CONTRACTS
Trial Court (RTC) of Makati City.
G.R. No. 190601 February 7, 2011
SPOUSES LUIGI M. GUANIO and ANNA
HERNANDEZ-GUANIO, Petitioners, versus
MAKATI SHANGRI-LA HOTEL and RESORT,
INC., also doing business under the name of
SHANGRI-LA HOTEL MANILA, Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
CARPIO MORALES, J.
For their wedding reception on July 28, 2001,
spouses Luigi M. Guanio and Anna Hernandez-Guanio
(petitioners) booked at the Shangri-la Hotel Makati (the
hotel).
Prior to the event, Makati Shangri-La Hotel &
Resort, Inc. (respondent) scheduled an initial food
tasting. Petitioners claim that they requested the hotel to
prepare for seven persons ─ the two of them, their
respective parents, and the wedding coordinator. At the
scheduled food tasting, however, respondent prepared
for only six.
Petitioners initially chose a set menu which
included black cod, king prawns and angel hair pasta
with wild mushroom sauce for the main course which
cost P1,000.00 per person. They were, however, given
an option in which salmon, instead of king prawns,
would be in the menu at P950.00 per person. They in fact
partook of the salmon.
Three days before the event, a final food tasting
took place. Petitioners aver that the salmon served was
half the size of what they were served during the initial
food tasting; and when queried about it, the hotel quoted
a much higher price (P1,200.00) for the size that was
initially served to them. The parties eventually agreed on
a final price ─ P1,150 per person.
A day before the event or on July 27, 2001, the
parties finalized and forged their contract.[1]
Petitioners claim that during the reception,
respondents representatives, Catering Director Bea
Marquez and Sales Manager Tessa Alvarez, did not
show up despite their assurance that they would; their
guests complained of the delay in the service of the
dinner; certain items listed in the published menu were
unavailable; the hotels waiters were rude and
unapologetic when confronted about the delay; and
despite Alvarezs promise that there would be no charge
for the extension of the reception beyond 12:00
midnight, they were billed and paid P8,000 per hour for
the three-hour extension of the event up to 4:00 A.M. the
next day.
Petitioners further claim that they brought wine
and liquor in accordance with their open bar
arrangement, but these were not served to the guests who
were forced to pay for their drinks.
Petitioners thus sent a letter-complaint to the
Makati Shangri-la Hotel and Resort, Inc. (respondent)
and received an apologetic reply from Krister Svensson,
the hotels Executive Assistant Manager in charge of
Food and Beverage. They nevertheless filed a complaint
for breach of contract and damages before the Regional
In its Answer, respondent claimed that
petitioners requested a combination of king prawns and
salmon, hence, the price was increased to P1,200.00 per
person, but discounted at P1,150.00; that contrary to
petitioners claim, Marquez and Alvarez were present
during the event, albeit they were not permanently
stationed thereat as there were three other hotel
functions; that while there was a delay in the service of
the meals, the same was occasioned by the sudden
increase of guests to 470 from the guaranteed expected
minimum number of guests of 350 to a maximum of 380,
as stated in the Banquet Event Order (BEO);[2] and that
Isaac Albacea, Banquet Service Director, in fact relayed
the delay in the service of the meals to petitioner Luigis
father, Gil Guanio.
Respecting the belated service of meals to some
guests, respondent attributed it to the insistence of
petitioners wedding coordinator that certain guests be
served first.
On Svenssons letter, respondent, denying it as an
admission of liability, claimed that it was meant to
maintain goodwill to its customers.
By Decision of August 17, 2006, Branch 148 of
the Makati RTC rendered judgment in favor of
petitioners, disposing as follows:
WHEREFORE, premises considered,
judgment is hereby rendered in favor of the plaintiffs
and against the defendant ordering the defendants to
pay the plaintiff the following:
1) The amount of P350,000.00 by way of actual
damages;
2) The amount of P250,000.00 for and as moral
damages;
3) The amount of P100,000.00 as exemplary
damages;
4) The amount of P100,000.00 for and as attorneys
fees.
With costs against the defendant.
SO ORDERED.[3]
In finding for petitioners, the trial court relied
heavily on the letter of Svensson which is partly quoted
below:
Upon receiving your comments on our service
rendered during your reception here with us, we
are in fact, very distressed. Right from minor
issues pappadums served in the soup instead of
the creutons, lack of valet parkers, hard rolls
being too hard till a major one slow service, rude
and arrogant waiters, we have disappointed you
in all means.
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 Indeed, we feel as strongly as you do that the
services you received were unacceptable and
definitely not up to our standards. We
understand that it is our job to provide excellent
service and in this instance, we have fallen short
of your expectations. We ask you please to
accept our profound apologies for causing such
discomfort and annoyance. [4] (underscoring
supplied)
The trial court observed that from the tenor of
the letter . . . the defendant[-herein respondent] admits
that the services the plaintiff[-herein petitioners]
received were unacceptable and definitely not up to their
standards.[5]
On appeal, the Court of Appeals, by Decision of
July 27, 2009,[6] reversed the trial courts decision, it
holding that the proximate cause of petitioners injury
was an unexpected increase in their guests:
x x x Hence, the alleged damage or injury brought
about by the confusion, inconvenience and disarray
during the wedding reception may not be attributed
to defendant-appellant Shangri-la.
We find that the said proximate cause, which is
entirely attributable to plaintiffs-appellants, set the
chain of events which resulted in the alleged
inconveniences, to the plaintiffs-appellants. Given
the circumstances that obtained, only the Sps.
Guanio may bear whatever consequential damages
that they may have allegedly suffered.[7]
(underscoring supplied)
Petitioners motion for reconsideration having
been denied by Resolution of November 18, 2009, the
present petition for review was filed.
The Court finds that since petitioners complaint
arose from a contract, the doctrine of proximate cause
finds no application to it:
The doctrine of proximate cause is
applicable only in actions for quasi-delicts, not in
actions involving breach of contract. x x x The
doctrine is a device for imputing liability to a person
where there is no relation between him and another
party. In such a case, the obligation is created by law
itself. But, where there is a pre-existing contractual
relation between the parties, it is the parties
themselves who create the obligation, and the
function of the law is merely to regulate the relation
thus created.[8] (emphasis and underscoring
supplied)
What applies in the present case is Article 1170
of the Civil Code which reads:
Art. 1170. Those who in the performance of
their obligations are guilty of fraud, negligence or
delay, and those who in any manner contravene the
tenor thereof, are liable for damages.
RCPI v. Verchez, et al. [9] enlightens:
In culpa contractual x x x the mere proof of
the existence of the contract and the failure of its
compliance justify, prima facie, a corresponding
right of relief. The law, recognizing the obligatory
force of contracts, will not permit a party to be set
free from liability for any kind of misperformance of
the contractual undertaking or a contravention of the
tenor thereof. A breach upon the contract confers
upon the injured party a valid cause for recovering
that which may have been lost or suffered. The
remedy serves to preserve the interests of the
promissee that may include his expectation
interest, which is his interest in having the benefit
of his bargain by being put in as good a position as
he would have been in had the contract been
performed, or his reliance interest, which is his
interest in being reimbursed for loss caused by
reliance on the contract by being put in as good a
position as he would have been in had the contract
not been made; or his restitution interest, which is
his interest in having restored to him any benefit that
he has conferred on the other party. Indeed,
agreements can accomplish little, either for their
makers or for society, unless they are made the basis
for action. The effect of every infraction is to create
a new duty, that is, to make RECOMPENSE to the
one who has been injured by the failure of another to
observe his contractual obligation unless he can
show extenuating circumstances, like proof of his
exercise of due diligence x x x or of the attendance
of fortuitous event, to excuse him from his ensuing
liability. (emphasis and underscoring in the original;
capitalization supplied)
The pertinent provisions of the Banquet and
Meeting Services Contract between the parties read:
4.3 The ENGAGER shall be billed in
accordance with the prescribed rate for the minimum
guaranteed number of persons contracted for,
regardless of under attendance or non-appearance of
the expected number of guests, except where the
ENGAGER cancels the Function in accordance with
its Letter of Confirmation with the HOTEL. Should
the attendance exceed the minimum guaranteed
attendance, the ENGAGER shall also be billed at the
actual rate per cover in excess of the minimum
guaranteed attendance.
xxxx
4.5. The ENGAGER must inform the
HOTEL at least forty eight (48) hours before the
scheduled date and time of the Function of any
change in the minimum guaranteed covers. In the
absence of such notice, paragraph 4.3 shall apply in
the event of under attendance. In case the actual
number of attendees exceed the minimum
guaranteed number by ten percent (10%), the
HOTEL shall not in any way be held liable for
any damage or inconvenience which may be
caused thereby. The ENGAGER shall also
undertake to advise the guests of the situation and
take positive steps to remedy the same.[10]
(emphasis, italics and underscoring supplied)
Breach of contract is defined as the failure
without legal reason to comply with the terms of a
contract. It is also defined as the [f]ailure, without legal
excuse, to perform any promise which forms the whole
or part of the contract.[11]
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 The appellate court, and even the trial court,
observed that petitioners were remiss in their obligation
to inform respondent of the change in the expected
number of guests. The observation is reflected in the
records of the case. Petitioners failure to discharge such
obligation thus excused, as the above-quoted paragraph
4.5 of the parties contract provide, respondent from
liability for any damage or inconvenience occasioned
thereby.
As for petitioners claim that respondent departed
from its verbal agreement with petitioners, the same
fails, given that the written contract which the parties
entered into the day before the event, being the law
between them.
Respecting the letter of Svensson on which the
trial court heavily relied as admission of respondents
liability but which the appellate court brushed aside, the
Court finds the appellate courts stance in order. It is not
uncommon in the hotel industry to receive comments,
criticisms or feedback on the service it delivers. It is also
customary for hotel management to try to smooth ruffled
feathers to preserve goodwill among its clientele.
Kalalo v. Luz holds:[12]
Statements which are not estoppels nor judicial
admissions have no quality of conclusiveness, and
an opponent whose admissions have been offered
against him may offer any evidence which serves as
an explanation for his former assertion of what he
now denies as a fact.
Respondents Catering Director, Bea Marquez,
explained the hotels procedure on receiving and
processing complaints, viz:
ATTY. CALMA:
Q You mentioned that the letter indicates an
acknowledgement of the concern and that there was-
the first letter there was an acknowledgment of the
concern and an apology, not necessarily indicating
that such or admitting fault?
A Yes.
Q Is this the letter that you are referring to?
If I may, Your Honor, that was the letter dated
August 4, 2001, previously marked as plaintiffs
exhibits, Your Honor. What is the procedure of the
hotel with respect to customer concern?
A Upon receipt of the concern from the guest or client,
we acknowledge receipt of such concern, and as part
of procedure in service industry particularly Makati
Shangri-la we apologize for whatever inconvenience
but at the same time saying, that of course, we would
go through certain investigation and get back to them
for the feedback with whatever concern they may
have.
Q Your Honor, I just like at this point mark the
exhibits, Your Honor, the letter dated August 4,
2001 identified by the witness, Your Honor, to be
marked as Exhibit 14 and the signature of Mr.
Krister Svensson be marked as Exhibit 14-A.[13]
xxxx
Q In your opinion, you just mentioned that there is a
procedure that the hotel follows with respect to the
complaint, in your opinion was this procedure
followed in this particular concern?
A Yes, maam.
Q What makes you say that this procedure was
followed?
A As I mentioned earlier, we proved that we did
acknowledge the concern of the client in this case
and we did emphatize from the client and
apologized, and at the same time got back to them in
whatever investigation we have.
Q You said that you apologized, what did you
apologize for?
A Well, first of all it is a standard that we apologize,
right? Being in the service industry, it is a practice
that we apologize if there is any inconvenience, so
the purpose for apologizing is mainly to show
empathy and to ensure the client that we are hearing
them out and that we will do a better investigation
and it is not in any way that we are admitting any
fault.[14] (underscoring supplied)
To the Court, the foregoing explanation of the
hotels Banquet Director overcomes any presumption of
admission of breach which Svenssons letter might have
conveyed.
The exculpatory clause notwithstanding, the
Court notes that respondent could have managed the
situation better, it being held in high esteem in the hotel
and service industry. Given respondents vast experience,
it is safe to presume that this is not its first encounter with
booked events exceeding the guaranteed cover. It is not
audacious to expect that certain measures have been
placed in case this predicament crops up. That regardless
of these measures, respondent still received complaints
as in the present case, does not amuse.
Respondent admitted that three hotel functions
coincided with petitioners reception. To the Court, the
delay in service might have been avoided or minimized
if respondent exercised prescience in scheduling events.
No less than quality service should be delivered
especially in events which possibility of repetition is
close to nil. Petitioners are not expected to get married
twice in their lifetimes.
In the present petition, under considerations of
equity, the Court deems it just to award the amount of
P50,000.00 by way of nominal damages to petitioners,
for the discomfiture that they were subjected to during to
the event.[15] The Court recognizes that every person is
entitled to respect of his dignity, personality, privacy and
peace of mind.[16] Respondents lack of prudence is an
affront to this right.
WHEREFORE, the Court of Appeals Decision
dated July 27, 2009 is PARTIALLY REVERSED.
Respondent is, in light of the foregoing discussion,
ORDERED to pay the amount of P50,000.00 to
petitioners by way of nominal damages.
SO ORDERED.
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G.R. No. 163419 February 13, 2008
TSPIC CORPORATION, Petitioner, - versus - TSPIC EMPLOYEES UNION (FFW), Respondents.
x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

The path towards industrial peace is a two-way street. Fundamental fairness and protection to labor should always
govern dealings between labor and management. Seemingly conflicting provisions should be harmonized to arrive at an
interpretation that is within the parameters of the law, compassionate to labor, yet, fair to management.

In this Petition for Review on Certiorari under Rule 45, petitioner TSPIC Corporation (TSPIC) seeks to annul and
set aside the October 22, 2003 Decision[5] and April 23, 2004 Resolution[6] of the Court of Appeals (CA) in CA-G.R. SP
No. 68616, which affirmed the September 13, 2001 Decision[7] of Accredited Voluntary Arbitrator Josephus B. Jimenez in
National Conciliation and Mediation Board Case No. JBJ-AVA-2001-07-57.

TSPIC is engaged in the business of designing, manufacturing, and marketing integrated circuits to serve the
communication, automotive, data processing, and aerospace industries. Respondent TSPIC Employees Union (FFW)
(Union), on the other hand, is the registered bargaining agent of the rank-and-file employees of TSPIC. The respondents,
Maria Fe Flores, Fe Capistrano, Amy Durias, Claire Evelyn Velez, Janice Olaguir, Jerico Alipit, Glen Batula, Ser John
Hernandez, Rachel Novillas, Nimfa Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn
Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade, Catherine Yaba, Diomedisa Erni, Mario Salmorin,
Loida Comullo, Marie Ann Delos Santos, Juanita Yana, and Suzette Dulay, are all members of the Union.

In 1999, TSPIC and the Union entered into a Collective Bargaining Agreement (CBA)[8] for the years 2000 to
2004. The CBA included a provision on yearly salary increases starting January 2000 until January 2002. Section 1, Article
X of the CBA provides, as follows:

Section 1. Salary/ Wage Increases.Employees covered by this Agreement shall be granted salary/wage
increases as follows:

a) Effective January 1, 2000, all employees on regular status and within the bargaining unit on
or before said date shall be granted a salary increase equivalent to ten percent (10%) of their
basic monthly salary as of December 31, 1999.
b) Effective January 1, 2001, all employees on regular status and within the bargaining unit on
or before said date shall be granted a salary increase equivalent to twelve (12%) of their basic
monthly salary as of December 31, 2000.
c) Effective January 1, 2002, all employees on regular status and within the bargaining unit on
or before said date shall be granted a salary increase equivalent to eleven percent (11%) of their
basic monthly salary as of December 31, 2001.

The wage salary increase of the first year of this Agreement shall be over and above the wage/salary
increase, including the wage distortion adjustment, granted by the COMPANY on November 1, 1999 as
per Wage Order No. NCR-07.

The wage/salary increases for the years 2001 and 2002 shall be deemed inclusive of the mandated
minimum wage increases under future Wage Orders, that may be issued after Wage Order No. NCR-07,
and shall be considered as correction of any wage distortion that may have been brought about by the said
future Wage Orders. Thus the wage/salary increases in 2001 and 2002 shall be deemed as compliance to
future wage orders after Wage Order No. NCR-07.

Consequently, on January 1, 2000, all the regular rank-and-file employees of TSPIC received a 10% increase in
their salary. Accordingly, the following nine (9) respondents (first group) who were already regular employees received the
said increase in their salary: Maria Fe Flores, Fe Capistrano, Amy Durias, Claire Evelyn Velez, Janice Olaguir, Jerico Alipit,
Glen Batula, Ser John Hernandez, and Rachel Novillas.[9]

The CBA also provided that employees who acquire regular employment status within the year but after the
effectivity of a particular salary increase shall receive a proportionate part of the increase upon attainment of their regular
status. Sec. 2 of the CBA provides:

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 SECTION 2. Regularization Increase.A covered daily paid employee who acquires regular status within
the year subsequent to the effectivity of a particular salary/wage increase mentioned in Section 1 above
shall be granted a salary/wage increase in proportionate basis as follows:

Regularization Period Equivalent Increase

- 1st Quarter 100%
- 2nd Quarter 75%
- 3rd Quarter 50%
- 4th Quarter 25%

Thus, a daily paid employee who becomes a regular employee covered by this Agreement only on
May 1, 2000, i.e., during the second quarter and subsequent to the January 1, 2000 wage increase under this
Agreement, will be entitled to a wage increase equivalent to seventy-five percent (75%) of ten percent
(10%) of his basic pay. In the same manner, an employee who acquires regular status on December 1, 2000
will be entitled to a salary increase equivalent to twenty-five percent (25%) of ten percent (10%) of his last
basic pay.

On the other hand, any monthly-paid employee who acquires regular status within the term of the
Agreement shall be granted regularization increase equivalent to 10% of his regular basic salary.

Then on October 6, 2000, the Regional Tripartite Wage and Productivity Board, National Capital Region, issued
Wage Order No. NCR-08[10] (WO No. 8) which raised the daily minimum wage from PhP 223.50 to PhP 250 effective
November 1, 2000. Conformably, the wages of 17 probationary employees, namely: Nimfa Anilao, Rose Subardiaga,
Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia
Andrade, Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo, Marie Ann Delos Santos, Juanita Yana, and
Suzette Dulay (second group), were increased to PhP 250.00 effective November 1, 2000.

On various dates during the last quarter of 2000, the above named 17 employees attained regular employment[11]
and received 25% of 10% of their salaries as granted under the provision on regularization increase under Article X, Sec. 2
of the CBA.

In January 2001, TSPIC implemented the new wage rates as mandated by the CBA. As a result, the nine employees
(first group), who were senior to the above-listed recently regularized employees, received less wages.

On January 19, 2001, a few weeks after the salary increase for the year 2001 became effective, TSPICs Human
Resources Department notified 24 employees,[12] namely: Maria Fe Flores, Janice Olaguir, Rachel Novillas, Fe Capistrano,
Jerico Alipit, Amy Durias, Glen Batula, Claire Evelyn Velez, Ser John Hernandez, Nimfa Anilao, Rose Subardiaga, Valerie
Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade,
Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo, and Marie Ann Delos Santos, that due to an error in the
automated payroll system, they were overpaid and the overpayment would be deducted from their salaries in a staggered
basis, starting February 2001. TSPIC explained that the correction of the erroneous computation was based on the crediting
provision of Sec. 1, Art. X of the CBA.

The Union, on the other hand, asserted that there was no error and the deduction of the alleged overpayment from
employees constituted diminution of pay. The issue was brought to the grievance machinery, but TSPIC and the Union
failed to reach an agreement.

Consequently, TSPIC and the Union agreed to undergo voluntary arbitration on the solitary issue of whether or not
the acts of the management in making deductions from the salaries of the affected employees constituted diminution of pay.

On September 13, 2001, Arbitrator Jimenez rendered a Decision, holding that the unilateral deduction made by
TSPIC violated Art. 100[13] of the Labor Code. The fallo reads:

WHEREFORE, in the light of the law on the matter and on the facts adduced in evidence, judgment
is hereby rendered in favor of the Union and the named individual employees and against the company,
thereby ordering the [TSPIC] to pay as follows:

1) to the sixteen (16) newly regularized employees named above, the amount of P12,642.24 a month
or a total of P113,780.16 for nine (9) months or P7,111.26 for each of them as well as an additional
P12,642.24 (for all), or P790.14 (for each), for every month after 30 September 2001, until full
payment, with legal interests for every month of delay;

2) to the nine (9) who were hired earlier than the sixteen (16); also named above, their respective
amount of entitlements, according to the Unions correct computation, ranging from P110.22 per
month (or P991.98 for nine months) to P450.58 a month (or P4,055.22 for nine months), as well as
corresponding monthly entitlements after 30 September 2001, plus legal interests until full
payment,

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 3) to Suzette Dulay, the amount of P608.14 a month (or P5,473.26), as well as corresponding
monthly entitlements after 30 September 2001, plus legal interest until full payment,

4) Attorneys fees equal to 10% of all the above monetary awards.

The claim for exemplary damages is denied for want of factual basis.

The parties are hereby directed to comply with their joint voluntary commitment to abide by this
Award and thus, submit to this Office jointly, a written proof of voluntary compliance with this DECISION
within ten (10) days after the finality hereof.

SO ORDERED.[14]

TSPIC filed a Motion for Reconsideration which was denied in a Resolution dated November 21, 2001.

Aggrieved, TSPIC filed before the CA a petition for review under Rule 43 docketed as CA-G.R. SP No. 68616. The
appellate court, through its October 22, 2003 Decision, dismissed the petition and affirmed in toto the decision of the
voluntary arbitrator. The CA declared TSPICs computation allowing PhP 287 as daily wages to the newly regularized
employees to be correct, noting that the computation conformed to WO No. 8 and the provisions of the CBA. According to
the CA, TSPIC failed to convince the appellate court that the deduction was a result of a system error in the automated
payroll system. The CA explained that when WO No. 8 took effect on November 1, 2000, the concerned employees were
still probationary employees who were receiving the minimum wage of PhP 223.50. The CA said that effective November
1, 2000, said employees should have received the minimum wage of PhP 250. The CA held that when respondents became
regular employees on November 29, 2000, they should be allowed the salary increase granted them under the CBA at the
rate of 25% of 10% of their basic salary for the year 2000; thereafter, the 12% increase for the year 2001 and the 10%
increase for the year 2002 should also be made applicable to them.[15]

TSPIC filed a Motion for Reconsideration which was denied by the CA in its April 23, 2004 Resolution.

TSPIC filed the instant petition which raises this sole issue for our resolution: Does the TSPICs decision to deduct
the alleged overpayment from the salaries of the affected members of the Union constitute diminution of benefits in violation
of the Labor Code?

TSPIC maintains that the formula proposed by the Union, adopted by the arbitrator and affirmed by the CA, was
flawed, inasmuch as it completely disregarded the crediting provision contained in the last paragraph of Sec. 1, Art. X of
the CBA.

We find TSPICs contention meritorious.

A Collective Bargaining Agreement is the law between the parties

It is familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they are obliged
to comply with its provisions.[16] We said so in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda:

A collective bargaining agreement or CBA refers to the negotiated contract between a legitimate
labor organization and the employer concerning wages, hours of work and all other terms and conditions
of employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals,
good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes
the law between the parties and compliance therewith is mandated by the express policy of the law. [17]

Moreover, if the terms of a contract, as in a CBA, are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of their stipulations shall control.[18] However, sometimes, as in this case, though the provisions
of the CBA seem clear and unambiguous, the parties sometimes arrive at conflicting interpretations. Here, TSPIC wants to
credit the increase granted by WO No. 8 to the increase granted under the CBA. According to TSPIC, it is specifically
provided in the CBA that the salary/wage increase for the year 2001 shall be deemed inclusive of the mandated minimum
wage increases under future wage orders that may be issued after Wage Order No. 7. The Union, on the other hand, insists
that the crediting provision of the CBA finds no application in the present case, since at the time WO No. 8 was issued, the
probationary employees (second group) were not yet covered by the CBA, particularly by its crediting provision.
As a general rule, in the interpretation of a contract, the intention of the parties is to be pursued.[19] Littera necat
spiritus vivificat. An instrument must be interpreted according to the intention of the parties. It is the duty of the courts to
place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and the
purpose which it is intended to serve.[20] Absurd and illogical interpretations should also be avoided. Considering that the
parties have unequivocally agreed to substitute the benefits granted under the CBA with those granted under wage orders,
the agreement must prevail and be given full effect.

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 Paragraph (b) of Sec. 1 of Art. X of the CBA provides for the general agreement that, effective January 1, 2001, all
employees on regular status and within the bargaining unit on or before said date shall be granted a salary increase equivalent
to twelve (12%) of their basic monthly salary as of December 31, 2000. The 12% salary increase is granted to all employees
who (1) are regular employees and (2) are within the bargaining unit.

Second paragraph of (c) provides that the salary increase for the year 2000 shall not include the increase in salary
granted under WO No. 7 and the correction of the wage distortion for November 1999.
The last paragraph, on the other hand, states the specific condition that the wage/salary increases for the years 2001
and 2002 shall be deemed inclusive of the mandated minimum wage increases under future wage orders, that may be issued
after WO No. 7, and shall be considered as correction of the wage distortions that may be brought about by the said future
wage orders. Thus, the wage/salary increases in 2001 and 2002 shall be deemed as compliance to future wage orders after
WO No. 7.

Paragraph (b) is a general provision which allows a salary increase to all those who are qualified. It, however,
clashes with the last paragraph which specifically states that the salary increases for the years 2001 and 2002 shall be deemed
inclusive of wage increases subsequent to those granted under WO No. 7. It is a familiar rule in interpretation of contracts
that conflicting provisions should be harmonized to give effect to all.[21] Likewise, when general and specific provisions
are inconsistent, the specific provision shall be paramount to and govern the general provision.[22] Thus, it may be
reasonably concluded that TSPIC granted the salary increases under the condition that any wage order that may be
subsequently issued shall be credited against the previously granted increase. The intention of the parties is clear: As long
as an employee is qualified to receive the 12% increase in salary, the employee shall be granted the increase; and as long as
an employee is granted the 12% increase, the amount shall be credited against any wage order issued after WO No. 7.

Respondents should not be allowed to receive benefits from the CBA while avoiding the counterpart crediting
provision. They have received their regularization increases under Art. X, Sec. 2 of the CBA and the yearly increase for the
year 2001. They should not then be allowed to avoid the crediting provision which is an accompanying condition.

Respondents attained regular employment status before January 1, 2001. WO No. 8, increasing the minimum wage,
was issued after WO No. 7. Thus, respondents rightfully received the 12% salary increase for the year 2001 granted in the
CBA; and consequently, TSPIC rightfully credited that 12% increase against the increase granted by WO No. 8.

Proper formula for computing the salaries for the year 2001

Thus, the proper computation of the salaries of individual respondents is as follows:

(1) With regard to the first group of respondents who attained regular employment status before the effectivity of
WO No. 8, the computation is as follows:

For respondents Jerico Alipit and Glen Batula:[23]

Wage rate before WO No. 8... PhP 234.67

Increase due to WO No. 8
setting the minimum wage at PhP 250. 15.33
Total Salary upon effectivity of WO No. 8. PhP 250.00

Increase for 2001 (12% of 2000 salary)........... PhP 30.00

Less the wage increase under WO No. 8. 15.33
Total difference between the wage increase
for 2001 and the increase granted under WO No. 8.. PhP 14.67

Wage rate by December 2000..... PhP 250.00

Plus total difference between the wage increase for 2001
and the increase granted under WO No. 8.. 14.67
Total (Wage rate range beginning January 1, 2001) PhP 264.67

7|Page
For respondents Ser John Hernandez and Rachel Novillas:[24]

Wage rate range before WO No. 8.PhP 234.68

Increase due to WO No. 8
setting the minimum wage at PhP 250.. 15.32
Total Salary upon effectivity of WO No. 8... PhP 250.00

Increase for 2001 (12% of 2000 salary) PhP 30.00

Less the wage increase under WO No. 8.. 15.32
Total difference between the wage increase
for 2001 and the increase granted under WO No. 8. PhP 14.68

Wage rate by December 2000......... PhP 250.00

Plus total difference between the wage increase for 2001
and the increase granted under WO No. 8.. 14.68
Total (Wage rate range beginning January 1, 2001) .. PhP 264.68

For respondents Amy Durias, Claire Evelyn Velez, and Janice Olaguir:[25]

Wage rate range before WO No. 8.. PhP 240.26

Increase due to WO No. 8
setting the minimum wage at PhP 250 9.74
Total Salary upon effectivity of WO No. 8. PhP 250.00

Increase for 2001 (12% of 2000 salary). PhP 30.00

Less the wage increase under WO No. 8 9.74
Total difference between the wage increase for 2001
and the increase granted under WO No. 8.. PhP 20.26

Wage rate by December 2000. PhP 250.00

Plus total difference between the wage increase for 2001
and the increase granted under WO No. 8.. 20.26
Total (Wage rate range beginning January 1, 2001).. PhP 270.26

For respondents Ma. Fe Flores and Fe Capistrano:[26]

Wage rate range before WO No. 8 PhP 245.85

Increase due to WO No. 8
setting the minimum wage at PhP 250.. 4.15
Total Salary upon effectivity of WO No. 8... PhP 250.00

Increase for 2001 (12% of 2000 salary). PhP 30.00

Less the wage increase under WO No. 8........... 4.15
Total difference between the wage increase for 2001
and the increase granted under WO No. 8. PhP 25.85

Wage rate by December 2000. PhP 250.00

Plus total difference between the wage increase for 2001
and the increase granted under WO No. 8.. 25.85

Total (Wage rate range beginning January 1, 2001).. PhP 275.85

(2) With regard to the second group of employees, who attained regular employment status after the implementation
of WO No. 8, namely: Nimfa Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon,
Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade, Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida
Comullo, Marie Ann Delos Santos, Juanita Yana, and Suzette Dulay, the proper computation of the salaries for the year
2001, in accordance with the CBA, is as follows:
Compute the increase in salary after the implementation of WO No. 8 by subtracting the minimum wage before WO No. 8
from the minimum wage per the wage order to arrive at the wage increase, thus:

Minimum Wage per Wage Order.. PhP 250.00

Wage rate before Wage Order.. 223.50
Wage Increase. PhP 26.50

8|Page
 Upon attainment of regular employment status, the employees salaries were increased by 25% of 10% of their basic
salaries, as provided for in Sec. 2, Art. X of the CBA, thus resulting in a further increase of PhP 6.25, for a total of PhP
256.25, computed as follows:

Wage rate after WO No. 8. PhP 250.00

Regularization increase (25 % of 10% of basic salary). 6.25
Total (Salary for the end of year 2000).. PhP 256.25

To compute for the increase in wage rates for the year 2001, get the increase of 12% of the employees salaries as
of December 31, 2000; then subtract from that amount, the amount increased in salaries as granted under WO No. 8 in
accordance with the crediting provision of the CBA, to arrive at the increase in salaries for the year 2001 of the recently
regularized employees. Add the result to their salaries as of December 31, 2000 to get the proper salary beginning January
1, 2001, thus:

Increase for 2001 (12% of 2000 salary)... PhP 30.75

Less the wage increase under WO No. 8. 26.50
Difference between the wage increase
for 2001 and the increase granted under WO No. 8.... PhP 4.25

Wage rate after regularization increase... PhP 256.25

Plus total difference between the wage increase and
the increase granted under WO No. 8. 4.25
Total (Wage rate beginning January 1, 2001). PhP 260.50

With these computations, the crediting provision of the CBA is put in effect, and the wage distortion between the
first and second group of employees is cured. The first group of employees who attained regular employment status before
the implementation of WO No. 8 is entitled to receive, starting January 1, 2001, a daily wage rate within the range of PhP
264.67 to PhP 275.85, depending on their wage rate before the implementation of WO No. 8. The second group that attained
regular employment status after the implementation of WO No. 8 is entitled to receive a daily wage rate of PhP 260.50
starting January 1, 2001.
Diminution of benefits

TSPIC also maintains that charging the overpayments made to the 16 respondents through staggered deductions
from their salaries does not constitute diminution of benefits.

We agree with TSPIC.

Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed by the employees.
There is diminution of benefits when it is shown that: (1) the grant or benefit is founded on a policy or has ripened into a
practice over a long period; (2) the practice is consistent and deliberate; (3) the practice is not due to error in the construction
or application of a doubtful or difficult question of law; and (4) the diminution or discontinuance is done unilaterally by the
employer.[27]

As correctly pointed out by TSPIC, the overpayment of its employees was a result of an error. This error was
immediately rectified by TSPIC upon its discovery. We have ruled before that an erroneously granted benefit may be
withdrawn without violating the prohibition against non-diminution of benefits. We ruled in Globe-Mackay Cable and
Radio Corp. v. NLRC:

Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous
application of the law. Payment may be said to have been made by reason of a mistake in the construction
or application of a doubtful or difficult question of law. (Article 2155, in relation to Article 2154 of the
Civil Code). Since it is a past error that is being corrected, no vested right may be said to have arisen nor
any diminution of benefit under Article 100 of the Labor Code may be said to have resulted by virtue of the
correction.[28]

Here, no vested right accrued to individual respondents when TSPIC corrected its error by crediting the salary
increase for the year 2001 against the salary increase granted under WO No. 8, all in accordance with the CBA.

Hence, any amount given to the employees in excess of what they were entitled to, as computed above, may be
legally deducted by TSPIC from the employees salaries. It was also compassionate and fair that TSPIC deducted the
overpayment in installments over a period of 12 months starting from the date of the initial deduction to lessen the burden
on the overpaid employees. TSPIC, in turn, must refund to individual respondents any amount deducted from their salaries
which was in excess of what TSPIC is legally allowed to deduct from the salaries based on the computations discussed in
this Decision.

9|Page
 As a last word, it should be reiterated that though it is the states responsibility to afford protection to labor, this
policy should not be used as an instrument to oppress management and capital.[29] In resolving disputes between labor and
capital, fairness and justice should always prevail. We ruled in Norkis Union v. Norkis Trading that in the resolution of
labor cases, we have always been guided by the State policy enshrined in the Constitution: social justice and protection of
the working class. Social justice does not, however, mandate that every dispute should be automatically decided in favor of
labor. In any case, justice is to be granted to the deserving and dispensed in the light of the established facts and the
applicable law and doctrine.[30]

WHEREFORE, premises considered, the September 13, 2001 Decision of the Labor Arbitrator in National
Conciliation and Mediation Board Case No. JBJ-AVA-2001-07-57 and the October 22, 2003 CA Decision in CA-G.R. SP
No. 68616 are hereby AFFIRMED with MODIFICATION. TSPIC is hereby ORDERED to pay respondents their salary
increases in accordance with this Decision, as follows:

No. of No. of
Name of Employee Daily Wage Working Days Months in a Total Salary
Rate in a Month Year for 2001
Nimfa Anilao 260.5 26 12 81,276.00
Rose Subardiaga 260.5 26 12 81,276.00
Valerie Carbon 260.5 26 12 81,276.00
Olivia Edroso 260.5 26 12 81,276.00
Maricris Donaire 260.5 26 12 81,276.00
Analyn Azarcon 260.5 26 12 81,276.00
Rosalie Ramirez 260.5 26 12 81,276.00
Julieta Rosete 260.5 26 12 81,276.00
Janice Nebre 260.5 26 12 81,276.00
Nia Andrade 260.5 26 12 81,276.00
Catherine Yaba 260.5 26 12 81,276.00
Diomedisa Erni 260.5 26 12 81,276.00
Mario Salmorin 260.5 26 12 81,276.00
Loida Camullo 260.5 26 12 81,276.00
Marie Ann Delos Santos 260.5 26 12 81,276.00
Juanita Yana 260.5 26 12 81,276.00
Suzette Dulay 260.5 26 12 81,276.00
Jerico Alipit 264.67 26 12 82,577.04
Glen Batula 264.67 26 12 82,577.04
Ser John Hernandez 264.68 26 12 82,580.16
Rachel Novillas 264.68 26 12 82,580.16
Amy Durias 270.26 26 12 84,321.12
Claire Evelyn Velez 270.26 26 12 84,321.12
Janice Olaguir 270.26 26 12 84,321.12
Maria Fe Flores 275.85 26 12 86,065.20
Fe Capistrano 275.85 26 12 86,065.20

The award for attorneys fees of ten percent (10%) of the total award is MAINTAINED.

SO ORDERED.

