance of the foregoing statements is critical.
First, they constitute judicial admission by PSI that while it had no
power to control the means or method by which Dr. Ampil conducted
the surgery on Natividad Agana, it had the power to review or
cause the review of what may have irregularly transpired within its
walls strictly for the purpose of determining whether some form of
negligence may have attended any procedure done inside its
premises, with the ultimate end of protecting its patients.
Second, it is a judicial admission that, by virtue of the nature of its
business as well as its prominence 57 in the hospital industry, it
assumed a duty to "tread on" the "captain of the ship" role of any
doctor rendering services within its premises for the purpose of
ensuring the safety of the patients availing themselves of its services
and facilities.
Third, by such admission, PSI defined the standards of its corporate
conduct under the circumstances of this case, specifically: (a) that it
had a corporate duty to Natividad even after her operation to ensure
her safety as a patient; (b) that its corporate duty was not limited to

having its nursing staff note or record the two missing gauzes and (c)
that its corporate duty extended to determining Dr. Ampil's role in it,
bringing the matter to his attention, and correcting his negligence.
And finally, by such admission, PSI barred itself from arguing in its
second motion for reconsideration that the concept of corporate
responsibility was not yet in existence at the time Natividad
underwent treatment;58 and that if it had any corporate responsibility,
the same was limited to reporting the missing gauzes and did not
include "taking an active step in fixing the negligence
committed."59 An admission made in the pleading cannot be
controverted by the party making such admission and is conclusive
as to him, and all proofs submitted by him contrary thereto or
inconsistent therewith should be ignored, whether or not objection is
interposed by a party.60
Given the standard of conduct that PSI defined for itself, the next
relevant inquiry is whether the hospital measured up to it.
PSI excuses itself from fulfilling its corporate duty on the ground that
Dr. Ampil assumed the personal responsibility of informing Natividad
about the two missing gauzes. 61 Dr. Ricardo Jocson, who was part of
the group of doctors that attended to Natividad, testified that toward
the end of the surgery, their group talked about the missing gauzes
but Dr. Ampil assured them that he would personally notify the
patient about it.62 Furthermore, PSI claimed that there was no reason
for it to act on the report on the two missing gauzes because
Natividad Agana showed no signs of complications. She did not even
inform the hospital about her discomfort.63
The excuses proffered by PSI are totally unacceptable.
To begin with, PSI could not simply wave off the problem and
nonchalantly delegate to Dr. Ampil the duty to review what transpired
during the operation. The purpose of such review would have been
to pinpoint when, how and by whom two surgical gauzes were
mislaid so that necessary remedial measures could be taken to avert
any jeopardy to Natividads recovery. Certainly, PSI could not have
expected that purpose to be achieved by merely hoping that the
person likely to have mislaid the gauzes might be able to retrace his

own steps. By its own standard of corporate conduct, PSI's duty to

initiate the review was non-delegable.
While Dr. Ampil may have had the primary responsibility of notifying
Natividad about the missing gauzes, PSI imposed upon itself the
separate and independent responsibility of initiating the inquiry into
the missing gauzes. The purpose of the first would have been to
apprise Natividad of what transpired during her surgery, while the
purpose of the second would have been to pinpoint any lapse in
procedure that led to the gauze count discrepancy, so as to prevent a
recurrence thereof and to determine corrective measures that would
ensure the safety of Natividad. That Dr. Ampil negligently failed to
notify Natividad did not release PSI from its self-imposed separate
responsibility.
Corollary to its non-delegable undertaking to review potential
incidents of negligence committed within its premises, PSI had the
duty to take notice of medical records prepared by its own staff and
submitted to its custody, especially when these bear earmarks of a
surgery gone awry. Thus, the record taken during the operation of
Natividad which reported a gauze count discrepancy should have
given PSI sufficient reason to initiate a review. It should not have
waited for Natividad to complain.
As it happened, PSI took no heed of the record of operation and
consequently did not initiate a review of what transpired during
Natividads operation. Rather, it shirked its responsibility and passed
it on to others to Dr. Ampil whom it expected to inform Natividad,
and to Natividad herself to complain before it took any meaningful
step. By its inaction, therefore, PSI failed its own standard of hospital
care. It committed corporate negligence.
It should be borne in mind that the corporate negligence ascribed to
PSI is different from the medical negligence attributed to Dr. Ampil.
The duties of the hospital are distinct from those of the doctorconsultant practicing within its premises in relation to the patient;
hence, the failure of PSI to fulfill its duties as a hospital corporation
gave rise to a direct liability to the Aganas distinct from that of Dr.
Ampil.

All this notwithstanding, we make it clear that PSIs hospital liability

based on ostensible agency and corporate negligence applies only
to this case, pro hac vice. It is not intended to set a precedent and
should not serve as a basis to hold hospitals liable for every form of
negligence of their doctors-consultants under any and all
circumstances. The ruling is unique to this case, for the liability of
PSI arose from an implied agency with Dr. Ampil and an admitted
corporate duty to Natividad.64
Other circumstances peculiar to this case warrant this ruling, 65 not
the least of which being that the agony wrought upon the Aganas has
gone on for 26 long years, with Natividad coming to the end of her
days racked in pain and agony. Such wretchedness could have been
avoided had PSI simply done what was logical: heed the report of a
guaze count discrepancy, initiate a review of what went wrong and
take corrective measures to ensure the safety of Nativad. Rather, for
26 years, PSI hemmed and hawed at every turn, disowning any such
responsibility to its patient. Meanwhile, the options left to the Aganas
have all but dwindled, for the status of Dr. Ampil can no longer be
ascertained.66
Therefore, taking all the equities of this case into consideration, this
Court believes P15 million would be a fair and reasonable liability of
PSI, subject to 12% p.a. interest from the finality of this resolution to
full satisfaction.
WHEREFORE,
the
second
motion
for
reconsideration
is DENIED and the motions for intervention are NOTED.
Professional Services, Inc. is ORDERED pro hac vice to pay
Natividad (substituted by her children Marcelino Agana III, Enrique
Agana, Jr., Emma Agana-Andaya, Jesus Agana and Raymund
Agana) and Enrique Agana the total amount of P15 million, subject to
12% p.a. interest from the finality of this resolution to full satisfaction.
No further pleadings by any party shall be entertained in this case.
Let the long-delayed entry of judgment be made in this case upon
receipt by all concerned parties of this resolution.

SO ORDERED.