10 | P a g e
[G.R. No. 156109. November 18, 2004]
KHRISTINE REA M. REGINO, Assisted and
Represented by ARMANDO REGINO, petitioner,
vs. PANGASINAN COLLEGES OF SCIENCE
AND TECHNOLOGY, RACHELLE A.
GAMUROT and ELISSA BALADAD, respondents.
DECISION
PANGANIBAN, J.:
Upon enrolment, students and their school enter upon a
reciprocal contract. The students agree to abide by the
standards of academic performance and codes of
conduct, issued usually in the form of manuals that are
distributed to the enrollees at the start of the school
term. Further, the school informs them of the itemized
fees they are expected to pay. Consequently, it cannot,
after the enrolment of a student, vary the terms of the
contract. It cannot require fees other than those it
specified upon enrolment.
The Case
Before the Court is a Petition for Review under Rule
45,[1] seeking to nullify the July 12, 2002[2] and the
November 22, 2002[3] Orders of the Regional Trial
Court (RTC) of Urdaneta City, Pangasinan (Branch 48)
in Civil Case No. U-7541. The decretal portion of the
first assailed Order reads:
WHEREFORE, the Court GRANTS
the instant motion to dismiss for lack of cause
of action.[4]
The second challenged Order denied petitioners Motion
for Reconsideration.
The Facts
Petitioner Khristine Rea M. Regino was a first year
computer science student at Respondent Pangasinan
Colleges of Science and Technology (PCST). Reared in
a poor family, Regino went to college mainly through
the financial support of her relatives. During the second
semester of school year 2001-2002, she enrolled in
logic and statistics subjects under Respondents Rachelle
A. Gamurot and Elissa Baladad, respectively, as
teachers.
In February 2002, PCST held a fund raising campaign
dubbed the Rave Party and Dance Revolution, the
proceeds of which were to go to the construction of the
schools tennis and volleyball courts. Each student was
required to pay for two tickets at the price of P100 each.
The project was allegedly implemented by
recompensing students who purchased tickets with
additional points in their test scores; those who refused
to pay were denied the opportunity to take the final
examinations.
Financially strapped and prohibited by her religion
from attending dance parties and celebrations, Regino
refused to pay for the tickets. On March 14 and March
15, 2002, the scheduled dates of the final examinations
in logic and statistics, her teachers -- Respondents
Rachelle A. Gamurot and Elissa Baladad -- allegedly
disallowed her from taking the tests. According to
petitioner, Gamurot made her sit out her logic class
while her classmates were taking their examinations.
The next day, Baladad, after announcing to the entire
class that she was not permitting petitioner and another
student to take their statistics examinations for failing to
pay for their tickets, allegedly ejected them from the
classroom. Petitioners pleas ostensibly went unheeded
by Gamurot and Baladad, who unrelentingly defended
their positions as compliance with PCSTs policy.
On April 25, 2002, petitioner filed, as a pauper litigant,
a Complaint[5] for damages against PCST, Gamurot
and Baladad. In her Complaint, she prayed for
P500,000 as nominal damages; P500,000 as moral
damages; at least P1,000,000 as exemplary damages;
P250,000 as actual damages; plus the costs of litigation
and attorneys fees.
On May 30, 2002, respondents filed a Motion to
Dismiss[6] on the ground of petitioners failure to
exhaust administrative remedies. According to
respondents, the question raised involved the
determination of the wisdom of an administrative
policy of the PCST; hence, the case should have been
initiated before the proper administrative body, the
Commission of Higher Education (CHED).
In her Comment to respondents Motion, petitioner
argued that prior exhaustion of administrative remedies
was unnecessary, because her action was not
administrative in nature, but one purely for damages
arising from respondents breach of the laws on human
relations. As such, jurisdiction lay with the courts.
On July 12, 2002, the RTC dismissed the Complaint for
lack of cause of action.
Ruling of the Regional Trial Court
In granting respondents Motion to Dismiss, the trial
court noted that the instant controversy involved a
higher institution of learning, two of its faculty
members and one of its students. It added that Section
54 of the Education Act of 1982 vested in the
Commission on Higher Education (CHED) the
supervision and regulation of tertiary schools. Thus, it
ruled that the CHED, not the courts, had jurisdiction
over the controversy.[7]
In its dispositive portion, the assailed Order dismissed
the Complaint for lack of cause of action without,
however, explaining this ground.
Aggrieved, petitioner filed the present Petition on pure
questions of law.[8]
11 | P a g e
Issues
In her Memorandum, petitioner raises the following
issues for our consideration:
Whether or not the principle of exhaustion of
administrative remedies applies in a civil action
exclusively for damages based on violation of the
human relation provisions of the Civil Code, filed by a
student against her former school.
Whether or not there is a need for prior declaration of
invalidity of a certain school administrative policy by
the Commission on Higher Education (CHED) before a
former student can successfully maintain an action
exclusively for damages in regular courts.
Whether or not the Commission on Higher Education
(CHED) has exclusive original jurisdiction over actions
for damages based upon violation of the Civil Code
provisions on human relations filed by a student against
the school.[9]
All of the foregoing point to one issue -- whether the
doctrine of exhaustion of administrative remedies is
applicable. The Court, however, sees a second issue
which, though not expressly raised by petitioner, was
impliedly contained in her Petition: whether the
Complaint stated sufficient cause(s) of action.
The Courts Ruling
The Petition is meritorious.
First Issue:
Exhaustion of Administrative Remedies
Respondents anchored their Motion to Dismiss on
petitioners alleged failure to exhaust administrative
remedies before resorting to the RTC. According to
them, the determination of the controversy hinge on the
validity, the wisdom and the propriety of PCSTs
academic policy. Thus, the Complaint should have been
lodged in the CHED, the administrative body tasked
under Republic Act No. 7722 to implement the state
policy to protect, foster and promote the right of all
citizens to affordable quality education at all levels and
to take appropriate steps to ensure that education is
accessible to all.[10]
Petitioner counters that the doctrine finds no relevance
to the present case since she is praying for damages, a
remedy beyond the domain of the CHED and well
within the jurisdiction of the courts.[11]
Petitioner is correct. First, the doctrine of exhaustion of
administrative remedies has no bearing on the present
case. In Factoran Jr. v. CA,[12] the Court had occasion
to elucidate on the rationale behind this doctrine:
The doctrine of exhaustion of
administrative remedies is basic. Courts, for
reasons of law, comity, and convenience,
should not entertain suits unless the available
administrative remedies have first been resorted
to and the proper authorities have been given
the appropriate opportunity to act and correct
their alleged errors, if any, committed in the
administrative forum. x x x.[13]
Petitioner is not asking for the reversal of the policies of
PCST. Neither is she demanding it to allow her to take
her final examinations; she was already enrolled in
another educational institution. A reversal of the acts
complained of would not adequately redress her
grievances; under the circumstances, the consequences
of respondents acts could no longer be undone or
rectified.
Second, exhaustion of administrative remedies is
applicable when there is competence on the part of the
administrative body to act upon the matter complained
of.[14] Administrative agencies are not courts; they are
neither part of the judicial system, nor are they deemed
judicial tribunals.[15] Specifically, the CHED does not
have the power to award damages.[16] Hence,
petitioner could not have commenced her case before
the Commission.
Third, the exhaustion doctrine admits of exceptions,
one of which arises when the issue is purely legal and
well within the jurisdiction of the trial court.[17]
Petitioners action for damages inevitably calls for the
application and the interpretation of the Civil Code, a
function that falls within the jurisdiction of the
courts.[18]
Second Issue:
Cause of Action
Sufficient Causes of Action Stated
in the Allegations in the Complaint
As a rule, every complaint must sufficiently allege a
cause of action; failure to do so warrants its
dismissal.[19] A complaint is said to assert a sufficient
cause of action if, admitting what appears solely on its
face to be correct, the plaintiff would be entitled to the
relief prayed for. Assuming the facts that are alleged to
be true, the court should be able to render a valid
judgment in accordance with the prayer in the
complaint.[20]
A motion to dismiss based on lack of cause of action
hypothetically admits the truth of the alleged facts. In
their Motion to Dismiss, respondents did not dispute
any of petitioners allegations, and they admitted that x x
x the crux of plaintiffs cause of action is the
determination of whether or not the assessment of P100
per ticket is excessive or oppressive.[21] They thereby
premised their prayer for dismissal on the Complaints
alleged failure to state a cause of action. Thus, a
reexamination of the Complaint is in order.
12 | P a g e
The Complaint contains the following factual
allegations:
10. In the second week of February 2002,
defendant Rachelle A. Gamurot, in
connivance with PCST, forced plaintiff
and her classmates to buy or take two
tickets each, x x x;
11. Plaintiff and many of her classmates objected
to the forced distribution and selling of
tickets to them but the said defendant
warned them that if they refused [to]
take or pay the price of the two tickets
they would not be allowed at all to take
the final examinations;
12. As if to add insult to injury, defendant Rachelle
A. Gamurot bribed students with
additional fifty points or so in their test
score in her subject just to unjustly
influence and compel them into taking
the tickets;
13. Despite the students refusal, they were forced
to take the tickets because [of]
defendant Rachelle A. Gamurots
coercion and act of intimidation, but
still many of them including the
plaintiff did not attend the dance party
imposed upon them by defendants
PCST and Rachelle A. Gamurot;
14. Plaintiff was not able to pay the price of her
own two tickets because aside form the
fact that she could not afford to pay
them it is also against her religious
practice as a member of a certain
religious congregation to be attending
dance parties and celebrations;
15. On March 14, 2002, before defendant Rachelle
A. Gamurot gave her class its final
examination in the subject Logic she
warned that students who had not paid
the tickets would not be allowed to
participate in the examination, for
which threat and intimidation many
students were eventually forced to
make payments:
16. Because plaintiff could not afford to pay,
defendant Rachelle A. Gamurot
inhumanly made plaintiff sit out the
class but the defendant did not allow
her to take her final examination in
Logic;
17. On March 15, 2002 just before the giving of
the final examination in the subject
Statistics, defendant Elissa Baladad, in
connivance with defendants Rachelle
A. Gamurot and PCST, announced in
the classroom that she was not allowing
plaintiff and another student to take the
examination for their failure and refusal
to pay the price of the tickets, and
thenceforth she ejected plaintiff and the
other student from the classroom;
18. Plaintiff pleaded for a chance to take the
examination but all defendants could
say was that the prohibition to give the
examinations to non-paying students
was an administrative decision;
19. Plaintiff has already paid her tuition fees and
other obligations in the school;
20. That the above-cited incident was not a first
since PCST also did another forced
distribution of tickets to its students in
the first semester of school year 2001-
2002; x x x [22]
The foregoing allegations show two causes of action;
first, breach of contract; and second, liability for tort.
Reciprocity of the
School-Student Contract
In Alcuaz v. PSBA,[23] the Court characterized the
relationship between the school and the student as a
contract, in which a student, once admitted by the
school is considered enrolled for one semester.[24] Two
years later, in Non v. Dames II,[25] the Court modified
the termination of contract theory in Alcuaz by holding
that the contractual relationship between the school and
the student is not only semestral in duration, but for the
entire period the latter are expected to complete
it.[26] Except for the variance in the period during
which the contractual relationship is considered to
subsist, both Alcuaz and Non were unanimous in
characterizing the school-student relationship as
contractual in nature.
The school-student relationship is also reciprocal. Thus,
it has consequences appurtenant to and inherent in all
contracts of such kind -- it gives rise to bilateral or
reciprocal rights and obligations. The school undertakes
to provide students with education sufficient to enable
them to pursue higher education or a profession. On the
other hand, the students agree to abide by the academic
requirements of the school and to observe its rules and
regulations.[27]
The terms of the school-student contract are defined at
the moment of its inception -- upon enrolment of the
student. Standards of academic performance and the
code of behavior and discipline are usually set forth in
manuals distributed to new students at the start of every
school year. Further, schools inform prospective
enrollees the amount of fees and the terms of payment.
In practice, students are normally required to make a
down payment upon enrollment, with the balance to be
paid before every preliminary, midterm and final
examination. Their failure to pay their financial
obligation is regarded as a valid ground for the school
to deny them the opportunity to take these
examinations.
13 | P a g e
The foregoing practice does not merely ensure
compliance with financial obligations; it also underlines
the importance of major examinations. Failure to take a
major examination is usually fatal to the students
promotion to the next grade or to graduation.
Examination results form a significant basis for their
final grades. These tests are usually a primary and an
indispensable requisite to their elevation to the next
educational level and, ultimately, to their completion of
a course.
Education is not a measurable commodity. It is not
possible to determine who is better educated than
another. Nevertheless, a students grades are an accepted
approximation of what would otherwise be an
intangible product of countless hours of study. The
importance of grades cannot be discounted in a setting
where education is generally the gate pass to
employment opportunities and better life; such grades
are often the means by which a prospective employer
measures whether a job applicant has acquired the
necessary tools or skills for a particular profession or
trade.
Thus, students expect that upon their payment of tuition
fees, satisfaction of the set academic standards,
completion of academic requirements and observance
of school rules and regulations, the school would
reward them by recognizing their completion of the
course enrolled in.
The obligation on the part of the school has been
established in Magtibay v. Garcia,[28] Licup v.
University of San Carlos[29] and Ateneo de Manila
University v. Garcia,[30] in which the Court held that,
barring any violation of the rules on the part of the
students, an institution of higher learning has a
contractual obligation to afford its students a fair
opportunity to complete the course they seek to
pursue.
We recognize the need of a school to fund its facilities
and to meet astronomical operating costs; this is a
reality in running it. Crystal v. Cebu International
School[31] upheld the imposition by respondent school
of a land purchase deposit in the amount of P50,000 per
student to be used for the purchase of a piece of land
and for the construction of new buildings and other
facilities x x x which the school would transfer [to] and
occupy after the expiration of its lease contract over its
present site.
The amount was refundable after the student graduated
or left the school. After noting that the imposition of the
fee was made only after prior consultation and approval
by the parents of the students, the Court held that the
school committed no actionable wrong in refusing to
admit the children of the petitioners therein for their
failure to pay the land purchase deposit and the 2.5
percent monthly surcharge thereon.
In the present case, PCST imposed the assailed
revenue-raising measure belatedly, in the middle of the
semester. It exacted the dance party fee as a condition
for the students taking the final examinations, and
ultimately for its recognition of their ability to finish a
course. The fee, however, was not part of the school-
student contract entered into at the start of the school
year. Hence, it could not be unilaterally imposed to the
prejudice of the enrollees.
Such contract is by no means an ordinary one. In Non,
we stressed that the school-student contract is imbued
with public interest, considering the high priority given
by the Constitution to education and the grant to the
State of supervisory and regulatory powers over all
educational institutions.[32] Sections 5 (1) and (3) of
Article XIV of the 1987 Constitution provide:
The State shall protect and promote the
right of all citizens to quality education at all
levels and shall take appropriate steps to make
such declaration accessible to all.
Every student has a right to select a
profession or course of study, subject to fair,
reasonable and equitable admission and
academic requirements.
The same state policy resonates in Section 9(2) of BP
232, otherwise known as the Education Act of 1982:
Section 9. Rights of Students in School.
In addition to other rights, and subject to the
limitations prescribed by law and regulations,
students and pupils in all schools shall enjoy
the following rights:
xxxxxxxxx
(2) The right to freely choose their field of
study subject to existing curricula and to
continue their course therein up to graduation,
except in cases of academic deficiency, or
violation of disciplinary regulations.
Liability for Tort
In her Complaint, petitioner also charged that private
respondents inhumanly punish students x x x by reason
only of their poverty, religious practice or lowly station
in life, which inculcated upon [petitioner] the feelings
of guilt, disgrace and unworthiness;[33] as a result of
such punishment, she was allegedly unable to finish any
of her subjects for the second semester of that school
year and had to lag behind in her studies by a full year.
The acts of respondents supposedly caused her extreme
humiliation, mental agony and demoralization of
unimaginable proportions in violation of Articles 19, 21
and 26 of the Civil Code. These provisions of the law
state thus:
Article 19. Every person must, in the exercise of his
rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and
good faith.
14 | P a g e
Article 21. Any person who wilfully causes loss or
injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the
latter for the damage.
Article 26. Every person shall respect the dignity,
personality, privacy and peace of mind of his neighbors
and other persons. The following and similar acts,
though they may not constitute a criminal offense, shall
produce a cause of action for damages, prevention and
other relief:
(1) Prying into the privacy of anothers
residence;
(2) Meddling with or disturbing the
private life or family relations of
another;
(3) Intriguing to cause another to be
alienated from his friends;
(4) Vexing or humiliating another on
account of his beliefs, lowly station
in life, place of birth, physical defect,
or other personal condition.
Generally, liability for tort arises only between parties
not otherwise bound by a contract. An academic
institution, however, may be held liable for tort even if
it has an existing contract with its students, since the act
that violated the contract may also be a tort. We ruled
thus in PSBA vs. CA,[34] from which we quote:
x x x A perusal of Article 2176 [of the Civil
Code] shows that obligations arising from
quasi-delicts or tort, also known as extra-
contractual obligations, arise only between
parties not otherwise bound by contract,
whether express or implied. However, this
impression has not prevented this Court from
determining the existence of a tort even when
there obtains a contract. In Air France v.
Carrascoso (124 Phil. 722), the private
respondent was awarded damages for his
unwarranted expulsion from a first-class seat
aboard the petitioner airline. It is noted,
however, that the Court referred to the
petitioner-airlines liability as one arising from
tort, not one arising form a contract of carriage.
In effect, Air France is authority for the view
that liability from tort may exist even if there is
a contract, for the act that breaks the contract
may be also a tort. x x x This view was not all
that revolutionary, for even as early as 1918,
this Court was already of a similar mind. In
Cangco v. Manila Railroad (38 Phil. 780), Mr.
Justice Fisher elucidated thus: x x x. When
such a contractual relation exists the obligor
may break the contract under such conditions
that the same act which constitutes a breach of
the contract would have constituted the source
of an extra-contractual obligation had no
contract existed between the parties.
Immediately what comes to mind is the chapter
of the Civil Code on Human Relations,
particularly Article 21 x x x.[35]
Academic Freedom
In their Memorandum, respondents harp on their right
to academic freedom. We are not impressed. According
to present jurisprudence, academic freedom
encompasses the independence of an academic
institution to determine for itself (1) who may teach, (2)
what may be taught, (3) how it shall teach, and (4) who
may be admitted to study.[36] In Garcia v. the Faculty
Admission Committee, Loyola School of Theology,[37]
the Court upheld the respondent therein when it denied
a female students admission to theological studies in a
seminary for prospective priests. The Court defined the
freedom of an academic institution thus: to decide for
itself aims and objectives and how best to attain them x
x x free from outside coercion or interference save
possibly when overriding public welfare calls for some
restraint.[38]
In Tangonan v. Pao,[39] the Court upheld, in the name
of academic freedom, the right of the school to refuse
readmission of a nursing student who had been enrolled
on probation, and who had failed her nursing subjects.
These instances notwithstanding, the Court has
emphasized that once a school has, in the name of
academic freedom, set its standards, these should be
meticulously observed and should not be used to
discriminate against certain students.[40] After
accepting them upon enrollment, the school cannot
renege on its contractual obligation on grounds other
than those made known to, and accepted by, students at
the start of the school year.
In sum, the Court holds that the Complaint alleges
sufficient causes of action against respondents, and that
it should not have been summarily dismissed. Needless
to say, the Court is not holding respondents liable for
the acts complained of. That will have to be ruled upon
in due course by the court a quo.
WHEREFORE, the Petition is hereby GRANTED,
and the assailed Orders REVERSED. The trial court is
DIRECTED to reinstate the Complaint and, with all
deliberate speed, to continue the proceedings in Civil
Case No. U-7541. No costs.
SO ORDERED.
15 | P a g e
G.R. No. 84698 February 4, 1992
PHILIPPINE SCHOOL OF BUSINESS
ADMINISTRATION, JUAN D. LIM, BENJAMIN
P. PAULINO, ANTONIO M. MAGTALAS, COL.
PEDRO SACRO and LT. M. SORIANO, petitioners,
vs. COURT OF APPEALS, HON. REGINA
ORDOÑEZ-BENITEZ, in her capacity as Presiding
Judge of Branch 47, Regional Trial Court, Manila,
SEGUNDA R. BAUTISTA and ARSENIA D.
BAUTISTA, respondents.
PADILLA, J.:
A stabbing incident on 30 August 1985 which caused
the death of Carlitos Bautista while on the second-floor
premises of the Philippine School of Business
Administration (PSBA) prompted the parents of the
deceased to file suit in the Regional Trial Court of
Manila (Branch 47) presided over by Judge (now Court
of Appeals justice) Regina Ordoñez-Benitez, for
damages against the said PSBA and its corporate
officers. At the time of his death, Carlitos was enrolled
in the third year commerce course at the PSBA. It was
established that his assailants were not members of the
school's academic community but were elements from
outside the school.
Specifically, the suit impleaded the PSBA and the
following school authorities: Juan D. Lim (President),
Benjamin P. Paulino (Vice-President), Antonio M.
Magtalas (Treasurer/Cashier), Col. Pedro Sacro (Chief
of Security) and a Lt. M. Soriano (Assistant Chief of
Security). Substantially, the plaintiffs (now private
respondents) sought to adjudge them liable for the
victim's untimely demise due to their alleged
negligence, recklessness and lack of security
precautions, means and methods before, during and
after the attack on the victim. During the proceedings a
quo, Lt. M. Soriano terminated his relationship with the
other petitioners by resigning from his position in the
school.
Defendants a quo (now petitioners) sought to have the
suit dismissed, alleging that since they are presumably
sued under Article 2180 of the Civil Code, the
complaint states no cause of action against them, as
jurisprudence on the subject is to the effect that
academic institutions, such as the PSBA, are beyond
the ambit of the rule in the afore-stated article.
The respondent trial court, however, overruled
petitioners' contention and thru an order dated 8
December 1987, denied their motion to dismiss. A
subsequent motion for reconsideration was similarly
dealt with by an order dated 25 January 1988.
Petitioners then assailed the trial court's disposition
before the respondent appellate court which, in a
decision * promulgated on 10 June 1988, affirmed the
trial court's orders. On 22 August 1988, the respondent
appellate court resolved to deny the petitioners' motion
for reconsideration. Hence, this petition.
At the outset, it is to be observed that the respondent
appellate court primarily anchored its decision on the
law of quasi-delicts, as enunciated in Articles 2176 and
2180 of the Civil Code. 1 Pertinent portions of the
appellate court's now assailed ruling state:
Article 2180 (formerly Article 1903) of the Civil
Code is an adoption from the old Spanish Civil
Code. The comments of Manresa and learned
authorities on its meaning should give way to
present day changes. The law is not fixed and
flexible (sic); it must be dynamic. In fact, the
greatest value and significance of law as a rule of
conduct in (sic) its flexibility to adopt to changing
social conditions and its capacity to meet the new
challenges of progress.
Construed in the light of modern day educational
system, Article 2180 cannot be construed in its
narrow concept as held in the old case of Exconde
vs. Capuno 2 and Mercado vs. Court of Appeals; 3
hence, the ruling in the Palisoc 4 case that it should
apply to all kinds of educational institutions,
academic or vocational.
At any rate, the law holds the teachers and heads of
the school staff liable unless they relieve
themselves of such liability pursuant to the last
paragraph of Article 2180 by "proving that they
observed all the diligence to prevent damage." This
can only be done at a trial on the merits of the case.
While we agree with the respondent appellate court that
the motion to dismiss the complaint was correctly
denied and the complaint should be tried on the merits,
we do not however agree with the premises of the
appellate court's ruling.
Article 2180, in conjunction with Article 2176 of the
Civil Code, establishes the rule of in loco parentis. This
Court discussed this doctrine in the afore-cited cases of
Exconde, Mendoza, Palisoc and, more recently, in
Amadora vs. Court of Appeals. 6 In all such cases, it
had been stressed that the law (Article 2180) plainly
provides that the damage should have been caused or
inflicted by pupils or students of he educational
institution sought to be held liable for the acts of its
pupils or students while in its custody. However, this
material situation does not exist in the present case for,
as earlier indicated, the assailants of Carlitos were not
students of the PSBA, for whose acts the school could
be made liable.
However, does the appellate court's failure to consider
such material facts mean the exculpation of the
petitioners from liability? It does not necessarily follow.
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. 7 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.
16 | P a g e
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.
Because the circumstances of the present case evince a
contractual relation between the PSBA and Carlitos
Bautista, the rules on quasi-delict do not really govern.
8 A perusal of Article 2176 shows that obligations
arising from quasi-delicts or tort, also known as extra-
contractual obligations, arise only between parties not
otherwise bound by contract, whether express or
implied. However, this impression has not prevented
this Court from determining the existence of a tort even
when there obtains a contract. In Air France vs.
Carrascoso (124 Phil. 722), the private respondent was
awarded damages for his unwarranted expulsion from a
first-class seat aboard the petitioner airline. It is noted,
however, that the Court referred to the petitioner-
airline's liability as one arising from tort, not one
arising from a contract of carriage. In effect, Air France
is authority for the view that liability from tort may
exist even if there is a contract, for the act that breaks
the contract may be also a tort. (Austro-America S.S.
Co. vs. Thomas, 248 Fed. 231).
This view was not all that revolutionary, for even as
early as 1918, this Court was already of a similar mind.
In Cangco vs. Manila Railroad (38 Phil. 780), Mr.
Justice Fisher elucidated thus:
The field of non-contractual obligation is much
broader than that of contractual obligation,
comprising, as it does, the whole extent of juridical
human relations. These two fields, figuratively
speaking, concentric; that is to say, the mere fact
that a person is bound to another by contract does
not relieve him from extra-contractual liability to
such person. When such a contractual relation
exists the obligor may break the contract under
such conditions that the same act which constitutes
a breach of the contract would have constituted the
source of an extra-contractual obligation had no
contract existed between the parties.
Immediately what comes to mind is the chapter of the
Civil Code on Human Relations, particularly Article 21,
which provides:
Any person who wilfully causes loss or injury to
another in a manner that is contrary to morals,
good custom or public policy shall compensate the
latter for the damage. (emphasis supplied).
Air France penalized the racist policy of the airline
which emboldened the petitioner's employee to forcibly
oust the private respondent to cater to the comfort of a
white man who allegedly "had a better right to the
seat." In Austro-American, supra, the public
embarrassment caused to the passenger was the
justification for the Circuit Court of Appeals, (Second
Circuit), to award damages to the latter. From the
foregoing, it can be concluded that should the act which
breaches a contract be done in bad faith and be violative
of Article 21, then there is a cause to view the act as
constituting a quasi-delict.
In the circumstances obtaining in the case at bar,
however, there is, as yet, no finding that the contract
between the school and Bautista had been breached thru
the former's negligence in providing proper security
measures. This would be for the trial court to
determine. And, even if there be a finding of
negligence, the same could give rise generally to a
breach of contractual obligation only. Using the test of
Cangco, supra, the negligence of the school would not
be relevant absent a contract. In fact, that negligence
becomes material only because of the contractual
relation between PSBA and Bautista. In other words, a
contractual relation is a condition sine qua non to the
school's liability. The negligence of the school cannot
exist independently of the contract, unless the
negligence occurs under the circumstances set out in
Article 21 of the Civil Code.
This Court is not unmindful of the attendant difficulties
posed by the obligation of schools, above-mentioned,
for conceptually a school, like a common carrier,
cannot be an insurer of its students against all risks.
This is specially true in the populous student
communities of the so-called "university belt" in
Manila where there have been reported several
incidents ranging from gang wars to other forms of
hooliganism. It would not be equitable to expect of
schools to anticipate all types of violent trespass upon
their premises, for notwithstanding the security
measures installed, the same may still fail against an
individual or group determined to carry out a nefarious
deed inside school premises and environs. Should this
be the case, the school may still avoid liability by
proving that the breach of its contractual obligation to
the students was not due to its negligence, here
statutorily defined to be the omission of that degree of
diligence which is required by the nature of the
obligation and corresponding to the circumstances of
persons, time and place. 9
As the proceedings a quo have yet to commence on the
substance of the private respondents' complaint, the
record is bereft of all the material facts. Obviously, at
this stage, only the trial court can make such a
determination from the evidence still to unfold.
WHEREFORE, the foregoing premises considered, the
petition is DENIED. The court of origin (RTC, Manila,
Br. 47) is hereby ordered to continue proceedings
consistent with this ruling of the Court. Costs against
the petitioners.
SO ORDERED.
17 | P a g e
[G.R. No. 134284. December 1, 2000]
AYALA CORPORATION, petitioner, vs. ROSA-
DIANA REALTY AND DEVELOPMENT
CORPORATION, respondent.
DECISION
DE LEON, JR., J.:
Before us is a petition for review on certiorari seeking
the reversal of a decision rendered by the Court of
Appeals in C.A. G.R. C.V. No. 4598 entitled, Ayala
Corporation vs. Rosa-Diana Realty and Development
Corporation, dismissing Ayala Corporations petition for
lack of merit.
The facts of the case are not in dispute:
Petitioner Ayala Corporation (hereinafter referred to as
Ayala) was the registered owner of a parcel of land
located in Alfaro Street, Salcedo Village, Makati City
with an area of 840 square meters, more or less and
covered by Transfer Certificate of Title (TCT) No.
233435 of the Register of Deeds of Rizal.
On April 20, 1976, Ayala sold the lot to Manuel Sy
married to Vilma Po and Sy Ka Kieng married to Rosa
Chan. The Deed of Sale executed between Ayala and
the buyers contained Special Conditions of Sale and
Deed Restrictions. Among the Special Conditions of
Sale were:
a) the vendees shall build on the lot and submit the
building plans to the vendor before September 30, 1976
for the latters approval
b) the construction of the building shall start on or
before March 30, 1977 and completed before 1979.
Before such completion, neither the deed of sale shall
be registered nor the title released even if the purchase
price shall have been fully paid
c) there shall be no resale of the property
The Deed Restrictions, on the other hand, contained the
stipulation that the gross floor area of the building to be
constructed shall not be more than five (5) times the lot
area and the total height shall not exceed forty two (42)
meters. The restrictions were to expire in the year 2025.
Manuel Sy and Sy Ka Kieng failed to construct the
building in violation of the Special Conditions of Sale.
Notwithstanding the violation, Manuel Sy and Sy Ka
Kieng, in April 1989, were able to sell the lot to
respondent Rosa-Diana Realty and Development
Corporation (hereinafter referred to as Rosa-Diana)
with Ayalas approval. As a consideration for Ayala to
release the Certificate of Title of the subject property,
Rosa-Diana, on July 27, 1989 executed an Undertaking
promising to abide by said special conditions of sale
executed between Ayala and the original vendees. Upon
the submission of the Undertaking, together with the
building plans for a condominium project, known as
The Peak, Ayala released title to the lot, thereby
enabling Rosa-Diana to register the deed of sale in its
favor and obtain Certificate of Title No. 165720 in its
name. The title carried as encumbrances the special
conditions of sale and the deed restrictions. Rosa-
Dianas building plans as approved by Ayala were
subject to strict compliance of cautionary notices
appearing on the building plans and to the restrictions
encumbering the Lot regarding the use and occupancy
of the same.
Thereafter, Rosa-Diana submitted to the building
official of Makati another set of building plans for The
Peak which were substantially different from those that
it earlier submitted to Ayala for approval. While the
building plans which Rosa-Diana submitted to Ayala
for approval envisioned a 24-meter high, seven (7)
storey condominium project with a gross floor area of
3,968.56 square meters, the building plans which Rosa-
Diana submitted to the building official of Makati,
contemplated a 91.65 meter high, 38 storey
condominium building with a gross floor area of
23,305.09 square meters.[1] Needless to say, while the
first set of building plans complied with the deed
restrictions, the latter set exceeded the same.
During the construction of Rosa-Dianas condominium
project, Ayala filed an action with the Regional Trial
Court (RTC) of Makati, Branch 139 for specific
performance, with application for a writ of preliminary
injunction/temporary restraining order against Rosa-
Diana Realty seeking to compel the latter to comply
with the contractual obligations under the deed of
restrictions annotated on its title as well as with the
building plans it submitted to the latter. In the
alternative, Ayala prayed for rescission of the sale of
the subject lot to Rosa- Diana Realty.
The lower court denied Ayalas prayer for injunctive
relief, thus enabling Rosa-Diana to complete the
construction of the building. Undeterred, Ayala tried to
cause the annotation of a notice of lis pendens on Rosa-
Dianas title. The Register of Deeds of Makati, however,
refused registration of the notice of lis pendens on the
ground that the case pending before the trial court,
being an action for specific performance and/or
rescission, is an action in personam which does not
involve the title, use or possession of the property.[2]
The Land Registration Authority (LRA) reversed the
ruling of the Register of Deeds saying that an action for
specific performance or rescission may be classified as
a proceeding of any kind in court directly affecting title
to the land or the use or occupation thereof for which a
notice of lis pendens may be held proper.[3] The
decision of the LRA, however, was overturned by the
Court of Appeals in C.A. G.R. S.P. No. 29157. In G.R.
No. 112774, We affirmed the ruling of the CA on
February 16, 1994 saying
We agree with respondent court that the notice of lis
pendens is not proper in this instance. The case before
the trial court is a personal action since the cause of
action thereof arises primarily from the alleged
violation of the Deed of Restrictions.
18 | P a g e
In the meantime, Ayala completed its presentation of
evidence before the trial court. Rosa-Diana filed a
Demurrer to Evidence averring that Ayala failed to
establish its right to the relief sought inasmuch as (a)
Ayala admittedly does not enforce the deed restrictions
uniformly and strictly (b) Ayala has lost its right/power
to enforce the restrictions due to its own acts and
omissions; and (c) the deed restrictions are no longer
valid and effective against lot buyers in Ayalas
controlled subdivision.
The trial court sustained Rosa-Dianas Demurrer to
Evidence saying that Ayala was guilty of abandonment
and/or estoppel due to its failure to enforce the terms of
deed of restrictions and special conditions of sale
against Manuel Sy and Sy Ka Kieng. The trial court
noted that notwithstanding the violation of the special
conditions of sale, Manuel Sy and Sy Ka Kieng were
able to transfer the title to Rosa-Diana with the
approval of Ayala. The trial court added that Ayalas
failure to enforce the restrictions with respect to
Trafalgar, Shellhouse, Eurovilla, LPL Plaza, Parc
Regent, LPL Mansion and Leronville which are located
within Salcedo Village, shows that Ayala discriminated
against those which it wants to have the obligation
enforced. The trial court then concluded that for Ayala
to discriminately choose which obligor would be made
to follow certain conditions and which should not, did
not seem fair and legal.
The Court of Appeals affirmed the ruling of the trial
court saying that the appeal is sealed by the doctrine of
the law of the case in C.A. G.R. S.P. No. 29157 where
it was stated that
]x x x Ayala is barred from enforcing the Deed of
Restrictions in question pursuant to the doctrine of
waiver and estoppel. Under the terms of the deed of
sale, the vendee Sy Ka Kieng assumed faithful
compliance with the special conditions of sale and with
the Salcedo Village Deed of Restrictions. One of the
conditions was that a building would be constructed
within one year. However, Sy Ka Kieng failed to
construct the building as required under the Deed of
Sale. Ayala did nothing to enforce the terms of the
contract. In fact, it even agreed to the sale of the lot by
Sy Ka Kieng in favor of petitioner Realty in 1989 or
thirteen (13) years later. We, therefore, see no
justifiable reason for Ayala to attempt to enforce the
terms of the conditions of sale against the petitioner.
xxx
The Court of Appeals also cited C.A. G.R. C.V. No.
46488 entitled, Ayala Corporation vs. Ray Burton
Development Corporation which relied on C.A. G.R.
S.P. No. 29157 in ruling that Ayala is barred from
enforcing the deed restrictions in dispute. Upon a
motion for reconsideration filed by herein petitioner,
the Court of Appeals clarified that the citation of the
decision in Ayala Corporation vs. Ray Burton
Development Corporation, C.A. G.R. C.V. No. 46488,
February 27, 1996, was made not because said decision
is res judicata to the case at bar but rather because it is
precedential under the doctrine of stare decisis.
Upon denial of said motion for reconsideration, Ayala
filed the present appeal.
Ayala contends that the pronouncement of the Court of
Appeals in C.A. G.R. S.P. No. 29157 that it is estopped
from enforcing the deed restrictions is merely obiter
dicta inasmuch as the only issue raised in the aforesaid
case was the propriety of a lis pendens annotation on
Rosa-Dianas certificate of title.
Ayala avers that Rosa-Diana presented no evidence
whatsoever on Ayalas supposed waiver or estoppel in
C.A. G.R. S.P. No. 29157. Ayala likewise pointed out
that at the time C.A. G.R. S.P. No. 29157 was on
appeal, the issues of the validity and continued viability
of the deed of restrictions and their enforceability by
Ayala were joined and then being tried before the trial
court.
Petitioners assignment of errors in the present appeal
may essentially be summarized as follows:
I. The Court of Appeals acted in a manner not in
accord with law and the applicable decisions of the
Supreme Court in holding that the doctrine of the law of
the case, or stare decisis, operated to dismiss Ayalas
appeal.
II. The Court of Appeals erred as a matter of law
and departed from the accepted and usual course of
judicial proceedings when it failed to expressly pass
upon the specific errors assigned in Ayalas appeal.
A discussion on the distinctions between law of the
case, stare decisis and obiter dicta is in order.
The doctrine of the law of the case has certain affinities
with, but is clearly distinguishable from, the doctrines
of res judicata and stare decisis, principally on the
ground that the rule of the law of the case operates only
in the particular case and only as a rule of policy and
not as one of law.[4] At variance with the doctrine of
stare decisis, the ruling adhered to in the particular case
under the doctrine of the law of the case need not be
followed as a precedent in subsequent litigation
between other parties, neither by the appellate court
which made the decision followed on a subsequent
appeal in the same case, nor by any other court. The
ruling covered by the doctrine of the law of the case is
adhered to in the single case where it arises, but is not
carried into other cases as a precedent.[5] On the other
hand, under the doctrine of stare decisis, once a point of
law has been established by the court, that point of law
will, generally, be followed by the same court and by
all courts of lower rank in subsequent cases where the
same legal issue is raised.[6] Stare decisis proceeds
from the first principle of justice that, absent powerful
countervailing considerations, like cases ought to be
decided alike.[7]
19 | P a g e
The Court of Appeals, in ruling against petitioner Ayala
Corporation stated that the appeal is sealed by the
doctrine of the law of the case, referring to G.R. No.
112774 entitled Ayala Corporation, petitioner vs. Court
of Appeals, et al., respondents. The Court of Appeals
likewise made reference to C.A. G.R. C.V. No. 46488
entitled, Ayala Corporation vs. Ray Burton
Development Corporation, Inc. in ruling against
petitioner saying that it is jurisprudential under the
doctrine of stare decisis.
It must be pointed out that the only issue that was raised
before the Court of Appeals in C.A. G.R. S.P. No.
29157 was whether or not the annotation of lis pendens
is proper. The Court of Appeals, in its decision, in fact
stated the principal issue to be resolved is: whether or
not an action for specific performance, or in the
alternative, rescission of deed of sale to enforce the
deed of restrictions governing the use of property, is a
real or personal action, or one that affects title thereto
and its use or occupation thereof."[8]
In the aforesaid decision, the Court of Appeals even
justified the cancellation of the notice of lis pendens on
the ground that Ayala had ample protection should it
succeed in proving its allegations regarding the
violation of the deed of restrictions, without unduly
curtailing the right of the petitioner to fully enjoy its
property in the meantime that there is as yet no decision
by the trial court.[9]
From the foregoing, it is clear that the Court of Appeals
was aware that the issue as to whether petitioner is
estopped from enforcing the deed of restrictions has yet
to be resolved by the trial court. Though it did make a
pronouncement that the petitioner is estopped from
enforcing the deed of restrictions, it also mentioned at
the same time that this particular issue has yet to be
resolved by the trial court. Notably, upon appeal to this
Court, We have affirmed the ruling of the Court of
Appeals only as regards the particular issue of the
propriety of the cancellation of the notice of lis
pendens.
We see no reason then, how the law of the case or stare
decisis can be held to be applicable in the case at bench.
If at all, the pronouncement made by the Court of
Appeals that petitioner Ayala is barred from enforcing
the deed of restrictions can only be considered as obiter
dicta. As earlier mentioned, the only issue before the
Court of Appeals at the time was the propriety of the
annotation of the lis pendens. The additional
pronouncement of the Court of Appeals that Ayala is
estopped from enforcing the deed of restrictions even as
it recognized that this said issue is being tried before the
trial court was not necessary to dispose of the issue as
to the propriety of the annotation of the lis pendens. A
dictum is an opinion of a judge which does not embody
the resolution or determination of the court, and made
without argument, or full consideration of the point, not
the proffered deliberate opinion of the judge
himself.[10] It is not necessarily limited to issues
essential to the decision but may also include
expressions of opinion which are not necessary to
support the decision reached by the court. Mere dicta
are not binding under the doctrine of stare decisis.[11]
While the Court of Appeals did not err in ruling that the
present petition is not barred by C.A. G.R. C.V. No.
46488 entitled Ayala Corporation vs. Ray Burton
Development Inc. under the doctrine of res judicata,
neither, however, can the latter case be cited as
precedential under the doctrine of stare decisis. It must
be pointed out that at the time the assailed decision was
rendered, C.A. G.R. C.V. No. 46488 was on appeal
with this Court. Significantly, in the decision We have
rendered in Ayala Corporation vs. Ray Burton
Development Corporation[12] which became final and
executory on July 5, 1999 we have clearly stated that
An examination of the decision in the said Rosa-Diana
case reveals that the sole issue raised before the
appellate court was the propriety of the lis pendens
annotation. However, the appellate court went beyond
the sole issue and made factual findings bereft of any
basis in the record to inappropriately rule that AYALA
is in estoppel and has waived its right to enforce the
subject restrictions. Such ruling was immaterial to the
resolution of the issue of the propriety of the annotation
of the lis pendens. The finding of estoppel was thus
improper and made in excess of jurisdiction.
Coming now to the merits of the case, petitioner avers
that the Court of Appeals departed from the usual
course of judicial proceedings when it failed to
expressly pass upon the specific errors assigned in its
appeal. Petitioner reiterates its contention that the trial
courts findings that Ayala has waived its right to
enforce the deed of restrictions is not supported by law
and evidence.
We find merit in the petition.
It is basic that findings of fact of the trial court and the
Court of Appeals are conclusive upon the Supreme
Court when supported by substantial evidence.[13] We
are constrained, however, to review the trial courts
findings of fact, which the Court of Appeals chose not
to pass upon, inasmuch as there is ample evidence on
record to show that certain facts were overlooked which
would affect the disposition of the case.
In its assailed decision of February 4, 1994, the trial
court, ruled in favor of respondent Rosa-Diana Realty
on the ground that Ayala had not acted fairly when it
did not institute an action against the original vendees
despite the latters violation of the Special Conditions of
Sale but chose instead to file an action against herein
respondent Rosa-Diana. The trial court added that
although the 38 storey building of Rosa-Diana is
beyond the total height restriction, it was not violative
of the National Building Code. According to the trial
court the construction of the 38 storey building known
as The Peak has not been shown to have been
prohibited by law and neither is it against public policy.
20 | P a g e
It bears emphasis that as complainant, Ayala had the
prerogative to initiate an action against violators of the
deed restrictions. That Rosa-Diana had acted in bad
faith is manifested by the fact that it submitted two sets
of building plans, one which was in conformity with the
deed restrictions submitted to Ayala and MACEA, and
the other, which exceeded the height requirement in the
deed restrictions to the Makati building official for the
purpose of procuring a building permit from the latter.
Moreover, the violation of the deed restrictions
committed by respondent can hardly be denominated as
a minor violation. It should be pointed out that the
original building plan which was submitted to and
approved by petitioner Ayala Corporation, envisioned a
twenty four (24) meter high, seven (7) storey
condominium whereas the respondents building plan
which was submitted to and approved by the building
official of Makati is that of a thirty eight (38) storey,
91.65 meters high, building. At present, the Peak
building of respondent which actually stands at 133.65
meters with a total gross floor area of 23,305.09 square
meters, seriously violates the dimensions indicated in
the building plans submitted by Rosa-Diana to
petitioner Ayala for approval inasmuch as the Peak
building exceeds the approved height limit by about
109 meters and the allowable gross floor area under the
applicable deed restrictions by about 19,105 square
meters. Clearly, there was a gross violation of the deed
restrictions and evident bad faith by the respondent.
It may not be amiss to mention that the deed restrictions
were revised in a general membership meeting of the
association of lot owners in Makati Central Business
District the Makati Commercial Estate Association, Inc.
(MACEA) whereby direct height restrictions were
abolished in lieu of floor area limits. Respondent,
however, did not vote for the approval of this revision
during the General Membership meeting which was
held on July 11, 1990 at the Manila Polo Club Pavilion,
Makati, Metro Manila and again on July 12, 1990 at the
Hotel Mandarin Oriental, Makati, Metro Manila.
Hence, respondent continues to be bound by the
original deed restrictions applicable to Lot 7, Block 1
and annotated on its title to said lot. In any event,
assuming arguendo that respondent voted for the
approval of direct height restrictions in lieu of floor
area limits, the total floor area of its Peak building
would still be violative of the floor area limits to the
extent of about 9,865 square meters of allowable floor
area under the MACEA revised restrictions.
Respondent Rosa-Diana avers that there is nothing
illegal or unlawful in the building plans which it used in
the construction of the Peak condominium inasmuch as
it bears the imprimatur of the building official of
Makati, who is tasked to determine whether building
and construction plans are in accordance with the law,
notably, the National Building Code.
Respondent Rosa-Diana, however, misses the point
inasmuch as it has freely consented to be bound by the
deed restrictions when it entered into a contract of sale
with spouses Manuel Sy and Sy Ka Kieng. While
respondent claims that it was under the impression that
the deed restrictions were no longer being enforced by
Ayala, the Undertaking[14] it executed belies this same
claim. In said Undertaking, respondent agreed to
construct and complete the construction of the house on
said lot as required under the special condition of sale.
Respondent likewise bound itself to abide and comply
with x x x the condition of the rescission of the sale by
Ayala Land, Inc. on the grounds therein stated x x x.
Contractual obligations between parties have the force
of law between them and absent any allegation that the
same are contrary to law, morals, good customs, public
order or public policy, they must be complied with in
good faith. Hence, Article 1159 of the New Civil Code
provides
Obligations arising from contracts have the force of
law between the contracting parties and should be
complied with in good faith.
Respondent Rosa-Diana insists that the trial court had
already ruled that the Undertaking executed by its
Chairman and President cannot validly bind Rosa-
Diana and hence, it should not be held bound by the
deed restrictions.
We agree with petitioner Ayalas observation that
respondent Rosa-Dianas special and affirmative
defenses before the trial court never mentioned any
allegation that its president and chairman were not
authorized to execute the Undertaking. It was
inappropriate therefore for the trial court to rule that in
the absence of any authority or confirmation from the
Board of Directors of respondent Rosa-Diana, its
Chairman and the President cannot validly enter into an
undertaking relative to the construction of the building
on the lot within one year from July 27, 1989 and in
accordance with the deed restrictions. Curiously, while
the trial court stated that it cannot be presumed that the
Chairman and the President can validly bind respondent
Rosa-Diana to enter into the aforesaid Undertaking in
the absence of any authority or confirmation from the
Board of Directors, the trial court held that the ordinary
presumption of regularity of business transactions is
applicable as regards the Deed of Sale which was
executed by Manuel Sy and Sy Ka Kieng and
respondent Rosa-Diana. In the light of the fact that
respondent Rosa-Diana never alleged in its Answer that
its president and chairman were not authorized to
execute the Undertaking, the aforesaid ruling of the trial
court is without factual and legal basis and surprising to
say the least.
The fact alone that respondent Rosa-Diana conveniently
prepared two sets of building plans - with one set which
fully conformed to the Deed Restrictions and another in
gross violation of the same - should have cautioned the
trial court to conclude that respondent Rosa-Diana was
under the erroneous impression that the Deed
Restrictions were no longer enforceable and that it
never intended to be bound by the Undertaking signed
by its President and Chairman. We reiterate that
contractual obligations have the force of law between
parties and unless the same are contrary to public policy
morals and good customs, they must be complied by the
parties in good faith.
21 | P a g e
Petitioner, in its Petition, prays that judgment be
rendered:
a) ordering Rosa-Diana Realty and Development
Corporation to comply with its contractual obligations
in the construction of the Peak by removing, or closing
down and prohibiting Rosa-Diana from using, selling,
leasing or otherwise disposing of, the portions of areas
thereof constructed beyond or in excess of the approved
height, as shown by the building plans submitted to,
and approved by, Ayala, including any other portion of
the building constructed not in accordance with the said
building plans, during the effectivity of the Deed
Restrictions;
b) Alternatively, in the event specific performance
has become impossible:
(1)Ordering the cancellation and rescission of
the April 20, 1976 Deed of Sale by Ayala in
favor of the original vendees thereof as well as
the subsequent Deed of Sale executed by such
original vendees in favor of Rosa-Diana, and
ordering Rosa-Diana to return to Ayala Lot 7,
Block 1 of Salcedo Village;
(2)ordering the cancellation of Transfer
Certificate of Title No. 165720 (in the name of
Rosa-Diana) and directing the office of the
Register of Deeds of Makati to issue a new title
over the lot in the name of Ayala; and
(3)ordering Rosa-Diana to pay Ayala attorneys
fees in the amount of P500,000.00, exemplary
damages in the amount of P5,000,000.00 and
the costs of suit.
It must be noted that during the trial respondent Rosa-
Diana was able to complete the construction of The
Peak as a building with a height of thirty eight (38)
floors or 133.65 meters and with a total gross floor area
of 23,305.09 square meters. Having been completed for
a number of years already, it would be reasonable to
assume that it is now fully tenanted. Consequently, the
remedy of specific performance by respondent is no
longer feasible. However, neither can we grant
petitioners prayer for the cancellation and rescission of
the April 20, 1976 Deed of Sale by petitioner Ayala in
favor of the original vendees thereof as well as the
subsequent Deed of Sale executed by the original
vendees in favor of respondent Rosa-Diana inasmuch as
the original vendees were not even made parties in the
case at bar. Moreover, petitioner Ayala, having agreed
to the resale of the property by the original vendees,
spouses Manuel Sy and Sy Ka Kieng, to respondent
Rosa-Diana despite the failure of Manuel Sy and Sy Ka
Kieng to comply with their obligation to construct a
building within one year from April 20, 1976, has
effectively waived its right to rescind the sale of the
subject lot to the original vendees.
Faced with the same question as to the proper remedy
available to petitioner in the case of Ayala Corporation
vs. Ray Burton Development Inc., a case which is on all
fours with the case at bench, we ruled therein that the
party guilty of violating the deed restrictions may only
be held alternatively liable for substitute performance
of its obligation, that is, for the payment of damages. In
the aforesaid case it was observed that the Consolidated
and Revised Deed Restrictions (CRDR) imposed
development charges on constructions which exceed the
estimated Gross Limits permitted under the original
Deed Restrictions but which are within the limits of the
CRDRs.
The pertinent portion of the Deed of Restrictions reads:
3. DEVELOPMENT CHARGE
For any building construction within the Gross Floor
Area limits defined under Paragraphs C-2.1 to C-2.4
above, but which will result in a Gross Floor Area
exceeding certain standards defined in Paragraphs C-
3.1-C below, the OWNER shall pay MACEA, prior to
the construction of any new building, a
DEVELOPMENT CHARGE as a contribution to a trust
fund to be administered by MACEA. This trust fund
shall be used to improve facilities and utilities in
Makati Central District.
3.1. The amount of the development charge that shall
be due from the OWNER shall be computed as follows:
DEVELOPMENT CHARGE = A x (B-C-D)
where:
A is equal to the Area Assessment which shall be set at
Five Hundred Pesos (P500.00) until December
31,1990. Each January 1st thereafter, such amount
shall increase by ten percent (10%) over the Area
Assessment charged in the immediately preceding year;
provided that beginning 1995 and at the end of every
successive five-year period thereafter, the increase in
the Area Assessment shall be reviewed and adjusted by
the VENDOR to correspond to the accumulated
increase in the construction cost index during the
immediately preceding five years as based on the
weighted average of wholesale price and wage indices
of the National Census and Statistics Office and the
Bureau of Labor Statistics.
B - is equal to the Gross Floor Area of the completed or
expanded building in square meters.
C - is equal to the estimated Gross Floor Area
permitted under the original deed restrictions, derived
by multiplying the lot area by the effective original FAR
shown below for each location.
We then ruled in the aforesaid case that the
development charges are a fair measure of
compensatory damages which therein respondent Ray
Burton Development Inc. is liable to Ayala
Corporation. The dispositive portion of the decision in
the said case which is squarely applicable to the case at
bar, reads as follows:
22 | P a g e
WHEREFORE, premises considered, the assailed
Decision of the Court of Appeals dated February 27,
1996, in CA-G.R. C.V. No. 46488, and its Resolution
dated October 7, 1996 are hereby REVERSED and SET
ASIDE, and in lieu thereof, judgment is hereby
rendered finding that:
(1) The Deed Restrictions are valid and
petitioner AYALA is not estopped from
enforcing them against lot owners who
have not yet adopted the Consolidated
and Revised Deed Restrictions.
(2) Having admitted that the Consolidated
and Revised Deed Restrictions are the
applicable Deed Restrictions to Ray
Burton Development Corporation,
RBDC should be, and is bound by the
same.
WHEREFORE, the assailed Decision of the Court of
Appeals dated December 4, 1997 and its Resolution
dated June 19, 1998 , C.A. G.R. C.V. No. 4598, are
REVERSED and SET ASIDE. In lieu thereof,
judgment is rendered
a) ordering respondent Rosa-Diana Realty and
Development Corporation to pay development charges
as computed under the provisions of the consolidated
and Revised Deed Restrictions currently in force; and
b) ordering respondent Rosa-Diana Realty and
Development Corporation to pay petitioner Ayala
Corporation exemplary damages in the sum of
P2,500,000.00, attorneys fees in the sum of
P250,000.00 and the costs of the suit.
SO ORDERED.

(3) Considering that Ray Burton

Development Corporations Trafalgar
plaza exceeds the floor area limits of
the Deed Restrictions, RBDC is hereby
ordered to pay development charges as
computed under the provisions of the
consolidated and Revised Deed
Restrictions currently in force.

(4) Ray Burton Development corporation

is further ordered to pay AYALA
exemplary damages in the amount of
P2,500,000.00 attorneys fees in the
amount of P250,000.00.

SO ORDERED.

There is no reason why the same rule should not be

followed in the case at bar, the remedies of specific
performance and/or rescission prayed for by petitioner
no longer being feasible. In accordance with the
peculiar circumstances of the case at bar, the
development charges would certainly be a fair measure
of compensatory damages to petitioner Ayala.

Exemplary damages in the sum of P2,500,000.00 as

prayed for by petitioner are also in order inasmuch as
respondent Rosa-Diana was in evident bad faith when it
submitted a set of building plans in conformity with the
deed restrictions to petitioner Ayala for the sole purpose
of obtaining title to the property, but only to prepare
and later on submit another set of building plans which
are in gross violation of the Deed Restrictions.
Petitioner Ayala is likewise entitled to an award of
attorneys fees in the sum of P250,000.00.

23 | P a g e
G.R. No. 112182 December 12, 1994
BRICKTOWN DEVELOPMENT CORP. (its new
corporate name MULTINATIONAL REALTY
DEVELOPMENT CORPORATION) and
MARIANO Z. VERALDE, petitioners,
vs.
AMOR TIERRA DEVELOPMENT
CORPORATION and the HON. COURT OF
APPEALS, respondents.
VITUG, J.:
A contract, once perfected, has the force of law
between the parties with which they are bound to
comply in good faith and from which neither one may
renege without the consent of the other. The autonomy
of contracts allows the parties to establish such
stipulations, clauses, terms and conditions as they may
deem appropriate provided only that they are not
contrary to law, morals, good customs, public order or
public policy. The standard norm in the performance of
their respective covenants in the contract, as well as in
the exercise of their rights thereunder, is expressed in
the cardinal principle that the parties in that juridical
relation must act with justice, honesty and good faith.
These basic tenets, once again, take the lead in the
instant controversy.
Private respondent reminds us that the factual findings
of the trial court, sustained by the Court of Appeals,
should be considered binding on this Court in this
petition. We concede to this reminder since, indeed,
there appears to be no valid justification in the case at
bench for us to take an exception from the rule. We
shall, therefore, momentarily paraphrase these findings.
On 31 March 1981, Bricktown Development
Corporation (herein petitioner corporation), represented
by its President and co-petitioner Mariano Z. Velarde,
executed two Contracts to Sell (Exhs. "A" and "B") in
favor of Amor Tierra Development Corporation (herein
private respondent), represented in these acts by its
Vice-President, Moises G. Petilla, covering a total of 96
residential lots, situated at the Multinational Village
Subdivision, La Huerta, Parañaque, Metro Manila, with
an aggregate area of 82,888 square meters. The total
price of P21,639,875.00 was stipulated to be paid by
private respondent in such amounts and maturity dates,
as follows: P2,200,000.00 on 31 March 1981;
P3,209,968.75 on 30 June 1981; P4,729,906.25 on 31
December 1981; and the balance of P11,500,000.00 to
be paid by means of an assumption by private
respondent of petitioner corporation's mortgage liability
to the Philippine Savings Bank or, alternatively, to be
made payable in cash. On even date, 31 March 1981,
the parties executed a Supplemental Agreement (Exh.
"C"), providing that private respondent would
additionally pay to petitioner corporation the amounts
of P55,364.68, or 21% interest on the balance of
downpayment for the period from 31 March to 30 June
1981, and of P390,369.37 representing interest paid by
petitioner corporation to the Philippine Savings Bank in
updating the bank loan for the period from 01 February
to 31 March 1981.
Private respondent was only able to pay petitioner
corporation the sum of P1,334,443.21 (Exhs. "A" to
"K"). In the meanwhile, however, the parties continued
to negotiate for a possible modification of their
agreement, although nothing conclusive would appear
to have ultimately been arrived at.
Finally, on 12 October 1981, petitioner corporation,
through its legal counsel, sent private respondent a
"Notice of Cancellation of Contract" (Exh. "D") on
account of the latter's continued failure to pay the
installment due 30 June 1981 and the interest on the
unpaid balance of the stipulated initial payment.
Petitioner corporation advised private respondent,
however, that it (private respondent) still had the right
to pay its arrearages within 30 days from receipt of the
notice "otherwise the actual cancellation of the contract
(would) take place."
Several months later, or on 26 September 1983, private
respondent, through counsel, demanded (Exh. "E") the
refund of private respondent's various payments to
petitioner corporation, allegedly "amounting to
P2,455,497.71," with interest within fifteen days from
receipt of said letter, or, in lieu of a cash payment, to
assign to private respondent an equivalent number of
unencumbered lots at the same price fixed in the
contracts. The demand, not having been heeded, private
respondent commenced, on 18 November 1983, its
action with the court a quo.1
Following the reception of evidence, the trial court
rendered its decision, the dispositive portion of which
read:
In view of all the foregoing, judgment is hereby
rendered as follows:
1. Declaring the Contracts to Sell and the
Supplemental Agreement (Exhibits "A", "B"
and "C") rescinded;
2. Ordering the [petitioner] corporation,
Bricktown Development Corporation, also
known as Multinational Realty Development
Corporation, to return to the [private
respondent] the amount of One Million Three
Hundred Thirty Four Thousand Four Hundred
Forty-Three Pesos and Twenty-One Centavos
(P1,334,443.21) with interest at the rate of
Twelve (12%) percent per annum, starting
November 18, 1983, the date when the
complaint was filed, until the amount is fully
paid;
3. Ordering the [petitioner] corporation to pay
the [private respondent] the amount of Twenty-
five Thousand (P25,000.00) Pesos, representing
attorney's fees;
4. Dismissing [petitioner's] counterclaim for
lack of merit; and
5. With costs against the [petitioner]
corporation.
SO ORDERED.2
24 | P a g e
On appeal, the appellate court affirmed in toto the trial
court's findings and judgment.
In their instant petition, petitioners contend that the
Court of Appeals has erred in ruling that —
(1) By petitioners' acts, conduct and
representation, they themselves delayed or
prevented the performance of the contracts to
sell and the supplemental agreement and were
thus estopped from cancelling the same.
(2) Petitioners were no justified in resolving the
contracts to sell and the supplemental
agreement.
(3) The cancellation of the contract required a
positive act on the part of petitioners giving
private respondent the sixty (60) day grace
period provided in the contracts to sell; and
(4) In not holding that the forfeiture of the
P1,378,197.48 was warranted under the
liquidated damages provisions of the contracts
to sell and the supplemental agreement and was
not iniquitous nor unconscionable.
The core issues would really come down to (a) whether
or not the contracts to sell were validly rescinded or
cancelled by petitioner corporation and, in the
affirmative, (b) whether or not the amounts already
remitted by private respondent under said contracts
were rightly forfeited by petitioner corporation.
Admittedly, the terms of payment agreed upon by the
parties were not met by private respondent. Of a total
selling price of P21,639,875.00, private respondent was
only able to remit the sum of P1,334,443.21 which was
even short of the stipulated initial payment of
P2,200,000.00. No additional payments, it would seem,
were made. A notice of cancellation was ultimately
made months after the lapse of the contracted grace
period. Paragraph 15 of the Contracts to Sell provided
thusly:
15. Should the PURCHASER fail to pay when
due any of the installments mentioned in
stipulation No. 1 above, the OWNER shall
grant the purchaser a sixty (60)-day grace
period within which to pay the amount/s due,
and should the PURCHASER still fail to pay
the due amount/s within the 60-day grace
period, the PURCHASER shall have the right
to ex-parte cancel or rescind this contract,
provided, however, that the actual cancellation
or rescission shall take effect only after the
lapse of thirty (30) days from the date of receipt
by the PURCHASER of the notice of
cancellation of this contract or the demand for
its rescission by a notarial act, and thereafter,
the OWNER shall have the right to resell the
lot/s subject hereof to another buyer and all
payments made, together with all
improvements introduced on the
aforementioned lot/s shall be forfeited in favor
of the OWNER as liquidated damages, and in
this connection, the PURCHASER obligates
itself to peacefully vacate the aforesaid lot/s
without necessity of notice or demand by the
OWNER.3
A grace period is a right, not an obligation, of the
debtor. When unconditionally conferred, such as in this
case, the grace period is effective without further need
of demand either calling for the payment of the
obligation or for honoring the right. The grace period
must not be likened to an obligation, the non-payment
of which, under Article 1169 of the Civil Code, would
generally still require judicial or extrajudicial demand
before "default" can be said to arise.4
Verily, in the case at bench, the sixty-day grace period
under the terms of the contracts to sell became ipso
facto operative from the moment the due payments
were not met at their stated maturities. On this score,
the provisions of Article 1169 of the Civil Code would
find no relevance whatsoever.
The cancellation of the contracts to sell by petitioner
corporation accords with the contractual covenants of
the parties, and such cancellation must be respected. It
may be noteworthy to add that in a contract to sell, the
non-payment of the purchase price (which is normally
the condition for the final sale) can prevent the
obligation to convey title from acquiring any obligatory
force (Roque vs. Lapuz, 96 SCRA 741; Agustin vs.
Court of Appeals, 186 SCRA 375).
The forfeiture of the payments thus far remitted under
the cancelled contracts in question, given the factual
findings of both the trial court and the appellate court,
must be viewed differently. While clearly insufficient to
justify a foreclosure of the right of petitioner
corporation to rescind or cancel its contracts with
private respondent, the series of events and
circumstances described by said courts to have
prevailed in the interim between the parties, however,
warrant some favorable consideration by this Court.
Petitioners do not deny the fact that there has indeed
been a constant dialogue between the parties during the
period of their juridical relation. Concededly, the
negotiations that they have pursued strictly did not
result in the novation, either extinctive or modificatory,
of the contracts to sell; nevertheless, this Court is
unable to completely disregard the following findings
of both the trial court and the appellate court. Said the
trial court:
25 | P a g e
 It has been duly established through the
testimony of plaintiff's witnesses Marcosa
Sanchez and Vicente Casas that there were
negotiations to enter into another agreement
between the parties, after March 31, 1981. The
first negotiation took place before June 30,
1981, when Moises Petilla and Renato Dragon,
Vice-President and president, respectively, of
the plaintiff corporation, together with Marcosa
Sanchez, went to the office of the defendant
corporation and made some proposals to the
latter, thru its president, the defendant Mariano
Velarde. They told the defendant Velarde of the
plaintiff's request for the division of the lots to
be purchased into smaller lots and the building
of town houses or smaller houses therein as
these kinds of houses can be sold easily than
big ones. Velarde replied that subdivision
owners would not consent to the building of
small houses. He, however, made two counter-
proposals, to wit: that the defendant corporation
would assign to the plaintiff a number of lots
corresponding to the amounts the latter had
already paid, or that the defendant corporation
may sell the corporation itself, together with the
Multinational Village Subdivision, and its other
properties, to the plaintiff and the latter's sister
companies engaged in the real estate business.
The negotiations between the parties went on
for sometime but nothing definite was
accomplished.5
In fine, while we must conclude that petitioner
corporation still acted within its legal right to declare
the contracts to sell rescinded or cancelled, considering,
nevertheless, the peculiar circumstances found to be
extant by the trial court, confirmed by the Court of
Appeals, it would be unconscionable, in our view, to
likewise sanction the forfeiture by petitioner
corporation of payments made to it by private
respondent. Indeed, in the opening statement of this
ponencia, we have intimated that the relationship
between parties in any contract must always be
characterized and punctuated by good faith and fair
dealing. Judging from what the courts below have said,
petitioners did fall well behind that standard. We do not
find it equitable, however, to adjudge any interest
payment by petitioners on the amount to be thus
refunded, computed from judicial demand, for, indeed,
private respondent should not be allowed to totally free
itself from its own breach.
WHEREFORE, the appealed decision is AFFIRMED
insofar as it declares valid the cancellation of the
contracts in question but MODIFIED by ordering the
refund by petitioner corporation of P1,334,443.21 with
12% interest per annum to commence only, however,
from the date of finality of this decision until such
refund is effected. No costs.
SO ORDERED.

For its part, the Court of Appeals observed:

We agree with the court a quo that there is,

therefore, reasonable ground to believe that
because of the negotiations between the parties,
coupled with the fact that the plaintiff never
took actual possession of the properties and the
defendants did not also dispose of the same
during the pendency of said negotiations, the
plaintiff was led to believe that the parties may
ultimately enter into another agreement in place
of the "contracts to sell." There was, evidently,
no malice or bad faith on the part of the
plaintiff in suspending payments. On the
contrary, the defendants not only contributed,
but had consented to the delay or suspension of
payments. They did not give the plaintiff a
categorical answer that their counter-proposals
will not materialize.6

26 | P a g e
 G.R. No. 192105, December 09, 2013
ANTONIO LOCSIN II, Petitioners, v. MEKENI
FOOD CORPORATION, Respondent.
DECISION
DEL CASTILLO, J.:
In the absence of specific terms and conditions
governing a car plan agreement between the employer
and employee, the former may not retain the installment
payments made by the latter on the car plan and treat
them as rents for the use of the service vehicle, in the
event that the employee ceases his employment and is
unable to complete the installment payments on the
vehicle. The underlying reason is that the service
vehicle was precisely used in the former’s business; any
personal benefit obtained by the employee from its use
is merely incidental.
This Petition for Review on Certiorari1 assails the
January 27, 2010 Decision2 of the Court of Appeals
(CA) in CA-G.R. SP No. 109550, as well as its April
23, 2010 Resolution3 denying petitioner’s Motion for
Partial Reconsideration.4ChanRoblesVirtualawlibrary
Factual Antecedents
In February 2004, respondent Mekeni Food
Corporation (Mekeni) – a Philippine company engaged
in food manufacturing and meat processing – offered
petitioner Antonio Locsin II the position of Regional
Sales Manager to oversee Mekeni’s National Capital
Region Supermarket/Food Service and South Luzon
operations. In addition to a compensation and benefit
package, Mekeni offered petitioner a car plan, under
which one-half of the cost of the vehicle is to be paid by
the company and the other half to be deducted from
petitioner’s salary. Mekeni’s offer was contained in an
Offer Sheet5 which was presented to petitioner.
Petitioner began his stint as Mekeni Regional Sales
Manager on March 17, 2004. To be able to effectively
cover his appointed sales territory, Mekeni furnished
petitioner with a used Honda Civic car valued at
P280,000.00, which used to be the service vehicle of
petitioner’s immediate supervisor. Petitioner paid for
his 50% share through salary deductions of P5,000.00
each month.
Subsequently, Locsin resigned effective February 25,
2006. By then, a total of P112,500.00 had been
deducted from his monthly salary and applied as part of
the employee’s share in the car plan. Mekeni
supposedly put in an equivalent amount as its share
under the car plan. In his resignation letter, petitioner
made an offer to purchase his service vehicle by paying
the outstanding balance thereon. The parties negotiated,
but could not agree on the terms of the proposed
purchase. Petitioner thus returned the vehicle to Mekeni
on May 2, 2006.
Petitioner made personal and written follow-ups
regarding his unpaid salaries, commissions, benefits,
and offer to purchase his service vehicle. Mekeni
replied that the company car plan benefit applied only
to employees who have been with the company for five
years; for this reason, the balance that petitioner should
pay on his service vehicle stood at P116,380.00 if he
opts to purchase the same.
On May 3, 2007, petitioner filed against Mekeni and/or
its President, Prudencio S. Garcia, a Complaint6 for the
recovery of monetary claims consisting of unpaid
salaries, commissions, sick/vacation leave benefits, and
recovery of monthly salary deductions which were
earmarked for his cost-sharing in the car plan. The case
was docketed in the National Labor Relations
Commission (NLRC), National Capital Region (NCR),
Quezon City as NLRC NCR CASE NO. 00-05-04139-
07.
On October 30, 2007, Labor Arbiter Cresencio G.
Ramos rendered a Decision,7 decreeing as follows:
WHEREFORE, in the light of the foregoing premises,
judgment is hereby rendered directing respondents to
turn-over to complainant x x x the subject vehicle upon
the said complainant’s payment to them of the sum of
P100,435.84.
SO ORDERED.8
Ruling of the National Labor Relations Commission
On appeal,9 the Labor Arbiter’s Decision was reversed
in a February 27, 2009 Decision10 of the NLRC, thus:
WHEREFORE, premises considered, the appeal is
hereby Granted. The assailed Decision dated October
30, 2007 is hereby REVERSED and SET ASIDE and a
new one entered ordering respondent-appellee Mekeni
Food Corporation to pay complainant-appellee the
following:
1. Unpaid Salary in the amount of P12,511.45;
2. Unpaid sick leave/vacation leave pay in the amount
of P14,789.15;
3. Unpaid commission in the amount of P9,780.00; and
4. Reimbursement of complainant’s payment under the
car plan agreement in the amount of P112,500.00; and
5. The equivalent share of the company as part of the
complainant’s benefit under the car plan 50/50 sharing
amounting to P112,500.00.
Respondent-Appellee Mekeni Food Corporation is
hereby authorized to deduct the sum of P4,736.50
representing complainant-appellant’s cash advance
from his total monetary award.
All other claims are dismissed for lack of merit.
SO ORDERED.11
27 | P a g e
The NLRC held that petitioner’s amortization payments
on his service vehicle amounting to P112,500.00 should
be reimbursed; if not, unjust enrichment would result,
as the vehicle remained in the possession and
ownership of Mekeni. In addition, the employer’s share
in the monthly car plan payments should likewise be
awarded to petitioner because it forms part of the
latter’s benefits under the car plan. It held further that
Mekeni’s claim that the company car plan benefit
applied only to employees who have been with the
company for five years has not been substantiated by its
evidence, in which case the car plan agreement should
be construed in petitioner’s favor.
Mekeni moved to reconsider, but in an April 30, 2009
Resolution,12 the NLRC sustained its original findings.
Ruling of the Court of Appeals
Mekeni filed a Petition for Certiorari13 with the CA
assailing the NLRC’s February 27, 2009 Decision,
saying that the NLRC committed grave abuse of
discretion in holding it liable to petitioner as it had no
jurisdiction to resolve petitioner’s claims, which are
civil in nature.
On January 27, 2010, the CA issued the assailed
Decision, decreeing as follows:
WHEREFORE, the petition for certiorari is GRANTED.
The Decision of the National Labor Relations
Commission dated 27 February 2009, in NLRC NCR
Case No. 00-05-04139-07, and its Resolution dated 30
April 2009 denying reconsideration thereof, are
MODIFIED in that the reimbursement of Locsin’s
payment under the car plan in the amount of
P112,500.00, and the payment to him of Mekeni’s 50%
share in the amount of P112,500.00 are DELETED. The
rest of the decision is AFFIRMED.
In the absence of evidence as to the stipulations of the
car plan arrangement between Mekeni and petitioner,
the CA treated petitioner’s monthly contributions in the
total amount of P112,500.00 as rentals for the use of his
service vehicle for the duration of his employment with
Mekeni. The appellate court applied Articles 1484-1486
of the Civil Code,17 and added that the installments paid
by petitioner should not be returned to him inasmuch as
the amounts are not unconscionable. It made the
following pronouncement:
Having used the car in question for the duration of his
employment, it is but fair that all of Locsin’s payments
be considered as rentals therefor which may be forfeited
by Mekeni. Therefore, Mekeni has no obligation to
return these payments to Locsin. Conversely, Mekeni
has no right to demand the payment of the balance of
the purchase price from Locsin since the latter has
already surrendered possession of the vehicle.18
Moreover, the CA held that petitioner cannot recover
Mekeni’s corresponding share in the purchase price of
the service vehicle, as this would constitute unjust
enrichment on the part of petitioner at Mekeni’s
expense.
The CA affirmed the NLRC judgment in all other
respects. Petitioner filed his Motion for Partial
Reconsideration,19 but the CA denied the same in its
April 23, 2010 Resolution.
Thus, petitioner filed the instant Petition; Mekeni, on
the other hand, took no further action.

SO ORDERED.14
In arriving at the above conclusion, the CA held that the
NLRC possessed jurisdiction over petitioner’s claims,
including the amounts he paid under the car plan, since
his Complaint against Mekeni is one for the payment of
salaries and employee benefits. With regard to the car
plan arrangement, the CA applied the ruling in Elisco
Tool Manufacturing Corporation v. Court of Appeals,15
where it was held that –

First. Petitioner does not deny that private respondent

Rolando Lantan acquired the vehicle in question under
a car plan for executives of the Elizalde group of
companies. Under a typical car plan, the company
advances the purchase price of a car to be paid back by
the employee through monthly deductions from his
salary. The company retains ownership of the motor
vehicle until it shall have been fully paid for. However,
retention of registration of the car in the company’s
name is only a form of a lien on the vehicle in the event
that the employee would abscond before he has fully
paid for it. There are also stipulations in car plan
agreements to the effect that should the employment of
the employee concerned be terminated before all
installments are fully paid, the vehicle will be taken by
the employer and all installments paid shall be
considered rentals per agreement.16

28 | P a g e
 Issue Mekeni asserts further that the service vehicle was
merely a loan which had to be paid through the monthly
Petitioner raises the following solitary issue: salary deductions. If it is not allowed to recover on the
WITH ALL DUE RESPECT, THE HONORABLE loan, this would constitute unjust enrichment on the
COURT OF APPEALS ERRED IN NOT part of petitioner.
CONSIDERING THE CAR PLAN PRIVILEGE AS
PART OF THE COMPENSATION PACKAGE Our Ruling
OFFERED TO PETITIONER AT THE
INCEPTION OF HIS EMPLOYMENT AND The Petition is partially granted.
INSTEAD LIKENED IT TO A CAR LOAN ON
INSTALLMENT, IN SPITE OF THE ABSENCE To begin with, the Court notes that Mekeni did not file
OF EVIDENCE ON RECORD.20 a similar petition questioning the CA Decision; thus, it
is deemed to have accepted what was decreed. The only
Petitioner’s Arguments
issue that must be resolved in this Petition, then, is
whether petitioner is entitled to a refund of all the
In his Petition and Reply,21 petitioner mainly argues
amounts applied to the cost of the service vehicle under
that the CA erred in treating his monthly contributions
the car plan.
to the car plan, totaling P112,500.00, as rentals for the
use of his service vehicle during his employment; the
When the conclusions of the CA are grounded entirely
car plan which he availed of was a benefit and it formed
on speculation, surmises and conjectures, or when the
part of the package of economic benefits granted to him
inferences made by it are manifestly mistaken or
when he was hired as Regional Sales Manager.
absurd, its findings are subject to review by this
Petitioner submits that this is shown by the Offer Sheet
Court.24
which was shown to him and which became the basis
for his decision to accept the offer and work for
Mekeni.
From the evidence on record, it is seen that the Mekeni
car plan offered to petitioner was subject to no other
Petitioner adds that the absence of documentary or
term or condition than that Mekeni shall cover one-half
other evidence showing the terms and conditions of the
of its value, and petitioner shall in turn pay the other
Mekeni company car plan cannot justify a reliance on
half through deductions from his monthly salary.
Mekeni’s self-serving claims that the full terms thereof
Mekeni has not shown, by documentary evidence or
applied only to employees who have been with the
otherwise, that there are other terms and conditions
company for at least five years; in the absence of
governing its car plan agreement with petitioner. There
evidence, doubts should be resolved in his favor
is no evidence to suggest that if petitioner failed to
pursuant to the policy of the law that affords protection
completely cover one-half of the cost of the vehicle,
to labor, as well as the principle that all doubts should
then all the deductions from his salary going to the cost
be construed to its benefit.
of the vehicle will be treated as rentals for his use
thereof while working with Mekeni, and shall not be
Finally, petitioner submits that the ruling in the Elisco
refunded. Indeed, there is no such stipulation or
Tool case cannot apply to his case because the car plan
arrangement between them. Thus, the CA’s reliance on
subject of the said case involved a car loan, which his
Elisco Tool is without basis, and its conclusions arrived
car plan benefit was not; it was part of his
at in the questioned decision are manifestly mistaken.
compensation package, and the vehicle was an
To repeat what was said in Elisco Tool –
important component of his work which required
First. Petitioner does not deny that private respondent
constant and uninterrupted mobility. Petitioner claims
Rolando Lantan acquired the vehicle in question under
that the car plan was in fact more beneficial to Mekeni
a car plan for executives of the Elizalde group of
than to him; besides, he did not choose to avail of it, as
companies. Under a typical car plan, the company
it was simply imposed upon him. He concludes that it is
advances the purchase price of a car to be paid back by
only just that his payments should be refunded and
the employee through monthly deductions from his
returned to him.
salary. The company retains ownership of the motor
vehicle until it shall have been fully paid for. However,
Petitioner thus prays for the reversal of the assailed CA
retention of registration of the car in the company’s
Decision and Resolution, and that the Court reinstate
name is only a form of a lien on the vehicle in the event
the NLRC’s February 27, 2009 Decision.
that the employee would abscond before he has fully
paid for it. There are also stipulations in car plan
Respondent’s Arguments
agreements to the effect that should the employment
In its Comment,22 Mekeni argues that the Petition does of the employee concerned be terminated before all
not raise questions of law, but merely of fact, which installments are fully paid, the vehicle will be taken
thus requires the Court to review anew issues already by the employer and all installments paid shall be
considered rentals per agreement.25 (Emphasis
passed upon by the CA – an unauthorized exercise
supplied)
given that the Supreme Court is not a trier of facts, nor
is it its function to analyze or weigh the evidence of the
parties all over again.23 It adds that the issue regarding
the car plan and the conclusions of the CA drawn from
the evidence on record are questions of fact.

29 | P a g e
It was made clear in the above pronouncement that
installments made on the car plan may be treated as
rentals only when there is an express stipulation in the
car plan agreement to such effect. It was therefore
patent error for the appellate court to assume that, even
in the absence of express stipulation, petitioner’s
payments on the car plan may be considered as rentals
which need not be returned.
Indeed, the Court cannot allow that payments made on
the car plan should be forfeited by Mekeni and treated
simply as rentals for petitioner’s use of the company
service vehicle. Nor may they be retained by it as
purported loan payments, as it would have this Court
believe. In the first place, there is precisely no
stipulation to such effect in their agreement. Secondly,
it may not be said that the car plan arrangement
between the parties was a benefit that the petitioner
enjoyed; on the contrary, it was an absolute necessity in
Mekeni’s business operations, which benefited it to the
fullest extent: without the service vehicle, petitioner
would have been unable to rapidly cover the vast sales
territory assigned to him, and sales or marketing of
Mekeni’s products could not have been booked or made
fast enough to move Mekeni’s inventory. Poor sales,
inability to market Mekeni’s products, a high rate of
product spoilage resulting from stagnant inventory, and
poor monitoring of the sales territory are the necessary
consequences of lack of mobility. Without a service
vehicle, petitioner would have been placed at the mercy
of inefficient and unreliable public transportation; his
official schedule would have been dependent on the
arrival and departure times of buses or jeeps, not to
mention the availability of seats in them. Clearly,
without a service vehicle, Mekeni’s business could only
prosper at a snail’s pace, if not completely paralyzed.
Its cost of doing business would be higher as well. The
Court expressed just such a view in the past. Thus –
In the case at bar, the disallowance of the subject car
plan benefits would hamper the officials in the
performance of their functions to promote and
develop trade which requires mobility in the
performance of official business. Indeed, the car plan
benefits are supportive of the implementation of the
objectives and mission of the agency relative to the
nature of its operation and responsive to the
exigencies of the service.26 (Emphasis supplied)
Any benefit or privilege enjoyed by petitioner from
using the service vehicle was merely incidental and
insignificant, because for the most part the vehicle was
under Mekeni’s control and supervision. Free and
complete disposal is given to the petitioner only after
the vehicle’s cost is covered or paid in full. Until then,
the vehicle remains at the beck and call of Mekeni.
Given the vast territory petitioner had to cover to be
able to perform his work effectively and generate
business for his employer, the service vehicle was an
absolute necessity, or else Mekeni’s business would
suffer adversely. Thus, it is clear that while petitioner
was paying for half of the vehicle’s value, Mekeni was
reaping the full benefits from the use thereof.
In light of the foregoing, it is unfair to deny petitioner a
refund of all his contributions to the car plan. Under
Article 22 of the Civil Code, “[e]very person who
through an act of performance by another, or any other
means, acquires or comes into possession of something
at the expense of the latter without just or legal ground,
shall return the same to him.” Article 214227 of the
same Code likewise clarifies that there are certain
lawful, voluntary and unilateral acts which give rise to
the juridical relation of quasi-contract, to the end that
no one shall be unjustly enriched or benefited at the
expense of another. In the absence of specific terms and
conditions governing the car plan arrangement between
the petitioner and Mekeni, a quasi-contractual relation
was created between them. Consequently, Mekeni may
not enrich itself by charging petitioner for the use of its
vehicle which is otherwise absolutely necessary to the
full and effective promotion of its business. It may not,
under the claim that petitioner’s payments constitute
rents for the use of the company vehicle, refuse to
refund what petitioner had paid, for the reasons that the
car plan did not carry such a condition; the subject
vehicle is an old car that is substantially, if not fully,
depreciated; the car plan arrangement benefited Mekeni
for the most part; and any personal benefit obtained by
petitioner from using the vehicle was merely incidental.
Conversely, petitioner cannot recover the monetary
value of Mekeni’s counterpart contribution to the cost
of the vehicle; that is not property or money that
belongs to him, nor was it intended to be given to him
in lieu of the car plan. In other words, Mekeni’s share
of the vehicle’s cost was not part of petitioner’s
compensation package. To start with, the vehicle is an
asset that belonged to Mekeni. Just as Mekeni is
unjustly enriched by failing to refund petitioner’s
payments, so should petitioner not be awarded the value
of Mekeni’s counterpart contribution to the car plan, as
this would unjustly enrich him at Mekeni’s expense.
There is unjust enrichment “when a person unjustly
retains a benefit to the loss of another, or when a person
retains money or property of another against the
fundamental principles of justice, equity and good
conscience.” The principle of unjust enrichment
requires two conditions: (1) that a person is benefited
without a valid basis or justification, and (2) that such
benefit is derived at the expense of another.
The main objective of the principle against unjust
enrichment is to prevent one from enriching himself at
the expense of another without just cause or
consideration. x x x28
WHEREFORE, the Petition is GRANTED IN PART.
The assailed January 27, 2010 Decision and April 23,
2010 Resolution of the Court of Appeals in CA-G.R.
SP No. 109550 are MODIFIED, in that respondent
Mekeni Food Corporation is hereby ordered to
REFUND petitioner Antonio Locsin II’s payments
under the car plan agreement in the total amount of
P112,500.00.
Thus, except for the counterpart or equivalent share of
Mekeni Food Corporation in the car plan agreement
amounting to P112,500.00, which is DELETED, the
February 27, 2009 Decision of the National Labor
Relations Commission is affirmed in all
respects.chanRoblesvirtualLawlibrary
SO ORDERED.
30 | P a g e
G.R. No. 183984 April 13, 2011
ARTURO SARTE FLORES, Petitioner, vs.
SPOUSES ENRICO L. LINDO, JR. and EDNA C.
LINDO, Respondents.
The Case
Before the Court is a petition for review1 assailing the
30 May 2008 Decision2 and the 4 August 2008
Resolution3 of the Court of Appeals in CA-G.R. SP No.
94003.
The Antecedent Facts
The facts, as gleaned from the Court of Appeals’
Decision, are as follows:
On 31 October 1995, Edna Lindo (Edna) obtained a
loan from Arturo Flores (petitioner) amounting to
₱400,000 payable on 1 December 1995 with 3%
compounded monthly interest and 3% surcharge in case
of late payment. To secure the loan, Edna executed a
Deed of Real Estate Mortgage4 (the Deed) covering a
property in the name of Edna and her husband Enrico
(Enrico) Lindo, Jr. (collectively, respondents). Edna
also signed a Promissory Note5 and the Deed for herself
and for Enrico as his attorney-in-fact.
Edna issued three checks as partial payments for the
loan. All checks were dishonored for insufficiency of
funds, prompting petitioner to file a Complaint for
Foreclosure of Mortgage with Damages against
respondents. The case was raffled to the Regional Trial
Court of Manila, Branch 33 (RTC, Branch 33) and
docketed as Civil Case No. 00-97942.
In its 30 September 2003 Decision,6 the RTC, Branch
33 ruled that petitioner was not entitled to judicial
foreclosure of the mortgage. The RTC, Branch 33
found that the Deed was executed by Edna without the
consent and authority of Enrico. The RTC, Branch 33
noted that the Deed was executed on 31 October 1995
while the Special Power of Attorney (SPA) executed by
Enrico was only dated 4 November 1995.
The RTC, Branch 33 further ruled that petitioner was
not precluded from recovering the loan from Edna as he
could file a personal action against her. However, the
RTC, Branch 33 ruled that it had no jurisdiction over
the personal action which should be filed in the place
where the plaintiff or the defendant resides in
accordance with Section 2, Rule 4 of the Revised Rules
on Civil Procedure.
Petitioner filed a motion for reconsideration. In its
Order7 dated 8 January 2004, the RTC, Branch 33
denied the motion for lack of merit.
On 8 September 2004, petitioner filed a Complaint for
Sum of Money with Damages against respondents. It
was raffled to Branch 42 (RTC, Branch 42) of the
Regional Trial Court of Manila, and docketed as Civil
Case No. 04-110858.
Respondents filed their Answer with Affirmative
Defenses and Counterclaims where they admitted the
loan but stated that it only amounted to ₱340,000.
Respondents further alleged that Enrico was not a party
to the loan because it was contracted by Edna without
Enrico’s signature. Respondents prayed for the
dismissal of the case on the grounds of improper venue,
res judicata and forum-shopping, invoking the Decision
of the RTC, Branch 33. On 7 March 2005, respondents
also filed a Motion to Dismiss on the grounds of res
judicata and lack of cause of action.
The Decision of the Trial Court
On 22 July 2005, the RTC, Branch 42 issued an Order8
denying the motion to dismiss. The RTC, Branch 42
ruled that res judicata will not apply to rights, claims or
demands which, although growing out of the same
subject matter, constitute separate or distinct causes of
action and were not put in issue in the former action.
Respondents filed a motion for reconsideration. In its
Order9 dated 8 February 2006, the RTC, Branch 42
denied respondents’ motion. The RTC, Branch 42 ruled
that the RTC, Branch 33 expressly stated that its
decision did not mean that petitioner could no longer
recover the loan petitioner extended to Edna.
Respondents filed a Petition for Certiorari and
Mandamus with Prayer for a Writ of Preliminary
Injunction and/or Temporary Restraining Order before
the Court of Appeals.
The Decision of the Court of Appeals
In its 30 May 2008 Decision, the Court of Appeals set
aside the 22 July 2005 and 8 February 2006 Orders of
the RTC, Branch 42 for having been issued with grave
abuse of discretion.
The Court of Appeals ruled that while the general rule
is that a motion to dismiss is interlocutory and not
appealable, the rule admits of exceptions. The Court of
Appeals ruled that the RTC, Branch 42 acted with grave
abuse of discretion in denying respondents’ motion to
dismiss.
The Court of Appeals ruled that under Section 3, Rule 2
of the 1997 Rules of Civil Procedure, a party may not
institute more than one suit for a single cause of action.
If two or more suits are instituted on the basis of the
same cause of action, the filing of one on a judgment
upon the merits in any one is available ground for the
dismissal of the others. The Court of Appeals ruled that
on a nonpayment of a note secured by a mortgage, the
creditor has a single cause of action against the debtor,
that is recovery of the credit with execution of the suit.
Thus, the creditor may institute two alternative
remedies: either a personal action for the collection of
debt or a real action to foreclose the mortgage, but not
both. The Court of Appeals ruled that petitioner had
only one cause of action against Edna for her failure to
pay her obligation and he could not split the single
cause of action by filing separately a foreclosure
proceeding and a collection case. By filing a petition for
foreclosure of the real estate mortgage, the Court of
Appeals held that petitioner had already waived his
personal action to recover the amount covered by the
promissory note.
31 | P a g e
Petitioner filed a motion for reconsideration. In its 4
August 2008 Resolution, the Court of Appeals denied
the motion.
Hence, the petition before this Court.
The Issue
The sole issue in this case is whether the Court of
Appeals committed a reversible error in dismissing the
complaint for collection of sum of money on the ground
of multiplicity of suits.
The Ruling of this Court
The petition has merit.
The rule is that a mortgage-creditor has a single cause
of action against a mortgagor-debtor, that is, to recover
the debt.10 The mortgage-creditor has the option of
either filing a personal action for collection of sum of
money or instituting a real action to foreclose on the
mortgage security.11 An election of the first bars
recourse to the second, otherwise there would be
multiplicity of suits in which the debtor would be
tossed from one venue to another depending on the
location of the mortgaged properties and the residence
of the parties.12
The two remedies are alternative and each remedy is
complete by itself.13 If the mortgagee opts to foreclose
the real estate mortgage, he waives the action for the
collection of the debt, and vice versa.14 The Court
explained:
x x x in the absence of express statutory provisions, a
mortgage creditor may institute against the mortgage
debtor either a personal action for debt or a real action
to foreclose the mortgage. In other words, he may
pursue either of the two remedies, but not both. By such
election, his cause of action can by no means be
impaired, for each of the two remedies is complete in
itself. Thus, an election to bring a personal action will
leave open to him all the properties of the debtor for
attachment and execution, even including the
mortgaged property itself. And, if he waives such
personal action and pursues his remedy against the
mortgaged property, an unsatisfied judgment thereon
would still give him the right to sue for deficiency
judgment, in which case, all the properties of the
defendant, other than the mortgaged property, are again
open to him for the satisfaction of the deficiency. In
either case, his remedy is complete, his cause of action
undiminished, and any advantages attendant to the
pursuit of one or the other remedy are purely accidental
and are all under his right of election. On the other
hand, a rule that would authorize the plaintiff to bring a
personal action against the debtor and simultaneously
or successively another action against the mortgaged
property, would result not only in multiplicity of suits
so offensive to justice (Soriano v. Enriques, 24 Phil.
584) and obnoxious to law and equity (Osorio v. San
Agustin, 25 Phil. 404), but also in subjecting the
defendant to the vexation of being sued in the place of
his residence or of the residence of the plaintiff, and
then again in the place where the property lies.15
The Court has ruled that if a creditor is allowed to file
his separate complaints simultaneously or successively,
one to recover his credit and another to foreclose his
mortgage, he will, in effect, be authorized plural redress
for a single breach of contract at so much costs to the
court and with so much vexation and oppressiveness to
the debtor.16
In this case, however, there are circumstances that the
Court takes into consideration.
Petitioner filed an action for foreclosure of mortgage.
The RTC, Branch 33 ruled that petitioner was not
entitled to judicial foreclosure because the Deed of Real
Estate Mortgage was executed without Enrico’s
consent. The RTC, Branch 33 stated:
All these circumstances certainly conspired against the
plaintiff who has the burden of proving his cause of
action. On the other hand, said circumstances tend to
support the claim of defendant Edna Lindo that her
husband did not consent to the mortgage of their
conjugal property and that the loan application was her
personal decision.
Accordingly, since the Deed of Real Estate Mortgage
was executed by defendant Edna Lindo lacks the
consent or authority of her husband Enrico Lindo, the
Deed of Real Estate Mortgage is void pursuant to
Article 96 of the Family Code.
This does not mean, however, that the plaintiff cannot
recover the ₱400,000 loan plus interest which he
extended to defendant Edna Lindo. He can institute a
personal action against the defendant for the amount
due which should be filed in the place where the
plaintiff resides, or where the defendant or any of the
principal defendants resides at the election of the
plaintiff in accordance with Section 2, Rule 4 of the
Revised Rules on Civil Procedure. This Court has no
jurisdiction to try such personal action.17
Edna did not deny before the RTC, Branch 33 that she
obtained the loan. She claimed, however, that her
husband did not give his consent and that he was not
aware of the transaction.18 Hence, the RTC, Branch 33
held that petitioner could still recover the amount due
from Edna through a personal action over which it had
no jurisdiction.
Edna also filed an action for declaratory relief before
the RTC, Branch 93 of San Pedro Laguna (RTC,
Branch 93), which ruled:
At issue in this case is the validity of the promissory
note and the Real Estate Mortgage executed by Edna
Lindo without the consent of her husband.
32 | P a g e
The real estate mortgage executed by petition Edna
Lindo over their conjugal property is undoubtedly an
act of strict dominion and must be consented to by her
husband to be effective. In the instant case, the real
estate mortgage, absent the authority or consent of the
husband, is necessarily void. Indeed, the real estate
mortgage is this case was executed on October 31, 1995
and the subsequent special power of attorney dated
November 4, 1995 cannot be made to retroact to
October 31, 1995 to validate the mortgage previously
made by petitioner.
The liability of Edna Lindo on the principal contract of
the loan however subsists notwithstanding the illegality
of the mortgage. Indeed, where a mortgage is not valid,
the principal obligation which it guarantees is not
thereby rendered null and void. That obligation matures
and becomes demandable in accordance with the
stipulation pertaining to it. Under the foregoing
circumstances, what is lost is merely the right to
foreclose the mortgage as a special remedy for
satisfying or settling the indebtedness which is the
principal obligation. In case of nullity, the mortgage
deed remains as evidence or proof of a personal
obligation of the debtor and the amount due to the
creditor may be enforced in an ordinary action.
In view of the foregoing, judgment is hereby rendered
declaring the deed of real estate mortgage as void in the
absence of the authority or consent of petitioner’s
spouse therein. The liability of petitioner on the
principal contract of loan however subsists
notwithstanding the illegality of the real estate
mortgage.19
The RTC, Branch 93 also ruled that Edna’s liability is
not affected by the illegality of the real estate mortgage.
Both the RTC, Branch 33 and the RTC, Branch 93
misapplied the rules.
Article 124 of the Family Code provides:
Art. 124. The administration and enjoyment of the
conjugal partnership property shall belong to both
spouses jointly. In case of disagreement, the husband’s
decision shall prevail, subject to recourse to the court
by the wife for proper remedy, which must be availed
of within five years from the date of contract
implementing such decision.
In the event that one spouse is incapacitated or
otherwise unable to participate in the administration of
the conjugal properties, the other spouse may assume
sole powers of administration. These powers do not
include disposition or encumbrance without authority of
the court or the written consent of the other spouse. In
the absence of such authority or consent the disposition
or encumbrance shall be void. However, the
transaction shall be construed as a continuing offer
on the part of the consenting spouse and the third
person, and may be perfected as a binding contract
upon the acceptance by the other spouse or
authorization by the court before the offer is
withdrawn by either or both offerors. (Emphasis
supplied)
Article 124 of the Family Code of which applies to
conjugal partnership property, is a reproduction of
Article 96 of the Family Code which applies to
community property.
Both Article 96 and Article 127 of the Family Code
provide that the powers do not include disposition or
encumbrance without the written consent of the other
spouse. Any disposition or encumbrance without the
written consent shall be void. However, both provisions
also state that "the transaction shall be construed as a
continuing offer on the part of the consenting spouse
and the third person, and may be perfected as a
binding contract upon the acceptance by the other
spouse x x x before the offer is withdrawn by either or
both offerors."
In this case, the Promissory Note and the Deed of Real
Estate Mortgage were executed on 31 October 1995.
The Special Power of Attorney was executed on 4
November 1995. The execution of the SPA is the
acceptance by the other spouse that perfected the
continuing offer as a binding contract between the
parties, making the Deed of Real Estate Mortgage a
valid contract.
However, as the Court of Appeals noted, petitioner
allowed the decisions of the RTC, Branch 33 and the
RTC, Branch 93 to become final and executory without
asking the courts for an alternative relief. The Court of
Appeals stated that petitioner merely relied on the
declarations of these courts that he could file a separate
personal action and thus failed to observe the rules and
settled jurisprudence on multiplicity of suits, closing
petitioner’s avenue for recovery of the loan.
Nevertheless, petitioner still has a remedy under the
law.
In Chieng v. Santos,20 this Court ruled that a mortgage-
creditor may institute against the mortgage-debtor
either a personal action for debt or a real action to
foreclose the mortgage. The Court ruled that the
remedies are alternative and not cumulative and held
that the filing of a criminal action for violation of Batas
Pambansa Blg. 22 was in effect a collection suit or a
suit for the recovery of the mortgage-debt.21 In that
case, however, this Court pro hac vice, ruled that
respondents could still be held liable for the balance of
the loan, applying the principle that no person may
unjustly enrich himself at the expense of another.22
The principle of unjust enrichment is provided under
Article 22 of the Civil Code which provides:
Art. 22. Every person who through an act of
performance by another, or any other means, acquires
or comes into possession of something at the expense of
the latter without just or legal ground, shall return the
same to him.
33 | P a g e
There is unjust enrichment "when a person unjustly
retains a benefit to the loss of another, or when a person
retains money or property of another against the
fundamental principles of justice, equity and good
conscience."23 The principle of unjust enrichment
requires two conditions: (1) that a person is benefited
without a valid basis or justification, and (2) that such
benefit is derived at the expense of another.241avvphi1

The main objective of the principle against unjust

enrichment is to prevent one from enriching himself at
the expense of another without just cause or
consideration.25 The principle is applicable in this case
considering that Edna admitted obtaining a loan from
petitioners, and the same has not been fully paid
without just cause. The Deed was declared void
erroneously at the instance of Edna, first when she
raised it as a defense before the RTC, Branch 33 and
second, when she filed an action for declaratory relief
before the RTC, Branch 93. Petitioner could not be
expected to ask the RTC, Branch 33 for an alternative
remedy, as what the Court of Appeals ruled that he
should have done, because the RTC, Branch 33 already
stated that it had no jurisdiction over any personal
action that petitioner might have against Edna.

Considering the circumstances of this case, the

principle against unjust enrichment, being a substantive
law, should prevail over the procedural rule on
multiplicity of suits. The Court of Appeals, in the
assailed decision, found that Edna admitted the loan,
except that she claimed it only amounted to ₱340,000.
Edna should not be allowed to unjustly enrich herself
because of the erroneous decisions of the two trial
courts when she questioned the validity of the Deed.
Moreover, Edna still has an opportunity to submit her
defenses before the RTC, Branch 42 on her claim as to
the amount of her indebtedness.

WHEREFORE, the 30 May 2008 Decision and the 4

August 2008 Resolution of the Court of Appeals in CA-
G.R. SP No. 94003 are SET ASIDE. The Regional
Trial Court of Manila, Branch 42 is directed to proceed
with the trial of Civil Case No. 04-110858.

SO ORDERED.

34 | P a g e
G.R. No. 172525 October 20, 2010
SHINRYO (PHILIPPINES) COMPANY, INC.,
Petitioner, - versus - RRN INCORPORATED,
Respondent.
x----------------------------------------------------------------x
DECISION
PERALTA, J.:
This resolves the Petition for Review on
Certiorari under Rule 45 of the Rules of Court, praying
that the Decision[1] of the Court of Appeals (CA) dated
February 22, 2006, affirming the Decision of the
Construction Industry Arbitration Commission (CIAC),
and the CA Resolution[2] dated April 26, 2006, denying
herein petitioner's motion for reconsideration, be
reversed and set aside.
The facts, as accurately narrated in the CA
Decision, are as follows.
Petitioner Shinryo (Philippines)
Company, Inc. (hereinafter petitioner) is a
domestic corporation organized under
Philippine laws. Private respondent RRN
Incorporated (hereinafter respondent) is
likewise a domestic corporation organized under
Philippine laws.
Respondent filed a claim for arbitration
against petitioner before CIAC for recovery of
unpaid account which consists of unpaid
portions of the sub-contract, variations and
unused materials in the total sum of
P5,275,184.17 and legal interest in the amount
of P442,014.73. Petitioner filed a counterclaim
for overpayment in the amount of
P2,512,997.96.
The parties admitted several facts before
the CIAC. It was shown that petitioner and
respondent executed an Agreement and
Conditions of Sub-contract (hereafter
Agreement signed on June 11, 1996 and June 14,
1996, respectively. Respondent signified its
willingness to accept and perform for petitioner
in any of its projects, a part or the whole of the
works more particularly described in Conditions
of Sub-Contract and other Sub-contract
documents.
On June 11, 2002, the parties executed a
Supply of Manpower, Tools/Equipment,
Consumables for the Electrical Works-Power
and Equipment Supply, Bus Duct Installation for
the Phillip Morris Greenfield Project (hereafter
Project) covered by Purchase Order Nos.
4501200300-000274 and 4501200300-000275
amounting to P15,724,000.00 and
P9,276,000.00 respectively, or a total amount of
P25,000,000.00. The parties also agreed that
respondent will perform variation orders in the
Project. In connection with the Project,
petitioner supplied manpower chargeable
against respondent.
Respondent was not able to finish the
entire works with petitioner due to financial
difficulties. Petitioner paid respondent a total
amount of P26,547,624.76. On June 25, 2005
[should read 2003], respondent, through its
former counsel sent a letter to petitioner
demanding for the payment of its unpaid balance
amounting to P5,275,184.17. Petitioner claimed
material back charges in the amount of
P4,063,633.43. On September 26, 2003,
respondent only acknowledged P2,371,895.33
as material back charges. Thereafter, on October
16, 2003, respondent sent another letter to
petitioner for them to meet and settle their
dispute.
On January 8, 2004, respondent sent
another letter to petitioner regarding the cost of
equipment rental and the use of scaffolding.
Thereafter, on August 12, 2004, petitioner sent a
letter to respondent denying any unpaid account
and the failure in their negotiations for amicable
settlement.
On September 3, 2004, respondent,
through its new counsel, advised petitioner of
their intention to submit the matter to arbitration.
Thereafter, their dispute was submitted to
arbitration. During the preliminary conference,
the parties agreed in their Terms of Reference to
resolve eight issues, to wit:
1. What should be the basis in
evaluating the variation cost?
1.1 How much is the
variation cost?
2. Is the Respondent
(petitioner in the instant case) justified
in charging claimant (herein respondent)
the equipment rental fee and for the use
of the scaffoldings? If so, how much
should be charged to Claimant?
3. What should be the basis in
evaluating the total cost of materials
supplied by Respondent to the Project
which is chargeable to Claimant?
3.1 How much is the total cost of
materials supply chargeable to
Claimant?
4. How much is the value of
the remaining works left undone by the
Claimant in the project?
5. Is the Claimant's claim for
inventory of excess materials valid? If
so, how much is the value thereof?
6. Is the Respondent entitled
to its claim for an overpayment in the
amount of P2,512,997.96?
35 | P a g e
 7. Is Claimant entitled to its
claim for interest? If so, how much?
8. Who between the parties
shall bear the cost of Arbitration?
III. THE COURT OF APPEALS
COMMITTED A GRAVE REVERSIBLE
ERROR IN AFFIRMING THE CIAC AWARD
FOR THE VALUE OF INVENTORIED
MATERIALS CONSIDERING THAT:

The CIAC rendered the assailed A. RESPONDENT RRN ADMITTED

decision after the presentation of the parties' THE VALIDITY OF THE
evidence. [The dispositive portion of said DEDUCTIONS ON ACCOUNT OF
decision reads as follows: MATERIAL SUPPLY, WHICH
INCLUDED THE INVENTORIED
WHEREFORE, judgment is MATERIALS.
hereby rendered in favor of the claimant
and respondent is ordered to pay B. RESPONDENT RRN HAS NO
claimant its unpaid account in the sum BASIS TO CLAIM BECAUSE ENGR.
of P3,728,960.54 plus legal interest of BONIFACIO ADMITTED THAT
6% reckoned from June 25, 2003 up to RESPONDENT RRN FAILED TO
the filing of the case on October 11, ESTABLISH WHETHER THE
2004 and 12% of P3,728,960.54 from MATERIALS CAME FROM
the finality of the judgment until fully RESPONDENT RRN OR FROM
paid and arbitration cost of P104,333.82 PETITIONER AND THAT IT WAS
representing claimant's share of the PETITIONER THAT ACTUALLY
arbitration cost which respondent INSTALLED THE SAID
should reimburse. MATERIALS AS PART OF
REMAINING WORKS THAT
SO ORDERED.] PETITIONER TOOK OVER FROM
RESPONDENT RRN.
Petitioner accepts the ruling of the CIAC
only in Issue No. 1 and Sub-Issue No. 1.1 and in C. THE CLAIM FOR THE VALUE OF
Issue No. 2 in so far as the amount of INVENTORIED MATERIALS IS A
P440,000.00 awarded as back charges for the DOUBLE CLAIM OR DOUBLE
use of scaffoldings. x x x[3] ENTRY BECAUSE IN THE
COMPUTATION OF THE FINAL
ACCOUNT, RESPONDENT RRN
WAS CREDITED THE FULL
On February 22, 2006, the CA promulgated the CONTRACT PRICE AND THE COST
assailed Decision affirming the decision of the CIAC. OF VARIATIONS, WHICH
The CA upheld the CIAC ruling that petitioner failed to INCLUDED THE INVENTORIED
adduce sufficient proof that the parties had an agreement MATERIALS.
regarding charges for respondent's use of the manlift. As
to the other charges for materials, the CA held that the IV. IN RENDERING THE
evidence on record amply supports the CIAC findings. QUESTIONED DECISION AND
Petitioner moved for reconsideration of said ruling, but QUESTIONED RESOLUTION, THE COURT
the same was denied per Resolution dated April 26, OF APPEALS COMMITTED A GRAVE
2006. REVERSIBLE ERROR IN THAT IT
COMPLETELY DISREGARDED THE
Hence, this petition where it is alleged that: PROVISION OF THE SUBCONTRACT,
WHICH ALLOWED PAYMENT OF ACTUAL
I. THE HONORABLE COURT OF COST INCURRED BY PETITIONER IN
APPEALS COMMITTED GRAVE COMPLETING THE REMAINING WORKS
REVERSIBLE ERROR WHEN IT DENIED THAT PRIVATE RESPONDENT
PETITIONER'S CLAIM FOR MANLIFT ADMITTEDLY FAILED TO COMPLETE.
EQUIPMENT RENTAL IN THE AMOUNT
OF P511,000.00 DESPITE EVIDENCE ON V. THE COURT OF APPEALS
RECORD THAT RESPONDENT RRN COMMITTED A GRAVE REVERSIBLE
ACTUALLY USED AND BENEFITED FROM ERROR WHEN IT COMPLETELY
THE MANLIFT EQUIPMENT. DISREGARDED THE EVIDENCE ON
ACTUAL COST INCURRED BY
II. IN RENDERING THE PETITIONER IN COMPLETING THE
QUESTIONED DECISION AND REMAINING WORKS.
QUESTIONED RESOLUTION, THE
HONORABLE COURT OF APPEALS HAS VI. THE COURT OF APPEALS
DECIDED A QUESTION OF SUBSTANCE COMMITTED GRAVE REVERSIBLE
NOT IN ACCORD WITH LAW AND/OR ERROR WHEN IT AFFIRMED THE CIAC
WITH THE APPLICABLE DECISIONS OF AWARD FOR INTERESTS AND
THE HONORABLE SUPREME COURT. ARBITRATION COSTS IN FAVOR OF
RESPONDENT RRN.[4]
36 | P a g e
 The petition is bereft of merit.
Despite petitioner's attempts to make it appear
that it is advancing questions of law, it is quite clear that
what petitioner seeks is for this Court to recalibrate the
evidence it has presented before the CIAC. It insists that
its evidence sufficiently proves that it is entitled to
payment for respondent's use of its manlift equipment,
and even absent proof of the supposed agreement on the
charges petitioner may impose on respondent for the use
of said equipment, respondent should be made to pay
based on the principle of unjust enrichment. Petitioner
also questions the amounts awarded by the CIAC for
inventoried materials, and costs incurred by petitioner
for completing the work left unfinished by respondent.
As reiterated by the Court in IBEX International,
Inc. v. Government Service Insurance System,[5] to wit:
It is settled that findings of fact of quasi-
judicial bodies, which have acquired expertise
because their jurisdiction is confined to specific
matters, are generally accorded not only respect, but
also finality, especially when affirmed by the Court of
Appeals. In particular, factual findings of
construction arbitrators are final and conclusive and
not reviewable by this Court on appeal.
This rule, however, admits of certain exceptions.
In Uniwide Sales Realty and Resources Corporation v.
Titan-Ikeda Construction and Development
Corporation, we said:
In David v. Construction
Industry and Arbitration Commission,
we ruled that, as exceptions, factual
findings of construction arbitrators may
be reviewed by this Court when the
petitioner proves affirmatively that: (1)
the award was procured by corruption,
fraud or other undue means; (2) there
was evident partiality or corruption of
the arbitrators or any of them; (3) the
arbitrators were guilty of misconduct in
refusing to hear evidence pertinent and
material to the controversy; (4) one or
more of the arbitrators were disqualified
to act as such under Section nine of
Republic Act No. 876 and willfully
refrained from disclosing such
disqualifications or of any other
misbehavior by which the rights of any
party have been materially prejudiced;
or (5) the arbitrators exceeded their
powers, or so imperfectly executed
them, that a mutual, final and definite
award upon the subject matter submitted
to them was not made.
Other recognized exceptions
are as follows: (1) when there is a very
clear showing of grave abuse of
discretion resulting in lack or loss of
jurisdiction as when a party was
deprived of a fair opportunity to present
its position before the Arbitral Tribunal
or when an award is obtained through
fraud or the corruption of arbitrators, (2)
when the findings of the Court of
Appeals are contrary to those of the
CIAC, and (3) when a party is deprived
of administrative due process.[6]
A perusal of the records would reveal that none
of the aforementioned circumstances, which would
justify exemption of this case from the general rule, are
present here. Such being the case, the Court, not being a
trier of facts, is not duty-bound to examine, appraise and
analyze anew the evidence presented before the
arbitration body.[7] Petitioner's reliance on the principle
of unjust enrichment is likewise misplaced. The ruling of
the Court in University of the Philippines v. Philab
Industries, Inc.[8] is highly instructive, thus:
Unjust enrichment claims do not lie
simply because one party benefits from the
efforts or obligations of others, but instead it
must be shown that a party was unjustly enriched
in the sense that the term unjustly could mean
illegally or unlawfully.
Moreover, to substantiate a claim for
unjust enrichment, the claimant must
unequivocally prove that another party
knowingly received something of value to which
he was not entitled and that the state of affairs
are such that it would be unjust for the person to
keep the benefit. Unjust enrichment is a term
used to depict result or effect of failure to make
remuneration of or for property or benefits
received under circumstances that give rise to
legal or equitable obligation to account for them;
to be entitled to remuneration, one must confer
benefit by mistake, fraud, coercion, or request.
Unjust enrichment is not itself a theory of
reconvey. Rather, it is a prerequisite for the
enforcement of the doctrine of restitution.
Article 22 of the New Civil Code reads:
Every person who, through an
act of performance by another, or any
other means, acquires or comes into
possession of something at the expense
of the latter without just or legal
ground, shall return the same to him.
In order that accion in rem verso may
prosper, the essential elements must be present:
(1) that the defendant has been enriched, (2) that
the plaintiff has suffered a loss, (3) that the
enrichment of the defendant is without just or
legal ground, and (4) that the plaintiff has no
other action based on contract, quasi-
contract, crime or quasi-delict.
An accion in rem verso is considered
merely an auxiliary action, available only when
there is no other remedy on contract, quasi-
contract, crime, and quasi-delict. If there is an
obtainable action under any other institution of
positive law, that action must be resorted to, and
the principle of accion in rem verso will not
lie.[9]
37 | P a g e
 As found by both the CIAC and affirmed by the IN VIEW OF THE FOREGOING, the Petition is
CA, petitioner failed to prove that respondent's DENIED. The Decision of the Court of Appeals dated
free use of the manlift was without legal ground February 22, 2006 and its Resolution dated April 26,
based on the provisions of their contract. Thus, 2006 are AFFIRMED.
the third requisite, i.e., that the enrichment of
respondent is without just or legal ground, is
missing. In addition, petitioner's claim is based
on contract, hence, the fourth requisite − that the SO ORDERED.
plaintiff has no other action based on contract,
quasi-contract, crime or quasi-delict − is also
absent. Clearly, the principle of unjust
enrichment is not applicable in this case.

The other issues raised by petitioner all boil

down to whether the CIAC or the CA erred in rejecting
its claims for costs of some materials.

Again, these issues are purely factual and cannot

be properly addressed in this petition for review on
certiorari. In Hanjin Heavy Industries and Construction
Co., Ltd. v. Dynamic Planners and Construction
Corp.,[10] it was emphasized that mathematical
computations, the propriety of arbitral awards, claims for
other costs and abandonment are factual questions. Since
the discussions of the CIAC and the CA in their
respective Decisions show that its factual findings are
supported by substantial evidence, there is no reason
why this Court should not accord finality to said
findings. Verily, to accede to petitioner's request for a
recalibration of its evidence, which had been thoroughly
studied by both the CIAC and the CA would result in
negating the objective of Executive Order No. 1008,
which created an arbitration body to ensure the prompt
and efficient settlement of disputes in the construction
industry. Thus, the Court held in Uniwide Sales Realty
and Resources Corporation v. Titan-Ikeda Construction
and Development Corporation,[11] that:

x x x The Court will not review the

factual findings of an arbitral tribunal upon the
artful allegation that such body had
"misapprehended facts" and will not pass upon
issues which are, at bottom, issues of fact, no
matter how cleverly disguised they might be as
"legal questions." The parties here had recourse
to arbitration and chose the arbitrators
themselves; they must have had confidence in
such arbitrators. The Court will not, therefore,
permit the parties to relitigate before it the issues
of facts previously presented and argued before
the Arbitral Tribunal, save only where a clear
showing is made that, in reaching its factual
conclusions, the Arbitral Tribunal committed an
error so egregious and hurtful to one party as to
constitute a grave abuse of discretion resulting
in lack or loss of jurisdiction.[12]

As discussed above, there is nothing in the

records that point to any grave abuse of discretion
committed by the CIAC.

The awards for interests and arbitration costs

are, likewise, correct as they are in keeping with
prevailing jurisprudence.[13]

38 | P a g e
G.R. No. 158768 February 12, 2008
TITAN-IKEDA CONSTRUCTION & Significantly, the supplemental agreement
DEVELOPMENT CORPORATION, Petitioner, -
versus- PRIMETOWN PROPERTY GROUP, INC.,
Respondent.
x------------------------------------x
DECISION
CORONA, J.:
This petition for review on certiorari[1] seeks to
set aside the decision of the Court of Appeals (CA) in
CA-G.R. CV No. 61353[2] and its resolution[3] denying
reconsideration.
In 1992, respondent Primetown Property Group,
Inc. awarded the contract for the structural works[4] of
its 32-storey Makati Prime Tower (MPT) to petitioner
Titan-Ikeda Construction and Development
Corporation.[5] The parties formalized their agreement
in a construction contract[6] dated February 4, 1993.[7]
Upon the completion of MPT's structural works,
respondent awarded the P130,000,000 contract for the
tower's architectural works[8] (project) to petitioner.
Thus, on January 31, 1994, the parties executed a
supplemental agreement.[9] The salient portions thereof
were:
1. the [project] shall cover the scope
of work of the detailed construction bid
plans and specifications and bid
documents dated 28 September 1993,
attached and forming an integral part
hereof as Annex A.
2. the contract price for the said works
shall be P130 million.
3. the payment terms shall be full
swapping or full payment in
condominium units. The condominium
units earmarked for the [petitioner] are
shown in the attached Annex B.
4. the [respondent] shall transfer and
surrender to [petitioner] the
condominium units abovestated in
accordance with the following schedule:
(a) 80% of units upon posting
and acceptance by [respondent]
of the performance bond [and]
(b) 20% or remaining balance
upon completion of the project
as provided in the construction
contract and simultaneous with
the posting by [petitioner] of the
reglementary guarantee bond.
5. the contract period shall be fifteen
(15) months reckoned from the release
of the condominium certificates of title
(CCTs) covering eighty percent (80%)
of the units transferable to [petitioner] as
aforesaid[.]
adopted those provisions of the construction contract
which it did not specifically discuss or provide for.[10]
Among those carried over was the designation of GEMM
Construction Corporation (GEMM) as the project's
construction manager.[11]
Petitioner started working on the project in
February 1994.
On June 30, 1994, respondent executed a deed
of sale[12] (covering 114 condominium units and 20
parking slots of the MPT collectively valued by the
parties at P112,416,716.88)[13] in favor of petitioner
pursuant to the full-swapping payment provision of the
supplemental agreement.
Shortly thereafter, petitioner sold some of its
units to third persons.[14]
In September 1995, respondent engaged the
services of Integratech, Inc. (ITI), an engineering
consultancy firm, to evaluate the progress of the
project.[15] In its September 7, 1995 report,[16] ITI
informed respondent that petitioner, at that point, had
only accomplished 31.89% of the project (or was 11
months and six days behind schedule).[17]
Meanwhile, petitioner and respondent were
discussing the possibility of the latters take over of the
projects supervision. Despite ongoing negotiations,
respondent did not obtain petitioners consent in hiring
ITI as the projects construction manager. Neither did it
inform petitioner of ITIs September 7, 1995 report.
On October 12, 1995, petitioner sought to
confirm respondent's plan to take over the project.[18]
Its letter stated:
The mutual agreement arrived at
sometime in the last week of August 1995 for
[respondent] to take over the construction
supervision of the balance of the [project] from
[petitioner's] [e]ngineering staff and complete
[the] same by December 31, 1995 as promised
by [petitioner's] engineer.
The [petitioner's] accomplished works
as of this date of [t]ake over is of acceptable
quality in materials and workmanship.
This mutual agreement on the take
over should not be misconstrued in any other
way except that the take over is part of the
long range plan of [respondent] that
[petitioner], in the spirit of cooperation, agreed
to hand over the construction supervision to
[respondent] as requested. (emphasis
supplied)[19]
Engineers Antonio Co, general construction manager of
respondent, and Luzon Y. Tablante, project manager of
petitioner, signed the letter.
39 | P a g e
INTEGRATECHS (ITIS) REPORT
In its September 7, 1995 report, ITI estimated
that petitioner should have accomplished 48.71% of the
project as of the October 12, 1995 takeover date.[20]
Petitioner repudiated this figure[21] but qualifiedly
admitted that it did not finish the project.[22] Records
showed that respondent did not merely take over the
supervision of the project but took full control
thereof.[23]
Petitioner consequently conducted an
inventory.[24] On the basis thereof, petitioner demanded
from respondent the payment of its balance amounting
to P1,779,744.85.[25]
On February 19, 1996, petitioner sent a second
letter to respondent demanding P2,023,876.25. This new
figure included the cost of materials (P244,331.40)
petitioner advanced from December 5, 1995 to January
26, 1996.[26]
On November 22, 1996, petitioner demanded
from respondent the delivery of MPT's management
certificate[27] and the keys to the condominium units
and the payment of its (respondent's) balance.[28]
Because respondent ignored petitioner's
demand, petitioner, on December 9, 1996, filed a
complaint for specific performance[29] in the Housing
and Land Use Regulatory Board (HLURB).
While the complaint for specific performance
was pending in the HLURB, respondent sent a demand
letter to petitioner asking it to reimburse the actual costs
incurred in finishing the project (or
P69,785,923.47).[30] In view of the pendency of the
HLURB case, petitioner did not heed respondent's
demands.
On April 29, 1997, the HLURB rendered a
decision in favor of petitioner.[31] It ruled that the
instrument executed on June 30, 1994 was a deed of
absolute sale because the conveyance of the
condominium units and parking slots was not subject to
any condition.[32] Thus, it ordered respondent to issue
MPTs management certificate and to deliver the keys to
the condominium units to petitioner.[33] Respondent did
not appeal this decision. Consequently, a writ of
execution was issued upon its finality.[34]
Undaunted by the finality of the HLURB
decision, respondent filed a complaint for collection of
sum of money[35] against petitioner in the Regional
Trial Court (RTC) of Makati City, Branch 58 on July 2,
1997. It prayed for the reimbursement of the value of the
projects unfinished portion amounting to
P66,677,000.[36]
During trial, the RTC found that because
respondent modified the MPT's architectural design,
petitioner had to adjust the scope of work.[37] Moreover,
respondent belatedly informed petitioner of those
modifications. It also failed to deliver the concrete mix
and rebars according to schedule. For this reason,
petitioner was not responsible for the project's delay.[38]
The trial court thus allowed petitioner to set-off
respondent's other outstanding liabilities with
respondents excess payment in the project.[39] It
concluded that respondent owed petitioner
P2,023,876.25.[40] In addition, because respondent
refused to deliver the keys to the condominium units and
the management certificate to petitioner, the RTC found
that petitioner lost rental income amounting to
US$1,665,260.[41] The dispositive portion of the RTC
decision stated:
WHEREFORE, PREMISES CONSIDERED,
judgment is hereby rendered dismissing
[respondent's] [c]omplaint for lack of merit. On the
other hand, finding preponderance of evidence to
sustain [petitioner's] counterclaim, judgment is
hereby rendered in favor of [petitioner] ordering
[respondent] to pay the former:
1. The unpaid balance of the
consideration for [petitioner's] services in
[the project] in the amount of P2,023,867.25
with legal interest from the date of demand
until fully paid;
2. Compensatory damages in the amount
of US$1,665,260 or its peso equivalent at
the current foreign exchange rate
representing lost rental income due only as
of July 1997 and the accrued lost earnings
from then on until the date of actual
payment, with legal interest from the date of
demand until fully paid; and
3. Attorney's fees in the amount of
P100,000 as acceptance fee, P1,000
appearance fee per hearing and 25% of the
total amount awarded to [petitioner].
With costs against the [respondent].
SO ORDERED.[42]
Respondent appealed the RTC decision to the
CA.[43] The appellate court found that respondent fully
performed its obligation when it executed the June 30,
1994 deed of absolute sale in favor of petitioner.[44]
Moreover, ITI's report clearly established that petitioner
had completed only 48.71% of the project as of October
12, 1995, the takeover date. Not only did it incur delay
in the performance of its obligation but petitioner also
failed to finish the project. The CA ruled that respondent
was entitled to recover the value of the unfinished
portion of the project under the principle of unjust
enrichment.[45] Thus:
WHEREFORE, the appealed decision
is REVERSED and a new one entered dismissing
[petitioner's] counterclaims of P2,023,867.25
representing unpaid balance for [its] services in [the
project]; US$1,665,260 as accrued lost earnings, and
attorney's fees. [Petitioner] is hereby ordered to
return to [respondent] the amount of P66,677,000
representing the value of unfinished [portion of the
project], plus legal interest thereon until fully paid.
Upon payment by [petitioner] of the aforementioned
amount, [respondent] is hereby ordered to deliver the
keys and [m]anagement [c]ertificate of the [Makati
Prime Tower] paid to [petitioner] as consideration
for the [project].[46]
40 | P a g e
 Petitioner moved for reconsideration but it was
denied. Hence, this petition.
Petitioner contends that the CA erred in giving
weight to ITI's report because the project evaluation was
commissioned only by respondent,[47] in disregard of
industry practice. Project evaluations are agreed upon by
the parties and conducted by a disinterested third
party.[48]
We grant the petition.
REVIEW OF CONFLICTING FACTUAL
FINDINGS
As a general rule, only questions of law may be
raised in a petition for review on certiorari. Factual issues
are entertained only in exceptional cases such as where
the findings of fact of the CA and the trial court are
conflicting.[49]
Here, a glaring contradiction exists between the
factual findings of the RTC and the CA. The trial court
found that respondent contributed to the project's delay
because it belatedly communicated the modifications
and failed to deliver the necessary materials on time. The
CA, however, found that petitioner incurred delay in the
performance of its obligation. It relied on ITI's report
which stated that petitioner had accomplished only
48.71% of the project as of October 12, 1995.
JANUARY 31, 1994 SUPPLEMENTAL
AGREEMENT WAS EXTINGUISHED
A contract is a meeting of the minds between
two persons whereby one binds himself, with respect to
the other, to give something or to render some
service.[50] This case involved two contracts entered
into by the parties with regard to the project.
The parties first entered into a contract for a
piece of work[51] when they executed the supplemental
agreement. Petitioner as contractor bound itself to
execute the project for respondent, the owner/developer,
in consideration of a price certain (P130,000,000). The
supplemental agreement was reciprocal in nature
because the obligation of respondent to pay the entire
contract price depended on the obligation of petitioner to
complete the project (and vice versa).
Thereafter, the parties entered into a second
contract. They agreed to extinguish the supplemental
agreement as evidenced by the October 12, 1995 letter-
agreement which was duly acknowledged by their
respective representatives.[52]
While the October 12, 1995 letter-agreement
stated that respondent was to take over merely the
supervision of the project, it actually took over the whole
project itself. In fact, respondent subsequently hired two
contractors in petitioner's stead.[53] Moreover,
petitioner's project engineer at site only monitored the
progress of architectural works undertaken in its
condominium units.[54] Petitioner never objected to this
arrangement; hence, it voluntarily surrendered its
participation in the project. Moreover, it judicially
admitted in its answer that respondent took over the
entire project, not merely its supervision, pursuant to its
(respondents) long-range plans.[55]
Because the parties agreed to extinguish the
supplemental agreement, they were no longer required to
fully perform their respective obligations. Petitioner was
relieved of its obligation to complete the project while
respondent was freed of its obligation to pay the entire
contract price. However, respondent, by executing the
June 30, 1994 deed of absolute sale, was deemed to have
paid P112,416,716.88. Nevertheless, because petitioner
applied part of what it received to respondents
outstanding liabilities,[56] it admitted overpayment.
Because petitioner acknowledged that it had
been overpaid, it was obliged to return the excess to
respondent. Embodying the principle of solutio indebiti,
Article 2154 of the Civil Code provides:
Article 2154. If something is received when
there is no right to demand it and it was unduly
delivered through mistake, the obligation to
return it arises.
For the extra-contractual obligation of solutio
indebiti to arise, the following requisites must be proven:
1. the absence of a right to collect the
excess sums and
2. the payment was made by mistake.[57]
With regard to the first requisite, because the
supplemental agreement had been extinguished by the
mutual agreement of the parties, petitioner became
entitled only to the cost of services it actually rendered
(i.e., that fraction of the project cost in proportion to the
percentage of its actual accomplishment in the project).
It was not entitled to the excess (or extent of
overpayment).
On the second requisite, Article 2163 of the
Civil Code provides:
Article 2163. It is presumed that there was a
mistake in the payment if something which
had never been due or had already been paid
was delivered; but, he from whom the return is
claimed may prove that the delivery was made
out of liberality or for any other just cause.
(emphasis supplied)
In this instance, respondent paid part of the
contract price under the assumption that petitioner would
complete the project within the stipulated period.
However, after the supplemental agreement was
extinguished, petitioner ceased working on the project.
Therefore, the compensation petitioner received in
excess of the cost of its actual accomplishment as of
October 12, 1995 was never due. The condominium units
and parking slots corresponding to the said excess were
mistakenly delivered by respondent and were therefore
not due to petitioner.
41 | P a g e
Stated simply, respondent erroneously delivered excess
units to petitioner and the latter, pursuant to Article 2154,
was obliged to the return them to respondent.[58] Article
2160 of the Civil Code provides:
Article 2160. He who in good faith
accepts an undue payment of a thing certain and
determinate shall only be responsible for the
impairment or loss of the same or its accessories
and accessions insofar as he has thereby been
benefited. If he has alienated it, he shall return
the price or assign the action to collect the sum.
One who receives payment by mistake in good
faith is, as a general rule, only liable to return the thing
delivered.[59] If he benefited therefrom, he is also liable
for the impairment or loss of the thing delivered and its
accessories and accessions.[60] If he sold the thing
delivered, he should either deliver the proceeds of the
sale or assign the action to collect to the other party.[61]
The situation is, however, complicated by the
following facts:
a) the basis of the valuation
(P112,416,716.99) of the condominium
units and parking slots covered by the June
30, 1994 deed of sale is unknown;
b) the percentage of petitioner's actual
accomplishment in the project has not been
determined and
c) the records of this case do not show the
actual number of condominium units and
parking slots sold by petitioners.
Because this Court is not a trier of facts, the
determination of these matters should be remanded to the
RTC for reception of further evidence.
The RTC must first determine the percentage of
the project petitioner actually completed and its
proportionate cost.[62] This will be the amount due to
petitioner. Thereafter, based on the stipulated valuation
in the June 30, 1994 deed of sale, the RTC shall
determine how many condominium units and parking
slots correspond to the amount due to petitioner. It will
only be the management certificate and the keys to these
units that petitioner will be entitled to. The remaining
units, having been mistakenly delivered by respondent,
will therefore be the subject of solutio indebiti.
What exactly must petitioner give back to
respondent? Under Article 2160 in relation to Article
2154, it should return to respondent the condominium
units and parking slots in excess of the value of its actual
accomplishment (i.e., the amount due to it) as of October
12, 1995. If these properties include units and/or slots
already sold to third persons, petitioner shall deliver the
proceeds of the sale thereof or assign the actions for
collection to respondent as required by Article 2160.
DELAY IN THE COMPLETION OF THE
PROJECT
Mora or delay is the failure to perform the
obligation in due time because of dolo (malice) or culpa
(negligence).[63] A debtor is deemed to have violated
his obligation to the creditor from the time the latter
makes a demand. Once the creditor makes a demand, the
debtor incurs mora or delay.[64]
The construction contract[65] provided a
procedure for protesting delay:
Article XIV
DELAYS AND ABANDONMENT
15.1. If at any time during the effectivity of
this contract, [PETITIONER] shall incur
unreasonable delay or slippages of more than
fifteen percent (15%) of the scheduled work
program, [RESPONDENT] should notify
[PETITIONER] in writing to accelerate the
work and reduce, if not erase, slippage. If after
the lapse of sixty (60) days from receipt of such
notice, [PETITIONER] fails to rectify the delay
or slippage, [RESPONDENT] shall have the
right to terminate this contract except in cases
where the same was caused by force majeure.
FORCE MAJEURE as contemplated herein, and
in determination of delay includes, but is not
limited to, typhoon, flood, earthquake, coup
d'etat, rebellion, sedition, transport strike,
stoppage of work, mass public action that
prevents workers from reporting for work, and
such other causes beyond [PETITIONER'S]
control.[66] (emphasis supplied)
xxx xxx xxx
Respondent never sent petitioner a written
demand asking it to accelerate work on the project and
reduce, if not eliminate, slippage. If delay had truly been
the reason why respondent took over the project, it would
have sent a written demand as required by the
construction contract. Moreover, according to the
October 12, 1995 letter-agreement, respondent took over
the project for the sole reason that such move was part of
its (respondent's) long-term plan.
Respondent, on the other hand, relied on ITI's
September 7, 1995 report. The construction contract
named GEMM, not ITI, as construction manager.[67]
Because petitioner did not consent to the change of the
designated construction manager, ITI's September 7,
1995 report could not bind it.
In view of the foregoing, we hold that petitioner
did not incur delay in the performance of its obligation.
RECOVERY OF ADDITIONAL COSTS
RESULTING FROM CHANGES
The supplemental agreement was a contract for
a stipulated price.[68] In such contracts, the recovery of
additional costs (incurred due to changes in plans or
specifications) is governed by Article 1724 of the Civil
Code.
Article 1724. The contractor who undertakes to
build a structure or any other work for a
stipulated price, in conformity with plans and
specifications agreed upon with the landowner,
can neither withdraw from the contract nor
demand an increase in the price on account of
higher cost of labor or materials, save when there
has been a change in plans and specifications,
provided:
42 | P a g e

1. such change has been authorized by the
proprietor in writing; and
2. the additional price to be paid to the
contractor has been determined in writing
by both parties.
In Powton Conglomerate, Inc. v. Agcolicol,[69]
we reiterated that a claim for the cost of additional work
arising from changes in the scope of work can only be
allowed upon the:
1. written authority from the
developer/owner ordering/allowing the
changes in work; and
2. written agreement of parties with regard to
the increase in cost (or price) due to the
change in work or design modification. [70]
Furthermore:
Compliance with the two requisites of Article
1724, a specific provision governing
additional works, is a condition precedent of
the recovery. The absence of one or the other
bars the recovery of additional costs. Neither the
authority for the changes made nor the additional
price to be paid therefor may be proved by any
other evidence for purposes of recovery.[71]
(emphasis supplied)
Petitioner submitted neither one. In addition,
petitioners project coordinator Estellita Garcia testified
that respondent never approved any change order.[72]
Thus, under Article 1724 and pursuant to our ruling in
Powton Conglomerate, Inc., petitioner cannot recover
the cost it incurred in effecting the design modifications.
A contractor who fails to secure the owner or developer's
written authority to changes in the work or written assent
to the additional cost to be incurred cannot invoke the
principle of unjust enrichment.[73]
RECOVERY OF COMPENSATORY DAMAGES
Indemnification for damages comprehends not
only the loss suffered (actual damages or damnum
emergens) but also the claimant's lost profits
(compensatory damages or lucrum cessans). For
compensatory damages to be awarded, it is necessary to
prove the actual amount of the alleged loss by
preponderance of evidence.[74]
The RTC awarded compensatory damages based
on the rental pool rates submitted by petitioner[75] and
on the premise that all those units would have been
leased had respondent only finished the project by
December 31, 1995.[76] However, other than bare
assertions, petitioner submitted no proof that the rental
pool was in fact able to lease out the units. We thus hold
that the losses sustained by petitioner were merely
speculative and there was no basis for the award.
REMAND OF OTHER CLAIMS
Since respondent did not repudiate petitioner's
other claims stated in the inventory[77] in the RTC and
CA, it is estopped from questioning the validity
thereof.[78] However, because some of petitioner's
claims have been disallowed, we remand the records of
this case to the RTC for the computation of respondent's
liability.[79]
WHEREFORE, the petition is hereby
GRANTED.
The March 15, 2002 decision and May 29, 2003
resolution of the Court of Appeals in CA-G.R. CV No.
61353 and the August 5, 1998 decision of the Regional
Trial Court, Branch 58, Makati City in Civil Case No.
97-1501 are hereby SET ASIDE. New judgment is
entered:
1. ordering petitioner Titan-Ikeda Construction
and Development Corporation to return to
respondent Primetown Property Group, Inc. the
condominium units and parking slots
corresponding to the payment made in excess of
the proportionate (project) cost of its actual
accomplishment as of October 12, 1995, subject
to its (petitioners) allowable claims as stated in
the inventory and
2. dismissing petitioner Titan-Ikeda Construction
and Development Corporations claims for the
cost of additional work (or change order) and
damages.
The records of this case are remanded to the
Regional Trial Court of Makati City, Branch 58 for:
1. the reception of additional evidence
to determine
(a) the percentage of the
architectural work actually
completed by petitioner Titan-
Ikeda Construction and
Development Corporation as of
October 12, 1995 on the Makati
Prime Tower and
(b) the number of condominium
units and parking slots sold by
petitioner Titan-Ikeda
Construction and Development
Corporation to third persons;
2. the computation of petitioner Titan-
Ikeda Construction and Development
Corporation's actual liability to
respondent Primetown Property Group,
Inc. or vice-versa, and the determination
of imposable interests and/or penalties,
if any.
SO ORDERED.
43 | P a g e
[G.R. No. 146807. May 9, 2002]
PADCOM CONDOMINIUM CORPORATION,
petitioner, vs. ORTIGAS CENTER ASSOCIATION,
INC., respondent.
DECISION
DAVIDE, JR., C.J.:
Challenged in this case is the 30 June 2000 decision[1]
of the Court of Appeals in CA-G.R. CV No. 60099,
reversing and setting aside the 1 September 1997
decision[2] of the Regional Trial Court of Pasig City,
Branch 264, in Civil Case No. 63801.[3]
Petitioner Padcom Condominium Corporation
(hereafter PADCOM) owns and manages the Padilla
Office Condominium Building (PADCOM Building)
located at Emerald Avenue, Ortigas Center, Pasig City.
The land on which the building stands was originally
acquired from the Ortigas & Company, Limited
Partnership (OCLP), by Tierra Development
Corporation (TDC) under a Deed of Sale dated 4
September 1974. Among the terms and conditions in
the deed of sale was the requirement that the transferee
and its successor-in-interest must become members of
an association for realty owners and long-term lessees
in the area later known as the Ortigas Center.
Subsequently, the said lot, together with improvements
thereon, was conveyed by TDC in favor of PADCOM
in a Deed of Transfer dated 25 February 1975.[4]
In 1982, respondent Ortigas Center Association, Inc.
(hereafter the Association) was organized to advance
the interests and promote the general welfare of the real
estate owners and long-term lessees of lots in the
Ortigas Center. It sought the collection of membership
dues in the amount of two thousand seven hundred
twenty-four pesos and forty centavos (P2,724.40) per
month from PADCOM. The corporate books showed
that PADCOM owed the Association P639,961.47,
representing membership dues, interests and penalty
charges from April 1983 to June 1993.[5] The letters
exchanged between the parties through the years
showed repeated demands for payment, requests for
extensions of payment, and even a settlement scheme
proposed by PADCOM in September 1990.
In view of PADCOMs failure and refusal to pay its
arrears in monthly dues, including interests and
penalties thereon, the Association filed a complaint for
collection of sum of money before the trial court below,
which was docketed as Civil Case No. 63801. The
Association averred that purchasers of lands within the
Ortigas Center complex from OCLP are obligated
under their contracts of sale to become members of the
Association. This obligation was allegedly passed on to
PADCOM when it bought the lot from TDC, its
predecessor-in-interest.[6]
In its answer, PADCOM contended that it is a non-
stock, non-profit association, and for it to become a
special member of the Association, it should first apply
for and be accepted for membership by the latters
Board of Directors. No automatic membership was
apparently contemplated in the Associations By-laws.
PADCOM added that it could not be compelled to
become a member without violating its right to freedom
of association. And since it was not a member of the
Association, it was not liable for membership dues,
interests and penalties.[7]
During the trial, the Association presented its
accountant as lone witness to prove that PADCOM
was, indeed, one of its members and, as such, did not
pay its membership dues.
PADCOM, on the other hand, did not present its
evidence; instead it filed a motion to dismiss by way of
demurrer to evidence. It alleged that the facts
established by the Association showed no right to the
relief prayed for. It claimed that the provisions of the
Associations By-laws and the Deed of Transfer did not
contemplate automatic membership. Rather, the owner
or long-term lessee becomes a member of the
Association only after applying with and being
accepted by its Board of Directors. Assuming further
that PADCOM was a member of the Association, the
latter failed to show that the collection of monthly dues
was a valid corporate act duly authorized by a proper
resolution of the Associations Board of Directors.[8]
After due consideration of the issues raised in the
motion to dismiss, the trial court rendered a decision
dismissing the complaint.[9]
The Association appealed the case to the Court of
Appeals, which docketed the appeal as CA-G.R. CV
No. 60099. In its decision[10] of 30 June 2000, the
Court of Appeals reversed and set aside the trial courts
dismissal of Civil Case No. 63801, and decreed as
follows:
WHEREFORE, the appealed decision dated
September 1, 1997 is REVERSED and SET ASIDE
and, in lieu thereof, a new one is entered ordering the
appellee (PADCOM) to pay the appellant (the
Association) the following:
1) P639,961.47 as and for membership dues in arrears
inclusive of earned interests and penalties; and
2) P25,000.00 as and for attorneys fees.
Costs against the appellees.
SO ORDERED.
The Court of Appeals justified its ruling by declaring
that PADCOM automatically became a member of the
Association when the land was sold to TDC. The intent
to pass the obligation to prospective transferees was
evident from the annotation of the same clause at the
back of the Transfer Certificate of Title covering the
lot. Despite disavowal of membership, PADCOMs
membership in the Association was evident from these
facts: (1) PADCOM was included in the Associations
list of bona fide members as of 30 March 1995; (2)
Narciso Padilla, PADCOMs President, was one of the
Associations incorporators; and (3) having received the
demands for payment, PADCOM not only
acknowledged them, but asked for and was granted
repeated extensions, and even proposed a scheme for
44 | P a g e
the settlement of its obligation. The Court of Appeals
also ruled that PADCOM cannot evade payment of its
obligation to the Association without violating
equitable principles underlying quasi-contracts. Being
covered by the Associations avowed purpose to
promote the interests and welfare of its members,
PADCOM cannot be allowed to expediently deny and
avoid the obligation arising from such membership.
Dissatisfied with the adverse judgment of the Court of
Appeals, PADCOM filed the petition for review in this
case. It raises the sole issue of whether it can be
compelled to join the association pursuant to the
provision on automatic membership appearing as a
condition in the Deed of Sale of 04 September 1974 and
the annotation thereof on Transfer Certificate of Title
No. 457308.
PADCOM contends that it cannot be compelled to be a
member of the Association solely by virtue of the
automatic membership clause that appears on the title
of the property and the Deed of Transfer. In 1975, when
it bought the land, the Association was still inexistent.
Therefore, the provision on automatic membership was
anticipatory in nature, subject to the actual formation of
the Association and the subsequent formulation of its
implementing rules.
PADCOM likewise maintains that the Associations By-
laws requires an application for membership. Since it
never sought membership, the Court of Appeals erred
in concluding that it was a member of the Association
by implication. Aside from the lack of evidence proving
such membership, the Association has no basis to
collect monthly dues since there is no board resolution
defining and prescribing how much should be paid.
For its part, the Association claims that the Deed of
Sale between OCLP and TDC clearly stipulates
automatic membership for the owners of lots in the
Ortigas Center, including their successors-in-interest.
The filing of applications and acceptance thereof by the
Board of Directors of the Association are, therefore,
mere formalities that can be dispensed with or waived.
The provisions of the Associations By-laws cannot in
any manner alter or modify the automatic membership
clause imposed on a property owner by virtue of an
annotation of encumbrance on his title.
The Association likewise asserts that membership
therein requires the payment of certain amounts for its
operations and activities, as may be authorized by its
Board of Directors. The membership dues are for the
common expenses of the homeowners for necessary
services.
After a careful examination of the records of this case,
the Court sees no reason to disturb the assailed
decision. The petition should be denied.
Section 44 of Presidential Decree No. 1529[11]
mandates that:
SEC. 44. Statutory liens affecting title. Every registered
owner receiving a certificate of title in pursuance of a
decree of registration, and every subsequent purchaser
of registered land taking a certificate of title for value
and in good faith, shall hold the same free from all
encumbrances except those noted on said certificate and
any of the following encumbrances which may be
subsisting, namely: xxx
Under the Torrens system of registration, claims and
liens of whatever character, except those mentioned by
law, existing against the land binds the holder of the
title and the whole world.[12]
It is undisputed that when the land in question was
bought by PADCOMs predecessor-in-interest, TDC,
from OCLP, the sale bound TDC to comply with
paragraph (G) of the covenants, conditions and
restrictions of the Deed of Sale, which reads as
follows:[13]
G. AUTOMATIC MEMBERSHIP WITH THE
ASSOCIATION:
The owner of this lot, its successor-in-interest hereby
binds himself to become a member of the
ASSOCIATION which will be formed by and among
purchasers, fully paid up Lot BUYERS, Building
Owners and the COMPANY in respect to COMPANY
OWNED LOTS.
The OWNER of this lot shall abide by such rules and
regulations that shall be laid down by the
ASSOCIATION in the interest of security,
maintenance, beautification and general welfare of the
OFFICE BUILDING zone. The ASSOCIATION when
organized shall also, among others, provide for and
collect assessments which shall constitute a lien on the
property, junior only to liens of the Government for
taxes.
Evidently, it was agreed by the parties that dues shall be
collected from an automatic member and such fees or
assessments shall be a lien on the property.
This stipulation was likewise annotated at the back of
Transfer Certificate of Title No. 457308 issued to
TDC.[14] And when the latter sold the lot to PADCOM
on 25 February 1975, the Deed of Transfer expressly
stated:[15]
NOW, THEREFORE, for and in consideration of the
foregoing premises, the DEVELOPER, by these
presents, cedes, transfers and conveys unto the
CORPORATION the above-described parcel of land
evidenced by Transfer Certificate of Title No. 457308,
as well as the Common and Limited Common Areas of
the Condominium project mentioned and described in
the Master Deed with Declaration of Restrictions
(Annex A hereof), free from all liens and
encumbrances, except those already annotated at the
back of said Transfer Certificate of Title No. 457308,
xxx
This is so because any lien annotated on previous
certificates of title should be incorporated in or carried
over to the new transfer certificates of title. Such lien is
inseparable from the property as it is a right in rem, a
burden on the property whoever its owner may be. It
subsists notwithstanding a change in ownership; in
short, the personality of the owner is disregarded.[16]
45 | P a g e
As emphasized earlier, the provision on automatic
membership was annotated in the Certificate of Title
and made a condition in the Deed of Transfer in favor
of PADCOM. Consequently, it is bound by and must
comply with the covenant.
Moreover, Article 1311 of the Civil Code provides that
contracts take effect between the parties, their assigns
and heirs. Since PADCOM is the successor-in-interest
of TDC, it follows that the stipulation on automatic
membership with the Association is also binding on the
former.
We are not persuaded by PADCOMs contention that
the By-laws of the Association requires application for
membership and acceptance thereof by the Board of
Directors. Section 2 of the By-laws[17] reads:
Section 2. Regular Members. Upon acceptance by the
Board of Directors of Ortigas Center Association, Inc.,
all real estate owners, or long-term lessees of lots
within the boundaries of the Association as defined in
the Articles of Incorporation become regular members,
provided, however that the long-term lessees of a lot or
lots in said area shall be considered as the regular
members in lieu of the owners of the same. Likewise,
regular membership in the Association automatically
ceases upon the cessation of a member to be an owner
or long-term lessee of real estate in the area.
A lessee shall be considered a long-term lessee if his
lease is in writing and for a period of two (2) years or
more. Membership of a long-term lessee in the
Association shall be co-terminus with his legal
possession (or his lease) of the lot/s in the area. Upon
the lessees cessation of membership in the Association,
the owner shall automatically succeed the lessee as
member thereat.
As lot owner, PADCOM is a regular member of the
Association. No application for membership is
necessary. If at all, acceptance by the Board of
Directors is a ministerial function considering that
PADCOM is deemed to be a regular member upon the
acquisition of the lot pursuant to the automatic
membership clause annotated in the Certificate of Title
of the property and the Deed of Transfer.
Neither are we convinced by PADCOMs contention
that the automatic membership clause is a violation of
its freedom of association. PADCOM was never forced
to join the association. It could have avoided such
membership by not buying the land from TDC. Nobody
forced it to buy the land when it bought the building
with the annotation of the condition or lien on the
Certificate of Title thereof and accepted the Deed.
PADCOM voluntarily agreed to be bound by and
respect the condition, and thus to join the Association.
In addition, under the principle of estoppel, PADCOM
is barred from disclaiming membership in the
Association. In estoppel, a person, who by his act or
conduct has induced another to act in a particular
manner, is barred from adopting an inconsistent
position, attitude or course of conduct that thereby
causes loss or injury to another.[18]
We agree with the Court of Appeals conclusion from
the facts or circumstances it enumerated in its decision
and enumerated above that PADCOM is, indeed, a
regular member of the Association. These facts and
circumstances are sufficient grounds to apply the
doctrine of estoppel against PADCOM.
Having ruled that PADCOM is a member of the
Association, it is obligated to pay its dues incidental
thereto. Article 1159 of the Civil Code mandates:
Art. 1159. Obligations arising from contracts have the
force of law between the contracting parties and should
be complied with in good faith.
Assuming in gratis argumenti that PADCOM is not a
member of the Association, it cannot evade payment
without violating the equitable principles underlying
quasi-contracts. Article 2142 of the Civil Code
provides:
Art. 2142. Certain lawful, voluntary and unilateral acts
give rise to the juridical relation of quasi-contract to the
end that no one shall be unjustly enriched or benefited
at the expense of another.
Generally, it may be said that a quasi-contract is based
on the presumed will or intent of the obligor dictated by
equity and by the principles of absolute justice.
Examples of these principles are: (1) it is presumed that
a person agrees to that which will benefit him; (2)
nobody wants to enrich himself unjustly at the expense
of another; or (3) one must do unto others what he
would want others to do unto him under the same
circumstances.[19]
As resident and lot owner in the Ortigas area,
PADCOM was definitely benefited by the Associations
acts and activities to promote the interests and welfare
of those who acquire property therein or benefit from
the acts or activities of the Association.
Finally, PADCOMs argument that the collection of
monthly dues has no basis since there was no board
resolution defining how much fees are to be imposed
deserves scant consideration. Suffice it is to say that
PADCOM never protested upon receipt of the earlier
demands for payment of membership dues. In fact, by
proposing a scheme to pay its obligation, PADCOM
cannot belatedly question the Associations authority to
assess and collect the fees in accordance with the total
land area owned or occupied by the members, which
finds support in a resolution dated 6 November 1982 of
the Associations incorporating directors[20] and
Section 2 of its By-laws.[21]
WHEREFORE, the petition is hereby DENIED for
lack of merit.
Costs against petitioner.
SO ORDERED.
46 | P a g e
DELICTS
G.R. No. L-32055 February 26, 1988
REYNALDO BERMUDEZ, SR., and, ADONITA
YABUT BERMUDEZ petitioners-appellants,
vs.
HON. JUDGE A. MELENCIO-HERRERA,
DOMINGO PONTINO y TACORDA and
CORDOVA NG SUN KWAN, respondents-appellees.
YAP, J.:
This is a direct appeal on pure questions of law from
the Order of March 10, 1970 of the Honorable Judge
(now Supreme Court Justice) Ameurfina Melencio-
Herrera of the defunct Court of First Instance of
Manila, Branch XVII, dismissing plaintiffs-appellants'
complaint in Civil Case No. 77188 entitled "Reynaldo
Bermudez, Sr. and Adonita Yabut Bermudez, plaintiffs,
versus Domingo Pontino y Tacorda and Cordova Ng
Sun Kwan, defendants," and from the Order of May 7,
1970 denying plaintiffs-appellants' Motion for
Reconsideration.
The background facts of the case are as follows:
A cargo truck, driven by Domingo Pontino and owned
by Cordova Ng Sun Kwan, bumped a jeep on which
Rogelio, a six-year old son of plaintiffs-appellants, was
riding. The boy sustained injuries which caused his
death. As a result, Criminal Case No.92944 for
Homicide Through Reckless Imprudence was filed
against Domingo Pontino by the Manila City Fiscal's
Office. Plaintiffs-appellants filed on July 27,1969 in the
said criminal case "A Reservation to File Separate Civil
Action."
On July 28,1969, the plaintiffs-appellants filed a civil
case for damages with the Court of First Instance of
Manila docketed as Civil Case No. 77188, entitled
"Reynaldo Bermudez, Sr. et al., Plaintiffs vs. Domingo
Pontino y Tacorda and Cordova Ng Sun Kwan,
Defendants." Finding that the plaintiffs instituted the
action "on the assumption that defendant Pontino's
negligence in the accident of May 10, 1969 constituted
a quasi-delict," the trial court stated that plaintiffs had
already elected to treat the accident as a "crime" by
reserving in the criminal case their right to file a
separate civil action. That being so, the trial court
decided to order the dismissal of the complaint against
defendant Cordova Ng Sun Kwan and to suspend the
hearing of the case against Domingo Pontino until after
the criminal case for Homicide Through Reckless
Imprudence is finally terminated. From said order,
plaintiffs filed the present appeal, stating as their main
reasons the following:
I. The main issue brought before this Honorable
Court is whether the present action is based on
quasi-delict under the Civil Code and therefore
could proceed independently of the criminal
case for homicide thru reckless imprudence.
II. The second question of law is whether the
lower court could properly suspend the hearing
of the civil action against Domingo Pontino and
dismiss the civil case against his employer
Cordova Ng Sun Kwan by reason of the fact
that a criminal case for homicide thru reckless
imprudence is pending in the lower court
against Domingo Pontino
III. The last question of law is whether the
suspension of the civil action against Domingo
Pontino and the dismissal of the civil case
against his employer Cordova Ng Sun Kwan by
reason of the pending criminal case against
Domingo Pontino for homicide thru reckless
imprudence in the lower court could be validly
done considering that the civil case against said
defendants-appellees also sought to recover
actual damages to the jeep of plaintiffs-
appellants."
We find the appeal meritorious.
The heart of the issue involved in the present case is
whether the civil action filed by the plaintiffs-appellants
is founded on crime or on quasi-delict. The trial court
treated the case as an action based on a crime in view of
the reservation made by the offended party in the
criminal case (Criminal Case No. 92944), also pending
before the court, to file a separate civil action. Said the
trial court:
It would appear that plaintiffs instituted this
action on the assumption that defendant
Pontino's negligence in the accident of May 10,
l969 constituted a quasi-delict. The Court
cannot accept the validity of that assumption. In
Criminal Case No. 92944 of this Court,
plaintiffs had already appeared as
complainants. While that case was pending, the
offended parties reserved the right to institute a
separate civil action. If, in a criminal case, the
right to file a separate civil action for damages
is reserved, such civil action is to be based on
crime and not on tort. That was the ruling in
Joaquin vs. Aniceto, L-18719, Oct. 31, 1964."
We do not agree. The doctrine in the case cited by the
trial court is inapplicable to the instant case. In Joaquin
vs. Aniceto, the Court held:
The issue in this case is: May an employee's
primary civil liability for crime and his
employer's subsidiary liability therefor be
proved in a separate civil action even while the
criminal case against the employee is still
pending?
To begin with, obligations arise from law,
contract, quasi-contract, crime and quasi-delict.
According to appellant, her action is one to
enforce the civil liability arising from crime.
With respect to obligations arising from crimes,
Article 1161 of the New Civil Code provides:
47 | P a g e
 Civil obligations arising from criminal
offenses shall be governed by the penal
laws, subject to the provisions of article
21 77, and of the pertinent provisions
of Chapter 2, Preliminary, Title, on
Human Relations, and of Title XVIII of
this book, regulating damages.
xxx xxx xxx
It is now settled that for an employer to be
subsidiarily liable, the following requisites
must be present: (1) that an employee has
committed a crime in the discharge of his
duties; (2) that said employee is insolvent and
has not satisfied his civil liability; (3) that the
employer is engaged in some kind of industry.
(1 Padilla, Criminal Law, Revised Penal Code
794 [1964])
Without the conviction of the employee, the
employer cannot be subsidiarily liable.
In cases of negligence, the injured party or his heirs has
the choice between an action to enforce the civil
liability arising from crime under Article 100 of the
Revised Penal Code and an action for quasi- delict
under Article 2176-2194 of the Civil Code. If a party
chooses the latter, he may hold the employer solidarity
liable for the negligent act of his employee, subject to
the employer's defense of exercise of the diligence of a
good father of the family.
In the case at bar, the action filed b appellant was an
action for damages based on quasi-delict. 1 The fact
that appellants reserved their right in the criminal case
to file an independent civil action did not preclude them
from choosing to file a civil action for quasi-delict.
The appellants invoke the provisions of Sections 1 and
2 of Rule 111 of the Rules of Court, which provide:
Section 1. — Institution of criminal and civil
action. — When a criminal action is instituted,
the civil action for recovery of civil liability
arising from the offense charged is impliedly
instituted with the criminal action, unless the
offended party expressly waives the civil action
or reserves his right to institute it separately.
Section 2. — Independent civil action.-In the
cases provided for in Articles 31, 32, 33, 34 and
2177 of the Civil Code of the Philippines, an
independent civil action entirely separate and
distinct from the criminal action, may be
brought by the injured party during the
pendency of the criminal case,provided the
right is reserved as required in the preceding
section. Such civil action shall proceed
independently of the criminal prosecution, and
shall require only a preponderance of evidence.
Article 2177 of the Civil Code, cited in Section 2, of
Rule 111, provides that —
Article 2177. Responsibility for fault or
negligence under the preceding article is
entirely separate and distinct from the civil
liability arising from negligence under the
Penal Code. But the plaintiff cannot recover
damages twice for the same act or omission of
the defendant.
The appellant precisely made a reservation to file an
independent civil action in accordance with the
provisions of Section 2 of Rule 111, Rules of Court. In
fact, even without such a reservation, we have allowed
the injured party in the criminal 1 case which resulted
in the acquittal of the accused to recover damages based
on quasi-delict. In People vs. Ligon, G.R. No. 74041,
we held:
However, it does not follow that a person who
is not criminally liable is also free from civil
liability. While the guilt of the accused in a
criminal prosecution must be established
beyond reasonable doubt, only a preponderance
of evidence is required in a civil action for
damages (Article 29, Civil Code). The
judgment of acquittal extinguishes the civil
liability of the accused only when it includes a
declaration that the facts from which the civil
liability might arise did not exist (Padilla vs.
Court of Appeals, 129 SCRA 559).
WHEREFORE, we grant the petition and annul and set
aside the appealed orders of the trial court, dated March
10, 1970 and May 7, 1970, and remand the case for
further proceedings. No costs.
SO ORDERED.
48 | P a g e
G.R. No. L-45129 March 6, 1987
PEOPLE OF THE PHILIPPINES, petitioner,
vs.
THE HONORABLE BENJAMIN RELOVA, in his
capacity as Presiding Judge of the Court of First
Instance of Batangas, Second Branch, and
MANUEL OPULENCIA, respondents.
FELICIANO, J.:
In this petition for certiorari and mandamus, the People
of the Philippines seek to set aside the orders of the
respondent Judge of the Court of First Instance of
Batangas in Criminal Case No. 266, dated 12 August
1976 and 8 November 1976, respectively, quashing an
information for theft filed against private respondent
Manuel Opulencia on the ground of double jeopardy
and denying the petitioner's motion for reconsideration.
On 1 February 1975, members of the Batangas City
Police together with personnel of the Batangas Electric
Light System, equipped with a search warrant issued by
a city judge of Batangas City, searched and examined
the premises of the Opulencia Carpena Ice Plant and
Cold Storage owned and operated by the private
respondent Manuel Opulencia. The police discovered
that electric wiring, devices and contraptions had been
installed, without the necessary authority from the city
government, and "architecturally concealed inside the
walls of the building" 1 owned by the private
respondent. These electric devices and contraptions
were, in the allegation of the petitioner "designed
purposely to lower or decrease the readings of electric
current consumption in the electric meter of the said
electric [ice and cold storage] plant." 2 During the
subsequent investigation, Manuel Opulencia admitted
in a written statement that he had caused the installation
of the electrical devices "in order to lower or decrease
the readings of his electric meter. 3
On 24 November 1975, an Assistant City Fiscal of
Batangas City filed before the City Court of Batangas
City an information against Manuel Opulencia for
violation of Ordinance No. 1, Series of 1974, Batangas
City. A violation of this ordinance was, under its terms,
punishable by a fine "ranging from Five Pesos (P5.00)
to Fifty Pesos (P50.00) or imprisonment, which shall
not exceed thirty (30) days, or both, at the discretion of
the court." 4 This information reads as follows:
The undersigned, Assistant City Fiscal, accuses
Manuel Opulencia y Lat of violation of Sec. 3
(b) in relation to Sec. 6 (d) and Sec. 10 Article
II, Title IV of ordinance No. 1, S. 1974, with
damage to the City Government of Batangas,
and penalized by the said ordinance, committed
as follows:
That from November, 1974 to February, 1975
at Batangas City, Philippines and within the
jurisdiction of this Honorable Court, the above-
named accused, with intent to defraud the City
Government of Batangas, without proper
authorization from any lawful and/or permit
from the proper authorities, did then and there
wilfully, unlawfully and feloniously make
unauthorized installations of electric wirings
and devices to lower or decrease the
consumption of electric fluid at the Opulencia
Ice Plant situated at Kumintang, Ibaba, this city
and as a result of such unathorized installations
of electric wirings and devices made by the
accused, the City Government of Batangas was
damaged and prejudiced in the total amount of
FORTY ONE THOUSAND, SIXTY TWO
PESOS AND SIXTEEN CENTAVOS
(P41,062.16) Philippine currency, covering the
period from November 1974 to February, 1975,
to the damage and prejudice of the City
Government of Batangas in the aforestated
amount of P41,062.16, Philippine currency.
The accused Manuel Opulencia pleaded not guilty to
the above information. On 2 February 1976, he filed a
motion to dismiss the information upon the grounds that
the crime there charged had already prescribed and that
the civil indemnity there sought to be recovered was
beyond the jurisdiction of the Batangas City Court to
award. In an order dated 6 April 1976, the Batangas
City Court granted the motion to dismiss on the ground
of prescription, it appearing that the offense charged
was a light felony which prescribes two months from
the time of discovery thereof, and it appearing further
that the information was filed by the fiscal more than
nine months after discovery of the offense charged in
February 1975.
Fourteen (14) days later, on 20 April 1976, the Acting
City Fiscal of Batangas City filed before the Court of
First Instance of Batangas, Branch 11, another
information against Manuel Opulencia, this time for
theft of electric power under Article 308 in relation to
Article 309, paragraph (1), of the Revised Penal Code.
This information read as follows:
The undersigned Acting City Fiscal accuses
Manuel Opulencia y Lat of the crime of theft,
defined and penalized by Article 308, in
relation to Article 309, paragraph (1) of the
Revised Penal Code, committed as follows:
That on, during, and between the month of
November, 1974, and the 21st day of February,
1975, at Kumintang, lbaba, Batangas City,
Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused,
with intent of gain and without the knowledge
and consent of the Batangas Electric Light
System, did then and there, wilfully, unlawfully
and feloniously take, steal and appropriate
electric current valued in the total amount of
FORTY ONE THOUSAND, SIXTY TWO
PESOS AND SIXTEEN CENTAVOS
(P41,062.16) Philippine Currency, to the
damage and prejudice of the said Batangas
Electric Light System, owned and operated by
the City Government of Batangas, in the
aforementioned sum of P41,062.16.
The above information was docketed as Criminal Case
No. 266 before the Court of First Instance of Batangas,
Branch II. Before he could be arraigned thereon,
Manuel Opulencia filed a Motion to Quash, dated 5
49 | P a g e
May 1976, alleging that he had been previously
acquitted of the offense charged in the second
information and that the filing thereof was violative of
his constitutional right against double jeopardy. By
Order dated 16 August 1976, the respondent Judge
granted the accused's Motion to Quash and ordered the
case dismissed. The gist of this Order is set forth in the
following paragraphs:
The only question here is whether the dismissal
of the first case can be properly pleaded by the
accused in the motion to quash.
In the first paragraph of the earlier information,
it alleges that the prosecution "accuses Manuel
Opulencia y Lat of violation of Sec. 3(b) in
relation to Sec. 6(d) and Sec. 10 Article II, Title
IV of Ordinance No. 1, s. 1974, with damage to
the City Government of Batangas, etc. "
(Emphasis supplied). The first case, as it
appears, was not simply one of illegal electrical
connections. It also covered an amount of
P41,062.16 which the accused, in effect,
allegedly with intent to defraud, deprived the
city government of Batangas. If the charge had
meant illegal electric installations only, it could
have alleged illegal connections which were
done at one instance on a particular date
between November, 1974, to February 21,
1975. But as the information states "that from
November, 1974 to February 1975 at Batangas
City, Philippines, and within the jurisdiction of
this Honorable Court, the above-named
accused with intent to defraud the City
Government of Batangas, without proper
authorization from any lawful and/or permit
from the proper authorities, did then and there
wilfully, unlawfully and feloniously make
unauthorized installations of electric wirings
and devices, etc." (Emphasis supplied), it was
meant to include the P 41,062.16 which the
accused had, in effect, defrauded the city
government. The information could not have
meant that from November 1974 to 21
February 1975, he had daily committed
unlawful installations.
When, therefore, he was arraigned and he faced
the indictment before the City Court, he had
already been exposed, or he felt he was
exposed to consequences of what allegedly
happened between November 1974 to February
21, 1975 which had allegedly resulted in
defrauding the City of Batangas in the amount
of P 41,062.16. (Emphases and parentheses in
the original)
A Motion for Reconsideration of the above-quoted
Order filed by the petitioner was denied by the
respondent Judge in an Order dated 18 November 1976.
On 1 December 1976, the present Petition for certiorari
and mandamus was filed in this Court by the Acting
City Fiscal of Batangas City on behalf of the People.
The basic premise of the petitioner's position is that the
constitutional protection against double jeopardy is
protection against a second or later jeopardy of
conviction for the same offense. The petitioner stresses
that the first information filed before the City Court of
Batangas City was one for unlawful or unauthorized
installation of electrical wiring and devices, acts which
were in violation of an ordinance of the City
Government of Batangas. Only two elements are
needed to constitute an offense under this City
Ordinance: (1) that there was such an installation; and
(2) no authority therefor had been obtained from the
Superintendent of the Batangas City Electrical System
or the District Engineer. The petitioner urges that the
relevant terms of the City Ordinance — which read as
follows:
Section 3.-Connection and Installation
(a) x x x
(b) The work and installation in the houses and
building and their connection with the
Electrical System shall be done either by the
employee of the system duly authorized by its
Superintendent or by persons adept in the
matter duly authorized by the District Engineer.
Applicants for electrical service permitting the
works of installation or connection with the
system to be undertaken by the persons not
duly authorized therefor shall be considered
guilty of violation of the ordinance.
would show that:
The principal purpose for (sic) such a provision
is to ensure that electrical installations on
residences or buildings be done by persons duly
authorized or adept in the matter, to avoid fires
and accidents due to faulty electrical wirings. It
is primarily a regulatory measure and not
intended to punish or curb theft of electric fluid
which is already covered by the Revised Penal
Code. 5
The gist of the offense under the City Ordinance, the
petitioner's argument continues, is the installing of
electric wiring and devices without authority from the
proper officials of the city government. To constitute an
offense under the city ordinance, it is not essential to
establish any mens rea on the part of the offender
generally speaking, nor, more specifically, an intent to
appropriate and steal electric fluid.
In contrast, the petitioner goes on, the offense of theft
under Article 308 of the Revised Penal Code filed
before the Court of First Instance of Batangas in
Criminal Case No. 266 has quite different essential
elements. These elements are:
1. That personal property be taken;
2. That the personal property (taken) belongs to
another;
3. That the taking be done with intent of gain;
4. That the taking be done without the consent
of the owner; and
50 | P a g e
 5. That the taking be accomplished without
violence against or intimidation of persons or
force upon things. 6
The petitioner also alleges, correctly, in our view, that
theft of electricity can be effected even without illegal
or unauthorized installations of any kind by, for
instance, any of the following means:
1. Turning back the dials of the electric meter;
2. Fixing the electric meter in such a manner
that it will not register the actual electrical
consumption;
3. Under-reading of electrical consumption; and
4. By tightening the screw of the rotary blade to
slow down the rotation of the same. 7
The petitioner concludes that:
The unauthorized installation punished by the
ordinance [of Batangas City] is not the same as
theft of electricity [under the Revised Penal
Code]; that the second offense is not an attempt
to commit the first or a frustration thereof and
that the second offense is not necessarily
included in the offense charged in the first
inforrnation 8
The above arguments made by the petitioner are of
course correct. This is clear both from the express terms
of the constitutional provision involved — which reads
as follows:
No person shall be twice put in jeopardy of
punishment for the same offense. If an act is
punished by a law and an ordinance, conviction
or acquittal under either shall constitute a bar to
another prosecution for the same act.
(Emphasis supplied; Article IV (22), 1973
Constitution) 9
and from our case law on this point. 10 The basic
difficulty with the petitioner's position is that it must be
examined, not under the terms of the first sentence of
Article IV (22) of the 1973 Constitution, but rather
under the second sentence of the same section. The first
sentence of Article IV (22) sets forth the general rule:
the constitutional protection against double jeopardy is
not available where the second prosecution is for an
offense that is different from the offense charged in the
first or prior prosecution, although both the first and
second offenses may be based upon the same act or set
of acts. The second sentence of Article IV (22)
embodies an exception to the general proposition: the
constitutional protection, against double jeopardy is
available although the prior offense charged under an
ordinance be different from the offense charged
subsequently under a national statute such as the
Revised Penal Code, provided that both offenses spring
from the same act or set of acts. This was made clear
sometime ago in Yap vs. Lutero. 11
In Yap, petitioner Manuel Yap was charged in Criminal
Case No. 16054 of the Municipal Court of Iloilo City,
with violation of Article 14 of Ordinance No. 22, Series
of 1951, in relation to Ordinance No. 15, Series of
1954, of the City of Iloilo. The information charged
him with having "wilfully, unlawfully and feloniously
drive[n] and operate[d]" an automobile — "recklessly
and without reasonable caution thereby endangering
other vehicles and pedestrians passing in said street."
Three months later, Yap was again charged in Criminal
Case No. 16443 of the same Municipal Court, this time
with serious physical injuries through reckless
imprudence. The information charged him with
violation of the Revised Motor Vehicle Law (Act No.
3992 as amended by Republic Act No. 587) committed
by driving and operating an automobile in a reckless
and negligent manner and as a result thereof inflicting
injuries upon an unfortunate pedestrian. Yap moved to
quash the second information upon the ground that it
placed him twice in jeopardy of punishment for the
same act. This motion was denied by the respondent
municipal judge. Meantime, another municipal judge
had acquitted Yap in Criminal Case No. 16054. Yap
then instituted a petition for certiorari in the Court of
First Instance of Iloilo to set aside the order of the
respondent municipal judge. The Court of First Instance
of Iloilo having reversed the respondent municipal
judge and having directed him to desist from continuing
with Criminal Case No. 16443, the respondent Judge
brought the case to the Supreme Court for review on
appeal. In affirming the decision appealed from and
holding that the constitutional protection against double
jeopardy was available to petitioner Yap, then
Associate Justice and later Chief Justice Roberto
Concepcion wrote:
To begin with, the crime of damage to property
through reckless driving — with which Diaz
stood charged in the court of first instance — is
a violation of the Revised Penal Code (third
paragraph of Article 365), not the Automobile
Law (Act No. 3992, as amended by Republic
Act No. 587). Hence, Diaz was not twice
accused of a violation of the same law.
Secondly, reckless driving and certain crimes
committed through reckless driving are
punishable under different provisions of said
Automobile Law. Hence — from the view
point of Criminal Law, as distinguished from
political or Constitutional Law — they
constitute, strictly, different offenses, although
under certain conditions, one offense may
include the other, and, accordingly, once placed
in jeopardy for one, the plea of double jeopardy
may be in order as regards the other, as in the
Diaz case. (Emphases in the original)
Thirdly, our Bill of Rights deals with two (2)
kinds of double jeopardy. The first sentence of
clause 20, section 1, Article III of the
Constitution, ordains that "no person shall be
twice put in jeopardy of punishment for the
same offense." (Emphasis in the original) The
second sentence of said clause provides that "if
an act is punishable by a law and an ordinance,
conviction or acquittal under either shall
constitute a bar to another prosecution for the
same act."
51 | P a g e
 Thus, the first sentence prohibits double
jeopardy of punishment for the same offense,
whereas the second contemplates double
jeopardy of punishment for the same act. Under
the first sentence, one may be twice put in
jeopardy of punishment of the same act
provided that he is charged with different
offenses, or the offense charged in one case is
not included in or does not include, the crime
charged in the other case. The second sentence
applies, even if the offenses charged are not the
same, owing to the fact that one constitutes a
violation of an ordinance and the other a
violation of a statute. If the two charges are
based on one and the same act conviction or
acquittal under either the law or the ordinance
shall bar a prosecution under the other. 12
Incidentally, such conviction or acquittal is not
indispensable to sustain the plea of double
jeopardy of punishment for the same offense.
So long as jeopardy has attached under one of
the informations charging said offense, the
defense may be availed of in the other case
involving the same offense, even if there has
been neither conviction nor acquittal in either
case.
The issue in the case at bar hinges, therefore,
on whether or not, under the information in
case No. 16443, petitioner could — if he failed
to plead double jeopardy — be convicted of the
same act charged in case No. 16054, in which
he has already been acquitted. The information
in case No. 16054 alleges, substantially, that on
the date and in the place therein stated,
petitioner herein had wilfully, unlawfully and
feloniously driven and operated "recklessly and
without reasonable caution" an automobile
described in said information. Upon the other
hand, the information in case No. 16443,
similarly states that, on the same date and in the
same place, petitioner drove and operated the
aforementioned automobile in a "reckless and
negligent manner at an excessive rate of speed
and in violation of the Revised Motor Vehicle
Law (Act No. 3992), as amended by Republic
Act No. 587, and existing city ordinances."
Thus, if the theories mentioned in the second
information were not established by the
evidence, petitioner could be convicted in case
No. 16443 of the very same violation of
municipal ordinance charged in case No.
16054, unless he pleaded double jeopardy.
It is clear, therefore, that the lower court has
not erred eventually sustaining the theory of
petitioner herein.
Put a little differently, where the offenses charged are
penalized either by different sections of the same statute
or by different statutes, the important inquiry relates to
the identity of offenses charge: the constitutional
protection against double jeopardy is available only
where an Identity is shown to exist between the earlier
and the subsequent offenses charged. In contrast, where
one offense is charged under a municipal ordinance
while the other is penalized by a statute, the critical
inquiry is to the identity of the acts which the accused is
said to have committed and which are alleged to have
given rise to the two offenses: the constitutional
protection against double jeopardy is available so long
as the acts which constitute or have given rise to the
first offense under a municipal ordinance are the same
acts which constitute or have given rise to the offense
charged under a statute.
The question may be raised why one rule should exist
where two offenses under two different sections of the
same statute or under different statutes are charged, and
another rule for the situation where one offense is
charged under a municipal ordinance and another
offense under a national statute. If the second sentence
of the double jeopardy provision had not been written
into the Constitution, conviction or acquittal under a
municipal ordinance would never constitute a bar to
another prosecution for the same act under a national
statute. An offense penalized by municipal ordinance is,
by definition, different from an offense under a statute.
The two offenses would never constitute the same
offense having been promulgated by different rule-
making authorities — though one be subordinate to the
other — and the plea of double jeopardy would never
lie. The discussions during the 1934-1935
Constitutional Convention show that the second
sentence was inserted precisely for the purpose of
extending the constitutional protection against double
jeopardy to a situation which would not otherwise be
covered by the first sentence. 13
The question of Identity or lack of Identity of offenses
is addressed by examining the essential elements of
each of the two offenses charged, as such elements are
set out in the respective legislative definitions of the
offenses involved. The question of Identity of the acts
which are claimed to have generated liability both
under a municipal ordinance and a national statute must
be addressed, in the first instance, by examining the
location of such acts in time and space. When the acts
of the accused as set out in the two informations are so
related to each other in time and space as to be
reasonably regarded as having taken place on the same
occasion and where those acts have been moved by one
and the same, or a continuing, intent or voluntary
design or negligence, such acts may be appropriately
characterized as an integral whole capable of giving rise
to penal liability simultaneously under different legal
enactments (a municipal ordinance and a national
statute).
In Yap, the Court regarded the offense of reckless
driving under the Iloilo City Ordinance and serious
physical injuries through reckless imprudence under the
Revised Motor Vehicle Law as derived from the same
act or sets of acts — that is, the operation of an
automobile in a reckless manner. The additional
technical element of serious physical injuries related to
the physical consequences of the operation of the
automobile by the accused, i.e., the impact of the
automobile upon the body of the offended party.
Clearly, such consequence occurred in the same
occasion that the accused operated the automobile
(recklessly). The moral element of negligence
permeated the acts of the accused throughout that
occasion.
52 | P a g e
In the instant case, the relevant acts took place within
the same time frame: from November 1974 to February
1975. During this period, the accused Manuel
Opulencia installed or permitted the installation of
electrical wiring and devices in his ice plant without
obtaining the necessary permit or authorization from
the municipal authorities. The accused conceded that he
effected or permitted such unauthorized installation for
the very purpose of reducing electric power bill. This
corrupt intent was thus present from the very moment
that such unauthorized installation began. The
immediate physical effect of the unauthorized
installation was the inward flow of electric current into
Opulencia's ice plant without the corresponding
recording thereof in his electric meter. In other words,
the "taking" of electric current was integral with the
unauthorized installation of electric wiring and devices.
It is perhaps important to note that the rule limiting the
constitutional protection against double jeopardy to a
subsequent prosecution for the same offense is not to be
understood with absolute literalness. The Identity of
offenses that must be shown need not be absolute
Identity: the first and second offenses may be regarded
as the "same offense" where the second offense
necessarily includes the first offense or is necessarily
included in such first offense or where the second
offense is an attempt to commit the first or a frustration
thereof. 14 Thus, for the constitutional plea of double
jeopardy to be available, not all the technical elements
constituting the first offense need be present in the
technical definition of the second offense. The law here
seeks to prevent harrassment of an accused person by
multiple prosecutions for offenses which though
different from one another are nonetheless each
constituted by a common set or overlapping sets of
technical elements. As Associate Justice and later Chief
Justice Ricardo Paras cautioned in People vs. del
Carmen et al., 88 Phil. 51 (1951):
While the rule against double jeopardy
prohibits prosecution for the same offense, it
seems elementary that an accused should be
shielded against being prosecuted for several
offenses made out from a single act. Otherwise,
an unlawful act or omission may give use to
several prosecutions depending upon the ability
of the prosecuting officer to imagine or concoct
as many offenses as can be justified by said act
or omission, by simply adding or subtracting
essential elements. Under the theory of
appellant, the crime of rape may be converted
into a crime of coercion, by merely alleging
that by force and intimidation the accused
prevented the offended girl from remaining a
virgin. (88 Phil. at 53; emphases supplied)
By the same token, acts of a person which physically
occur on the same occasion and are infused by a
common intent or design or negligence and therefore
form a moral unity, should not be segmented and sliced,
as it were, to produce as many different acts as there are
offenses under municipal ordinances or statutes that an
enterprising prosecutor can find
It remains to point out that the dismissal by the
Batangas City Court of the information for violation of
the Batangas City Ordinance upon the ground that such
offense had already prescribed, amounts to an acquittal
of the accused of that offense. Under Article 89 of the
Revised Penal Code, "prescription of the crime" is one
of the grounds for "total extinction of criminal
liability." Under the Rules of Court, an order sustaining
a motion to quash based on prescription is a bar to
another prosecution for the same offense. 15
It is not without reluctance that we deny the people's
petition for certiorari and mandamus in this case. It is
difficult to summon any empathy for a businessman
who would make or enlarge his profit by stealing from
the community. Manuel Opulencia is able to escape
criminal punishment because an Assistant City Fiscal
by inadvertence or otherwise chose to file an
information for an offense which he should have known
had already prescribed. We are, however, compelled by
the fundamental law to hold the protection of the right
against double jeopardy available even to the private
respondent in this case.
The civil liability aspects of this case are another
matter. Because no reservation of the right to file a
separate civil action was made by the Batangas City
electric light system, the civil action for recovery of
civil liability arising from the offense charged was
impliedly instituted with the criminal action both before
the City Court of Batangas City and the Court of First
Instance of Batangas. The extinction of criminal
liability whether by prescription or by the bar of double
jeopardy does not carry with it the extinction of civil
liability arising from the offense charged. In the present
case, as we noted earlier, 16 accused Manuel Opulencia
freely admitted during the police investigation having
stolen electric current through the installation and use
of unauthorized elibctrical connections or devices.
While the accused pleaded not guilty before the City
Court of Batangas City, he did not deny having
appropriated electric power. However, there is no
evidence in the record as to the amount or value of the
electric power appropriated by Manuel Opulencia, the
criminal informations having been dismissed both by
the City Court and by the Court of First Instance (from
which dismissals the Batangas City electric light system
could not have appealed 17) before trial could begin.
Accordingly, the related civil action which has not been
waived expressly or impliedly, should be remanded to
the Court of First Instance of Batangas City for
reception of evidence on the amount or value of the
electric power appropriated and converted by Manuel
Opulencia and rendition of judgment conformably with
such evidence.
WHEREFORE, the petition for certiorari and
mandamus is DENIED. Let the civil action for related
civil liability be remanded to the Court of First Instance
of Batangas City for further proceedings as indicated
above. No pronouncement as to costs.
SO ORDERED.
53 | P a g e
[G.R. No. 107125. January 29, 2001]
GEORGE MANANTAN, petitioner, vs. THE
COURT OF APPEALS, SPOUSES MARCELINO
NICOLAS and MARIA NICOLAS, respondents.
DECISION
QUISUMBING, J.:
This is a petition for review of the decision dated
January 31, 1992 of the Court of Appeals in CA-G.R.
CV No. 19240, modifying the judgment of the Regional
Trial Court of Santiago, Isabela, Branch 21, in Criminal
Case No. 066. Petitioner George Manantan was
acquitted by the trial court of homicide through reckless
imprudence without a ruling on his civil liability. On
appeal from the civil aspect of the judgment in Criminal
Case No. 066, the appellate court found petitioner
Manantan civilly liable and ordered him to indemnify
private respondents Marcelino Nicolas and Maria
Nicolas P104,400.00 representing loss of support,
P50,000.00 as death indemnity, and moral damages of
P20,000.00 or a total of P174,400.00 for the death of
their son, Ruben Nicolas.
The facts of this case are as follows:
On June 1, 1983, the Provincial Fiscal of Isabela filed
an information charging petitioner Manantan with
reckless imprudence resulting in homicide, allegedly
committed as follows:
That on or about the 25th day of September 1982, in the
municipality of Santiago, province of Isabela,
Philippines, and within the jurisdiction of this
Honorable Court, the said accused, being then the
driver and person-in-charge of an automobile bearing
Plate No. NGA-816, willfully and unlawfully drove and
operated the same while along the Daang Maharlika at
Barangay Malvar, in said municipality, in a negligent,
careless and imprudent manner, without due regard to
traffic laws, regulations and ordinances and without
taking the necessary precaution to prevent accident to
person and damage to property, causing by such
negligence, carelessness and imprudence said
automobile driven and operated by him to sideswipe a
passenger jeep bearing plate No. 918-7F driven by
Charles Codamon, thereby causing the said automobile
to turn down (sic) resulting to the death of Ruben
Nicolas a passenger of said automobile.
CONTRARY TO LAW.[1]
On arraignment, petitioner pleaded not guilty to the
charge. Trial on the merits ensued.
The prosecutions evidence, as summarized by the trial
court and adopted by the appellate court, showed that:
[I]n the morning of September 25, 1982, Fiscal
Wilfredo Ambrocio decided to catch shrimps at the
irrigation canal at his farm. He invited the deceased
who told him that they (should) borrow the Ford Fiera
of the accused George Manantan who is also from
Cordon. The deceased went to borrow the Ford Fiera
butsaid that the accused also wanted to (come) along.
So Fiscal Ambrocio and the deceased dropped by the
accused at the Manantan Technical School. They drank
beer there before they proceeded to the farm using the
Toyota Starlet of the accused. At the farm they
consumed one (more) case of beer. At about 12:00
oclock noon they went home. Then at about 2:00 or
3:00 oclock that afternoon, (defense witness Miguel)
Tabangin and (Ruben) Nicolas and the accused returned
to the house of Fiscal Ambrocio with a duck. They
cooked the duck and ate the same with one more case
of beer. They ate and drank until about 8:30 in the
evening when the accused invited them to go bowling.
They went to Santiago, Isabela on board the Toyota
Starlet of the accused who drove the same. They went
to the Vicap Bowling Lanes at Mabini, Santiago,
Isabela but unfortunately there was no vacant alley.
While waiting for a vacant alley they drank one beer
each. After waiting for about 40 minutes and still no
alley became vacant the accused invited his
companions to go to the LBC Night Club. They had
drinks and took some lady partners at the LBC. After
one hour, they left the LBC and proceeded to a nearby
store where they ate arroz caldoand then they decided
to go home. Again the accused drove the car. Miguel
Tabangin sat with the accused in the front seat while the
deceased and Fiscal Ambrocio sat at the back seat with
the deceased immediately behind the accused. The
accused was driving at a speed of about 40 kilometers
per hour along the Maharlika Highway at Malvar,
Santiago, Isabela, at the middle portion of the highway
(although according to Charles Cudamon, the car was
running at a speed of 80 to 90 kilometers per hours on
[the] wrong lane of the highway because the car was
overtaking a tricycle) when they met a passenger
jeepney with bright lights on. The accused immediately
tried to swerve the car to the right and move his body
away from the steering wheel but he was not able to
avoid the oncoming vehicle and the two vehicles
collided with each other at the center of the road.
xxx
As a result of the collision the car turned turtle twice
and landed on its top at the side of the highway
immediately at the approach of the street going to the
Flores Clinic while the jeep swerved across the road so
that one half front portion landed on the lane of the car
while the back half portion was at its right lane five
meters away from the point of impact as shown by a
sketch (Exhibit A) prepared by Cudamon the following
morning at the Police Headquarters at the instance of
his lawyer. Fiscal Ambrocio lost consciousness. When
he regained consciousness he was still inside the car
(lying) on his belly with the deceased on top of him.
Ambrocio pushed (away) the deceased and then he was
pulled out of the car by Tabangin. Afterwards, the
deceased who was still unconscious was pulled out
from the car. Both Fiscal Ambrocio and the deceased
were brought to the Flores Clinic. The deceased died
that night (Exhibit B) while Ambrocio suffered only
minor injuries to his head and legs.[2]
The defense version as to the events prior to the
incident was essentially the same as that of the
prosecution, except that defense witness Miguel
Tabangin declared that Manantan did not drink beer
that night. As to the accident, the defense claimed that:
54 | P a g e
The accused was driving slowly at the right lane [at]
about 20 inches from the center of the road at about 30
kilometers per hour at the National Highway at Malvar,
Santiago, Isabela, when suddenly a passenger jeepney
with bright lights which was coming from the opposite
direction and running very fast suddenly swerve(d) to
the cars lane and bumped the car which turned turtle
twice and rested on its top at the right edge of the road
while the jeep stopped across the center of the road as
shown by a picture taken after the incident (Exhibit 1)
and a sketch (Exhibit 3) drawn by the accused during
his rebuttal testimony. The car was hit on the drivers
side. As a result of the collision, the accused and
Miguel Tabangin and Fiscal Ambrocio were injured
while Ruben Nicolas died at the Flores Clinic where
they were all brought for treatment.[3]
In its decision dated June 30, 1988, promulgated on
August 4, 1988, the trial court decided Criminal Case
No. 066 in petitioners favor, thus:
WHEREFORE, in the light of the foregoing
considerations, the Court finds the accused NOT
GUILTY of the crime charged and hereby acquits him.
SO ORDERED.[4]
On August 8, 1988, private respondents filed their
notice of appeal on the civil aspect of the trial courts
judgment. In their appeal, docketed as CA-G.R. CV No.
19240, the Nicolas spouses prayed that the decision
appealed from be modified and that appellee be ordered
to pay indemnity and damages.
On January 31, 1992, the appellate court decided CA-
G.R. CV No. 19240 in favor of the Nicolas spouses,
thus:
WHEREFORE, the decision appealed from is
MODIFIED in that defendant-appellee is hereby held
civilly liable for his negligent and reckless act of
driving his car which was the proximate cause of the
vehicular accident, and sentenced to indemnify
plaintiffs-appellants in the amount of P174,400.00 for
the death of Ruben Nicolas,
SO ORDERED.[5]
In finding petitioner civilly liable, the court a quo noted
that at the time the accident occurred, Manantan was in
a state of intoxication, due to his having consumed all
in all, a total of at least twelve (12) bottles of
beerbetween 9 a.m. and 11 p.m.[6] It found that
petitioners act of driving while intoxicated was a clear
violation of Section 53 of the Land Transportation and
Traffic Code (R.A. No. 4136)[7] and pursuant to
Article 2185 of the Civil Code,[8] a statutory
presumption of negligence existed. It held that
petitioners act of violating the Traffic Code is
negligence in itself because the mishap, which
occurred, was the precise injury sought to be prevented
by the regulation.[9]
Petitioner moved for reconsideration, but the appellate
court in its resolution of August 24, 1992 denied the
motion.
Hence, the present case. Petitioner, in his
memorandum, submits the following issues for our
consideration:
FIRST THE DECISION OF THE TRIAL COURT
ACQUITTING THE PETITIONER OF THE CRIME
OF RECKLESS IMPRUDENCE RESULTING TO
HOMICIDE FORECLOSED ANY FURTHER
INQUIRY ON THE ACCUSEDS (PETITIONERS)
NEGLIGENCE OR RECKLESS IMPRUDENCE
BECAUSE BY THEN HE WILL BE PLACED IN
DOUBLE JEOPARDY AND THEREFORE THE
COURT OF APPEALS ERRED IN PASSING UPON
THE SAME ISSUE AGAIN.
SECOND THE COURT OF APPEALS DID NOT
HAVE JURISDICTION TO AWARD DAMAGES
AND INDEMNITY TO THE PRIVATE
RESPONDENTS CONSIDERING THAT THE NON-
DECLARATION OF ANY INDEMNITY OR
AWARD OF DAMAGES BY THE REGIONAL
TRIAL COURT OF ISABELA, BRANCH XXI, WAS
ITSELF CONSISTENT WITH THE PETITIONERS
ACQUITTAL FOR THE REASON THAT THE CIVIL
ACTION WAS IMPLIEDLY INSTITUTED WITH
THE CRIMINAL ACTION AND THERE WAS NO
EXPRESS WAIVER OF THE CIVIL ACTION OR
RESERVATION TO INSTITUTE IT SEPARATELY
BY THE PRIVATE RESPONDENTS IN THE TRIAL
COURT.
THIRD THE COURT OF APPEALS DID NOT HAVE
JURISDICTION TO TAKE COGNIZANCE OF THE
CASE CA-G.R. CV No. 19240 ENTITLED: SPOUSES
MARCELINO NICOLAS AND MARIA NICOLAS v.
GEORGE MANANTAN, AND RENDER THE
DECISION SOUGHT TO BE REVIEWED WHEN
THE SAME WAS PROSECUTED BY THE
PRIVATE RESPONDENTS IN THEIR PERSONAL
CAPACITIES AND THE FILING FEES NOT
HAVING BEEN PAID, THUS VIOLATING THE
MANCHESTER DOCTRINE.
In brief, the issues for our resolution are:
(1) Did the acquittal of petitioner foreclose any
further inquiry by the Court of Appeals as to his
negligence or reckless imprudence?
(2) Did the court a quo err in finding that
petitioners acquittal did not extinguish his civil
liability?
(3) Did the appellate court commit a reversible
error in failing to apply the Manchester doctrine to CA-
G.R. CV No. 19240?
On the first issue, petitioner opines that the Court of
Appeals should not have disturbed the findings of the
trial court on the lack of negligence or reckless
imprudence under the guise of determining his civil
liability. He argues that the trial courts finding that he
was neither imprudent nor negligent was the basis for
his acquittal, and not reasonable doubt. He submits that
in finding him liable for indemnity and damages, the
appellate court not only placed his acquittal in
suspicion, but also put him in double jeopardy.
55 | P a g e
Private respondents contend that while the trial court
found that petitioners guilt had not been proven beyond
reasonable doubt, it did not state in clear and
unequivocal terms that petitioner was not recklessly
imprudent or negligent. Hence, impliedly the trial court
acquitted him on reasonable doubt. Since civil liability
is not extinguished in criminal cases, if the acquittal is
based on reasonable doubt, the Court of Appeals had to
review the findings of the trial court to determine if
there was a basis for awarding indemnity and damages.
Preliminarily, petitioners claim that the decision of the
appellate court awarding indemnity placed him in
double jeopardy is misplaced. The constitution provides
that no person shall be twice put in jeopardy for the
same offense. If an act is punished by a law and an
ordinance, conviction or acquittal under either shall
constitute a bar to another prosecution for the same
act.[10] When a person is charged with an offense and
the case is terminated either by acquittal or conviction
or in any other manner without the consent of the
accused, the latter cannot again be charged with the
same or identical offense.[11] This is double jeopardy.
For double jeopardy to exist, the following elements
must be established: (a) a first jeopardy must have
attached prior to the second; (2) the first jeopardy must
have terminated; and (3) the second jeopardy must be
for the same offense as the first.[12] In the instant case,
petitioner had once been placed in jeopardy by the
filing of Criminal Case No. 066 and the jeopardy was
terminated by his discharge. The judgment of acquittal
became immediately final. Note, however, that what
was elevated to the Court of Appeals by private
respondents was the civil aspect of Criminal Case No.
066. Petitioner was not charged anew in CA-G.R. CV
No. 19240 with a second criminal offense identical to
the first offense. The records clearly show that no
second criminal offense was being imputed to petitioner
on appeal. In modifying the lower courts judgment, the
appellate court did not modify the judgment of
acquittal. Nor did it order the filing of a second criminal
case against petitioner for the same offense. Obviously,
therefore, there was no second jeopardy to speak of.
Petitioners claim of having been placed in double
jeopardy is incorrect.
Our law recognizes two kinds of acquittal, with
different effects on the civil liability of the accused.
First is an acquittal on the ground that the accused is
not the author of the act or omission complained of.
This instance closes the door to civil liability, for a
person who has been found to be not the perpetrator of
any act or omission cannot and can never be held liable
for such act or omission.[13] There being no delict,
civil liability ex delicto is out of the question, and the
civil action, if any, which may be instituted must be
based on grounds other than the delict complained of.
This is the situation contemplated in Rule 111 of the
Rules of Court.[14] The second instance is an acquittal
based on reasonable doubt on the guilt of the accused.
In this case, even if the guilt of the accused has not
been satisfactorily established, he is not exempt from
civil liability which may be proved by preponderance of
evidence only.[15] This is the situation contemplated in
Article 29 of the Civil Code,[16] where the civil action
for damages is for the same act or omission. Although
the two actions have different purposes, the matters
discussed in the civil case are similar to those discussed
in the criminal case. However, the judgment in the
criminal proceeding cannot be read in evidence in the
civil action to establish any fact there determined, even
though both actions involve the same act or
omission.[17] The reason for this rule is that the parties
are not the same and secondarily, different rules of
evidence are applicable. Hence, notwithstanding herein
petitioners acquittal, the Court of Appeals in
determining whether Article 29 applied, was not
precluded from looking into the question of petitioners
negligence or reckless imprudence.
On the second issue, petitioner insists that he was
acquitted on a finding that he was neither criminally
negligent nor recklessly imprudent. Inasmuch as his
civil liability is predicated on the criminal offense, he
argues that when the latter is not proved, civil liability
cannot be demanded. He concludes that his acquittal
bars any civil action.
Private respondents counter that a closer look at the
trial courts judgment shows that the judgment of
acquittal did not clearly and categorically declare the
non-existence of petitioners negligence or imprudence.
Hence, they argue that his acquittal must be deemed
based on reasonable doubt, allowing Article 29 of the
Civil Code to come into play.
Our scrutiny of the lower courts decision in Criminal
Case No. 066 supports the conclusion of the appellate
court that the acquittal was based on reasonable doubt;
hence, petitioners civil liability was not extinguished by
his discharge. We note the trial courts declaration that
did not discount the possibility that the accused was
really negligent. However, it found that a hypothesis
inconsistent with the negligence of the accused
presented itself before the Court and since said
hypothesis is consistent with the recordthe Courts mind
cannot rest on a verdict of conviction.[18] The
foregoing clearly shows that petitioners acquittal was
predicated on the conclusion that his guilt had not been
established with moral certainty. Stated differently, it is
an acquittal based on reasonable doubt and a suit to
enforce civil liability for the same act or omission lies.
On the third issue, petitioner argues that the Court of
Appeals erred in awarding damages and indemnity,
since private respondents did not pay the corresponding
filing fees for their claims for damages when the civil
case was impliedly instituted with the criminal action.
Petitioner submits that the non-payment of filing fees
on the amount of the claim for damages violated the
doctrine in Manchester Development Corporation v.
Court of Appeals, 149 SCRA 562 (1987) and Supreme
Court Circular No. 7 dated March 24, 1988.[19] He
avers that since Manchester held that The Court
acquires jurisdiction over any case only upon payment
of the prescribed docket fees, the appellate court was
without jurisdiction to hear and try CA-G.R. CV No.
19240, much less award indemnity and damages.
56 | P a g e
Private respondents argue that the Manchester doctrine
is inapplicable to the instant case. They ask us to note
that the criminal case, with which the civil case was
impliedly instituted, was filed on July 1, 1983, while
the Manchester requirements as to docket and filing
fees took effect only with the promulgation of Supreme
Court Circular No. 7 on March 24, 1988. Moreover, the
information filed by the Provincial Prosecutor of
Isabela did not allege the amount of indemnity to be
paid. Since it was not then customarily or legally
required that the civil damages sought be stated in the
information, the trial court had no basis in assessing the
filing fees and demanding payment thereof. Moreover,
assuming that the Manchester ruling is applied
retroactively, under the Rules of Court, the filing fees
for the damages awarded are a first lien on the
judgment. Hence, there is no violation of the
Manchester doctrine to speak of.
for petitioners allegations that the filing fees were not
paid or improperly paid and that the appellate court
acquired no jurisdiction.
WHEREFORE, the instant petition is DISMISSED for
lack of merit. The assailed decision of the Court of
Appeals in CA-G.R. CV No. 19240 promulgated on
January 31, 1992, as well as its resolution dated August
24, 1992, denying herein petitioners motion for
reconsideration, are AFFIRMED. Costs against
petitioner.
SO ORDERED.

At the time of the filing of the information in 1983, the

implied institution of civil actions with criminal actions
was governed by Rule 111, Section 1 of the 1964 Rules
of Court.[20] As correctly pointed out by private
respondents, under said rule, it was not required that the
damages sought by the offended party be stated in the
complaint or information. With the adoption of the
1985 Rules of Criminal Procedure, and the amendment
of Rule 111, Section 1 of the 1985 Rules of Criminal
Procedure by a resolution of this Court dated July 7,
1988, it is now required that:

When the offended party seeks to enforce civil liability

against the accused by way of moral, nominal,
temperate or exemplary damages, the filing fees for
such civil action as provided in these Rules shall
constitute a first lien on the judgment except in an
award for actual damages.

In cases wherein the amount of damages, other than

actual, is alleged in the complaint or information, the
corresponding filing fees shall be paid by the offended
party upon the filing thereof in court for trial.

The foregoing were the applicable provisions of the

Rules of Criminal Procedure at the time private
respondents appealed the civil aspect of Criminal Case
No. 066 to the court a quo in 1989. Being in the nature
of a curative statute, the amendment applies
retroactively and affects pending actions as in this case.

Thus, where the civil action is impliedly instituted

together with the criminal action, the actual damages
claimed by the offended parties, as in this case, are not
included in the computation of the filing fees. Filing
fees are to be paid only if other items of damages such
as moral, nominal, temperate, or exemplary damages
are alleged in the complaint or information, or if they
are not so alleged, shall constitute a first lien on the
judgment.[21] Recall that the information in Criminal
Case No. 066 contained no specific allegations of
damages. Considering that the Rules of Criminal
Procedure effectively guarantee that the filing fees for
the award of damages are a first lien on the judgment,
the effect of the enforcement of said lien must retroact
to the institution of the criminal action. The filing fees
are deemed paid from the filing of the criminal
complaint or information. We therefore find no basis

57 | P a g e
G.R. No. 102007 September 2, 1994
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
ROGELIO BAYOTAS y CORDOVA, accused-
appellant.
ROMERO, J.:
In Criminal Case No. C-3217 filed before Branch 16,
RTC Roxas City, Rogelio Bayotas y Cordova was
charged with Rape and eventually convicted thereof on
June 19, 1991 in a decision penned by Judge Manuel E.
Autajay. Pending appeal of his conviction, Bayotas died
on February 4, 1992 at
the National Bilibid Hospital due to cardio respiratory
arrest secondary to hepatic encephalopathy secondary
to hipato carcinoma gastric malingering. Consequently,
the Supreme Court in its Resolution of May 20, 1992
dismissed the criminal aspect of the appeal. However, it
required the Solicitor General to file its comment with
regard to Bayotas' civil liability arising from his
commission of the offense charged.
In his comment, the Solicitor General expressed his
view that the death of accused-appellant did not
extinguish his civil liability as a result of his
commission of the offense charged. The Solicitor
General, relying on the case of People v. Sendaydiego 1
insists that the appeal should still be resolved for the
purpose of reviewing his conviction by the lower court
on which the civil liability is based.
Counsel for the accused-appellant, on the other hand,
opposed the view of the Solicitor General arguing that
the death of the accused while judgment of conviction
is pending appeal extinguishes both his criminal and
civil penalties. In support of his position, said counsel
invoked the ruling of the Court of Appeals in People v.
Castillo and Ocfemia 2 which held that the civil
obligation in a criminal case takes root in the criminal
liability and, therefore, civil liability is extinguished if
accused should die before final judgment is rendered.
We are thus confronted with a single issue: Does death
of the accused pending appeal of his conviction
extinguish his civil liability?
In the aforementioned case of People v. Castillo, this
issue was settled in the affirmative. This same issue
posed therein was phrased thus: Does the death of
Alfredo Castillo affect both his criminal responsibility
and his civil liability as a consequence of the alleged
crime?
It resolved this issue thru the following disquisition:
Article 89 of the Revised Penal Code is the
controlling statute. It reads, in part:
Art. 89. How criminal liability is totally
extinguished. — Criminal liability is
totally extinguished:
1. By the death of the convict, as to the
personal penalties; and as to the
pecuniary penalties liability therefor is
extinguished only when the death of
the offender occurs before final
judgment;
With reference to Castillo's criminal liability,
there is no question. The law is plain. Statutory
construction is unnecessary. Said liability is
extinguished.
The civil liability, however, poses a problem.
Such liability is extinguished only when the
death of the offender occurs before final
judgment. Saddled upon us is the task of
ascertaining the legal import of the term "final
judgment." Is it final judgment as
contradistinguished from an interlocutory
order? Or, is it a judgment which is final and
executory?
We go to the genesis of the law. The legal
precept contained in Article 89 of the Revised
Penal Code heretofore transcribed is lifted from
Article 132 of the Spanish El Codigo Penal de
1870 which, in part, recites:
La responsabilidad penal se extingue.
1. Por la muerte del reo en cuanto a las
penas personales siempre, y respecto a
las pecuniarias, solo cuando a su
fallecimiento no hubiere recaido
sentencia firme.
xxx xxx xxx
The code of 1870 . . . it will be observed
employs the term "sentencia firme." What is
"sentencia firme" under the old statute?
XXVIII Enciclopedia Juridica Española, p. 473,
furnishes the ready answer: It says:
SENTENCIA FIRME. La sentencia
que adquiere la fuerza de las definitivas
por no haberse utilizado por las partes
litigantes recurso alguno contra ella
dentro de los terminos y plazos legales
concedidos al efecto.
"Sentencia firme" really should be understood
as one which is definite. Because, it is only
when judgment is such that, as Medina y
Maranon puts it, the crime is confirmed — "en
condena determinada;" or, in the words of
Groizard, the guilt of the accused becomes —
"una verdad legal." Prior thereto, should the
accused die, according to Viada, "no hay
legalmente, en tal caso, ni reo, ni delito, ni
responsabilidad criminal de ninguna clase."
And, as Judge Kapunan well explained, when a
defendant dies before judgment becomes
executory, "there cannot be any determination
by final judgment whether or not the felony
upon which the civil action might arise exists,"
for the simple reason that "there is no party
defendant." The legal import of the term "final
judgment" is similarly reflected in the Revised
58 | P a g e
 Penal Code. Articles 72 and 78 of that legal
body mention the term "final judgment" in the
sense that it is already enforceable. This also
brings to mind Section 7, Rule 116 of the Rules
of Court which states that a judgment in a
criminal case becomes final "after the lapse of
the period for perfecting an appeal or when the
sentence has been partially or totally satisfied
or served, or the defendant has expressly
waived in writing his right to appeal."
By fair intendment, the legal precepts and
opinions here collected funnel down to one
positive conclusion: The term final judgment
employed in the Revised Penal Code means
judgment beyond recall. Really, as long as a
judgment has not become executory, it cannot
be truthfully said that defendant is definitely
guilty of the felony charged against him.
Not that the meaning thus given to final
judgment is without reason. For where, as in
this case, the right to institute a separate civil
action is not reserved, the decision to be
rendered must, of necessity, cover "both the
criminal and the civil aspects of the case."
People vs. Yusico (November 9, 1942), 2 O.G.,
No. 100, p. 964. See also: People vs. Moll, 68
Phil., 626, 634; Francisco, Criminal Procedure,
1958 ed., Vol. I, pp. 234, 236. Correctly, Judge
Kapunan observed that as "the civil action is
based solely on the felony committed and of
which the offender might be found guilty, the
death of the offender extinguishes the civil
liability." I Kapunan, Revised Penal Code,
Annotated, supra.
Here is the situation obtaining in the present
case: Castillo's criminal liability is out. His
civil liability is sought to be enforced by reason
of that criminal liability. But then, if we
dismiss, as we must, the criminal action and let
the civil aspect remain, we will be faced with
the anomalous situation whereby we will be
called upon to clamp civil liability in a case
where the source thereof — criminal liability
— does not exist. And, as was well stated in
Bautista, et al. vs. Estrella, et al., CA-G.R.
No. 19226-R, September 1, 1958, "no party can
be found and held criminally liable in a civil
suit," which solely would remain if we are to
divorce it from the criminal proceeding."
This ruling of the Court of Appeals in the Castillo case
3 was adopted by the Supreme Court in the cases of
People of the Philippines v. Bonifacio Alison, et al., 4
People of the Philippines v. Jaime Jose, et al. 5 and
People of the Philippines v. Satorre 6 by dismissing the
appeal in view of the death of the accused pending
appeal of said cases.
As held by then Supreme Court Justice Fernando in the
Alison case:
The death of accused-appellant Bonifacio
Alison having been established, and
considering that there is as yet no final
judgment in view of the pendency of the
appeal, the criminal and civil liability of the
said accused-appellant Alison was extinguished
by his death (Art. 89, Revised Penal Code;
Reyes' Criminal Law, 1971 Rev. Ed., p. 717,
citing People v. Castillo and Ofemia C.A., 56
O.G. 4045); consequently, the case against him
should be dismissed.
On the other hand, this Court in the subsequent cases of
Buenaventura Belamala v. Marcelino Polinar 7 and
Lamberto Torrijos v. The Honorable Court of Appeals
8 ruled differently. In the former, the issue decided by
this court was: Whether the civil liability of one
accused of physical injuries who died before final
judgment is extinguished by his demise to the extent of
barring any claim therefore against his estate. It was the
contention of the administrator-appellant therein that
the death of the accused prior to final judgment
extinguished all criminal and civil liabilities resulting
from the offense, in view of Article 89, paragraph 1 of
the Revised Penal Code. However, this court ruled
therein:
We see no merit in the plea that the civil
liability has been extinguished, in view of the
provisions of the Civil Code of the Philippines
of 1950 (Rep. Act No. 386) that became
operative eighteen years after the revised Penal
Code. As pointed out by the Court below,
Article 33 of the Civil Code establishes a civil
action for damages on account of physical
injuries, entirely separate and distinct from the
criminal action.
Art. 33. In cases of defamation, fraud,
and physical injuries, a civil action for
damages, entirely separate and distinct
from the criminal action, may be
brought by the injured party. Such civil
action shall proceed independently of
the criminal prosecution, and shall
require only a preponderance of
evidence.
Assuming that for lack of express reservation,
Belamala's civil action for damages was to be
considered instituted together with the criminal
action still, since both proceedings were
terminated without final adjudication, the civil
action of the offended party under Article 33
may yet be enforced separately.
59 | P a g e
 In Torrijos, the Supreme Court held that:
xxx xxx xxx
It should be stressed that the extinction of civil
liability follows the extinction of the criminal
liability under Article 89, only when the civil
liability arises from the criminal act as its only
basis. Stated differently, where the civil
liability does not exist independently of the
criminal responsibility, the extinction of the
latter by death, ipso facto extinguishes the
former, provided, of course, that death
supervenes before final judgment. The said
principle does not apply in instant case wherein
the civil liability springs neither solely nor
originally from the crime itself but from a civil
contract of purchase and sale. (Emphasis ours)
xxx xxx xxx
In the above case, the court was convinced that
the civil liability of the accused who was
charged with estafa could likewise trace its
genesis to Articles 19, 20 and 21 of the Civil
Code since said accused had swindled the first
and second vendees of the property subject
matter of the contract of sale. It therefore
concluded: "Consequently, while the death of
the accused herein extinguished his criminal
liability including fine, his civil liability based
on the laws of human relations remains."
Thus it allowed the appeal to proceed with respect to
the civil liability of the accused, notwithstanding the
extinction of his criminal liability due to his death
pending appeal of his conviction.
To further justify its decision to allow the civil liability
to survive, the court relied on the following
ratiocination: Since Section 21, Rule 3 of the Rules of
Court 9 requires the dismissal of all money claims
against the defendant whose death occurred prior to the
final judgment of the Court of First Instance (CFI), then
it can be inferred that actions for recovery of money
may continue to be heard on appeal, when the death of
the defendant supervenes after the CFI had rendered its
judgment. In such case, explained this tribunal, "the
name of the offended party shall be included in the title
of the case as plaintiff-appellee and the legal
representative or the heirs of the deceased-accused
should be substituted as defendants-appellants."
It is, thus, evident that as jurisprudence evolved from
Castillo to Torrijos, the rule established was that the
survival of the civil liability depends on whether the
same can be predicated on sources of obligations other
than delict. Stated differently, the claim for civil
liability is also extinguished together with the criminal
action if it were solely based thereon, i.e., civil liability
ex delicto.
However, the Supreme Court in People v. Sendaydiego,
et al. 10 departed from this long-established principle
of law. In this case, accused Sendaydiego was charged
with and convicted by the lower court of malversation
thru falsification of public documents. Sendaydiego's
death supervened during the pendency of the appeal of
his conviction.
This court in an unprecedented move resolved to
dismiss Sendaydiego's appeal but only to the extent of
his criminal liability. His civil liability was allowed to
survive although it was clear that such claim thereon
was exclusively dependent on the criminal action
already extinguished. The legal import of such decision
was for the court to continue exercising appellate
jurisdiction over the entire appeal, passing upon the
correctness of Sendaydiego's conviction despite
dismissal of the criminal action, for the purpose of
determining if he is civilly liable. In doing so, this
Court issued a Resolution of July 8, 1977 stating thus:
The claim of complainant Province of
Pangasinan for the civil liability survived
Sendaydiego because his death occurred after
final judgment was rendered by the Court of
First Instance of Pangasinan, which convicted
him of three complex crimes of malversation
through falsification and ordered him to
indemnify the Province in the total sum of
P61,048.23 (should be P57,048.23).
The civil action for the civil liability is deemed
impliedly instituted with the criminal action in
the absence of express waiver or its reservation
in a separate action (Sec. 1, Rule 111 of the
Rules of Court). The civil action for the civil
liability is separate and distinct from the
criminal action (People and Manuel vs.
Coloma, 105 Phil. 1287; Roa vs. De la Cruz,
107 Phil. 8).
When the action is for the recovery of money
and the defendant dies before final judgment in
the Court of First Instance, it shall be dismissed
to be prosecuted in the manner especially
provided in Rule 87 of the Rules of Court (Sec.
21, Rule 3 of the Rules of Court).
The implication is that, if the defendant dies
after a money judgment had been rendered
against him by the Court of First Instance, the
action survives him. It may be continued on
appeal (Torrijos vs. Court of Appeals, L-40336,
October 24, 1975; 67 SCRA 394).
The accountable public officer may still be
civilly liable for the funds improperly disbursed
although he has no criminal liability (U.S. vs.
Elvina, 24 Phil. 230; Philippine National Bank
vs. Tugab, 66 Phil. 583).
60 | P a g e
 In view of the foregoing, notwithstanding the
dismissal of the appeal of the deceased
Sendaydiego insofar as his criminal liability is
concerned, the Court Resolved to continue
exercising appellate jurisdiction over his
possible civil liability for the money claims of
the Province of Pangasinan arising from the
alleged criminal acts complained of, as if no
criminal case had been instituted against him,
thus making applicable, in determining his civil
liability, Article 30 of the Civil Code . . . and,
for that purpose, his counsel is directed to
inform this Court within ten (10) days of the
names and addresses of the decedent's heirs or
whether or not his estate is under
administration and has a duly appointed judicial
administrator. Said heirs or administrator will
be substituted for the deceased insofar as the
civil action for the civil liability is concerned
(Secs. 16 and 17, Rule 3, Rules of Court).
Succeeding cases 11 raising the identical issue have
maintained adherence to our ruling in Sendaydiego; in
other words, they were a reaffirmance of our
abandonment of the settled rule that a civil liability
solely anchored on the criminal (civil liability ex
delicto) is extinguished upon dismissal of the entire
appeal due to the demise of the accused.
But was it judicious to have abandoned this old ruling?
A re-examination of our decision in Sendaydiego
impels us to revert to the old ruling.
To restate our resolution of July 8, 1977 in
Sendaydiego: The resolution of the civil action
impliedly instituted in the criminal action can proceed
irrespective of the latter's extinction due to death of the
accused pending appeal of his conviction, pursuant to
Article 30 of the Civil Code and Section 21, Rule 3 of
the Revised Rules of Court.
Article 30 of the Civil Code provides:
When a separate civil action is brought to
demand civil liability arising from a criminal
offense, and no criminal proceedings are
instituted during the pendency of the civil case,
a preponderance of evidence shall likewise be
sufficient to prove the act complained of.
Clearly, the text of Article 30 could not possibly lend
support to the ruling in Sendaydiego. Nowhere in its
text is there a grant of authority to continue exercising
appellate jurisdiction over the accused's civil liability ex
delicto when his death supervenes during appeal. What
Article 30 recognizes is an alternative and separate civil
action which may be brought to demand civil liability
arising from a criminal offense independently of any
criminal action. In the event that no criminal
proceedings are instituted during the pendency of said
civil case, the quantum of evidence needed to prove the
criminal act will have to be that which is compatible
with civil liability and that is, preponderance of
evidence and not proof of guilt beyond reasonable
doubt. Citing or invoking Article 30 to justify the
survival of the civil action despite extinction of the
criminal would in effect merely beg the question of
whether civil liability ex delicto survives upon
extinction of the criminal action due to death of the
accused during appeal of his conviction. This is because
whether asserted in
the criminal action or in a separate civil action, civil
liability ex delicto is extinguished by the death of the
accused while his conviction is on appeal. Article 89 of
the Revised Penal Code is clear on this matter:
Art. 89. How criminal liability is totally
extinguished. — Criminal liability is totally
extinguished:
1. By the death of the convict, as to the
personal penalties; and as to pecuniary
penalties, liability therefor is extinguished only
when the death of the offender occurs before
final judgment;
xxx xxx xxx
However, the ruling in Sendaydiego deviated from the
expressed intent of Article 89. It allowed claims for
civil liability ex delicto to survive by ipso facto treating
the civil action impliedly instituted with the criminal, as
one filed under Article 30, as though no criminal
proceedings had been filed but merely a separate civil
action. This had the effect of converting such claims
from one which is dependent on the outcome of the
criminal action to an entirely new and separate one, the
prosecution of which does not even necessitate the
filing of criminal proceedings. 12 One would be hard
put to pinpoint the statutory authority for such a
transformation. It is to be borne in mind that in
recovering civil liability ex delicto, the same has
perforce to be determined in the criminal action, rooted
as it is in the court's pronouncement of the guilt or
innocence of the accused. This is but to render fealty to
the intendment of Article 100 of the Revised Penal
Code which provides that "every person criminally
liable for a felony is also civilly liable." In such cases,
extinction of the criminal action due to death of the
accused pending appeal inevitably signifies the
concomitant extinction of the civil liability. Mors
Omnia Solvi. Death dissolves all things.
In sum, in pursuing recovery of civil liability arising
from crime, the final determination of the criminal
liability is a condition precedent to the prosecution of
the civil action, such that when the criminal action is
extinguished by the demise of accused-appellant
pending appeal thereof, said civil action cannot survive.
The claim for civil liability springs out of and is
dependent upon facts which, if true, would constitute a
crime. Such civil liability is an inevitable consequence
of the criminal liability and is to be declared and
enforced in the criminal proceeding. This is to be
distinguished from that which is contemplated under
Article 30 of the Civil Code which refers to the
institution of a separate civil action that does not draw
its life from a criminal proceeding.
61 | P a g e
The Sendaydiego resolution of July 8, 1977, however,
failed to take note of this fundamental distinction when
it allowed the survival of the civil action for the
recovery of civil liability ex delicto by treating the same
as a separate civil action referred to under Article 30.
Surely, it will take more than just a summary judicial
pronouncement to authorize the conversion of said civil
action to an independent one such as that contemplated
under Article 30.
Ironically however, the main decision in Sendaydiego
did not apply Article 30, the resolution of July 8, 1977
notwithstanding. Thus, it was held in the main decision:
Sendaydiego's appeal will be resolved only for
the purpose of showing his criminal liability
which is the basis of the civil liability for which
his estate would be liable. 13
In other words, the Court, in resolving the issue of his
civil liability, concomitantly made a determination on
whether Sendaydiego, on the basis of evidenced
adduced, was indeed guilty beyond reasonable doubt of
committing the offense charged. Thus, it upheld
Sendaydiego's conviction and pronounced the same as
the source of his civil liability. Consequently, although
Article 30 was not applied in the final determination of
Sendaydiego's civil liability, there was a reopening of
the criminal action already extinguished which served
as basis for Sendaydiego's civil liability. We reiterate:
Upon death of the accused pending appeal of his
conviction, the criminal action is extinguished
inasmuch as there is no longer a defendant to stand as
the accused; the civil action instituted therein for
recovery of civil liability ex delicto is ipso facto
extinguished, grounded as it is on the criminal.
Section 21, Rule 3 of the Rules of Court was also
invoked to serve as another basis for the Sendaydiego
resolution of July 8, 1977. In citing Sec. 21, Rule 3 of
the Rules of Court, the Court made the inference that
civil actions of the type involved in Sendaydiego
consist of money claims, the recovery of which may be
continued on appeal if defendant dies pending appeal of
his conviction by holding his estate liable therefor.
Hence, the Court's conclusion:
"When the action is for the recovery of money"
"and the defendant dies before final judgment
in the court of First Instance, it shall be
dismissed to be prosecuted in the manner
especially provided" in Rule 87 of the Rules of
Court (Sec. 21, Rule 3 of the Rules of Court).
The implication is that, if the defendant dies
after a money judgment had been rendered
against him by the Court of First Instance, the
action survives him. It may be continued on
appeal.
Sadly, reliance on this provision of law is misplaced.
From the standpoint of procedural law, this course
taken in Sendaydiego cannot be sanctioned. As
correctly observed by Justice Regalado:
xxx xxx xxx
I do not, however, agree with the justification
advanced in both Torrijos and Sendaydiego
which, relying on the provisions of Section 21,
Rule 3 of the Rules of Court, drew the strained
implication therefrom that where the civil
liability instituted together with the criminal
liabilities had already passed beyond the
judgment of the then Court of First Instance
(now the Regional Trial Court), the Court of
Appeals can continue to exercise appellate
jurisdiction thereover despite the
extinguishment of the component criminal
liability of the deceased. This pronouncement,
which has been followed in the Court's
judgments subsequent and consonant to
Torrijos and Sendaydiego, should be set aside
and abandoned as being clearly erroneous and
unjustifiable.
Said Section 21 of Rule 3 is a rule of civil
procedure in ordinary civil actions. There is
neither authority nor justification for its
application in criminal procedure to civil
actions instituted together with and as part of
criminal actions. Nor is there any authority in
law for the summary conversion from the latter
category of an ordinary civil action upon the
death of the offender. . . .
Moreover, the civil action impliedly instituted in a
criminal proceeding for recovery of civil liability ex
delicto can hardly be categorized as an ordinary money
claim such as that referred to in Sec. 21, Rule 3
enforceable before the estate of the deceased accused.
Ordinary money claims referred to in Section 21, Rule
3 must be viewed in light of the provisions of Section 5,
Rule 86 involving claims against the estate, which in
Sendaydiego was held liable for Sendaydiego's civil
liability. "What are contemplated in Section 21 of Rule
3, in relation to Section 5 of Rule 86, 14 are contractual
money claims while the claims involved in civil
liability ex delicto may include even the restitution of
personal or real property." 15 Section 5, Rule 86
provides an exclusive enumeration of what claims may
be filed against the estate. These are: funeral expenses,
expenses for the last illness, judgments for money and
claim arising from contracts, expressed or implied. It is
clear that money claims arising from delict do not form
part of this exclusive enumeration. Hence, there could
be no legal basis in (1) treating a civil action ex delicto
as an ordinary contractual money claim referred to in
Section 21, Rule 3 of the Rules of Court and (2)
allowing it to survive by filing a claim therefor before
the estate of the deceased accused. Rather, it should be
extinguished upon extinction of the criminal action
engendered by the death of the accused pending finality
of his conviction.
62 | P a g e
Accordingly, we rule: if the private offended party,
upon extinction of the civil liability ex delicto desires to
recover damages from the same act or omission
complained of, he must subject to Section 1, Rule 111
16 (1985 Rules on Criminal Procedure as amended) file
a separate civil action, this time predicated not on the
felony previously charged but on other sources of
obligation. The source of obligation upon which the
separate civil action is premised determines against
whom the same shall be enforced.
If the same act or omission complained of also arises
from quasi-delict or may, by provision of law, result in
an injury to person or property (real or personal), the
separate civil action must be filed against the executor
or administrator 17 of the estate of the accused pursuant
to Sec. 1, Rule 87 of the Rules of Court:
Sec. 1. Actions which may and which may not
be brought against executor or administrator.
— No action upon a claim for the recovery of
money or debt or interest thereon shall be
commenced against the executor or
administrator; but actions to recover real or
personal property, or an interest therein, from
the estate, or to enforce a lien thereon, and
actions to recover damages for an injury to
person or property, real or personal, may be
commenced against him.
This is in consonance with our ruling in Belamala 18
where we held that, in recovering damages for injury to
persons thru an independent civil action based on
Article 33 of the Civil Code, the same must be filed
against the executor or administrator of the estate of
deceased accused and not against the estate under Sec.
5, Rule 86 because this rule explicitly limits the claim
to those for funeral expenses, expenses for the last
sickness of the decedent, judgment for money and
claims arising from contract, express or implied.
Contractual money claims, we stressed, refers only to
purely personal obligations other than those which
have their source in delict or tort.
Conversely, if the same act or omission complained of
also arises from contract, the separate civil action must
be filed against the estate of the accused, pursuant to
Sec. 5, Rule 86 of the Rules of Court.
From this lengthy disquisition, we summarize our
ruling herein:
1. Death of the accused pending appeal of his
conviction extinguishes his criminal liability as well as
the civil liability based solely thereon. As opined by
Justice Regalado, in this regard, "the death of the
accused prior to final judgment terminates his criminal
liability and only the civil liability directly arising from
and based solely on the offense committed, i.e., civil
liability ex delicto in senso strictiore."
2. Corollarily, the claim for civil liability survives
notwithstanding the death of accused, if the same may
also be predicated on a source of obligation other than
delict. 19 Article 1157 of the Civil Code enumerates
these other sources of obligation from which the civil
liability may arise as a result of the same act or
omission:
a) Law 20
b) Contracts
c) Quasi-contracts
d) . . .
e) Quasi-delicts
3. Where the civil liability survives, as explained in
Number 2 above, an action for recovery therefor may
be pursued but only by way of filing a separate civil
action and subject to Section 1, Rule 111 of the 1985
Rules on Criminal Procedure as amended. This separate
civil action may be enforced either against the
executor/administrator or the estate of the accused,
depending on the source of obligation upon which the
same is based as explained above.
4. Finally, the private offended party need not fear a
forfeiture of his right to file this separate civil action by
prescription, in cases where during the prosecution of
the criminal action and prior to its extinction, the
private-offended party instituted together therewith the
civil action. In such case, the statute of limitations on
the civil liability is deemed interrupted during the
pendency of the criminal case, conformably with
provisions of Article 1155 21 of the Civil Code, that
should thereby avoid any apprehension on a possible
privation of right by prescription. 22
Applying this set of rules to the case at bench, we hold
that the death of appellant Bayotas extinguished his
criminal liability and the civil liability based solely on
the act complained of, i.e., rape. Consequently, the
appeal is hereby dismissed without qualification.
WHEREFORE, the appeal of the late Rogelio Bayotas
is DISMISSED with costs de oficio.
SO ORDERED.
63 | P a g e
QUASI_DELICTS
G.R. No. L-48006 July 8, 1942
FAUSTO BARREDO, petitioner,
vs.
SEVERINO GARCIA and TIMOTEA ALMARIO,
respondents.
BOCOBO, J.:
This case comes up from the Court of Appeals which
held the petitioner herein, Fausto Barredo, liable in
damages for the death of Faustino Garcia caused by the
negligence of Pedro Fontanilla, a taxi driver employed
by said Fausto Barredo.
At about half past one in the morning of May 3, 1936,
on the road between Malabon and Navotas, Province of
Rizal, there was a head-on collision between a taxi of
the Malate Taxicab driven by Pedro Fontanilla and a
carretela guided by Pedro Dimapalis. The carretela was
overturned, and one of its passengers, 16-year-old boy
Faustino Garcia, suffered injuries from which he died
two days later. A criminal action was filed against
Fontanilla in the Court of First Instance of Rizal, and he
was convicted and sentenced to an indeterminate
sentence of one year and one day to two years of
prision correccional. The court in the criminal case
granted the petition that the right to bring a separate
civil action be reserved. The Court of Appeals affirmed
the sentence of the lower court in the criminal case.
Severino Garcia and Timotea Almario, parents of the
deceased on March 7, 1939, brought an action in the
Court of First Instance of Manila against Fausto
Barredo as the sole proprietor of the Malate Taxicab
and employer of Pedro Fontanilla. On July 8, 1939, the
Court of First Instance of Manila awarded damages in
favor of the plaintiffs for P2,000 plus legal interest from
the date of the complaint. This decision was modified
by the Court of Appeals by reducing the damages to
P1,000 with legal interest from the time the action was
instituted. It is undisputed that Fontanilla 's negligence
was the cause of the mishap, as he was driving on the
wrong side of the road, and at high speed. As to
Barredo's responsibility, the Court of Appeals found:
... It is admitted that defendant is Fontanilla's
employer. There is proof that he exercised the
diligence of a good father of a family to prevent
damage. (See p. 22, appellant's brief.) In fact it
is shown he was careless in employing
Fontanilla who had been caught several times
for violation of the Automobile Law and
speeding (Exhibit A) — violation which
appeared in the records of the Bureau of Public
Works available to be public and to himself.
Therefore, he must indemnify plaintiffs under
the provisions of article 1903 of the Civil Code.
The main theory of the defense is that the liability of
Fausto Barredo is governed by the Revised Penal Code;
hence, his liability is only subsidiary, and as there has
been no civil action against Pedro Fontanilla, the person
criminally liable, Barredo cannot be held responsible in
the case. The petitioner's brief states on page 10:
... The Court of Appeals holds that the
petitioner is being sued for his failure to
exercise all the diligence of a good father of a
family in the selection and supervision of Pedro
Fontanilla to prevent damages suffered by the
respondents. In other words, The Court of
Appeals insists on applying in the case article
1903 of the Civil Code. Article 1903 of the
Civil Code is found in Chapter II, Title 16,
Book IV of the Civil Code. This fact makes
said article to a civil liability arising from a
crime as in the case at bar simply because
Chapter II of Title 16 of Book IV of the Civil
Code, in the precise words of article 1903 of
the Civil Code itself, is applicable only to
"those (obligations) arising from wrongful or
negligent acts or commission not punishable by
law.
The gist of the decision of the Court of Appeals is
expressed thus:
... We cannot agree to the defendant's
contention. The liability sought to be imposed
upon him in this action is not a civil obligation
arising from a felony or a misdemeanor (the
crime of Pedro Fontanilla,), but an obligation
imposed in article 1903 of the Civil Code by
reason of his negligence in the selection or
supervision of his servant or employee.
The pivotal question in this case is whether the
plaintiffs may bring this separate civil action against
Fausto Barredo, thus making him primarily and
directly, responsible under article 1903 of the Civil
Code as an employer of Pedro Fontanilla. The
defendant maintains that Fontanilla's negligence being
punishable by the Penal Code, his (defendant's) liability
as an employer is only subsidiary, according to said
Penal code, but Fontanilla has not been sued in a civil
action and his property has not been exhausted. To
decide the main issue, we must cut through the tangle
that has, in the minds of many confused and jumbled
together delitos and cuasi delitos, or crimes under the
Penal Code and fault or negligence under articles 1902-
1910 of the Civil Code. This should be done, because
justice may be lost in a labyrinth, unless principles and
remedies are distinctly envisaged. Fortunately, we are
aided in our inquiry by the luminous presentation of the
perplexing subject by renown jurists and we are
likewise guided by the decisions of this Court in
previous cases as well as by the solemn clarity of the
consideration in several sentences of the Supreme
Tribunal of Spain.
Authorities support the proposition that a quasi-delict
or "culpa aquiliana " is a separate legal institution
under the Civil Code with a substantivity all its own,
and individuality that is entirely apart and independent
from delict or crime. Upon this principle and on the
wording and spirit article 1903 of the Civil Code, the
primary and direct responsibility of employers may be
safely anchored.
The pertinent provisions of the Civil Code and Revised
Penal Code are as follows:
64 | P a g e
 CIVIL CODE
ART. 1089 Obligations arise from law, from
contracts and quasi-contracts, and from acts
and omissions which are unlawful or in which
any kind of fault or negligence intervenes.
xxx xxx xxx
ART. 1092. Civil obligations arising from
felonies or misdemeanors shall be governed by
the provisions of the Penal Code.
ART. 1093. Those which are derived from acts
or omissions in which fault or negligence, not
punishable by law, intervenes shall be subject
to the provisions of Chapter II, Title XVI of
this book.
xxx xxx xxx
ART 1902. Any person who by an act or
omission causes damage to another by his fault
or negligence shall be liable for the damage so
done.
ART. 1903. The obligation imposed by the next
preceding article is enforcible, not only for
personal acts and omissions, but also for those
of persons for whom another is responsible.
The father and in, case of his death or
incapacity, the mother, are liable for any
damages caused by the minor children who live
with them.
Guardians are liable for damages done by
minors or incapacitated persons subject to their
authority and living with them.
Owners or directors of an establishment or
business are equally liable for any damages
caused by their employees while engaged in the
branch of the service in which employed, or on
occasion of the performance of their duties.
The State is subject to the same liability when it
acts through a special agent, but not if the
damage shall have been caused by the official
upon whom properly devolved the duty of
doing the act performed, in which case the
provisions of the next preceding article shall be
applicable.
Finally, teachers or directors of arts trades are
liable for any damages caused by their pupils or
apprentices while they are under their custody.
The liability imposed by this article shall cease
in case the persons mentioned therein prove
that they are exercised all the diligence of a
good father of a family to prevent the damage.
ART. 1904. Any person who pays for damage
caused by his employees may recover from the
latter what he may have paid.
REVISED PENAL CODE
ART. 100. Civil liability of a person guilty of
felony. — Every person criminally liable for a
felony is also civilly liable.
ART. 101. Rules regarding civil liability in
certain cases. — The exemption from criminal
liability established in subdivisions 1, 2, 3, 5,
and 6 of article 12 and in subdivision 4 of
article 11 of this Code does not include
exemption from civil liability, which shall be
enforced to the following rules:
First. In cases of subdivision, 1, 2 and 3 of
article 12 the civil liability for acts committed
by any imbecile or insane person, and by a
person under nine years of age, or by one over
nine but under fifteen years of age, who has
acted without discernment shall devolve upon
those having such person under their legal
authority or control, unless it appears that there
was no fault or negligence on their part.
Should there be no person having such insane,
imbecile or minor under his authority, legal
guardianship, or control, or if such person be
insolvent, said insane, imbecile, or minor shall
respond with their own property, excepting
property exempt from execution, in accordance
with the civil law.
Second. In cases falling within subdivision 4 of
article 11, the person for whose benefit the
harm has been prevented shall be civilly liable
in proportion to the benefit which they may
have received.
The courts shall determine, in their sound discretion,
the proportionate amount for which each one shall be
liable.
When the respective shares can not be equitably
determined, even approximately, or when the liability
also attaches to the Government, or to the majority of
the inhabitants of the town, and, in all events, whenever
the damage has been caused with the consent of the
authorities or their agents, indemnification shall be
made in the manner prescribed by special laws or
regulations.
Third. In cases falling within subdivisions 5 and 6 of
article 12, the persons using violence or causing the fear
shall be primarily liable and secondarily, or, if there be
no such persons, those doing the act shall be liable,
saving always to the latter that part of their property
exempt from execution.
ART. 102. Subsidiary civil liability of innkeepers,
tavern keepers and proprietors of establishment. —
In default of persons criminally liable, innkeepers,
tavern keepers, and any other persons or
corporation shall be civilly liable for crimes
committed in their establishments, in all cases
where a violation of municipal ordinances or some
general or special police regulation shall have been
committed by them or their employees.
65 | P a g e
 Innkeepers are also subsidiarily liable for the
restitution of goods taken by robbery or theft
within their houses lodging therein, or the
person, or for the payment of the value thereof,
provided that such guests shall have notified in
advance the innkeeper himself, or the person
representing him, of the deposit of such goods
within the inn; and shall furthermore have
followed the directions which such innkeeper
or his representative may have given them with
respect to the care of and vigilance over such
goods. No liability shall attach in case of
robbery with violence against or intimidation
against or intimidation of persons unless
committed by the innkeeper's employees.
ART. 103. Subsidiary civil liability of other
persons. — The subsidiary liability established
in the next preceding article shall also apply to
employers, teachers, persons, and corporations
engaged in any kind of industry for felonies
committed by their servants, pupils, workmen,
apprentices, or employees in the discharge of
their duties.
xxx xxx xxx
ART. 365. Imprudence and negligence. — Any
person who, by reckless imprudence, shall
commit any act which, had it been intentional,
would constitute a grave felony, shall suffer the
penalty of arresto mayor in its maximum period
to prision correccional in its minimum period;
if it would have constituted a less grave felony,
the penalty of arresto mayor in its minimum
and medium periods shall be imposed.
Any person who, by simple imprudence or
negligence, shall commit an act which would
otherwise constitute a grave felony, shall suffer
the penalty of arresto mayor in its medium and
maximum periods; if it would have constituted
a less serious felony, the penalty of arresto
mayor in its minimum period shall be
imposed."
It will thus be seen that while the terms of articles 1902
of the Civil Code seem to be broad enough to cover the
driver's negligence in the instant case, nevertheless
article 1093 limits cuasi-delitos to acts or omissions
"not punishable by law." But inasmuch as article 365 of
the Revised Penal Code punishes not only reckless but
even simple imprudence or negligence, the fault or
negligence under article 1902 of the Civil Code has
apparently been crowded out. It is this overlapping that
makes the "confusion worse confounded." However, a
closer study shows that such a concurrence of scope in
regard to negligent acts does not destroy the distinction
between the civil liability arising from a crime and the
responsibility for cuasi-delitos or culpa extra-
contractual. The same negligent act causing damages
may produce civil liability arising from a crime under
article 100 of the Revised Penal Code, or create an
action for cuasi-delito or culpa extra-contractual under
articles 1902-1910 of the Civil Code.
The individuality of cuasi-delito or culpa extra-
contractual looms clear and unmistakable. This legal
institution is of ancient lineage, one of its early
ancestors being the Lex Aquilia in the Roman Law. In
fact, in Spanish legal terminology, this responsibility is
often referred to as culpa aquiliana. The Partidas also
contributed to the genealogy of the present fault or
negligence under the Civil Code; for instance, Law 6,
Title 15, of Partida 7, says: "Tenudo es de fazer
emienda, porque, como quier que el non fizo a
sabiendas en daño al otro, pero acaescio por su culpa."
The distinctive nature of cuasi-delitos survives in the
Civil Code. According to article 1089, one of the five
sources of obligations is this legal institution of cuasi-
delito or culpa extra-contractual: "los actos . . . en que
intervenga cualquier genero de culpa o negligencia."
Then article 1093 provides that this kind of obligation
shall be governed by Chapter II of Title XVI of Book
IV, meaning articles 1902-0910. This portion of the
Civil Code is exclusively devoted to the legal institution
of culpa aquiliana.
Some of the differences between crimes under the Penal
Code and the culpa aquiliana or cuasi-delito under the
Civil Code are:
1. That crimes affect the public interest, while cuasi-
delitos are only of private concern.
2. That, consequently, the Penal Code punishes or
corrects the criminal act, while the Civil Code, by
means of indemnification, merely repairs the damage.
3. That delicts are not as broad as quasi-delicts, because
the former are punished only if there is a penal law
clearly covering them, while the latter, cuasi-delitos,
include all acts in which "any king of fault or
negligence intervenes." However, it should be noted
that not all violations of the penal law produce civil
responsibility, such as begging in contravention of
ordinances, violation of the game laws, infraction of the
rules of traffic when nobody is hurt. (See Colin and
Capitant, "Curso Elemental de Derecho Civil," Vol. 3,
p. 728.)
Let us now ascertain what some jurists say on the
separate existence of quasi-delicts and the employer's
primary and direct liability under article 1903 of the
Civil Code.
Dorado Montero in his essay on "Responsibilidad" in
the "Enciclopedia Juridica Española" (Vol. XXVII, p.
414) says:
El concepto juridico de la responsabilidad civil
abarca diversos aspectos y comprende a
diferentes personas. Asi, existe una
responsabilidad civil propiamente dicha, que en
ningun casl lleva aparejada responsabilidad
criminal alguna, y otra que es consecuencia
indeclinable de la penal que nace de todo delito
o falta."
66 | P a g e
 The juridical concept of civil responsibility has
various aspects and comprises different
persons. Thus, there is a civil responsibility,
properly speaking, which in no case carries
with it any criminal responsibility, and another
which is a necessary consequence of the penal
liability as a result of every felony or
misdemeanor."
Maura, an outstanding authority, was consulted on the
following case: There had been a collision between two
trains belonging respectively to the Ferrocarril
Cantabrico and the Ferrocarril del Norte. An employee
of the latter had been prosecuted in a criminal case, in
which the company had been made a party as
subsidiarily responsible in civil damages. The employee
had been acquitted in the criminal case, and the
employer, the Ferrocarril del Norte, had also been
exonerated. The question asked was whether the
Ferrocarril Cantabrico could still bring a civil action for
damages against the Ferrocarril del Norte. Maura's
opinion was in the affirmative, stating in part (Maura,
Dictamenes, Vol. 6, pp. 511-513):
Quedando las cosas asi, a proposito de la
realidad pura y neta de los hechos, todavia
menos parece sostenible que exista cosa
juzgada acerca de la obligacion civil de
indemnizar los quebrantos y menoscabos
inferidos por el choque de los trenes. El titulo
en que se funda la accion para demandar el
resarcimiento, no puede confundirse con las
responsabilidades civiles nacidas de delito,
siquiera exista en este, sea el cual sea, una
culpa rodeada de notas agravatorias que
motivan sanciones penales, mas o menos
severas. La lesion causada por delito o falta en
los derechos civiles, requiere restituciones,
reparaciones o indemnizaciones, que cual la
pena misma atañen al orden publico; por tal
motivo vienen encomendadas, de ordinario, al
Ministerio Fiscal; y claro es que si por esta via
se enmiendan los quebrantos y menoscabos, el
agraviado excusa procurar el ya conseguido
desagravio; pero esta eventual coincidencia de
los efectos, no borra la diversidad originaria de
las acciones civiles para pedir indemnizacion.
Estas, para el caso actual (prescindiendo de
culpas contractuales, que no vendrian a cuento
y que tiene otro regimen), dimanan, segun el
articulo 1902 del Codigo Civil, de toda accion
u omision, causante de daños o perjuicios, en
que intervenga culpa o negligencia. Es trivial
que acciones semejantes son ejercitadas ante
los Tribunales de lo civil cotidianamente, sin
que la Justicia punitiva tenga que mezclarse en
los asuntos. Los articulos 18 al 21 y 121 al 128
del Codigo Penal, atentos al espiritu y a los
fines sociales y politicos del mismo,
desenvuelven y ordenan la materia de
responsabilidades civiles nacidas de delito, en
terminos separados del regimen por ley comun
de la culpa que se denomina aquiliana, por
alusion a precedentes legislativos del Corpus
Juris. Seria intempestivo un paralelo entre
aquellas ordenaciones, y la de la obligacion de
indemnizar a titulo de culpa civil; pero viene al
caso y es necesaria una de las diferenciaciones
que en el tal paralelo se notarian.
Los articulos 20 y 21 del Codigo Penal,
despues de distribuir a su modo las
responsabilidades civiles, entre los que sean por
diversos conceptos culpables del delito o falta,
las hacen extensivas a las empresas y los
establecimientos al servicio de los cuales estan
los delincuentes; pero con caracter subsidiario,
o sea, segun el texto literal, en defecto de los
que sean responsables criminalmente. No
coincide en ello el Codigo Civil, cuyo articulo
1903, dice; La obligacion que impone el
articulo anterior es exigible, no solo por los
actos y omisiones propios, sino por los de
aquellas personas de quienes se debe
responder; personas en la enumeracion de las
cuales figuran los dependientes y empleados de
los establecimientos o empresas, sea por actos
del servicio, sea con ocasion de sus funciones.
Por esto acontece, y se observa en la
jurisprudencia, que las empresas, despues de
intervenir en las causas criminales con el
caracter subsidiario de su responsabilidad civil
por razon del delito, son demandadas y
condenadas directa y aisladamente, cuando se
trata de la obligacion, ante los tribunales
civiles.
Siendo como se ve, diverso el titulo de esta
obligacion, y formando verdadero postulado de
nuestro regimen judicial la separacion entre
justicia punitiva y tribunales de lo civil, de
suerte que tienen unos y otros normas de fondo
en distintos cuerpos legales, y diferentes modos
de proceder, habiendose, por añadidura,
abstenido de asistir al juicio criminal la
Compañia del Ferrocarril Cantabrico, que se
reservo ejercitar sus acciones, parece innegable
que la de indemnizacion por los daños y
perjuicios que le irrogo el choque, no estuvo
sub judice ante el Tribunal del Jurado, ni fue
sentenciada, sino que permanecio intacta, al
pronunciarse el fallo de 21 de marzo. Aun
cuando el veredicto no hubiese sido de
inculpabilidad, mostrose mas arriba, que tal
accion quedaba legitimamente reservada para
despues del proceso; pero al declararse que no
existio delito, ni responsabilidad dimanada de
delito, materia unica sobre que tenian
jurisdiccion aquellos juzgadores, se redobla el
motivo para la obligacion civil ex lege, y se
patentiza mas y mas que la accion para pedir su
cumplimiento permanece incolume, extraña a la
cosa juzgada.
67 | P a g e
As things are, apropos of the reality pure and
simple of the facts, it seems less tenable that
there should be res judicata with regard to the
civil obligation for damages on account of the
losses caused by the collision of the trains. The
title upon which the action for reparation is
based cannot be confused with the civil
responsibilities born of a crime, because there
exists in the latter, whatever each nature, a
culpa surrounded with aggravating aspects
which give rise to penal measures that are more
or less severe. The injury caused by a felony or
misdemeanor upon civil rights requires
restitutions, reparations, or indemnifications
which, like the penalty itself, affect public
order; for this reason, they are ordinarily
entrusted to the office of the prosecuting
attorney; and it is clear that if by this means the
losses and damages are repaired, the injured
party no longer desires to seek another relief;
but this coincidence of effects does not
eliminate the peculiar nature of civil actions to
ask for indemnity.
Such civil actions in the present case (without
referring to contractual faults which are not
pertinent and belong to another scope) are
derived, according to article 1902 of the Civil
Code, from every act or omission causing
losses and damages in which culpa or
negligence intervenes. It is unimportant that
such actions are every day filed before the civil
courts without the criminal courts interfering
therewith. Articles 18 to 21 and 121 to 128 of
the Penal Code, bearing in mind the spirit and
the social and political purposes of that Code,
develop and regulate the matter of civil
responsibilities arising from a crime, separately
from the regime under common law, of culpa
which is known as aquiliana, in accordance
with legislative precedent of the Corpus Juris.
It would be unwarranted to make a detailed
comparison between the former provisions and
that regarding the obligation to indemnify on
account of civil culpa; but it is pertinent and
necessary to point out to one of such
differences.
Articles 20 and 21 of the Penal Code, after
distriburing in their own way the civil
responsibilities among those who, for different
reasons, are guilty of felony or misdemeanor,
make such civil responsibilities applicable to
enterprises and establishments for which the
guilty parties render service, but with
subsidiary character, that is to say, according to
the wording of the Penal Code, in default of
those who are criminally responsible. In this
regard, the Civil Code does not coincide
because article 1903 says: "The obligation
imposed by the next preceding article is
demandable, not only for personal acts and
omissions, but also for those of persons for
whom another is responsible." Among the
persons enumerated are the subordinates and
employees of establishments or enterprises,
either for acts during their service or on the
occasion of their functions. It is for this reason
that it happens, and it is so observed in judicial
decisions, that the companies or enterprises,
after taking part in the criminal cases because
of their subsidiary civil responsibility by reason
of the crime, are sued and sentenced directly
and separately with regard to the obligation,
before the civil courts.
Seeing that the title of this obligation is
different, and the separation between punitive
justice and the civil courts being a true
postulate of our judicial system, so that they
have different fundamental norms in different
codes, as well as different modes of procedure,
and inasmuch as the Compaña del Ferrocarril
Cantabrico has abstained from taking part in
the criminal case and has reserved the right to
exercise its actions, it seems undeniable that the
action for indemnification for the losses and
damages caused to it by the collision was not
sub judice before the Tribunal del Jurado, nor
was it the subject of a sentence, but it remained
intact when the decision of March 21 was
rendered. Even if the verdict had not been that
of acquittal, it has already been shown that such
action had been legitimately reserved till after
the criminal prosecution; but because of the
declaration of the non-existence of the felony
and the non-existence of the responsibility
arising from the crime, which was the sole
subject matter upon which the Tribunal del
Jurado had jurisdiction, there is greater reason
for the civil obligation ex lege, and it becomes
clearer that the action for its enforcement
remain intact and is not res judicata.
Laurent, a jurist who has written a monumental work on
the French Civil Code, on which the Spanish Civil
Code is largely based and whose provisions on cuasi-
delito or culpa extra-contractual are similar to those of
the Spanish Civil Code, says, referring to article 1384
of the French Civil Code which corresponds to article
1903, Spanish Civil Code:
The action can be brought directly against the
person responsible (for another), without
including the author of the act. The action
against the principal is accessory in the sense
that it implies the existence of a prejudicial act
committed by the employee, but it is not
subsidiary in the sense that it can not be
instituted till after the judgment against the
author of the act or at least, that it is subsidiary
to the principal action; the action for
responsibility (of the employer) is in itself a
principal action. (Laurent, Principles of French
Civil Law, Spanish translation, Vol. 20, pp.
734-735.)
Amandi, in his "Cuestionario del Codigo Civil
Reformado" (Vol. 4, pp. 429, 430), declares that the
responsibility of the employer is principal and not
subsidiary. He writes:
68 | P a g e
 Cuestion 1. La responsabilidad declarada en el
articulo 1903 por las acciones u omisiones de
aquellas personas por las que se debe
responder, es subsidiaria? es principal? Para
contestar a esta pregunta es necesario saber, en
primer lugar, en que se funda el precepto legal.
Es que realmente se impone una
responsabilidad por una falta ajena? Asi parece
a primera vista; pero semejante afirmacion seria
contraria a la justicia y a la maxima universal,
segun la que las faltas son personales, y cada
uno responde de aquellas que le son
imputables. La responsabilidad de que tratamos
se impone con ocasion de un delito o culpa,
pero no por causa de ellos, sino por causa del
causi delito, esto es, de la imprudencia o de la
negligencia del padre, del tutor, del dueño o
director del establecimiento, del maestro, etc.
Cuando cualquiera de las personas que enumera
el articulo citado (menores de edad,
incapacitados, dependientes, aprendices)
causan un daño, la ley presume que el padre, el
tutor, el maestro, etc., han cometido una falta
de negligencia para prevenir o evitar el daño.
Esta falta es la que la ley castiga. No hay, pues,
responsabilidad por un hecho ajeno, sino en la
apariencia; en realidad la responsabilidad se
exige por un hecho propio. La idea de que esa
responsabilidad sea subsidiaria es, por lo tanto,
completamente inadmisible.
Question No. 1. Is the responsibility declared in
article 1903 for the acts or omissions of those
persons for who one is responsible, subsidiary
or principal? In order to answer this question it
is necessary to know, in the first place, on what
the legal provision is based. Is it true that there
is a responsibility for the fault of another
person? It seems so at first sight; but such
assertion would be contrary to justice and to the
universal maxim that all faults are personal, and
that everyone is liable for those faults that can
be imputed to him. The responsibility in
question is imposed on the occasion of a crime
or fault, but not because of the same, but
because of the cuasi-delito, that is to say, the
imprudence or negligence of the father,
guardian, proprietor or manager of the
establishment, of the teacher, etc. Whenever
anyone of the persons enumerated in the article
referred to (minors, incapacitated persons,
employees, apprentices) causes any damage,
the law presumes that the father, guardian,
teacher, etc. have committed an act of
negligence in not preventing or avoiding the
damage. It is this fault that is condemned by the
law. It is, therefore, only apparent that there is a
responsibility for the act of another; in reality
the responsibility exacted is for one's own act.
The idea that such responsibility is subsidiary
is, therefore, completely inadmissible.
Oyuelos, in his "Digesto: Principios, Doctrina y
Jurisprudencia, Referentes al Codigo Civil Español,"
says in Vol. VII, p. 743:
Es decir, no responde de hechos ajenos, porque
se responde solo de su propia culpa, doctrina
del articulo 1902; mas por excepcion, se
responde de la ajena respecto de aquellas
personas con las que media algun nexo o
vinculo, que motiva o razona la
responsabilidad. Esta responsabilidad, es
directa o es subsidiaria? En el orden penal, el
Codigo de esta clase distingue entre menores e
incapacitados y los demas, declarando directa
la primera (articulo 19) y subsidiaria la segunda
(articulos 20 y 21); pero en el orden civil, en el
caso del articulo 1903, ha de entenderse directa,
por el tenor del articulo que impone la
responsabilidad precisamente "por los actos de
aquellas personas de quienes se deba
responder."
That is to say, one is not responsible for the
acts of others, because one is liable only for his
own faults, this being the doctrine of article
1902; but, by exception, one is liable for the
acts of those persons with whom there is a bond
or tie which gives rise to the responsibility. Is
this responsibility direct or subsidiary? In the
order of the penal law, the Penal Code
distinguishes between minors and incapacitated
persons on the one hand, and other persons on
the other, declaring that the responsibility for
the former is direct (article 19), and for the
latter, subsidiary (articles 20 and 21); but in the
scheme of the civil law, in the case of article
1903, the responsibility should be understood
as direct, according to the tenor of that articles,
for precisely it imposes responsibility "for the
acts of those persons for whom one should be
responsible."
Coming now to the sentences of the Supreme Tribunal
of Spain, that court has upheld the principles above set
forth: that a quasi-delict or culpa extra-contractual is a
separate and distinct legal institution, independent from
the civil responsibility arising from criminal liability,
and that an employer is, under article 1903 of the Civil
Code, primarily and directly responsible for the
negligent acts of his employee.
One of the most important of those Spanish decisions is
that of October 21, 1910. In that case, Ramon Lafuente
died as the result of having been run over by a street car
owned by the "compañia Electric Madrileña de
Traccion." The conductor was prosecuted in a criminal
case but he was acquitted. Thereupon, the widow filed a
civil action against the street car company, paying for
damages in the amount of 15,000 pesetas. The lower
court awarded damages; so the company appealed to
the Supreme Tribunal, alleging violation of articles
1902 and 1903 of the Civil Code because by final
judgment the non-existence of fault or negligence had
been declared. The Supreme Court of Spain dismissed
the appeal, saying:
69 | P a g e
Considerando que el primer motivo del recurso
se funda en el equivocado supuesto de que el
Tribunal a quo, al condonar a la compañia
Electrica Madrileña al pago del daño causado
con la muerte de Ramon La fuente Izquierdo,
desconoce el valor y efectos juridicos de la
sentencia absolutoria deictada en la causa
criminal que se siguio por el mismo hecho,
cuando es lo cierto que de este han conocido las
dos jurisdicciones bajo diferentes as pectos, y
como la de lo criminal declrao dentro de los
limites de su competencia que el hecho de que
se trata no era constitutivo de delito por no
haber mediado descuido o negligencia graves,
lo que no excluye, siendo este el unico
fundamento del fallo absolutorio, el concurso
de la culpa o negligencia no califacadas, fuente
de obligaciones civiles segun el articulo 1902
del Codigo, y que alcanzan, segun el 1903,
netre otras perosnas, a los Directores de
establecimientos o empresas por los daños
causados por sus dependientes en determinadas
condiciones, es manifesto que la de lo civil, al
conocer del mismo hehco baho este ultimo
aspecto y al condenar a la compañia recurrente
a la indemnizacion del daño causado por uno de
sus empleados, lejos de infringer los
mencionados textos, en relacion con el articulo
116 de la Ley de Enjuciamiento Criminal, se ha
atenido estrictamente a ellos, sin invadir
atribuciones ajenas a su jurisdiccion propia, ni
contrariar en lo mas minimo el fallo recaido en
la causa.
Considering that the first ground of the appeal
is based on the mistaken supposition that the
trial court, in sentencing the Compañia
Madrileña to the payment of the damage
caused by the death of Ramon Lafuente
Izquierdo, disregards the value and juridical
effects of the sentence of acquittal rendered in
the criminal case instituted on account of the
same act, when it is a fact that the two
jurisdictions had taken cognizance of the same
act in its different aspects, and as the criminal
jurisdiction declared within the limits of its
authority that the act in question did not
constitute a felony because there was no grave
carelessness or negligence, and this being the
only basis of acquittal, it does no exclude the
co-existence of fault or negligence which is not
qualified, and is a source of civil obligations
according to article 1902 of the Civil Code,
affecting, in accordance with article 1903,
among other persons, the managers of
establishments or enterprises by reason of the
damages caused by employees under certain
conditions, it is manifest that the civil
jurisdiccion in taking cognizance of the same
act in this latter aspect and in ordering the
company, appellant herein, to pay an indemnity
for the damage caused by one of its employees,
far from violating said legal provisions, in
relation with article 116 of the Law of Criminal
Procedure, strictly followed the same, without
invading attributes which are beyond its own
jurisdiction, and without in any way
contradicting the decision in that cause.
(Emphasis supplied.)
It will be noted, as to the case just cited:
First. That the conductor was not sued in a civil case,
either separately or with the street car company. This is
precisely what happens in the present case: the driver,
Fontanilla, has not been sued in a civil action, either
alone or with his employer.
Second. That the conductor had been acquitted of grave
criminal negligence, but the Supreme Tribunal of Spain
said that this did not exclude the co-existence of fault or
negligence, which is not qualified, on the part of the
conductor, under article 1902 of the Civil Code. In the
present case, the taxi driver was found guilty of
criminal negligence, so that if he had even sued for his
civil responsibility arising from the crime, he would
have been held primarily liable for civil damages, and
Barredo would have been held subsidiarily liable for the
same. But the plaintiffs are directly suing Barredo, on
his primary responsibility because of his own presumed
negligence — which he did not overcome — under
article 1903. Thus, there were two liabilities of Barredo:
first, the subsidiary one because of the civil liability of
the taxi driver arising from the latter's criminal
negligence; and, second, Barredo's primary liability as
an employer under article 1903. The plaintiffs were free
to choose which course to take, and they preferred the
second remedy. In so doing, they were acting within
their rights. It might be observed in passing, that the
plaintiff choose the more expeditious and effective
method of relief, because Fontanilla was either in
prison, or had just been released, and besides, he was
probably without property which might be seized in
enforcing any judgment against him for damages.
Third. That inasmuch as in the above sentence of
October 21, 1910, the employer was held liable civilly,
notwithstanding the acquittal of the employee (the
conductor) in a previous criminal case, with greater
reason should Barredo, the employer in the case at bar,
be held liable for damages in a civil suit filed against
him because his taxi driver had been convicted. The
degree of negligence of the conductor in the Spanish
case cited was less than that of the taxi driver,
Fontanilla, because the former was acquitted in the
previous criminal case while the latter was found guilty
of criminal negligence and was sentenced to an
indeterminate sentence of one year and one day to two
years of prision correccional.
(See also Sentence of February 19, 1902, which is
similar to the one above quoted.)
In the Sentence of the Supreme Court of Spain, dated
February 14, 1919, an action was brought against a
railroad company for damages because the station
agent, employed by the company, had unjustly and
fraudulently, refused to deliver certain articles
consigned to the plaintiff. The Supreme Court of Spain
held that this action was properly under article 1902 of
the Civil Code, the court saying:
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Considerando que la sentencia discutida
reconoce, en virtud de los hechos que consigna
con relacion a las pruebas del pleito: 1.º, que las
expediciones facturadas por la compañia
ferroviaria a la consignacion del actor de las
vasijas vacias que en su demanda relacionan
tenian como fin el que este las devolviera a sus
remitentes con vinos y alcoholes; 2.º, que
llegadas a su destino tales mercanias no se
quisieron entregar a dicho consignatario por el
jefe de la estacion sin motivo justificado y con
intencion dolosa, y 3.º, que la falta de entrega
de estas expediciones al tiempo de reclamarlas
el demandante le originaron daños y perjuicios
en cantidad de bastante importancia como
expendedor al por mayor que era de vinos y
alcoholes por las ganancias que dejo de obtener
al verse privado de servir los pedidos que se le
habian hecho por los remitentes en los envases:
Considerando que sobre esta base hay
necesidad de estimar los cuatro motivos que
integran este recurso, porque la demanda inicial
del pleito a que se contrae no contiene accion
que nazca del incumplimiento del contrato de
transporte, toda vez que no se funda en el
retraso de la llegada de las mercancias ni de
ningun otro vinculo contractual entre las partes
contendientes, careciendo, por tanto, de
aplicacion el articulo 371 del Codigo de
Comercio, en que principalmente descansa el
fallo recurrido, sino que se limita a pedir la
reparaction de los daños y perjuicios
producidos en el patrimonio del actor por la
injustificada y dolosa negativa del porteador a
la entrega de las mercancias a su nombre
consignadas, segun lo reconoce la sentencia, y
cuya responsabilidad esta claramente
sancionada en el articulo 1902 del Codigo
Civil, que obliga por el siguiente a la Compañia
demandada como ligada con el causante de
aquellos por relaciones de caracter economico y
de jurarquia administrativa.
Considering that the sentence, in question
recognizes, in virtue of the facts which it
declares, in relation to the evidence in the case:
(1) that the invoice issued by the railroad
company in favor of the plaintiff contemplated
that the empty receptacles referred to in the
complaint should be returned to the consignors
with wines and liquors; (2) that when the said
merchandise reached their destination, their
delivery to the consignee was refused by the
station agent without justification and with
fraudulent intent, and (3) that the lack of
delivery of these goods when they were
demanded by the plaintiff caused him losses
and damages of considerable importance, as he
was a wholesale vendor of wines and liquors
and he failed to realize the profits when he was
unable to fill the orders sent to him by the
consignors of the receptacles:
Considering that upon this basis there is need of
upholding the four assignments of error, as the
original complaint did not contain any cause of
action arising from non-fulfillment of a contract
of transportation, because the action was not
based on the delay of the goods nor on any
contractual relation between the parties litigant
and, therefore, article 371 of the Code of
Commerce, on which the decision appealed
from is based, is not applicable; but it limits to
asking for reparation for losses and damages
produced on the patrimony of the plaintiff on
account of the unjustified and fraudulent
refusal of the carrier to deliver the goods
consigned to the plaintiff as stated by the
sentence, and the carrier's responsibility is
clearly laid down in article 1902 of the Civil
Code which binds, in virtue of the next article,
the defendant company, because the latter is
connected with the person who caused the
damage by relations of economic character and
by administrative hierarchy. (Emphasis
supplied.)
The above case is pertinent because it shows that the
same act may come under both the Penal Code and the
Civil Code. In that case, the action of the agent was
unjustified and fraudulent and therefore could have
been the subject of a criminal action. And yet, it was
held to be also a proper subject of a civil action under
article 1902 of the Civil Code. It is also to be noted that
it was the employer and not the employee who was
being sued.
Let us now examine the cases previously decided by
this Court.
In the leading case of Rakes vs. Atlantic Gulf and
Pacific Co. (7 Phil., 359, 362-365 [year 1907]), the trial
court awarded damages to the plaintiff, a laborer of the
defendant, because the latter had negligently failed to
repair a tramway in consequence of which the rails slid
off while iron was being transported, and caught the
plaintiff whose leg was broken. This Court held:
It is contended by the defendant, as its first
defense to the action that the necessary
conclusion from these collated laws is that the
remedy for injuries through negligence lies
only in a criminal action in which the official
criminally responsible must be made primarily
liable and his employer held only subsidiarily
to him. According to this theory the plaintiff
should have procured the arrest of the
representative of the company accountable for
not repairing the track, and on his prosecution a
suitable fine should have been imposed,
payable primarily by him and secondarily by
his employer.
This reasoning misconceived the plan of the
Spanish codes upon this subject. Article 1093
of the Civil Code makes obligations arising
from faults or negligence not punished by the
law, subject to the provisions of Chapter II of
Title XVI. Section 1902 of that chapter reads:
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 "A person who by an act or omission
causes damage to another when there is
fault or negligence shall be obliged to
repair the damage so done.
"SEC. 1903. The obligation imposed
by the preceeding article is
demandable, not only for personal acts
and omissions, but also for those of the
persons for whom they should be
responsible.
"The father, and on his death or
incapacity, the mother, is liable for the
damages caused by the minors who live
with them.
xxx xxx xxx
"Owners or directors of an
establishment or enterprise are equally
liable for the damages caused by their
employees in the service of the
branches in which the latter may be
employed or in the performance of
their duties.
xxx xxx xxx
"The liability referred to in this article
shall cease when the persons
mentioned therein prove that they
employed all the diligence of a good
father of a family to avoid the
damage."
As an answer to the argument urged in this
particular action it may be sufficient to point
out that nowhere in our general statutes is the
employer penalized for failure to provide or
maintain safe appliances for his workmen. His
obligation therefore is one 'not punished by the
laws' and falls under civil rather than criminal
jurisprudence. But the answer may be a broader
one. We should be reluctant, under any
conditions, to adopt a forced construction of
these scientific codes, such as is proposed by
the defendant, that would rob some of these
articles of effect, would shut out litigants
against their will from the civil courts, would
make the assertion of their rights dependent
upon the selection for prosecution of the proper
criminal offender, and render recovery doubtful
by reason of the strict rules of proof prevailing
in criminal actions. Even if these articles had
always stood alone, such a construction would
be unnecessary, but clear light is thrown upon
their meaning by the provisions of the Law of
Criminal Procedure of Spain (Ley de
Enjuiciamiento Criminal), which, though never
in actual force in these Islands, was formerly
given a suppletory or explanatory effect. Under
article 111 of this law, both classes of action,
civil and criminal, might be prosecuted jointly
or separately, but while the penal action was
pending the civil was suspended. According to
article 112, the penal action once started, the
civil remedy should be sought therewith, unless
it had been waived by the party injured or been
expressly reserved by him for civil proceedings
for the future. If the civil action alone was
prosecuted, arising out of a crime that could be
enforced only on private complaint, the penal
action thereunder should be extinguished.
These provisions are in harmony with those of
articles 23 and 133 of our Penal Code on the
same subject.
An examination of this topic might be carried
much further, but the citation of these articles
suffices to show that the civil liability was not
intended to be merged in the criminal nor even
to be suspended thereby, except as expressly
provided in the law. Where an individual is
civilly liable for a negligent act or omission, it
is not required that the injured party should
seek out a third person criminally liable whose
prosecution must be a condition precedent to
the enforcement of the civil right.
Under article 20 of the Penal Code the
responsibility of an employer may be regarded
as subsidiary in respect of criminal actions
against his employees only while they are in
process of prosecution, or in so far as they
determine the existence of the criminal act from
which liability arises, and his obligation under
the civil law and its enforcement in the civil
courts is not barred thereby unless by the
election of the injured person. Inasmuch as no
criminal proceeding had been instituted,
growing our of the accident in question, the
provisions of the Penal Code can not affect this
action. This construction renders it unnecessary
to finally determine here whether this
subsidiary civil liability in penal actions has
survived the laws that fully regulated it or has
been abrogated by the American civil and
criminal procedure now in force in the
Philippines.
The difficulty in construing the articles of the
code above cited in this case appears from the
briefs before us to have arisen from the
interpretation of the words of article 1093,
"fault or negligence not punished by law," as
applied to the comprehensive definition of
offenses in articles 568 and 590 of the Penal
Code. It has been shown that the liability of an
employer arising out of his relation to his
employee who is the offender is not to be
regarded as derived from negligence punished
by the law, within the meaning of articles 1902
and 1093. More than this, however, it cannot be
said to fall within the class of acts unpunished
by the law, the consequence of which are
regulated by articles 1902 and 1903 of the Civil
Code. The acts to which these articles are
applicable are understood to be those not
growing out of pre-existing duties of the parties
to one another.
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 But where relations already formed give rise to
duties, whether springing from contract or quasi
contract, then breaches of those duties are subject to
articles 1101, 1103, and 1104 of the same code. A
typical application of this distinction may be found
in the consequences of a railway accident due to
defective machinery supplied by the employer. His
liability to his employee would arise out of the
contract of employment, that to the passengers out
of the contract for passage, while that to the injured
bystander would originate in the negligent act itself.
In Manzanares vs. Moreta, 38 Phil., 821 (year 1918),
the mother of the 8 of 9-year-old child Salvador Bona
brought a civil action against Moreta to recover
damages resulting from the death of the child, who had
been run over by an automobile driven and managed by
the defendant. The trial court rendered judgment
requiring the defendant to pay the plaintiff the sum of
P1,000 as indemnity: This Court in affirming the
judgment, said in part:
If it were true that the defendant, in coming from
the southern part of Solana Street, had to stop his
auto before crossing Real Street, because he had
met vehicles which were going along the latter
street or were coming from the opposite direction
along Solana Street, it is to be believed that, when
he again started to run his auto across said Real
Street and to continue its way along Solana Street
northward, he should have adjusted the speed of the
auto which he was operating until he had fully
crossed Real Street and had completely reached a
clear way on Solana Street. But, as the child was
run over by the auto precisely at the entrance of
Solana Street, this accident could not have occurred
if the auto had been running at a slow speed, aside
from the fact that the defendant, at the moment of
crossing Real Street and entering Solana Street, in a
northward direction, could have seen the child in
the act of crossing the latter street from the
sidewalk on the right to that on the left, and if the
accident had occurred in such a way that after the
automobile had run over the body of the child, and
the child's body had already been stretched out on
the ground, the automobile still moved along a
distance of about 2 meters, this circumstance shows
the fact that the automobile entered Solana Street
from Real Street, at a high speed without the
defendant having blown the horn. If these
precautions had been taken by the defendant, the
deplorable accident which caused the death of the
child would not have occurred.
It will be noticed that the defendant in the above case
could have been prosecuted in a criminal case because
his negligence causing the death of the child was
punishable by the Penal Code. Here is therefore a clear
instance of the same act of negligence being a proper
subject-matter either of a criminal action with its
consequent civil liability arising from a crime or of an
entirely separate and independent civil action for fault
or negligence under article 1902 of the Civil Code.
Thus, in this jurisdiction, the separate individually of a
cuasi-delito or culpa aquiliana under the Civil Code
has been fully and clearly recognized, even with regard
to a negligent act for which the wrongdoer could have
been prosecuted and convicted in a criminal case and
for which, after such a conviction, he could have been
sued for this civil liability arising from his crime.
Years later (in 1930) this Court had another occasion to
apply the same doctrine. In Bernal and Enverso vs.
House and Tacloban Electric & Ice Plant, Ltd., 54
Phil., 327, the parents of the five-year-old child,
Purificacion Bernal, brought a civil action to recover
damages for the child's death as a result of burns caused
by the fault and negligence of the defendants. On the
evening of April 10, 1925, the Good Friday procession
was held in Tacloban, Leyte. Fortunata Enverso with
her daughter Purificacion Bernal had come from
another municipality to attend the same. After the
procession the mother and the daughter with two others
were passing along Gran Capitan Street in front of the
offices of the Tacloban Electric & Ice Plant, Ltd.,
owned by defendants J. V. House, when an automobile
appeared from the opposite direction. The little girl,
who was slightly ahead of the rest, was so frightened by
the automobile that she turned to run, but unfortunately
she fell into the street gutter where hot water from the
electric plant was flowing. The child died that same
night from the burns. The trial courts dismissed the
action because of the contributory negligence of the
plaintiffs. But this Court held, on appeal, that there was
no contributory negligence, and allowed the parents
P1,000 in damages from J. V. House who at the time of
the tragic occurrence was the holder of the franchise for
the electric plant. This Court said in part:
Although the trial judge made the findings of fact
hereinbefore outlined, he nevertheless was led to
order the dismissal of the action because of the
contributory negligence of the plaintiffs. It is from
this point that a majority of the court depart from
the stand taken by the trial judge. The mother and
her child had a perfect right to be on the principal
street of Tacloban, Leyte, on the evening when the
religious procession was held. There was nothing
abnormal in allowing the child to run along a few
paces in advance of the mother. No one could
foresee the coincidence of an automobile appearing
and of a frightened child running and falling into a
ditch filled with hot water. The doctrine announced
in the much debated case of Rakes vs. Atlantic Gulf
and Pacific Co. ([1907]), 7 Phil., 359), still rule.
Article 1902 of the Civil Code must again be
enforced. The contributory negligence of the child
and her mother, if any, does not operate as a bar to
recovery, but in its strictest sense could only result
in reduction of the damages.
It is most significant that in the case just cited, this
Court specifically applied article 1902 of the Civil
Code. It is thus that although J. V. House could have
been criminally prosecuted for reckless or simple
negligence and not only punished but also made civilly
liable because of his criminal negligence, nevertheless
this Court awarded damages in an independent civil
action for fault or negligence under article 1902 of the
Civil Code.
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In Bahia vs. Litonjua and Leynes (30 Phil., 624 [year
1915), the action was for damages for the death of the
plaintiff's daughter alleged to have been caused by the
negligence of the servant in driving an automobile over
the child. It appeared that the cause of the mishap was a
defect in the steering gear. The defendant Leynes had
rented the automobile from the International Garage of
Manila, to be used by him in carrying passengers during
the fiesta of Tuy, Batangas. Leynes was ordered by the
lower court to pay P1,000 as damages to the plaintiff.
On appeal this Court reversed the judgment as to
Leynes on the ground that he had shown that the
exercised the care of a good father of a family, thus
overcoming the presumption of negligence under article
1903. This Court said:
As to selection, the defendant has clearly shown
that he exercised the care and diligence of a good
father of a family. He obtained the machine from a
reputable garage and it was, so far as appeared, in
good condition. The workmen were likewise
selected from a standard garage, were duly licensed
by the Government in their particular calling, and
apparently thoroughly competent. The machine had
been used but a few hours when the accident
occurred and it is clear from the evidence that the
defendant had no notice, either actual or
constructive, of the defective condition of the
steering gear.
The legal aspect of the case was discussed by this Court
thus:
Article 1903 of the Civil Code not only establishes
liability in cases of negligence, but also provides
when the liability shall cease. It says:
"The liability referred to in this article shall
cease when the persons mentioned therein
prove that they employed all the diligence of a
good father of a family to avoid the damage."
From this article two things are apparent: (1) That
when an injury is caused by the negligence of a
servant or employee there instantly arises a
presumption of law that there was negligence on
the part of the matter or employer either in the
selection of the servant or employee, or in
supervision over him after the selection, or both;
and (2) that presumption is juris tantum and not
juris et de jure, and consequently, may be rebutted.
It follows necessarily that if the employer shows to
the satisfaction of the court that in selection and
supervision he has exercised the care and diligence
of a good father of a family, the presumption is
overcome and he is relieve from liability.
This theory bases the responsibility of the master
ultimately on his own negligence and not on that of
his servant.
The doctrine of the case just cited was followed by this
Court in Cerf vs. Medel (33 Phil., 37 [year 1915]). In
the latter case, the complaint alleged that the
defendant's servant had so negligently driven an
automobile, which was operated by defendant as a
public vehicle, that said automobile struck and damaged
the plaintiff's motorcycle. This Court, applying article
1903 and following the rule in Bahia vs. Litonjua and
Leynes, said in part (p. 41) that:
The master is liable for the negligent acts of his
servant where he is the owner or director of a
business or enterprise and the negligent acts are
committed while the servant is engaged in his
master's employment as such owner.
Another case which followed the decision in Bahia vs.
Litonjua and Leynes was Cuison vs. Norton & Harrison
Co., 55 Phil., 18 (year 1930). The latter case was an
action for damages brought by Cuison for the death of
his seven-year-old son Moises. The little boy was on his
way to school with his sister Marciana. Some large
pieces of lumber fell from a truck and pinned the boy
underneath, instantly killing him. Two youths,
Telesforo Binoya and Francisco Bautista, who were
working for Ora, an employee of defendant Norton &
Harrison Co., pleaded guilty to the crime of homicide
through reckless negligence and were sentenced
accordingly. This Court, applying articles 1902 and
1903, held:
The basis of civil law liability is not respondent
superior but the relationship of pater familias. This
theory bases the liability of the master ultimately on
his own negligence and not on that of his servant.
(Bahia vs. Litonjua and Leynes [1915], 30 Phil.,
624; Cangco vs. Manila Railroad Co. [1918], 38
Phil., 768.)
In Walter A. Smith & Co. vs. Cadwallader Gibson
Lumber Co., 55 Phil., 517 (year 1930) the plaintiff
brought an action for damages for the demolition of its
wharf, which had been struck by the steamer Helen C
belonging to the defendant. This Court held (p. 526):
The evidence shows that Captain Lasa at the time
the plaintiff's wharf collapsed was a duly licensed
captain, authorized to navigate and direct a vessel
of any tonnage, and that the appellee contracted his
services because of his reputation as a captain,
according to F. C. Cadwallader. This being so, we
are of the opinion that the presumption of liability
against the defendant has been overcome by the
exercise of the care and diligence of a good father
of a family in selecting Captain Lasa, in accordance
with the doctrines laid down by this court in the
cases cited above, and the defendant is therefore
absolved from all liability.
It is, therefore, seen that the defendant's theory about
his secondary liability is negatived by the six cases
above set forth. He is, on the authority of these cases,
primarily and directly responsible in damages under
article 1903, in relation to article 1902, of the Civil
Code.
Let us now take up the Philippine decisions relied upon
by the defendant. We study first, City of Manila vs.
Manila Electric Co., 52 Phil., 586 (year 1928). A
collision between a truck of the City of Manila and a
street car of the Manila Electric Co. took place on June
8, 1925. The truck was damaged in the amount of
P1,788.27.
74 | P a g e
Sixto Eustaquio, the motorman, was prosecuted for the
crime of damage to property and slight injuries through
reckless imprudence. He was found guilty and
sentenced to pay a fine of P900, to indemnify the City
of Manila for P1,788.27, with subsidiary imprisonment
in case of insolvency. Unable to collect the indemnity
from Eustaquio, the City of Manila filed an action
against the Manila Electric Company to obtain
payment, claiming that the defendant was subsidiarily
liable. The main defense was that the defendant had
exercised the diligence of a good father of a family to
prevent the damage. The lower court rendered judgment
in favor of the plaintiff. This Court held, in part, that
this case was governed by the Penal Code, saying:
With this preliminary point out of the way, there is
no escaping the conclusion that the provisions of
the Penal Code govern. The Penal Code in easily
understandable language authorizes the
determination of subsidiary liability. The Civil
Code negatives its application by providing that
civil obligations arising from crimes or
misdemeanors shall be governed by the provisions
of the Penal Code. The conviction of the motorman
was a misdemeanor falling under article 604 of the
Penal Code. The act of the motorman was not a
wrongful or negligent act or omission not
punishable by law. Accordingly, the civil obligation
connected up with the Penal Code and not with
article 1903 of the Civil Code. In other words, the
Penal Code affirms its jurisdiction while the Civil
Code negatives its jurisdiction. This is a case of
criminal negligence out of which civil liability
arises and not a case of civil negligence.
Our deduction, therefore, is that the case relates to
the Penal Code and not to the Civil Code. Indeed,
as pointed out by the trial judge, any different
ruling would permit the master to escape scot-free
by simply alleging and proving that the master had
exercised all diligence in the selection and training
of its servants to prevent the damage. That would
be a good defense to a strictly civil action, but
might or might not be to a civil action either as a
part of or predicated on conviction for a crime or
misdemeanor. (By way of parenthesis, it may be
said further that the statements here made are
offered to meet the argument advanced during our
deliberations to the effect that article 0902 of the
Civil Code should be disregarded and codal articles
1093 and 1903 applied.)
It is not clear how the above case could support the
defendant's proposition, because the Court of Appeals
based its decision in the present case on the defendant's
primary responsibility under article 1903 of the Civil
Code and not on his subsidiary liability arising from
Fontanilla's criminal negligence. In other words, the
case of City of Manila vs. Manila Electric Co., supra, is
predicated on an entirely different theory, which is the
subsidiary liability of an employer arising from a
criminal act of his employee, whereas the foundation of
the decision of the Court of Appeals in the present case
is the employer's primary liability under article 1903 of
the Civil Code. We have already seen that this is a
proper and independent remedy.
Arambulo vs. Manila Electric Co. (55 Phil., 75), is
another case invoked by the defendant. A motorman in
the employ of the Manila Electric Company had been
convicted o homicide by simple negligence and
sentenced, among other things, to pay the heirs of the
deceased the sum of P1,000. An action was then
brought to enforce the subsidiary liability of the
defendant as employer under the Penal Code. The
defendant attempted to show that it had exercised the
diligence of a good father of a family in selecting the
motorman, and therefore claimed exemption from civil
liability. But this Court held:
In view of the foregoing considerations, we are
of opinion and so hold, (1) that the exemption
from civil liability established in article 1903 of
the Civil Code for all who have acted with the
diligence of a good father of a family, is not
applicable to the subsidiary civil liability
provided in article 20 of the Penal Code.
The above case is also extraneous to the theory of the
defendant in the instant case, because the action there
had for its purpose the enforcement of the defendant's
subsidiary liability under the Penal Code, while in the
case at bar, the plaintiff's cause of action is based on the
defendant's primary and direct responsibility under
article 1903 of the Civil Code. In fact, the above case
destroys the defendant's contention because that
decision illustrates the principle that the employer's
primary responsibility under article 1903 of the Civil
Code is different in character from his subsidiary
liability under the Penal Code.
In trying to apply the two cases just referred to, counsel
for the defendant has failed to recognize the distinction
between civil liability arising from a crime, which is
governed by the Penal Code, and the responsibility for
cuasi-delito or culpa aquiliana under the Civil Code,
and has likewise failed to give the importance to the
latter type of civil action.
The defendant-petitioner also cites Francisco vs.
Onrubia (46 Phil., 327). That case need not be set forth.
Suffice it to say that the question involved was also
civil liability arising from a crime. Hence, it is as
inapplicable as the two cases above discussed.
The foregoing authorities clearly demonstrate the
separate individuality of cuasi-delitos or culpa
aquiliana under the Civil Code. Specifically they show
that there is a distinction between civil liability arising
from criminal negligence (governed by the Penal Code)
and responsibility for fault or negligence under articles
1902 to 1910 of the Civil Code, and that the same
negligent act may produce either a civil liability arising
from a crime under the Penal Code, or a separate
responsibility for fault or negligence under articles
1902 to 1910 of the Civil Code. Still more concretely,
the authorities above cited render it inescapable to
conclude that the employer — in this case the
defendant-petitioner — is primarily and directly liable
under article 1903 of the Civil Code.
75 | P a g e
The legal provisions, authors, and cases already
invoked should ordinarily be sufficient to dispose of
this case. But inasmuch as we are announcing doctrines
that have been little understood in the past, it might not
be inappropriate to indicate their foundations.
Firstly, the Revised Penal Code in article 365 punishes
not only reckless but also simple negligence. If we were
to hold that articles 1902 to 1910 of the Civil Code
refer only to fault or negligence not punished by law,
according to the literal import of article 1093 of the
Civil Code, the legal institution of culpa aquiliana
would have very little scope and application in actual
life. Death or injury to persons and damage to property
through any degree of negligence — even the slightest
— would have to be indemnified only through the
principle of civil liability arising from a crime. In such
a state of affairs, what sphere would remain for cuasi-
delito or culpa aquiliana? We are loath to impute to the
lawmaker any intention to bring about a situation so
absurd and anomalous. Nor are we, in the interpretation
of the laws, disposed to uphold the letter that killeth
rather than the spirit that giveth life. We will not use the
literal meaning of the law to smother and render almost
lifeless a principle of such ancient origin and such full-
grown development as culpa aquiliana or cuasi-delito,
which is conserved and made enduring in articles 1902
to 1910 of the Spanish Civil Code.
Secondly, to find the accused guilty in a criminal case,
proof of guilt beyond reasonable doubt is required,
while in a civil case, preponderance of evidence is
sufficient to make the defendant pay in damages. There
are numerous cases of criminal negligence which can
not be shown beyond reasonable doubt, but can be
proved by a preponderance of evidence. In such cases,
the defendant can and should be made responsible in a
civil action under articles 1902 to 1910 of the Civil
Code. Otherwise, there would be many instances of
unvindicated civil wrongs. Ubi jus ibi remedium.
Thirdly, to hold that there is only one way to make
defendant's liability effective, and that is, to sue the
driver and exhaust his (the latter's) property first, would
be tantamount to compelling the plaintiff to follow a
devious and cumbersome method of obtaining relief.
True, there is such a remedy under our laws, but there is
also a more expeditious way, which is based on the
primary and direct responsibility of the defendant under
article 1903 of the Civil Code. Our view of the law is
more likely to facilitate remedy for civil wrongs,
because the procedure indicated by the defendant is
wasteful and productive of delay, it being a matter of
common knowledge that professional drivers of taxis
and similar public conveyance usually do not have
sufficient means with which to pay damages. Why,
then, should the plaintiff be required in all cases to go
through this roundabout, unnecessary, and probably
useless procedure? In construing the laws, courts have
endeavored to shorten and facilitate the pathways of
right and justice.
At this juncture, it should be said that the primary and
direct responsibility of employers and their presumed
negligence are principles calculated to protect society.
Workmen and employees should be carefully chosen
and supervised in order to avoid injury to the public. It
is the masters or employers who principally reap the
profits resulting from the services of these servants and
employees. It is but right that they should guarantee the
latter's careful conduct for the personnel and
patrimonial safety of others. As Theilhard has said,
"they should reproach themselves, at least, some for
their weakness, others for their poor selection and all
for their negligence." And according to Manresa, "It is
much more equitable and just that such responsibility
should fall upon the principal or director who could
have chosen a careful and prudent employee, and not
upon the injured person who could not exercise such
selection and who used such employee because of his
confidence in the principal or director." (Vol. 12, p.
622, 2nd Ed.) Many jurists also base this primary
responsibility of the employer on the principle of
representation of the principal by the agent. Thus,
Oyuelos says in the work already cited (Vol. 7, p. 747)
that before third persons the employer and employee
"vienen a ser como una sola personalidad, por
refundicion de la del dependiente en la de quien le
emplea y utiliza." ("become as one personality by the
merging of the person of the employee in that of him
who employs and utilizes him.") All these observations
acquire a peculiar force and significance when it comes
to motor accidents, and there is need of stressing and
accentuating the responsibility of owners of motor
vehicles.
Fourthly, because of the broad sweep of the provisions
of both the Penal Code and the Civil Code on this
subject, which has given rise to the overlapping or
concurrence of spheres already discussed, and for lack
of understanding of the character and efficacy of the
action for culpa aquiliana, there has grown up a
common practice to seek damages only by virtue of the
civil responsibility arising from a crime, forgetting that
there is another remedy, which is by invoking articles
1902-1910 of the Civil Code. Although this habitual
method is allowed by our laws, it has nevertheless
rendered practically useless and nugatory the more
expeditious and effective remedy based on culpa
aquiliana or culpa extra-contractual. In the present
case, we are asked to help perpetuate this usual course.
But we believe it is high time we pointed out to the
harm done by such practice and to restore the principle
of responsibility for fault or negligence under articles
1902 et seq. of the Civil Code to its full rigor. It is high
time we caused the stream of quasi-delict or culpa
aquiliana to flow on its own natural channel, so that its
waters may no longer be diverted into that of a crime
under the Penal Code. This will, it is believed, make for
the better safeguarding of private rights because it re-
establishes an ancient and additional remedy, and for
the further reason that an independent civil action, not
depending on the issues, limitations and results of a
criminal prosecution, and entirely directed by the party
wronged or his counsel, is more likely to secure
adequate and efficacious redress.
In view of the foregoing, the judgment of the Court of
Appeals should be and is hereby affirmed, with costs
against the defendant-petitioner.
76 | P a g e
G.R. No. 173870 April 25, 2012 Defendants refused to assume civil liability for the
victims deaths. Oscar Sr. averred that the Monsaluds have no
OSCAR DEL CARMEN, JR., cause of action against them because he and his wife do not
Petitioner, own the jeep and that they were never the employers of
- versus - Allan.[8] For his part, Oscar Jr. claimed to be a victim himself.
He alleged that Allan and his friends[9] stole his jeep while it
GERONIMO BACOY, Guardian and
was parked beside his drivers rented house to take it for a
representing the children, namely: joyride. Both he and a vehicle mechanic testified that the
MARY MARJORIE B. MONSALUD, subject jeep can easily be started by mere pushing sans the
ERIC B. MONSALUD, METZIE ANN ignition key. The vehicles engine shall then run but without
any headlights on.[10] And implying that this was the manner
B. MONSALUD, KAREEN B. by which the vehicle was illegally taken, Oscar Jr. submitted
MONSALUD, LEONARDO B. as part of his documentary evidence the statements[11] of
Jemar Alarcon (Jemar) and Benjamin Andujar (Benjamin).
MONSALUD, JR., and CRISTINA B. The two, who were with Allan in the jeep at the time of the
MONSALUD, accident, declared before the investigating officer that during
said time, the vehicles headlights were off. Because of this
Respondents. allegation, Oscar Jr. even filed before the same trial court a
carnapping case against Allan and his companions docketed
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x as Criminal Case No. 93-10380.[12] The case was, however,
dismissed for insufficiency of evidence.[13]
DECISION
Oscar Jr. clarified that Allan was his jeep conductor
DEL CASTILLO, J.: 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
In this Petition for Review on Certiorari,[1] the
the mishap occurred on January 1, 1993 since he served as
registered owner of a motor vehicle challenges the Decision[2]
such conductor only from the first week of December until
dated July 11, 2006 of the Court of Appeals (CA) in CA-G.R.
December 14, 1992.[15] In support of this, Oscar Jr. presented
CV No. 67764 which held him liable for damages to the heirs
as witnesses Faustino Sismundo (Faustino) and Cresencio
of the victims who were run over by the said vehicle.
Junior Baobao (Cresencio). Faustino, a resident of Molave,
testified that when he boarded the jeep heading to Sominot on
Factual Antecedents
December 31, 1992, it was Cresencio who was the conductor.
He also believed that Crecencio started to work as such at
At dawn on New Years Day of 1993, Emilia Bacoy
around December 15 or 16, 1992.[16] Cresencio, for his part,
Monsalud (Emilia), along with her spouse Leonardo
testified that he worked as Oscar Jr.s conductor from
Monsalud, Sr. and their daughter Glenda Monsalud, were on
December 15, 1992 to January 1, 1993 and that Rodrigo was
their way home from a Christmas party they attended in
his driver.[17] He stated that upon learning that the jeep
Poblacion, Sominot, Zamboanga Del Sur. Upon reaching
figured in an accident, he never bothered to verify the news.
Purok Paglaom in Sominot, they were run over by a Fuso
Instead, he went to Midsalip to work there as a conductor for
passenger jeep bearing plate number UV-PEK-600 that was
his brothers vehicle, thereby terminating his employment with
being driven by Allan Maglasang (Allan). The jeep was
Oscar Jr.[18]
registered in the name of petitioner Oscar del Carmen, Jr.
(Oscar Jr.) and used as a public utility vehicle plying the
Oscar Jr. likewise testified that it was routinary that
Molave, Zamboanga del Sur to Sominot, Zamboanga del Sur
after a days trip, the jeep would be parked beside Rodrigos
and vice versa route.
rented house[19] for the next early-morning operation.
Because of the unfortunate incident, Criminal Case
Geronimo, on the other hand, averred that Allan was
No. 93-10347[3] for Reckless Imprudence Resulting in
still Oscar Jr.s employee subsequent to December 14, 1992.
Multiple Homicide was filed against Allan before the
To prove this, he presented as witnesses Saturnino Jumawan
Regional Trial Court of Molave, Zamboanga del Sur, Branch
(Saturnino) and Jose Navarro (Jose). Saturnino testified that he
23. In a Decision dated March 13, 1997, said court declared
would pay his fare to Allan every time he would board the jeep
Allan guilty beyond reasonable doubt of the crime charged.[4]
in going to Molave and that the last time he rode the subject
vehicle was on December 23, 1992. He also claimed that
During the pendency of said criminal case, Emilias
immediately before January 1, 1993, Rodrigo and Allan used
father, Geronimo Bacoy (Geronimo), in behalf of the six
to park the jeep at the yard of his house.[20] Jose likewise
minor children[5] of the Monsaluds, filed Civil Case No. 96-
attested that Allan was still the jeep conductor during the said
20219,[6] an independent civil action for damages based on
period as he had ridden the jeep many times in mid-December
culpa aquiliana. Aside from Allan, also impleaded therein
of 1992.[21]
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]

77 | P a g e
Ruling of the Regional Trial Court
In its Decision[22] 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;
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.;
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 reconsideration[24] contending
that the provision on vicarious liability of the employer under
Article 2180 of the Civil Code[25] 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.
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. IT
IS SO ORDERED.[28]
Geronimo appealed.
Ruling of the Court of Appeals
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
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]
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.
78 | P a g e

The dispositive portion of the CA Decision reads:
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:
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 damages of Forty
Thousand Pesos (P40,000.00).
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]
79 | P a g e
 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 cross-examination 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 the dismissal
of the carnapping case, thus:
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.
Q: Because there was no sufficient evidence to
establish that the jeep was carnapped, is that
correct?
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]
80 | P a g e
 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.[42] The 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;
2) the cause of the injury was under the
exclusive control of the person in charge and
3) the injury suffered must not have been
due to any voluntary action or contribution on the part
of the person injured.[44]
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.
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.
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.
Without disputing the factual finding of the CA that
Allan was still his
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 stolen[49] which are valid
defenses available to a registered owner, Oscar Jr. cannot
escape liability for quasi-delict resulting from his jeeps use.
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.
81 | P a g e
G.R. No. 166869 February 16, 2010
PHILIPPINE HAWK
CORPORATION,
Petitioner,
-versus-
VIVIAN TAN LEE,
Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
PERALTA, J.:
This is a Petition for Review on Certiorari[1] of
the Decision of the Court of Appeals in CA-G.R. CV No.
70860, promulgated on August 17, 2004, affirming with
modification the Decision of the Regional Trial Court
(RTC) of Quezon City, Branch 102, dated March 16,
2001, in Civil Case No. Q-91-9191, ordering petitioner
Philippine Hawk Corporation and Margarito Avila to
jointly and severally pay respondent Vivian Tan Lee
damages as a result of a vehicular accident.
The facts are as follows:
On March 15, 2005, respondent Vivian Tan Lee
filed before the RTC of Quezon City a Complaint[2]
against petitioner Philippine Hawk Corporation and
defendant Margarito Avila for damages based on quasi-
delict, arising from a vehicular accident that occurred on
March 17, 1991 in Barangay Buensoceso, Gumaca,
Quezon. The accident resulted in the death of
respondents husband, Silvino Tan, and caused
respondent physical injuries.
On June 18, 1992, respondent filed an Amended
Complaint,[3] in her own behalf and in behalf of her
children, in the civil case for damages against petitioner.
Respondent sought the payment of indemnity for the
death of Silvino Tan, moral and exemplary damages,
funeral and interment expenses, medical and
hospitalization expenses, the cost of the motorcycles
repair, attorneys fees, and other just and equitable reliefs.
The accident involved a motorcycle, a passenger
jeep, and a bus with Body No. 119. The bus was owned
by petitioner Philippine Hawk Corporation, and was then
being driven by Margarito Avila.
In its Answer,[4] petitioner denied liability for
the vehicular accident, alleging that the immediate and
proximate cause of the accident was the recklessness or
lack of caution of Silvino Tan. Petitioner asserted that it
exercised the diligence of a good father of the family in
the selection and supervision of its employees, including
Margarito Avila.
On March 25, 1993, the trial court issued a Pre-
trial Order[5] stating that the parties manifested that
there was no possibility of amicable settlement between
them. However, they agreed to stipulate on the following
facts:
1. On March 17, 1991, in Bgy. Buensoceso,
Gumaca, Quezon, plaintiff Vivian Lee Tan
and her husband Silvino Tan, while on board
a motorcycle with [P]late No. DA-5480
driven by the latter, and a Metro Bus with
[P]late No. NXR-262 driven by Margarito
Avila, were involved in an accident;
2. As a result of the accident, Silvino Tan
died on the spot while plaintiff Vivian Lee
Tan suffered physical injuries which
necessitated medical attention and
hospitalization;
3. The deceased Silvino Tan is survived by
his wife, plaintiff Vivian Lee Tan and four
children, three of whom are now residents of
the United States; and
4. Defendant Margarito Avila is an employee
of defendant Philippine Hawk.[6]
The parties also agreed on the following issues:
1. Whether or not the proximate cause of the
accident causing physical injuries upon the
plaintiff Vivian Lee Tan and resulting in the
death of the latters husband was the
recklessness and negligence of Margarito
Avila or the deceased Silvino Tan; and
2. Whether or not defendant Philippine Hawk
Transport Corporation exercised the
diligence of a good father of the family in
the selection and supervision of its driver
Margarito Avila.[7]
Respondent testified that on March 17, 1991, she
was riding on their motorcycle in tandem with her
husband, who was on the wheel, at a place after a Caltex
gasoline station in Barangay Buensoceso, Gumaca,
Quezon on the way to Lopez, Quezon. They came from
the Pasumbal Machine Shop, where they inquired about
the repair of their tanker. They were on a stop position at
the side of the highway; and when they were about to
make a turn, she saw a bus running at fast speed coming
toward them, and then the bus hit a jeep parked on the
roadside, and their motorcycle as well. She lost
consciousness and was brought to the hospital in
Gumaca, Quezon, where she was confined for a week.
She was later transferred to St. Lukes Hospital in Quezon
City, Manila. She suffered a fracture on her left chest,
her left arm became swollen, she felt pain in her bones,
and had high blood pressure.[8]
Respondents husband died due to the vehicular
accident. The immediate cause of his death was massive
cerebral hemorrhage.[9]
Respondent further testified that her husband
was leasing[10] and operating a Caltex gasoline station
in Gumaca, Quezon that yielded one million pesos a year
in revenue. They also had a copra business, which gave
them an income of P3,000.00 a month or P36,000.00 a
year.[11]
Ernest Ovial, the driver of the passenger jeep
involved in the accident, testified that in the afternoon of
March 17, 1991, his jeep was parked on the left side of
the highway near the Pasumbal Machine Shop. He did
not notice the motorcycle before the accident. But he saw
the bus dragging the motorcycle along the highway, and
then the bus bumped his jeep and sped away.[12]
82 | P a g e
 For the defense, Margarito Avila, the driver of
petitioners bus, testified that on March 17, 1999, at about
4:30 p.m., he was driving his bus at 60 kilometers per
hour on the Maharlika Highway. When they were at
Barangay Buensoceso, Gumaca, Quezon, a motorcycle
ran from his left side of the highway, and as the bus came
near, the motorcycle crossed the path of the bus, and so
he turned the bus to the right. He heard a loud banging
sound. From his side mirror, he saw that the motorcycle
turned turtle (bumaliktad). He did not stop to help out of
fear for his life, but drove on and surrendered to the
police. He denied that he bumped the motorcycle.[13]
Avila further testified that he had previously
been involved in sideswiping incidents, but he forgot
how many times.[14]
Rodolfo Ilagan, the bus conductor, testified that
the motorcycle bumped the left side of the bus that was
running at 40 kilometers per hour.[15]
Domingo S. Sisperes, operations officer of
petitioner, testified that, like their other drivers, Avila
was subjected to and passed the following requirements:
(1) Submission of NBI clearance;
(2) Certification from his previous employer
that he had no bad record;
(3) Physical examination to determine his fitness
to drive;
(4) Test of his driving ability, particularly his
defensive skill; and
(5) Review of his driving skill every six
months.[16]
Efren Delantar, a Barangay Kagawad in
Buensoceso, Gumaca, Quezon, testified that the bus was
running on the highway on a straight path when a
motorcycle, with a woman behind its driver, suddenly
emerged from the left side of the road from a machine
shop. The motorcycle crossed the highway in a zigzag
manner and bumped the side of the bus.[17]
In its Decision dated March 16, 2001, the trial
court rendered judgment against petitioner and
defendant Margarito Avila, the dispositive portion of
which reads:
ACCORDINGLY, MARGARITO
AVILA is adjudged guilty of simple negligence,
and judgment is hereby rendered in favor of the
plaintiff Vivian Lee Tan and h[er] husbands
heirs ordering the defendants Philippine Hawk
Corporation and Margarito Avila to pay them
jointly and solidarily the sum of P745,575.00
representing loss of earnings and actual damages
plus P50,000.00 as moral damages.[18]
The trial court found that before the collision,
the motorcycle was on the left side of the road, just as
the passenger jeep was. Prior to the accident, the
motorcycle was in a running position moving toward the
right side of the highway. The trial court agreed with the
bus driver that the motorcycle was moving ahead of the
bus from the left side of the road toward the right side of
the road, but disagreed that the motorcycle crossed the
path of the bus while the bus was running on the right
side of the road.[19]
The trial court held that if the bus were on the
right side of the highway, and Margarito Avila turned his
bus to the right in an attempt to avoid hitting the
motorcyle, then the bus would not have hit the passenger
jeep, which was then parked on the left side of the road.
The fact that the bus also hit the passenger jeep showed
that the bus must have been running from the right lane
to the left lane of the highway, which caused the collision
with the motorcycle and the passenger jeep parked on the
left side of the road. The trial court stated that since Avila
saw the motorcycle before the collision, he should have
stepped on the brakes and slowed down, but he just
maintained his speed and veered to the left.[20] The trial
court found Margarito Avila guilty of simple negligence.
The trial court held petitioner bus company
liable for failing to exercise the diligence of a good father
of the family in the selection and supervision of Avila,
having failed to sufficiently inculcate in him discipline
and correct behavior on the road.[21]
On appeal, the Court of Appeals affirmed the
decision of the trial court with modification in the award
of damages. The dispositive portion of the decision
reads:
WHEREFORE, foregoing premises
considered, the appeal is DENIED. The assailed
decision dated March 16, 2001 is hereby
AFFIRMED with MODIFICATION.
Appellants Philippine Hawk and Avila are
hereby ordered to pay jointly and severally
appellee the following amount: (a) P168,019.55
as actual damages; (b) P10,000.00 as temperate
damages; (c) P100,000.00 as moral damages; (d)
P590,000.00 as unearned income; and (e)
P50,000.00 as civil indemnity.[22]
Petitioner filed this petition, raising the
following issues:
1) The Court of Appeals committed grave
abuse of discretion amounting to lack of
jurisdiction in passing upon an issue, which
had not been raised on appeal, and which
had, therefore, attained finality, in total
disregard of the doctrine laid down by this
Court in Abubakar v. Abubakar, G.R. No.
134622, October 22, 1999.
2) The Court of Appeals committed reversible
error in its finding that the petitioners bus
driver saw the motorcycle of private
respondent executing a U-turn on the
highway about fifteen (15) meters away and
thereafter held that the Doctrine of Last
Clear was applicable to the instant case. This
was a palpable error for the simple reason
that the aforesaid distance was the distance
of the witness to the bus and not the distance
of the bus to the respondents motorcycle, as
clearly borne out by the records.
83 | P a g e
 3) The Court of Appeals committed reversible
error in awarding damages in total disregard
of the established doctrine laid down in
Danao v. Court of Appeals, 154 SCRA 447
and Viron Transportation Co., Inc. v. Delos
Santos, G.R. No. 138296, November 22,
2000.[23]
In short, the issues raised by petitioner are: (1)
whether or not negligence may be attributed to
petitioners driver, and whether negligence on his part
was the proximate cause of the accident, resulting in the
death of Silvino Tan and causing physical injuries to
respondent; (2) whether or not petitioner is liable to
respondent for damages; and (3) whether or not the
damages awarded by respondent Court of Appeals are
proper.
Petitioner seeks a review of the factual findings
of the trial court, which were sustained by the Court of
Appeals, that petitioners driver was negligent in driving
the bus, which caused physical injuries to respondent and
the death of respondents husband.
The rule is settled that the findings of the trial
court, especially when affirmed by the Court of Appeals,
are conclusive on this Court when supported by the
evidence on record.[24] The Court has carefully
reviewed the records of this case, and found no cogent
reason to disturb the findings of the trial court, thus:
The Court agree[s] with the bus driver
Margarito that the motorcycle was moving
ahead of the bus towards the right side from the
left side of the road, but disagrees with him that
it crossed the path of the bus while the bus was
running on the right side of the highway.
If the bus were on the right side of the
highway and Margarito turned his bus to the
right in an attempt to avoid hitting it, then the
bus would not have hit the passenger jeep
vehicle which was then parked on the left side of
the road. The fact that the bus hit the jeep too,
shows that the bus must have been running to the
left lane of the highway from right to the left,
that the collision between it and the parked jeep
and the moving rightways cycle became
inevitable. Besides, Margarito said he saw the
motorcycle before the collision ahead of the bus;
that being so, an extra-cautious public utility
driver should have stepped on his brakes and
slowed down. Here, the bus never slowed down,
it simply maintained its highway speed and
veered to the left. This is negligence indeed.[25]
Petitioner contends that the Court of Appeals
was mistaken in stating that the bus driver saw
respondents motorcycle about 15 meters away before the
collision, because the said distance, as testified to by its
witness Efren Delantar Ong, was Ongs distance from the
bus, and not the distance of the bus from the motorcycle.
Petitioner asserts that this mistaken assumption of the
Court of Appeals made it conclude that the bus driver,
Margarito Avila, had the last clear chance to avoid the
accident, which was the basis for the conclusion that
Avila was guilty of simple negligence.
A review of the records showed that it was
petitioners witness, Efren Delantar Ong, who was about
15 meters away from the bus when he saw the vehicular
accident.[26] Nevertheless, this fact does not affect the
finding of the trial court that petitioners bus driver,
Margarito Avila, was guilty of simple negligence as
affirmed by the appellate court. Foreseeability is the
fundamental test of negligence.[27] To be negligent, a
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 risks.[28]
In this case, the bus driver, who was driving on
the right side of the road, already saw the motorcycle on
the left side of the road before the collision. However, he
did not take the necessary precaution to slow down, but
drove on and bumped the motorcycle, and also the
passenger jeep parked on the left side of the road,
showing that the bus was negligent in veering to the left
lane, causing it to hit the motorcycle and the passenger
jeep.
Whenever an employees negligence causes
damage or injury to another, there instantly arises a
presumption that the employer failed to exercise the due
diligence of a good father of the family in the selection
or supervision of its employees.[29] To avoid liability
for a quasi-delict committed by his employee, an
employer must overcome the presumption by presenting
convincing proof that he exercised the care and diligence
of a good father of a family in the selection and
supervision of his employee.[30]
The Court upholds the finding of the trial court
and the Court of Appeals that petitioner is liable to
respondent, since it failed to exercise the diligence of a
good father of the family in the selection and supervision
of its bus driver, Margarito Avila, for having failed to
sufficiently inculcate in him discipline and correct
behavior on the road. Indeed, petitioners tests were
concentrated on the ability to drive and physical fitness
to do so. It also did not know that Avila had been
previously involved in sideswiping incidents.
As regards the issue on the damages awarded,
petitioner contends that it was the only one that appealed
the decision of the trial court with respect to the award
of actual and moral damages; hence, the Court of
Appeals erred in awarding other kinds of damages in
favor of respondent, who did not appeal from the trial
courts decision.
Petitioners contention is unmeritorious.
Section 8, Rule 51 of the 1997 Rules of Civil
Procedure provides:
SEC. 8. Questions that may be decided.
-- No error which does not affect the jurisdiction
over the subject matter or the validity of the
judgment appealed from or the proceedings
therein will be considered unless stated in the
assignment of errors, or closely related to or
dependent on an assigned error and properly
argued in the brief, save as the court pass upon
plain errors and clerical errors.
84 | P a g e
 Philippine National Bank v. Rabat[31] cited the
book[32] of Justice Florenz D. Regalado to explain the
section above, thus:
In his book, Mr. Justice Florenz D.
Regalado commented on this section, thus:
1. Sec. 8, which is an amendment of the
former Sec. 7 of this Rule, now includes some
substantial changes in the rules on assignment of
errors. The basic procedural rule is that only
errors claimed and assigned by a party will be
considered by the court, except errors affecting
its jurisdiction over the subject matter. To this
exception has now been added errors affecting
the validity of the judgment appealed from or the
proceedings therein.
Also, even if the error complained of by
a party is not expressly stated in his assignment
of errors but the same is closely related to or
dependent on an assigned error and properly
argued in his brief, such error may now be
considered by the court. These changes are of
jurisprudential origin.
2. The procedure in the Supreme
Court being generally the same as that in the
Court of Appeals, unless otherwise indicated
(see Secs. 2 and 4, Rule 56), it has been held
that the latter is clothed with ample authority
to review matters, even if they are not
assigned as errors on appeal, if it finds that
their consideration is necessary in arriving at
a just decision of the case. Also, an unassigned
error closely related to an error properly
assigned (PCIB vs. CA, et al., L-34931, Mar. 18,
1988), or upon which the determination of the
question raised by error properly assigned is
dependent, will be considered by the appellate
court notwithstanding the failure to assign it as
error (Ortigas, Jr. vs. Lufthansa German
Airlines, L-28773, June 30, 1975; Soco vs.
Militante, et al., G.R. No. 58961, June 28, 1983).
It may also be observed that under Sec.
8 of this Rule, the appellate court is authorized
to consider a plain error, although it was not
specifically assigned by the appellant (Dilag vs.
Heirs of Resurreccion, 76 Phil. 649), otherwise
it would be sacrificing substance for
technicalities.[33]
In this case for damages based on quasi-delict,
the trial court awarded respondent the sum of
P745,575.00, representing loss of earning capacity
(P590,000.00) and actual damages (P155,575.00 for
funeral expenses), plus P50,000.00 as moral damages.
On appeal to the Court of Appeals, petitioner assigned as
error the award of damages by the trial court on the
ground that it was based merely on suppositions and
surmises, not the admissions made by respondent during
the trial.
In its Decision, the Court of Appeals sustained
the award by the trial court for loss of earning capacity
of the deceased Silvino Tan, moral damages for his
death, and actual damages, although the amount of the
latter award was modified.
The indemnity for loss of earning capacity of the
deceased is provided for by Article 2206 of the Civil
Code.[34] Compensation of this nature is awarded not
for loss of earnings, but for loss of capacity to earn
money.[35]
As a rule, documentary evidence should be
presented to substantiate the claim for damages for loss
of earning capacity.[36] By way of exception, damages
for loss of earning capacity may be awarded despite the
absence of documentary evidence when: (1) the
deceased is self-employed and earning less than the
minimum wage under current labor laws, in which case,
judicial notice may be taken of the fact that in the
deceased's line of work no documentary evidence is
available; or (2) the deceased is employed as a daily
wage worker earning less than the minimum wage under
current labor laws.[37]
In this case, the records show that respondents
husband was leasing and operating a Caltex gasoline
station in Gumaca, Quezon. Respondent testified that her
husband earned an annual income of one million pesos.
Respondent presented in evidence a Certificate of
Creditable Income Tax Withheld at Source for the Year
1990,[38] which showed that respondents husband
earned a gross income of P950,988.43 in 1990. It is
reasonable to use the Certificate and respondents
testimony as bases for fixing the gross annual income of
the deceased at one million pesos before respondents
husband died on March 17, 1999. However, no
documentary evidence was presented regarding the
income derived from their copra business; hence, the
testimony of respondent as regards such income cannot
be considered.
In the computation of loss of earning capacity,
only net earnings, not gross earnings, are to be
considered; that is, the total of the earnings less expenses
necessary for the creation of such earnings or income,
less living and other incidental expenses.[39] In the
absence of documentary evidence, it is reasonable to peg
necessary expenses for the lease and operation of the
gasoline station at 80 percent of the gross income, and
peg living expenses at 50 percent of the net income
(gross income less necessary expenses).
In this case, the computation for loss of earning
capacity is as follows:
Net Earning = Life Expectancy x Gross Annual
Income Reasonable and
Capacity [2/3 (80-age at the (GAI) Necessary
time of death)] Expenses
(80% of GAI)
X = [2/3 (80-65)] x P1,000,000.00 -
P800,000.00
X = 2/3 (15) x P200,000.00 - P100,000.00
(Living Expenses)
X = 30/3 x P100,000.00
X = 10 x P100,000.00
X = P1,000,000.00
85 | P a g e
 The Court of Appeals also awarded actual
damages for the expenses incurred in connection with the
death, wake, and interment of respondents husband in the
amount of P154,575.30, and the medical expenses of
respondent in the amount of P168,019.55.
Actual damages must be substantiated by
documentary evidence, such as receipts, in order to prove
expenses incurred as a result of the death of the
victim[40] or the physical injuries sustained by the
victim. A review of the valid receipts submitted in
evidence showed that the funeral and related expenses
amounted only to P114,948.60, while the medical
expenses of respondent amounted only to P12,244.25,
yielding a total of P127,192.85 in actual damages.
Moreover, the Court of Appeals correctly
sustained the award of moral damages in the amount of
P50,000.00 for the death of respondents husband. Moral
damages are not intended to enrich a plaintiff at the
expense of the defendant.[41] They are awarded to
allow the plaintiff to obtain means, diversions or
amusements that will serve to alleviate the moral
suffering he/she has undergone due to the defendants
culpable action and must, perforce, be proportional to
the suffering inflicted.[42]
In addition, the Court of Appeals correctly
awarded temperate damages in the amount of
P10,000.00 for the damage caused on respondents
motorcycle. Under Art. 2224 of the Civil Code,
temperate damages may be recovered when the court
finds that some pecuniary loss has been suffered but its
amount cannot, from the nature of the case, be proved
with certainty. The cost of the repair of the motorcycle
was prayed for by respondent in her Complaint.
However, the evidence presented was merely a job
estimate[43] of the cost of the motorcycles repair
amounting to P17, 829.00. The Court of Appeals aptly
held that there was no doubt that the damage caused on
the motorcycle was due to the negligence of petitioners
driver. In the absence of competent proof of the actual
damage caused on the motorcycle or the actual cost of its
repair, the award of temperate damages by the appellate
court in the amount of P10,000.00 was reasonable under
the circumstances.[44]
In fine, the Court of Appeals correctly awarded
civil indemnity for the death of respondents husband,
temperate damages, and moral damages for the physical
injuries sustained by respondent in addition to the
damages granted by the trial court to respondent. The
trial court overlooked awarding the additional damages,
which were prayed for by respondent in her Amended
Complaint. The appellate court is clothed with ample
authority to review matters, even if they are not assigned
as errors in the appeal, if it finds that their consideration
is necessary in arriving at a just decision of the case.[49]
WHEREFORE, the petition is DENIED. The
Decision of the Court of Appeals dated August 17, 2004
in CA-G.R. CV No. 70860 is hereby AFFIRMED with
MODIFICATION. Petitioner Philippine Hawk
Corporation and Margarito Avila are hereby ordered to
pay jointly and severally respondent Vivian Lee Tan: (a)
civil indemnity in the amount of Fifty Thousand Pesos
(P50,000.00); (b) actual damages in the amount of One
Hundred Twenty-Seven Thousand One Hundred Ninety-
Two Pesos and Eighty-Five Centavos ( P127,192.85); (c)
moral damages in the amount of Eighty Thousand Pesos
(P80,000.00); (d) indemnity for loss of earning capacity
in the amount of One Million Pesos (P1,000,000.00); and
(e) temperate damages in the amount of Ten Thousand
Pesos (P10,000.00).
Costs against petitioner.
SO ORDERED.

The Court of Appeals also correctly awarded

respondent moral damages for the physical injuries she
sustained due to the vehicular accident. Under Art. 2219
of the Civil Code,[45] moral damages may be recovered
in quasi-delicts causing physical injuries. However, the
award of P50,000.00 should be reduced to P30,000.00 in
accordance with prevailing jurisprudence.[46]

Further, the Court of Appeals correctly awarded

respondent civil indemnity for the death of her husband,
which has been fixed by current jurisprudence at
P50,000.00.[47] The award is proper under Art. 2206 of
the Civil Code.[48]

86 | P a g e
G.R. No. 161803 February 4, 2008
DY TEBAN TRADING, INC., Petitioner, - versus -
JOSE CHING AND/OR LIBERTY FOREST, INC.
and CRESILITO M. LIMBAGA, Respondents.
x------------------------------------ x
DECISION
REYES, R.T., J.:
THE vehicular collision resulting in damages
and injuries in this case could have been avoided if the
stalled prime mover with trailer were parked properly
and equipped with an early warning device. It is high
time We sounded the call for strict enforcement of the
law and regulation on traffic and vehicle registration.
Panahon na para mahigpit na ipatupad ang batas at
regulasyon sa trapiko at pagpapatala ng sasakyan.
Before Us is a petition for review on certiorari
of the Decision[1] of the Court of Appeals (CA)
modifying that[2] of the Regional Trial Court (RTC) in
Butuan City finding private respondents Liberty Forest,
Inc. and Cresilito Limbaga liable to petitioner Dy Teban
Trading, Inc. for damages.
Facts
On July 4, 1995, at around 4:45 a.m., Rogelio
Ortiz, with helper Romeo Catamora, was driving a
Nissan van owned by petitioner Dy Teban Trading, Inc.
along the National Highway in Barangay Sumilihon,
Butuan City, going to Surigao City. They were
delivering commercial ice to nearby barangays and
municipalities. A Joana Paula passenger bus was
cruising on the opposite lane towards the van. In between
the two vehicles was a parked prime mover with a trailer,
owned by private respondent Liberty Forest, Inc.[3]
The night before, at around 10:00 p.m., the
prime mover with trailer suffered a tire blowout. The
driver, private respondent Cresilito Limbaga, parked the
prime mover askew occupying a substantial portion of
the national highway, on the lane of the passenger bus.
He parked the prime mover with trailer at the shoulder of
the road with the left wheels still on the cemented
highway and the right wheels on the sand and gravel
shoulder of the highway.[4] The prime mover was not
equipped with triangular, collapsible reflectorized plates,
the early warning device required under Letter of
Instruction No. 229. As substitute, Limbaga placed a
banana trunk with leaves on the front and the rear portion
of the prime mover to warn incoming motorists. It is
alleged that Limbaga likewise placed kerosene lighted
tin cans on the front and rear of the trailer.[5]
To avoid hitting the parked prime mover
occupying its lane, the incoming passenger bus swerved
to the right, onto the lane of the approaching Nissan van.
Ortiz saw two bright and glaring headlights and the
approaching passenger bus. He pumped his break
slowly, swerved to the left to avoid the oncoming bus but
the van hit the front of the stationary prime mover. The
passenger bus hit the rear of the prime mover.[6]
Ortiz and Catamora only suffered minor injuries.
The Nissan van, however, became inoperable as a result
of the incident. After the collision, SPO4 Teofilo Pame
conducted an investigation and submitted a police traffic
incident investigation report.[7]
On October 31, 1995, petitioner Nissan van
owner filed a complaint for damages[8] against private
respondents prime mover owner and driver with the RTC
in Butuan City. The Joana Paula passenger bus was not
impleaded as defendant in the complaint.
RTC Disposition
On August 7, 2001, the RTC rendered a decision
in favor of petitioner Dy Teban Trading, Inc. with a fallo
reading:
WHEREFORE, judgment is hereby
rendered directing, ordaining and ordering:
a) That defendants Liberty Forest,
Inc. and Cresilito M. Limbaga pay,
jointly and solidarily, plaintiff Dy
Teban Trading, Inc. the amounts of
P279,832.00 as actual and
compensatory damages,
P30,000.00 as attorneys fees and
P5,000.00 as expenses of litigation;
b) That all money claims of plaintiff
Rogelio C. Ortiz are dismissed;
c) That defendant Jose Ching is
absolved from any civil liability or
the case against him dismissed;
d) That the counterclaim of all the
defendants is dismissed; and
e) That defendants Liberty Forest,
Inc. and Cresilito M. Limbaga to
pay, jointly and solidarily, the
costs.
SO ORDERED.[9]
The RTC held that the proximate cause of the
three-way vehicular collision was improper parking of
the prime mover on the national highway and the
absence of an early warning device on the vehicle, thus:
The court finds that the proximate cause
of the incidents is the negligence and
carelessness attributable to the defendants.
When the trailer being pulled by the prime
mover suffered two (2) flat tires at Sumilihon,
the prime mover and trailer were parked
haphazardly, as the right tires of the prime
mover were the only ones on the sand and gravel
shoulder of the highway while the left tires and
all the tires of the trailer were on the cemented
pavement of the highway, occupying almost the
whole of the right lane on the direction the prime
mover and trailer were traveling. The statement
of Limbaga that he could not park the prime
mover and trailer deeper into the sand and gravel
shoulder of the highway to his right because
there were banana plants is contradicted by the
picture marked Exhibit F.
87 | P a g e
 The picture shows that there was ample
space on the shoulder. If defendant Limbaga was
careful and prudent enough, he should have the
prime mover and trailer traveled more distance
forward so that the bodies of the prime mover
and trailer would be far more on the shoulder
rather than on the cemented highway when they
were parked. x x x The court has some doubts on
the statement of witness-driver Limbaga that
there were banana trunks with leaves and lighted
tin cans with crude oil placed 3 strides in front
of the prime mover and behind the trailer
because the testimonies of witnesses Rogelio C.
Ortiz, driver of the ice van, Romeo D. Catamora,
helper of the ice van, and Police Traffic
Investigator SPO3 Teofilo M. Pame show that
there were no banana trunks with leaves and
lighted tin cans at the scene of the incident. But
even assuming that there were banana trunks
with leaves but they were placed close to the
prime mover and trailer as they were placed 3
strides away which to the mind of the court is
equivalent approximately to 3 meters and with
this distance, approaching vehicles would have
no sufficient time and space to make a complete
stop, especially if the vehicles are heavy and
loaded. If there were lighted tin cans, it was not
explained by the defendants why the driver,
especially driver witness Ortiz, did not see them.
xxxx
Defendant Liberty Forest, Inc. did not
exercise the diligence of a good father of a
family in managing and running its business.
The evidence on record shows that it failed to
provide its prime mover and trailer with the
required early warning devices with reflectors
and it did not keep proper maintenance and
condition of the prime mover and the trailer. The
circumstances show that the trailer were
provided with wornout tires and with only one
(1) piece of spare tire. The pictures marked
Exhibit 3 and 4 show that two (2) flat tires
suffered by the trailer and these two (2) tires
were attached to one of the two (2) I-beams or
axles attached to the rear of the trailer which axle
is very near but behind the other axle and with
the location of the 2 I-beams, it would have the
other I-beam that would have suffered the flat
tires as it has to bear the brunt of weight of the
D-8 bulldozer. The bulldozer was not loaded
directly above the two (2) I-beams as 2 I-beams,
as a pair, were attached at the far rear end of the
trailer.
xxxx
However, defendant Jose Ching should
be absolved of any liability as there is no
showing that he is the manager or CEO of
defendant Liberty Forest, Inc. Although in the
answer, it is admitted that he is an officer of the
defendant corporation, but it is not clarified what
kind of position he is holding, as he could be an
officer as one of the members of the Board of
Directors or a cashier and treasurer of the
corporation. Witness Limbaga in his testimony
mentioned a certain Boy Ching as the Manager
but it was never clarified whether or not Boy
Ching and defendant Jose Ching is one and the
same person.[10]
Private respondents appealed to the CA.
CA Disposition
On August 28, 2003, the CA reversed the RTC
decision, disposing as follows:
WHEREFORE, premises considered,
the decision dated August 7, 2001 of the
Regional Trial Court, Branch 2, Butuan City in
Civil Case No. 4360 is hereby PARTLY
MODIFIED by absolving the defendants-
appellants/appellees of any liability to plaintiffs-
appellants/appellees by reason of the incident on
July 4, 1995.
The dismissal of the case against Jose
Ching, the counterclaim of defendants-
appellants/appellees and the money claim of
Rogelio Ortiz STANDS.
SO ORDERED.[11]
In partly reversing or partly modifying the RTC
decision, the CA held that the proximate cause of the
vehicular collision was the failure of the Nissan van to
give way or yield to the right of way of the passenger
bus, thus:
It was stated that the Joana Paula bus in
trying to avoid a head-on collision with the
truck, sideswept the parked trailer loaded with
bulldozer.
Evidently, the driver of the Joana Paula
bus was aware of the presence on its lane of the
parked trailer with bulldozer. For this reason, it
proceeded to occupy what was left of its lane and
part of the opposite lane. The truck occupying
the opposite lane failed to give way or yield the
right of way to the oncoming bus by proceeding
with the same speed. The two vehicles were, in
effect, trying to beat each other in occupying a
single lane. The bus was the first to occupy the
said lane but upon realizing that the truck
refused to give way or yield the right of way, the
bus, as a precaution, geared to its right where the
trailer was parked. Unfortunately, the bus
miscalculated its distance from the parked trailer
and its rear right side hit the protruding blade of
the bulldozer then on the top of the parked
trailer. The impact of the collision on its right
rear side with the blade of the bulldozer threw
the bus further to the opposite lane, landing its
rear portion on the shoulder of the opposite lane.
xxxx
88 | P a g e
 Facts of the case reveal that when Ortiz, the
driver of the truck, failed to give the Joana Paula
bus the space on the road it needed, the latter
vehicle scraped its rear right side on the
protruded bulldozer blade and the impact threw
the bus directly on the path of the oncoming
truck. This made plaintiffs-appellants/appellees
conclude that the Joana Paula bus occupied its
lane which forced Ortiz, the driver of the truck,
to swerve to its left and ram the front of the
parked trailer.
xxxx
The trailer was parked because its two
(2) rear-left tires were blown out. With a
bulldozer on top of the trailer and two (2) busted
tires, it would be dangerous and quite impossible
for the trailer to further park on the graveled
shoulder of the road. To do so will cause the flat
car to tilt and may cause the bulldozer to fall
from where it was mounted. In fact, it appeared
that the driver of the trailer tried its best to park
on the graveled shoulder since the right-front
tires were on the graveled shoulder of the road.
The lower court erred in stating that the
Joana Paula bus swerved to the left of the truck
because it did not see the parked trailer due to
lack of warning sign of danger of any kind that
can be seen from a distance. The damage
suffered by the Joana Paula bus belied this
assessment. As stated before, the Joana Paula
bus, with the intention of passing first which it
did, first approached the space beside the parked
trailer, veered too close to the parked trailer
thereby hitting its rear right side on the
protruding bulldozer blade. Since the damage
was on the rear right most of the bus, it was
clearly on the space which was wide enough for
a single passing vehicle but not sufficient for two
(2) passing vehicles. The bus was thrown right
to the path of the truck by the impact of the
collision of its rear right side with the bulldozer
blade.[12]
The CA disagreed with the RTC that the prime
mover did not have an early warning device. The
appellate court accepted the claim of private respondent
that Limbaga placed kerosene lighted tin cans on the
front and rear of the trailer which, in Baliwag Transit,
Inc. v. Court of Appeals,[13] may act as substitute early
warning device. The CA stated:
Likewise, it was incorrect for the lower
court to state that there was no warning sign of
danger of any kind, most probably referring to
the absence of the triangular reflectorized plates.
The police sketch clearly indicated the stack of
banana leaves placed at the rear of the parked
trailer. The trailers driver testified that they
placed kerosene lighted tin can at the back of the
parked trailer.
A pair of triangular reflectorized plates
is not the only early warning device allowed by
law. The Supreme Court (in Baliwag Transit,
Inc. v. Court of Appeals) held that:
x x x Col. Dela Cruz and
Romano testified that they did not see
any early warning device at the scene of
the accident. They were referring to the
triangular reflectorized plates in red and
yellow issued by the Land
Transportation Office. However, the
evidence shows that Recontique and
Ecala placed a kerosene lamp or torch at
the edge of the road, near the rear
portion of the truck to serve as an early
warning device. This substantially
complies with Section 34(g) of the Land
Transportation and Traffic Code x x x
Baliwags argument that the
kerosene lamp or torch does not
substantially comply with the law is
untenable. The aforequoted law clearly
allows the use not only of an early
warning device of the triangular
reflectorized plates variety but also
parking lights or flares visible one
hundred meters away. x x x.
This Court holds that the defendants-
appellants/appellees were not negligent in
parking the trailer on the scene of the accident.
It would have been different if there was only
one flat tire and defendant-appellant/appellee
Limbaga failed to change the same and left
immediately.
As such, defendants-
appellants/appellees are not liable for the
damages suffered by plaintiffs-
appellants/appellees. Whatever damage
plaintiffs-appellants/appellees suffered, they
alone must bear them.[14]
Issues
Petitioner raises two issues[15] for Our
consideration, to wit:
I.
THE HONORABLE COURT OF
APPEALS, WITHOUT ANY AVAILABLE
CONCRETE EVIDENCE, ERRONEOUSLY
DETERMINED THAT THERE WERE
EARLY WARNING DEVICES PLACED IN
FRONT OF THE DEFENDANT-
APPELLANTS/APPELLEES TRUCK AND
FLAT CAR TO WARN PLAINTIFF-
APPELLANT/APPELLEE ROGELIO ORTIZ
OF THEIR PRESENCE.
II.
WITH DUE RESPECT, IT IS HIGH
TIME TO ENFORCE THE LAW ON EARLY
WARNING DEVICES IN THE PUBLIC
INTEREST.
89 | P a g e
 Our Ruling
The petition is meritorious.
The meat of the petition is whether or not the
prime mover is liable for the damages suffered by the
Nissan van. The RTC ruled in the affirmative holding
that the proximate cause of the vehicular collision was
the negligence of Limbaga in parking the prime mover
on the national highway without an early warning device
on the vehicle. The CA reversed the RTC decision,
holding that the proximate cause of the collision was the
negligence of Ortiz in not yielding to the right of way of
the passenger bus.
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 relation 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 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
plaintiff.[16]
There is no dispute that the Nissan van suffered
damage. That is borne by the records and conceded by
the parties. The outstanding issues are negligence and
proximate cause. Tersely put, the twin issues are: (a)
whether or not prime mover driver Limbaga was
negligent in parking the vehicle; and (b) whether or not
his negligence was the proximate cause of the damage to
the Nissan van.
Limbaga was negligent in parking the prime mover on
the national highway; he failed to prevent or minimize
the risk to oncoming motorists.
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, whereby such other person
suffers injury.[17] The Supreme Court stated the test of
negligence in the landmark case Picart v. Smith[18] as
follows:
The test by which to determine the
existence or 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 ordinary 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.
(Underscoring supplied)
The test of negligence is objective. We measure
the act or omission of the tortfeasor with that of an
ordinary reasonable person in the same situation. The
test, as applied to this case, is whether Limbaga, in
parking the prime mover, used that reasonable care and
caution which an ordinary reasonable person would have
used in the same situation.
We find that Limbaga was utterly negligent in
parking the prime mover askew on the right side of the
national highway. The vehicle occupied a substantial
portion of the national road on the lane of the passenger
bus. It was parked at the shoulder of the road with its left
wheels still on the cemented highway and the right
wheels on the sand and gravel shoulder of the highway.
It is common sense that the skewed parking of the prime
mover on the national road posed a serious risk to
oncoming motorists. It was incumbent upon Limbaga to
take some measures to prevent that risk, or at least
minimize it.
We are unable to agree with the CA conclusion
it would have been dangerous and quite impossible to
further park the prime mover on the graveled shoulder of
the road because the prime mover may tilt and the
bulldozer may fall off. The photographs taken after the
incident show that it could have been possible for
Limbaga to park the prime mover completely on the
shoulder of the national road without risk to oncoming
motorists. We agree with the RTC observation on this
point, thus:
x x x The statement of Limbaga that he
could not park the prime mover and trailer
deeper into the sand and gravel shoulder of the
highway to his right because there were banana
plants is contradicted by the picture marked
Exhibit F. The picture shows that there was
ample space on the shoulder. If defendant
Limbaga was careful and prudent enough, he
should have the prime mover and trailer traveled
more distance forward so that the bodies of the
prime mover and trailer would be far more on
the shoulder rather than on the cemented
highway when they were parked. Although at
the time of the incident, it was about 4:45 in the
morning and it was drizzling but there is
showing that it was pitch dark that whoever
travels along the highway must be extra careful.
If the Joana Paula bus swerved to the lane on
which the Nissan ice van was properly traveling,
as prescribed by Traffic Rules and Regulations,
it is because the driver of the bus did not see at a
distance the parked prime mover and trailer on
the bus proper lane because there was no
warning signs of danger of any kind that can be
seen from a distance.[19]
Limbaga also failed to take proper steps to
minimize the risk posed by the improperly parked prime
mover. He did not immediately inform his employer,
private respondent Liberty Forest, Inc., that the prime
mover suffered two tire blowouts and that he could not
have them fixed because he had only one spare tire.
Instead of calling for help, Limbaga took it upon himself
to simply place banana leaves on the front and rear of the
prime mover to serve as warning to oncoming motorists.
Worse, Limbaga slept on the prime mover instead of
standing guard beside the vehicle.
90 | P a g e
By his own account, Limbaga was sleeping on the prime
mover at the time of the collision and that he was only
awakened by the impact of the Nissan van and the
passenger bus on the prime mover.[20]
Limbaga also admitted on cross-examination
that it was his first time to drive the prime mover with
trailer loaded with a D-8 caterpillar bulldozer.[21] We
find that private respondent Liberty Forest, Inc. was
utterly negligent in allowing a novice driver, like
Limbaga, to operate a vehicle, such as a truck loaded
with a bulldozer, which required highly specialized
driving skills. Respondent employer clearly failed to
properly supervise Limbaga in driving the prime mover.
The RTC noted that private respondent Liberty
Forest, Inc. also failed to keep the prime mover in proper
condition at the time of the collision. The prime mover
had worn out tires. It was only equipped with one spare
tire. It was for this reason that Limbaga was unable to
change the two blown out tires because he had only one
spare. The bulldozer was not even loaded properly on the
prime mover, which caused the tire blowouts.
All told, We agree with the RTC that private
respondent Limbaga was negligent in parking the prime
mover on the national highway. Private respondent
Liberty Forest, Inc. was also negligent in failing to
supervise Limbaga and in ensuring that the prime mover
was in proper condition.
The case of Baliwag Transit, Inc. v. Court of Appeals
is inapplicable; Limbaga did not put lighted kerosene
tin cans on the front and rear of the prime mover.
Anent the absence of an early warning device on
the prime mover, the CA erred in accepting the bare
testimony of Limbaga that he placed kerosene lighted tin
cans on the front and rear of the prime mover. The
evidence on records belies such claim. The CA reliance
on Baliwag Transit, Inc. v. Court of Appeals[22] as
authority for the proposition that kerosene lighted tin
cans may act as substitute early warning device is
misplaced.
First, the traffic incident report did not mention
any lighted tin cans on the prime mover or within the
immediate vicinity of the accident. Only banana leaves
were placed on the prime mover. The report reads:
VIII RESULT OF INVESTIGATION:
A Joana Paula Bus, with Body No. 7788, with
Plate No. LVA-137, driven by one Temestocles
Relova v. Antero, of legal age, married and a
resident of San Roque, Kitcharao, Agusan del
Norte, while traveling along the National
Highway, coming from the east going to the
west direction, as it moves along the way and
upon reaching Brgy. Sumilihon, Butuan City to
evade bumping to the approaching Nissan Ice
Van with Plate No. PNT-247, driven by one
Rogelio Cortez y Ceneza. As the result, the
Joana Paula Bus accidentally busideswept (sic)
to the parked Prime Mover with Trailer loaded
with Bulldozer without early warning device,
instead placing only dry banana leaves three (3)
meters at the rear portion of the Trailer, while
failure to place at the front portion, and the said
vehicle occupied the whole lane. As the result,
the Joana Paula Bus hit to the left edge blade of
the Bulldozer. Thus, causing the said bus swept
to the narrow shouldering, removing the rear
four (4) wheels including the differential and
injuring the above-stated twelve (12) passengers
and damaged to the right side fender above the
rear wheel. Thus, causing damage on it. While
the Nissan Ice Van in evading, accidentally
swerved to the left lane and accidentally bumped
to the front bumper of the parked Prime Mover
with Trailer loaded with Bulldozer. Thus,
causing heavy damage to said Nissan Ice Van
including the cargoes of the said van.[23]
Second, SPO4 Pame, who investigated the
collision, testified[24] that only banana leaves were
placed on the front and rear of the prime mover. He did
not see any lighted tin cans in the immediate vicinity of
the collision.
Third, the claim of Limbaga that he placed
lighted tin cans on the front and rear of the prime mover
belatedly surfaced only during his direct examination.
No allegation to this effect was made by private
respondents in their Answer to the complaint for
damages. Petitioners counsel promptly objected to the
testimony of Limbaga, thus:
ATTY. ROSALES:
Q. Now you mentioned about placing some
word signs in front and at the rear of the
prime mover with trailer, will you please
describe to us what this word signs are?
A. We placed a piece of cloth on tin cans and
filled them with crude oil. And these tin
cans were lighted and they are like torches.
These two lights or torches were placed in
front and at the rear side of the prime mover
with trailer. After each torch, we placed
banana trunk. The banana trunk is placed
between the two (2) torches and the prime
mover, both on the rear and on the front
portion of the prime mover.
Q. How far was the lighted tin cans with wick
placed in front of the prime mover.
ATTY. ASIS:
At this point, we will be objecting to
questions particularly referring to the
alleged tin cans as some of the warning-
sign devices, considering that there is no
allegation to that effect in the answer of the
defendants. The answer was just limited to
the numbers 4 & 5 of the answer. And,
therefore, if we follow the rule of the
binding effect of an allegation in the
complaint, then the party will not be
allowed to introduce evidence to attack
jointly or rather the same, paragraph 5
states, warning device consisting of 3
banana trunks, banana items and leaves
were filed. He can be cross-examined in the
point, Your Honor.
91 | P a g e
 COURT:
Q. Put that on record that as far as this tin cans
are concerned, the plaintiffs are interposing
continuing objections. But the Court will
allow the question.[25]
We thus agree with the RTC that Limbaga did
not place lighted tin cans on the front and rear of the
prime mover. We give more credence to the traffic
incident report and the testimony of SPO4 Pame that
only banana leaves were placed on the vehicle. Baliwag
Transit, Inc. v. Court of Appeals[26] thus finds no
application to the case at bar.
The skewed parking of the prime mover was the
proximate cause of the collision.
Proximate cause is defined as that cause, which,
in natural and continuous sequence, unbroken by any
efficient intervening cause, produces the injury, and
without which the result would not have occurred. More
comprehensively, proximate cause is that cause acting
first and producing the injury, either immediately or by
setting other events in motion, all constituting a natural
and continuous chain of events, each having a close
causal connection with its immediate predecessor, the
final event in the chain immediately effecting the injury
as natural and probable result of the cause which first
acted, under such circumstances that the person
responsible for the first event should, as an ordinarily
prudent and intelligent person, have reasonable ground
to expect at the moment of his act or default that an injury
to some person might probably result therefrom.[27]
There is no exact mathematical formula to
determine proximate cause. It is based upon mixed
considerations of logic, common sense, policy and
precedent.[28] Plaintiff must, however, establish a
sufficient link between the act or omission and the
damage or injury. That link must not be remote or far-
fetched; otherwise, no liability will attach. The damage
or injury must be a natural and probable result of the act
or omission. In the precedent-setting Vda. de Bataclan v.
Medina,[29] this Court discussed the necessary link that
must be established between the act or omission and the
damage or injury, viz.:
It may be that ordinarily, when a
passenger bus overturns, and pins down a
passenger, merely causing him physical injuries,
if through some event, unexpected and
extraordinary, the overturned bus is set on fire,
say, by lightning, or if some highwaymen after
looting the vehicle sets it on fire, and the
passenger is burned to death, one might still
contend that the proximate cause of his death
was the fire and not the overturning of the
vehicle. But in the present case and under the
circumstances obtaining in the same, we do not
hesitate to hold that the proximate cause of the
death of Bataclan was the overturning of the bus,
this for the reason that when the vehicle turned
not only on its side but completely on its back,
the leaking of the gasoline from the tank was not
unnatural or unexpected; that the coming of the
men with a lighted torch was in response to the
call for help, made not only by the passengers,
but most probably, by the driver and the
conductor themselves, and that because it was
very dark (about 2:30 in the morning), the
rescuers had to carry a light with them; and
coming as they did from a rural area where
lanterns and flashlights were not available, they
had to use a torch, the most handy and available;
and what was more natural than that said
rescuers should innocently approach the
overturned vehicle to extend the aid and effect
the rescue requested from them. In other words,
the coming of the men with the torch was to be
expected and was natural sequence of the
overturning of the bus, the trapping of some of
its passengers bus, the trapping of some of its
passengers and the call for outside help.
The ruling in Bataclan has been repeatedly cited
in subsequent cases as authority for the proposition that
the damage or injury must be a natural or probable result
of the act or omission. Here, We agree with the RTC that
the damage caused to the Nissan van was a natural and
probable result of the improper parking of the prime
mover with trailer. As discussed, the skewed parking of
the prime mover posed a serious risk to oncoming
motorists. Limbaga failed to prevent or minimize that
risk. The skewed parking of the prime mover triggered
the series of events that led to the collision, particularly
the swerving of the passenger bus and the Nissan van.
Private respondents Liberty Forest, Inc. and
Limbaga are liable for all damages that resulted from the
skewed parking of the prime mover. Their liability
includes those damages resulting from precautionary
measures taken by other motorist in trying to avoid
collision with the parked prime mover. As We see it, the
passenger bus swerved to the right, onto the lane of the
Nissan van, to avoid colliding with the improperly
parked prime mover. The driver of the Nissan van, Ortiz,
reacted swiftly by swerving to the left, onto the lane of
the passenger bus, hitting the parked prime mover. Ortiz
obviously would not have swerved if not for the
passenger bus abruptly occupying his vans lane. The
passenger bus, in turn, would not have swerved to the
lane of the Nissan van if not for the prime mover
improperly parked on its lane. The skewed parking is the
proximate cause of the damage to the Nissan van.
In Phoenix Construction, Inc. v. Intermediate
Appellate Court,[30] this Court held that a similar
vehicular collision was caused by the skewed parking of
a dump truck on the national road, thus:
The conclusion we draw from the
factual circumstances outlined above is that
private respondent Dionisio was negligent the
night of the accident. He was hurrying home that
night and driving faster than he should have
been. Worse, he extinguished his headlights at
or near the intersection of General Lacuna and
General Santos Streets and thus did not see the
dump truck that was parked askew and sticking
out onto the road lane.
92 | P a g e
 Nonetheless, we agree with the Court of
First Instance and the Intermediate Appellate
Court that the legal and proximate cause of the
accident and of Dionisios injuries was the
wrongful or negligent manner in which the
dump truck was parked in other words, the
negligence of petitioner Carbonel. That there
was a reasonable relationship between petitioner
Carbonels negligence on the one hand and the
accident and respondents injuries on the other
hand, is quite clear. Put in a slightly different
manner, the collision of Dionisios car with the
dump truck was a natural and foreseeable
consequence of the truck drivers negligence.
xxxx
We believe, secondly, that the truck
drivers negligence far from being a passive and
static condition was rather an indispensable and
efficient cause. The collision between the dump
truck and the private respondents car would in
all probability not have occurred had the dump
truck not been parked askew without any
warning lights or reflector devices. The
improper parking of the dump truck created an
unreasonable risk of injury for anyone driving
down General Lacuna Street and for having so
created this risk, the truck driver must be held
responsible. In our view, Dionisios negligence,
although later in point of time than the truck
drivers negligence and, therefore, closer to the
accident, was not an efficient intervening or
independent cause. What the Petitioner
describes as an intervening cause was no more
than a foreseeable consequence of the risk
created by the negligent manner in which the
truck driver had parked the dump truck. In other
words, the petitioner truck driver owed a duty to
private respondent Dionisio and others similarly
situated not to impose upon them the very risk
the truck driver had created. Dionisios
negligence was not of an independent and
overpowering nature as to cut, as it were, the
chain of causation in fact between the improper
parking of the dump truck and the accident, nor
to sever the juris vinculum of liability. x x x
(Underscoring supplied)
We cannot rule on the proportionate or contributory
liability of the passenger bus, if any, because it was not
a party to the case; joint tortfeasors are solidarily liable.
The CA also faults the passenger bus for the
vehicular collision. The appellate court noted that the
passenger bus was aware of the presence of the prime
mover on its lane, but it still proceeded to occupy the lane
of the Nissan van. The passenger bus also miscalculated
its distance from the prime mover when it hit the vehicle.
We cannot definitively rule on the proportionate
or contributory liability of the Joana Paula passenger bus
vis--vis the prime mover because it was not a party to the
complaint for damages. Due process dictates that the
passenger bus must be given an opportunity to present its
own version of events before it can be held liable. Any
contributory or proportionate liability of the passenger
bus must be litigated in a separate action, barring any
defense of prescription or laches. Insofar as petitioner is
concerned, the proximate cause of the collision was the
improper parking of the prime mover. It was the
improper parking of the prime mover which set in
motion the series of events that led to the vehicular
collision.
Even granting that the passenger bus was at
fault, its fault will not necessarily absolve private
respondents from liability. If at fault, the passenger bus
will be a joint tortfeasor along with private respondents.
The liability of joint tortfeasors is joint and solidary. This
means that petitioner may hold either of them liable for
damages from the collision. In Philippine National
Construction Corporation v. Court of Appeals,[31] this
Court held:
According to the great weight of
authority, where the concurrent or successive
negligent acts or omission of two or more
persons, although acting independently of each
other, are, in combination, the direct and
proximate cause of a single injury to a third
person and it is impossible to determine in what
proportion each contributed to the injury, either
is responsible for the whole injury, even though
his act alone might not have caused the entire
injury, or the same damage might have resulted
from the acts of the other tort-feasor x x x.
In Far Eastern Shipping Company v. Court of
Appeals, the Court declared that the liability of joint
tortfeasors is joint and solidary, to wit:
It may be said, as a general rule, that
negligence in order to render a person liable
need not be the sole cause of an injury. It is
sufficient that his negligence, concurring with
one or more efficient causes other than plaintiffs,
is the proximate cause of the injury.
Accordingly, where several causes combine to
produce injuries, a person is not relieved from
liability because he is responsible for only one
of them, it being sufficient that the negligence of
the person charged with injury is an efficient
cause without which the injury would not have
resulted to as great an extent, and that such cause
is not attributable to the person injured. It is no
defense to one of the concurrent tortfeasors that
the injury would not have resulted from his
negligence alone, without the negligence or
wrongful acts of the other concurrent tortfeasors.
Where several causes producing an injury are
concurrent and each is an efficient cause without
which the injury would not have happened, the
injury may be attributed to all or any of the
causes and recovery may be had against any or
all of the responsible persons although under the
circumstances of the case, it may appear that one
of them was more culpable, and that the duty
owed by them to the injured person was not the
same. No actors negligence ceases to be a
proximate cause merely because it does not
exceed the negligence of other actors. Each
wrongdoer is responsible for the entire result and
is liable as though his acts were the sole cause of
the injury.
93 | P a g e
 There is no contribution between joint It is, indeed, time for traffic enforcement
tortfeasors whose liability is solidary since both agencies and the LTO to strictly enforce all pertinent
of them are liable for the total damage. Where laws and regulations within their mandate.
the concurrent or successive negligent acts or
omissions of two or more persons, although WHEREFORE, the petition is GRANTED.
acting independently, are in combination with The Court of Appeals decision dated August 28, 2003 is
the direct and proximate cause of a single injury hereby SET ASIDE. The RTC decision dated August 7,
to a third person, it is impossible to determine in 2001 is REINSTATED IN FULL.
what proportion each contributed to the injury
and either of them is responsible for the whole SO ORDERED.
injury. Where their concurring negligence
resulted in injury or damage to a third party, they
become joint tortfeasors and are solidarily liable
for the resulting damage under Article 2194 of
the Civil Code. (Underscoring supplied)

All told, all the elements of quasi delict have

been proven by clear and convincing evidence. The CA
erred in absolving private respondents from liability for
the vehicular collision.

Final Note

It is lamentable that the vehicular collision in

this case could have been easily avoided by following
basic traffic rules and regulations and road safety
standards. In hindsight, private respondent Limbaga
could have prevented the three-way vehicular collision if
he had properly parked the prime mover on the shoulder
of the national road. The improper parking of vehicles,
most especially along the national highways, poses a
serious and unnecessary risk to the lives and limbs of
other motorists and passengers. Drivers owe a duty of
care to follow basic traffic rules and regulations and to
observe road safety standards. They owe that duty not
only for their own safety, but also for that of other
motorists. We can prevent most vehicular accidents by
simply following basic traffic rules and regulations.

We also note a failure of implementation of

basic safety standards, particularly the law on early
warning devices. This applies even more to trucks and
big vehicles, which are prone to mechanical breakdown
on the national highway. The law, as crafted, requires
vehicles to be equipped with triangular reflectorized
plates.[32] Vehicles without the required early warning
devices are ineligible for registration.[33] Vehicle
owners may also be arrested and fined for non-
compliance with the law.[34]

The Land Transportation Office (LTO) owes a

duty to the public to ensure that all vehicles on the road
meet basic and minimum safety features, including that
of early warning devices. It is most unfortunate that We
still see dilapidated and rundown vehicles on the road
with substandard safety features. These vehicles not only
pose a hazard to the safety of their occupants but that of
other motorists. The prime mover truck in this case
should not have been granted registration because it
failed to comply with the minimum safety features
required for vehicles on the road.

94 | P a g e
G.R. NO. 165732 December 14, 2006
SAFEGUARD SECURITY AGENCY, INC., and WHEREFORE, judgment is hereby
ADMER PAJARILLO, Petitioners, - versus - rendered in favor of the plaintiffs, the heirs of
LAURO TANGCO, VAL TANGCO, VERN LARRY Evangeline Tangco, and against defendants
TANGCO, VAN LAURO TANGCO, VON LARRIE Admer Pajarillo and Safeguard Security
TANGCO, VIEN LARI TANGCO and VIVIEN Agency, Inc. ordering said defendants to pay the
LAURIZ TANGCO,Respondents. plaintiffs, jointly and severally, the following:

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x 1. ONE HUNDRED FIFTY

SEVEN THOUSAND FOUR
DECISION HUNDRED THIRTY PESOS
(P157,430.00), as actual
AUSTRIA-MARTINEZ, J.: damages
2. FIFTY THOUSAND
PESOS (P50,000.00) as death
Before us is a petition for review on certiorari indemnity;
filed by Safeguard Security Agency, Inc. (Safeguard) 3. ONE MILLION PESOS
and Admer Pajarillo (Pajarillo) assailing the Decision[1] (P1,000,000.00), as moral
dated July 16, 2004 and the Resolution[2] dated October damages;
20, 2004 issued by the Court of Appeals (CA) in CA- 4. THREE HUNDRED
G.R. CV No. 77462. THOUSAND PESOS
On November 3, 1997, at about 2:50 p.m., (P300,000.00), as exemplary
Evangeline Tangco (Evangeline) went to Ecology Bank, damages;
Katipunan Branch, Quezon City, to renew her time 5. THIRTY THOUSAND
deposit per advise of the banks cashier as she would sign PESOS (P30,000.00), as
a specimen card. Evangeline, a duly licensed firearm attorneys fees; and
holder with corresponding permit to carry the same 6. costs of suit.
outside her residence, approached security guard
Pajarillo, who was stationed outside the bank, and pulled For lack of merit, defendants
out her firearm from her bag to deposit the same for counterclaim is hereby DISMISSED.
safekeeping. Suddenly, Pajarillo shot Evangeline with
his service shotgun hitting her in the abdomen instantly SO ORDERED. [8]
causing her death.
The RTC found respondents to be entitled to
Lauro Tangco, Evangelines husband, together damages. It rejected Pajarillos claim that he merely acted
with his six minor children (respondents) filed with the in self-defense. It gave no credence to Pajarillos bare
Regional Trial Court (RTC) of Quezon City, a criminal claim that Evangeline was seen roaming around the area
case of Homicide against Pajarillo, docketed as Criminal prior to the shooting incident since Pajarillo had not
Case No. 0-97-73806 and assigned to Branch 78. made such report to the head office and the police
Respondents reserved their right to file a separate civil authorities. The RTC further ruled that being the guard
action in the said criminal case. The RTC of Quezon City on duty, the situation demanded that he should have
subsequently convicted Pajarillo of Homicide in its exercised proper prudence and necessary care by asking
Decision dated January 19, 2000.[3] On appeal to the Evangeline for him to ascertain the matter instead of
CA, the RTC decision was affirmed with modification as shooting her instantly; that Pajarillo had already been
to the penalty in a Decision[4] dated July 31, 2000. Entry convicted of Homicide in Criminal Case No. 0-97-
of Judgment was made on August 25, 2001. 73806; and that he also failed to proffer proof negating
liability in the instant case.
Meanwhile, on January 14, 1998, respondents
filed with RTC, Branch 273, Marikina City, a The RTC also found Safeguard as employer of
complaint[5] for damages against Pajarillo for Pajarillo to be jointly and severally liable with Pajarillo.
negligently shooting Evangeline and against Safeguard It ruled that while it may be conceded that Safeguard had
for failing to observe the diligence of a good father of a perhaps exercised care in the selection of its employees,
family to prevent the damage committed by its security particularly of Pajarillo, there was no sufficient evidence
guard. Respondents prayed for actual, moral and to show that Safeguard exercised the diligence of a good
exemplary damages and attorneys fees. father of a family in the supervision of its employee; that
Safeguards evidence simply showed that it required its
In their Answer,[6] petitioners denied the guards to attend trainings and seminars which is not the
material allegations in the complaint and alleged that supervision contemplated under the law; that supervision
Safeguard exercised the diligence of a good father of a includes not only the issuance of regulations and
family in the selection and supervision of Pajarillo; that instructions designed for the protection of persons and
Evangelines death was not due to Pajarillos negligence property, for the guidance of their servants and
as the latter acted only in self-defense. Petitioners set up employees, but also the duty to see to it that such
a compulsory counterclaim for moral damages and regulations and instructions are faithfully complied with.
attorneys fees.
Petitioners appealed the RTC decision to the
Trial thereafter ensued. On January 10, 2003, the CA. On July 16, 2004, the CA issued its assailed
RTC rendered its Decision,[7] the dispositive portion of Decision, the dispositive portion of which reads:
which reads:
95 | P a g e
 IN VIEW OF ALL THE FOREGOING,
the appealed decision is hereby AFFIRMED,
with the modification that Safeguard Security
Agency, Inc.s civil liability in this case is only
subsidiary under Art. 103 of the Revised Penal
Code. No pronouncement as to costs.[9]
In finding that Safeguard is only subsidiarily
liable, the CA held that the applicable provisions are not
Article 2180 in relation to Article 2176 of the Civil Code,
on quasi-delicts, but the provisions on civil liability
arising from felonies under the Revised Penal Code; that
since Pajarillo had been found guilty of Homicide in a
final and executory judgment and is said to be serving
sentence in Muntinlupa, he must be adjudged civilly
liable under the provisions of Article 100 of the Revised
Penal Code since the civil liability recoverable in the
criminal action is one solely dependent upon conviction,
because said liability arises from the offense charged and
no other; that this is also the civil liability that is deemed
extinguished with the extinction of the penal liability
with a pronouncement that the fact from which the civil
action might proceed does not exist; that unlike in civil
liability arising from quasi-delict, the defense of
diligence of a good father of a family in the employment
and supervision of employees is inapplicable and
irrelevant in civil liabilities based on crimes or ex-
delicto; that Article 103 of the Revised Penal Code
provides that the liability of an employer for the civil
liability of their employees is only subsidiary, not joint
or solidary.
Petitioners filed their Motion for
Reconsideration which the CA denied in a Resolution
dated October 20, 2004.
Hence, the instant Petition for Review on
Certiorari with the following assignment of errors, to
wit:
The Honorable Court of Appeals
gravely erred in finding petitioner Pajarillo
liable to respondents for the payment of
damages and other money claims.
The Honorable Court of Appeals
gravely erred when it applied Article 103 of the
Revised Penal Code in holding petitioner
Safeguard solidarily [sic] liable with petitioner
Pajarillo for the payment of damages and other
money claims.
The Honorable Court of Appeals gravely
erred in failing to find that petitioner Safeguard
Security Agency, Inc. exercised due diligence in
the selection and supervision of its employees,
hence, should be excused from any liability.[10]
The issues for resolution are whether (1)
Pajarillo is guilty of negligence in shooting Evangeline;
and (2) Safeguard should be held solidarily liable for the
damages awarded to respondents.
Safeguard insists that the claim for damages by
respondents is based on culpa aquiliana under Article
2176[11] of the Civil Code, in which case, its liability is
jointly and severally with Pajarillo. However, since it has
established that it had exercised due diligence in the
selection and supervision of Pajarillo, it should be
exonerated from civil liability.
We will first resolve whether the CA correctly
held that respondents, in filing a separate civil action
against petitioners are limited to the recovery of damages
arising from a crime or delict, in which case the liability
of Safeguard as employer under Articles 102 and 103 of
the Revised Penal Code[12] is subsidiary and the defense
of due diligence in the selection and supervision of
employee is not available to it.
The CA erred in ruling that the liability of
Safeguard is only subsidiary.
The law at the time the complaint for damages
was filed is Rule 111 of the 1985 Rules on Criminal
Procedure, as amended, to wit:
SECTION 1. Institution of criminal
and civil actions. - When a criminal action is
instituted, the civil action for the recovery of
civil
liability is impliedly instituted with the criminal
action, unless the offended party waives the
civil action, reserves his right to institute it
separately, or institutes the civil action prior to
the criminal action.
Such civil action includes recovery of
indemnity under the Revised Penal Code, and
damages under Articles 32, 33, 34, and 2176 of
the Civil Code of the Philippines arising from
the same act or omission of the accused.
Respondents reserved the right to file a separate
civil action and in fact filed the same on January 14,
1998.
The CA found that the source of damages in the
instant case must be the crime of homicide, for which
he had already been found guilty of and serving
sentence thereof, thus must be governed by the Revised
Penal Code.
We do not agree.
An act or omission causing damage to another
may give rise to two separate civil liabilities on the part
of the offender, i.e., (1) civil liability ex delicto, under
Article 100 of the Revised Penal Code; and (2)
independent civil liabilities, such as those (a) not
arising from an act or omission complained of as a
felony, e.g., culpa contractual or obligations arising
from law under Article 31 of the Civil Code, intentional
torts under Articles 32 and 34, and culpa aquiliana
under Article 2176 of the Civil Code; or (b) where the
injured party is granted a right to file an action
independent and distinct from the criminal action under
Article 33 of the Civil Code. Either of these liabilities
may be enforced against the offender subject to the
caveat under Article 2177 of the Civil Code that the
offended party cannot recover damages twice for the
same act or omission or under both causes.[13]
96 | P a g e
 It is important to determine the nature of
respondents cause of action. The nature of a cause of
action is determined by the facts alleged in the complaint
as constituting the cause of action.[14] The purpose of
an action or suit and the law to govern it is to be
determined not by the claim of the party filing the action,
made in his argument or brief, but rather by the
complaint itself, its allegations and prayer for relief.[15]
The pertinent portions of the complaint read:
7. That Defendant Admer A. Pajarillo
was the guard assigned and posted in the
Ecology Bank Katipunan Branch, Quezon City,
who was employed and under employment of
Safeguard Security Agency, Inc. hence there is
employer-employee relationship between co-
defendants.
The Safeguard Security Agency, Inc.
failed to observe the diligence of a good father
of a family to prevent damage to herein
plaintiffs.
8. That defendant Admer Pajarillo upon
seeing Evangeline Tangco, who brought her
firearm out of her bag, suddenly without
exercising necessary caution/care, and in idiotic
manner, with the use of his shotgun, fired and
burst bullets upon Evangeline M. Tangco,
killing her instantly. x x x
xxxx
16. That defendants, being employer
and the employee are jointly and severally liable
for the death of Evangeline M. Tangco.[16]
Thus, a reading of respondents complaint shows that
the latter are invoking their right to recover damages
against Safeguard for their vicarious responsibility for
the injury caused by Pajarillos act of shooting and
killing Evangeline under Article 2176, Civil Code
which provides:
ARTICLE 2176. Whoever by act or
omission causes damage to another, there being
fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there
is no pre-existing contractual relation between
the parties is called a quasi-delict and is
governed by the provisions of this Chapter.
The scope of Article 2176 is not limited to acts
or omissions resulting from negligence. In Dulay v.
Court of Appeals,[17] we held:
x x x Well-entrenched is the doctrine
that Article 2176 covers not only acts
committed with negligence, but also acts which
are voluntary and intentional. As far back as the
definitive case of Elcano v. Hill (77 SCRA 98
[1977]), this Court already held that:
"x x x Article 2176, where it refers to
"fault or negligence," covers not only acts
"not punishable by law" but also acts
criminal in character, whether intentional
and voluntary or negligent. Consequently, a
separate civil action lies against the offender in
a criminal act, whether or not he is criminally
prosecuted and found guilty or acquitted,
provided that the offended party is not allowed,
if he is actually charged also criminally, to
recover damages on both scores, and would be
entitled in such eventuality only to the bigger
award of the two, assuming the awards made in
the two cases vary. In other words, the
extinction of civil liability referred to in Par. (e)
of Section 3, Rule 111, refers exclusively to
civil liability founded on Article 100 of the
Revised Penal Code, whereas the civil liability
for the same act considered as quasi-delict only
and not as a crime is not extinguished even by a
declaration in the criminal case that the
criminal act charged has not happened or has
not been committed by the accused. Briefly
stated, We here hold, in reiteration of Garcia,
that culpa aquiliana includes voluntary and
negligent acts which may be punishable by
law." (Emphasis supplied)
The civil action filed by respondents was not
derived from the criminal liability of Pajarillo in the
criminal case but one based on culpa aquiliana or
quasi-delict which is separate and distinct from the civil
liability arising from crime.[18] The source of the
obligation sought to be enforced in the civil case is a
quasi-delict not an act or omission punishable by law.
In Bermudez v. Melencio-Herrera,[19] where
the issue involved was whether the civil action filed by
plaintiff-appellants is founded on crime or on quasi-
delict, we held:
x x x The trial court treated the case as
an action based on a crime in view of the
reservation made by the offended party in the
criminal case (Criminal Case No. 92944), also
pending before the court, to file a separate civil
action. Said the trial court:
It would appear that plaintiffs instituted
this action on the assumption that defendant
Pontino's negligence in the accident of May 10,
1969 constituted a quasi-delict. The Court
cannot accept the validity of that assumption. In
Criminal Case No. 92944 of this Court,
plaintiffs had already appeared as
complainants. While that case was pending, the
offended parties reserved the right to institute a
separate civil action. If, in a criminal case, the
right to file a separate civil action for damages
is reserved, such civil action is to be based on
crime and not on tort. That was the ruling in
Joaquin vs. Aniceto, L-18719, Oct. 31, 1964.
We do not agree. The doctrine in the
case cited by the trial court is inapplicable to
the instant case x x x.
xxxx
97 | P a g e
 In cases of negligence, the injured
party or his heirs has the choice between an
action to enforce the civil liability arising from
crime under Article 100 of the Revised Penal
Code and an action for quasi-delict under
Article 2176-2194 of the Civil Code. If a party
chooses the latter, he may hold the employer
solidarily liable for the negligent act of his
employee, subject to the employer's defense of
exercise of the diligence of a good father of the
family.
In the case at bar, the action filed by
appellant was an action for damages based on
quasi-delict. The fact that appellants
reserved their right in the criminal case to
file an independent civil action did not
preclude them from choosing to file a civil
action for quasi-delict.[20] (Emphasis
supplied)
Although the judgment in the criminal case
finding Pajarillo guilty of Homicide is already final and
executory, such judgment has no relevance or
importance to this case.[21] It would have been entirely
different if respondents cause of action was for
damages arising from a delict, in which case the CA is
correct in finding Safeguard to be only subsidiary liable
pursuant to Article 103 of the Revised Penal Code.[22]
As clearly shown by the allegations in the
complaint, respondents cause of action is based on
quasi-delict. Under Article 2180 of the Civil Code,
when the injury is caused by the negligence of the
employee, there instantly arises a presumption of law
that there was negligence on the part of the master or
the employer either in the selection of the servant or
employee, or in the supervision over him after selection
or both. The liability of the employer under Article
2180 is direct and immediate. Therefore, it is incumbent
upon petitioners to prove that they exercised the
diligence of a good father of a family in the selection
and supervision of their employee.
We must first resolve the issue of whether
Pajarillo was negligent in shooting Evangeline.
The issue of negligence is factual in nature.
Whether a person is negligent or not is a question of fact,
which, as a general rule, we cannot pass upon in a
petition for review on certiorari, as our jurisdiction is
limited to reviewing errors of law.[23] Generally, factual
findings of the trial court, affirmed by the CA, are final
and conclusive and may not be reviewed on appeal. The
established exceptions are: (1) when the inference made
is manifestly mistaken, absurd or impossible; (2) when
there is grave abuse of discretion; (3) when the findings
are grounded entirely on speculations, surmises or
conjectures; (4) when the judgment of the CA is based
on misapprehension of facts; (5) when the findings of
fact are conflicting; (6) when the CA, in making its
findings, went beyond the issues of the case and the same
is contrary to the admissions of both appellant and
appellee; (7) when the findings of fact are conclusions
without citation of specific evidence on which they are
based; (8) when the CA manifestly overlooked certain
relevant facts not disputed by the parties and which, if
properly considered, would justify a different
conclusion; and (9) when the findings of fact of the CA
are premised on the absence of evidence and are
contradicted by the evidence on record. [24]
A thorough review of the records of the case
fails to show any cogent reason for us to deviate from the
factual finding of the trial court and affirmed by the CA
that petitioner Pajarillo was guilty of negligence in
shooting Evangeline.
Respondents evidence established that
Evangelines purpose in going to the bank was to renew
her time deposit.[25] On the other hand, Pajarillo claims
that Evangeline drew a gun from her bag and aimed the
same at him, thus, acting instinctively, he shot her in self-
defense.
Pajarillo testified that when Evangeline aimed
the gun at him at a distance of about one meter or one
arms length[26] he stepped backward, loaded the
chamber of his gun and shot her.[27] It is however
unimaginable that petitioner Pajarillo could still make
such movements if indeed the gun was already pointed
at him. Any movement could have prompted Evangeline
to pull the trigger to shoot him.
Petitioner Pajarillo would like to justify his
action in shooting Evangeline on his mere apprehension
that Evangeline will stage a bank robbery. However,
such claim is befuddled by his own testimony. Pajarillo
testified that prior to the incident, he saw Evangeline
roaming under the fly over which was about 10 meters
away from the bank[28] and saw her talking to a man
thereat;[29] that she left the man under the fly-over,
crossed the street and approached the bank. However,
except for the bare testimony of Pajarillo, the records do
not show that indeed Evangeline was seen roaming near
the vicinity of the bank and acting suspiciously prior to
the shooting incident. In fact, there is no evidence that
Pajarillo called the attention of his head guard or the
banks branch manager regarding his concerns or that he
reported the same to the police authorities whose outpost
is just about 15 meters from the bank.
Moreover, if Evangeline was already roaming
the vicinity of the bank, she could have already apprised
herself that Pajarillo, who was posted outside the bank,
was armed with a shotgun; that there were two guards
inside the bank[30] manning the entrance door. Thus, it
is quite incredible that if she really had a companion, she
would leave him under the fly-over which is 10 meters
far from the bank and stage a bank robbery all by herself
without a back-up. In fact, she would have known, after
surveying the area, that aiming her gun at Pajarillo would
not ensure entrance to the bank as there were guards
manning the entrance door.
Evidence, to be believed, must not only proceed
from the mouth of a credible witness, but it must be
credible in itself such as the common experience and
observation of mankind can approve as probable under
the circumstances. We have no test of the truth of human
testimony, except its conformity to our knowledge,
observation and experience. Whatever is repugnant to
these belongs to the miraculous and is outside judicial
cognizance.[31]
98 | P a g e
 That Evangeline just wanted to deposit her gun
before entering the bank and was actually in the act of
pulling her gun from her bag when petitioner Pajarillo
recklessly shot her, finds support from the contentions
raised in petitioners petition for review where they
argued that when Evangeline approached the bank, she
was seen pulling a gun from inside her bag and petitioner
Pajarillo who was suddenly beset by fear and perceived
the act as a dangerous threat, shot and killed the deceased
out of pure instinct;[32] that the act of drawing a gun is
a threatening act, regardless of whether or not the gun
was intended to be used against petitioner Pajarillo;[33]
that the fear that was created in the mind of petitioner
Pajarillo as he saw Evangeline Tangco drawing a gun
from her purse was suddenly very real and the former
merely reacted out of pure self-preservation.[34]
Considering that unlawful aggression on the part
of Evangeline is absent, Pajarillos claim of self-defense
cannot be accepted specially when such claim was
uncorroborated by any separate competent evidence
other than his testimony which was even doubtful.
Pajarillos apprehension that Evangeline will shoot him
to stage a bank robbery has no basis at all. It is therefore
clear that the alleged threat of bank robbery was just a
figment of Pajarillos imagination which caused such
unfounded unlawful aggression on his part.
Petitioners argue that Evangeline was guilty of
contributory negligence. Although she was a licensed
firearm holder, she had no business bringing the gun in
such establishment where people would react
instinctively upon seeing the gun; that had Evangeline
been prudent, she could have warned Pajarillo before
drawing the gun and did not conduct herself with
suspicion by roaming outside the vicinity of the bank;
that she should not have held the gun with the nozzle
pointed at Pajarillo who mistook the act as hold up or
robbery.
We are not persuaded.
As we have earlier held, Pajarillo failed to
substantiate his claim that Evangeline was seen roaming
outside the vicinity of the bank and acting suspiciously
prior to the shooting incident. Evangelines death was
merely due to Pajarillos negligence in shooting her on
his imagined threat that Evangeline will rob the bank.
Safeguard contends that it cannot be jointly held
liable since it had adequately shown that it had exercised
the diligence required in the selection and supervision of
its employees. It claims that it had required the guards to
undergo the necessary training and to submit the
requisite qualifications and credentials which even the
RTC found to have been complied with; that the RTC
erroneously found that it did not exercise the diligence
required in the supervision of its employee. Safeguard
further claims that it conducts monitoring of the
activities of its personnel, wherein supervisors are
assigned to routinely check the activities of the security
guards which include among others, whether or not they
are in their proper post and with proper equipment, as
well as regular evaluations of the employees
performances; that the fact that Pajarillo loaded his
firearm contrary to Safeguards operating procedure is
not sufficient basis to say that Safeguard had failed its
duty of proper supervision; that it was likewise error to
say that Safeguard was negligent in seeing to it that the
procedures and policies were not properly implemented
by reason of one unfortunate event.
We are not convinced.
Article 2180 of the Civil Code provides:
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.
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.
As the employer of Pajarillo, Safeguard is
primarily and solidarily liable for the quasi-delict
committed by the former. Safeguard is presumed to be
negligent in the selection and supervision of his
employee by operation of law. This presumption may be
overcome only by satisfactorily showing that the
employer exercised the care and the diligence of a good
father of a family in the selection and the supervision of
its employee.
In the selection of prospective employees,
employers are required to examine them as to their
qualifications, experience, and service records.[35] On
the other hand, due diligence in the supervision of
employees includes the formulation of suitable rules and
regulations for the guidance of employees and the
issuance of proper instructions intended for the
protection of the public and persons with whom the
employer has relations through his or its employees and
the imposition of necessary disciplinary measures upon
employees in case of breach or as may be warranted to
ensure the performance of acts indispensable to the
business of and beneficial to their employer. To this, we
add that actual implementation and monitoring of
consistent compliance with said rules should be the
constant concern of the employer, acting through
dependable supervisors who should regularly report on
their supervisory functions.[36] To establish these
factors in a trial involving the issue of vicarious liability,
employers must submit concrete proof, including
documentary evidence.
99 | P a g e
 We agree with the RTCs finding that Safeguard
had exercised the diligence in the selection of Pajarillo
since the record shows that Pajarillo underwent a
psychological and neuro-psychiatric evaluation
conducted by the St. Martin de Porres Center where no
psychoses ideations were noted, submitted a certification
on the Pre-licensing training course for security guards,
as well as police and NBI clearances.
The RTC did not err in ruling that Safeguard fell
short of the diligence required in the supervision of its
employee, particularly Pajarillo. In this case, while
Safeguard presented Capt. James Camero, its Director
for Operations, who testified on the issuance of company
rules and regulations, such as the Guidelines of Guards
Who Will Be Assigned To Banks,[37] Weapons
Training,[38] Safeguard Training Center Marksmanship
Training Lesson Plan,[39] Disciplinary/Corrective
Sanctions,[40] it had also been established during
Cameros cross-examination that Pajarillo was not aware
of such rules and regulations.[41] Notwithstanding
Cameros clarification on his re-direct examination that
these company rules and regulations are lesson plans as
a basis of guidelines of the instructors during classroom
instructions and not necessary to give students copy of
the same,[42] the records do not show that Pajarillo had
attended such classroom instructions.
The records also failed to show that there was
adequate training and continuous evaluation of the
security guards performance. Pajarillo had only attended
an in-service training on March 1, 1997 conducted by
Toyota Sta. Rosa, his first assignment as security guard
of Safeguard, which was in collaboration with
Safeguard. It was established that the concept of such
training was purely on security of equipments to be
guarded and protection of the life of the employees.[43]
It had not been established that after Pajarillos
training in Toyota, Safeguard had ever conducted further
training of Pajarillo when he was later assigned to guard
a bank which has a different nature of business with that
of Toyota. In fact, Pajarillo testified that being on duty
in a bank is different from being on duty in a factory
since a bank is a very sensitive area.[44]
Moreover, considering his reactions to
Evangelines act of just depositing her firearm for
safekeeping, i.e., of immediately shooting her, confirms
that there was no training or seminar given on how to
handle bank clients and on human psychology.
Furthermore, while Safeguard would like to
show that there were inspectors who go around the bank
two times a day to see the daily performance of the
security guards assigned therein, there was no record
ever presented of such daily inspections. In fact, if there
was really such inspection made, the alleged suspicious
act of Evangeline could have been taken noticed and
reported.
Turning now to the award of damages, we find
that the award of actual damages in the amount
P157,430.00 which were the expenses incurred by
respondents in connection with the burial of Evangeline
were supported by receipts. The award of P50,000.00 as
civil indemnity for the death of Evangeline is likewise in
order.
As to the award of moral damages, Article 2206
of the Civil Code provides that the spouse, legitimate
children and illegitimate descendants and ascendants of
the deceased may demand moral damages for mental
anguish by reason of the death of the deceased. Moral
damages are awarded to enable the injured party to
obtain means, diversions or amusements that will serve
to alleviate the moral suffering he/she has undergone, by
reason of the defendants culpable action. Its award is
aimed at restoration, as much as possible, of the spiritual
status quo ante; thus it must be proportionate to the
suffering inflicted.[45] The intensity of the pain
experienced by the relatives of the victim is
proportionate to the intensity of affection for him and
bears no relation whatsoever with the wealth or means of
the offender.[46]
In this case, respondents testified as to their
moral suffering caused by Evangelines death was so
sudden causing respondent Lauro to lose a wife and a
mother to six children who were all minors at the time of
her death. In People v. Teehankee, Jr.,[47] we awarded
one million pesos as moral damages to the heirs of a
seventeen-year-old girl who was murdered. In Metro
Manila Transit Corporation v. Court of Appeals,[48] we
likewise awarded the amount of one million pesos as
moral damages to the parents of a third year high school
student and who was also their youngest child who died
in a vehicular accident since the girls death left a void in
their lives. Hence, we hold that the respondents are also
entitled to the amount of one million pesos as
Evangelines death left a void in the lives of her husband
and minor children as they were deprived of her love and
care by her untimely demise.
We likewise uphold the award of exemplary
damages in the amount of P300,000.00. Under Article
2229 of the Civil Code, exemplary damages are imposed
by way of example or correction for the public good, in
addition to moral, temperate, liquidated or compensatory
damages.[49] It is awarded as a deterrent to socially
deleterious actions. In quasi-delict, exemplary damages
may be granted if the defendant acted with gross
negligence.[50]
Pursuant to Article 2208 of the Civil Code,
attorney's fees may be recovered when, as in the instant
case, exemplary damages are awarded. Hence, we affirm
the award of attorney's fees in the amount of P30,000.00.
WHEREFORE, the petition for review is
DENIED. The Decision dated July 16, 2004 of the
Court of Appeals is AFFIRMED with
MODIFICATION that the civil liability of petitioner
Safeguard Security Agency, Inc. is SOLIDARY and
PRIMARY under Article 2180 of the Civil Code.
SO ORDERED.
100 | P a g e
[G.R. No. 144274. September 20, 2004]
NOSTRADAMUS VILLANUEVA petitioner, vs.
PRISCILLA R. DOMINGO and LEANDRO LUIS
R. DOMINGO, respondents.
DECISION
CORONA, J.:
This is a petition to review the decision[1] of the Court
of Appeals in CA-G.R. CV No. 52203 affirming in turn
the decision of the trial court finding petitioner liable to
respondent for damages. The dispositive portion read:
WHEREFORE, the appealed decision is hereby
AFFIRMED except the award of attorneys fees
including appearance fees which is DELETED.
SO ORDERED.[2]
The facts of the case, as summarized by the Court of
Appeals, are as follows:
[Respondent] Priscilla R. Domingo is the registered
owner of a silver Mitsubishi Lancer Car model 1980
bearing plate No. NDW 781 91 with [co-respondent]
Leandro Luis R. Domingo as authorized driver.
[Petitioner] Nostradamus Villanueva was then the
registered owner of a green Mitsubishi Lancer bearing
Plate No. PHK 201 91.
On 22 October 1991 at about 9:45 in the evening,
following a green traffic light, [respondent] Priscilla
Domingos silver Lancer car with Plate No. NDW 781
91 then driven by [co-respondent] Leandro Luis R.
Domingo was cruising along the middle lane of South
Superhighway at moderate speed from north to south.
Suddenly, a green Mitsubishi Lancer with plate No.
PHK 201 91 driven by Renato Dela Cruz Ocfemia
darted from Vito Cruz Street towards the South
Superhighway directly into the path of NDW 781 91
thereby hitting and bumping its left front portion. As a
result of the impact, NDW 781 91 hit two (2) parked
vehicles at the roadside, the second hitting another
parked car in front of it.
Except for Ocfemia, all the defendants filed separate
answers to the complaint. [Petitioner] Nostradamus
Villanueva claimed that he was no longer the owner of
the car at the time of the mishap because it was
swapped with a Pajero owned by Albert Jaucian/Auto
Palace Car Exchange. For her part, Linda Gonzales
declared that her presence at the scene of the accident
was upon the request of the actual owner of the
Mitsubishi Lancer (PHK 201 91) [Albert Jaucian] for
whom she had been working as agent/seller. On the
other hand, Auto Palace Car Exchange represented by
Albert Jaucian claimed that he was not the registered
owner of the car. Moreover, it could not be held
subsidiary liable as employer of Ocfemia because the
latter was off-duty as utility employee at the time of the
incident. Neither was Ocfemia performing a duty
related to his employment.[3]
After trial, the trial court found petitioner liable and
ordered him to pay respondent actual, moral and
exemplary damages plus appearance and attorneys fees:
WHEREFORE, judgment is hereby rendered for the
plaintiffs, ordering Nostradamus Villanueva to pay the
amount of P99,580 as actual damages, P25,000.00 as
moral damages, P25,000.00 as exemplary damages and
attorneys fees in the amount of P10,000.00 plus
appearance fees of P500.00 per hearing with legal
interest counted from the date of judgment. In
conformity with the law on equity and in accordance
with the ruling in First Malayan Lending and Finance
Corporation vs. Court of Appeals (supra), Albert
Jaucian is hereby ordered to indemnify Nostradamus
Villanueva for whatever amount the latter is hereby
ordered to pay under the judgment.
SO ORDERED.[4]
The CA upheld the trial courts decision but deleted the
award for appearance and attorneys fees because the
justification for the grant was not stated in the body of
the decision. Thus, this petition for review which raises
a singular issue:

Per Traffic Accident Report prepared by Traffic

Investigator Pfc. Patrocinio N. Acido, Renato dela Cruz
Ocfemia was driving with expired license and positive
for alcoholic breath. Hence, Manila Assistant City
Prosecutor Oscar A. Pascua recommended the filing of
information for reckless imprudence resulting to (sic)
damage to property and physical injuries.

The original complaint was amended twice: first,

impleading Auto Palace Car Exchange as commercial
agent and/or buyer-seller and second, impleading
Albert Jaucian as principal defendant doing business
under the name and style of Auto Palace Car Exchange.

101 | P a g e
MAY THE REGISTERED OWNER OF A MOTOR
VEHICLE BE HELD LIABLE FOR DAMAGES
ARISING FROM A VEHICULAR ACCIDENT
INVOLVING HIS MOTOR VEHICLE WHILE
BEING OPERATED BY THE EMPLOYEE OF
ITS BUYER WITHOUT THE LATTERS
CONSENT AND KNOWLEDGE?[5]
Yes.
We have consistently ruled that the registered owner of
any vehicle is directly and primarily responsible to the
public and third persons while it is being operated.[6]
The rationale behind such doctrine was explained way
back in 1957 in Erezo vs. Jepte[7]:
The principle upon which this doctrine is based is that
in dealing with vehicles registered under the Public
Service Law, the public has the right to assume or
presume that the registered owner is the actual owner
thereof, for it would be difficult for the public to
enforce the actions that they may have for injuries
caused to them by the vehicles being negligently
operated if the public should be required to prove who
the actual owner is. How would the public or third
persons know against whom to enforce their rights in
case of subsequent transfers of the vehicles? We do not
imply by his doctrine, however, that the registered
owner may not recover whatever amount he had paid
by virtue of his liability to third persons from the person
to whom he had actually sold, assigned or conveyed the
vehicle.
Under the same principle the registered owner of any
vehicle, even if not used for a public service, should
primarily be responsible to the public or to third
persons for injuries caused the latter while the vehicle
is being driven on the highways or streets. The
members of the Court are in agreement that the
defendant-appellant should be held liable to plaintiff-
appellee for the injuries occasioned to the latter
because of the negligence of the driver, even if the
defendant-appellant was no longer the owner of the
vehicle at the time of the damage because he had
previously sold it to another. What is the legal basis for
his (defendant-appellants) liability?
There is a presumption that the owner of the guilty
vehicle is the defendant-appellant as he is the registered
owner in the Motor Vehicles Office. Should he not be
allowed to prove the truth, that he had sold it to another
and thus shift the responsibility for the injury to the real
and actual owner? The defendant holds the affirmative
of this proposition; the trial court held the negative.
The Revised Motor Vehicle Law (Act No. 3992, as
amended) provides that no vehicle may be used or
operated upon any public highway unless the same is
property registered. It has been stated that the system of
licensing and the requirement that each machine must
carry a registration number, conspicuously displayed, is
one of the precautions taken to reduce the danger of
injury to pedestrians and other travelers from the
careless management of automobiles. And to furnish a
means of ascertaining the identity of persons violating
the laws and ordinances, regulating the speed and
operation of machines upon the highways (2 R.C.L.
1176). Not only are vehicles to be registered and that no
motor vehicles are to be used or operated without being
properly registered for the current year, but that dealers
in motor vehicles shall furnish thee Motor Vehicles
Office a report showing the name and address of each
purchaser of motor vehicle during the previous month
and the manufacturers serial number and motor number.
(Section 5(c), Act No. 3992, as amended.)
Registration is required not to make said registration the
operative act by which ownership in vehicles is
transferred, as in land registration cases, because the
administrative proceeding of registration does not bear
any essential relation to the contract of sale between the
parties (Chinchilla vs. Rafael and Verdaguer, 39 Phil.
888), but to permit the use and operation of the vehicle
upon any public highway (section 5 [a], Act No. 3992,
as amended). 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 therefore 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:
One of the principal purposes of motor vehicles
legislation is identification of the vehicle and of the
operator, in case of accident; and another is that the
knowledge that means of detection are always available
may act as a deterrent from lax observance of the law
and of the rules of conservative and safe operation.
Whatever purpose there may be in these statutes, it is
subordinate at the last to the primary purpose of
rendering it certain that the violator of the law or of the
rules of safety shall not escape because of lack of
means to discover him. The purpose of the statute is
thwarted, and the displayed number becomes a share
and delusion, if courts would entertain such defenses as
that put forward by appellee in this case. No responsible
person or corporation could be held liable for the most
outrageous acts of negligence, if they should be allowed
to pace a middleman between them and the public, and
escape liability by the manner in which they
recompense servants. (King vs. Brenham Automobile
Co., Inc. 145 S.W. 278, 279.)
102 | P a g e
With the above policy in mind, the question that
defendant-appellant poses is: should not the registered
owner be allowed at the trial to prove who the actual
and real owner is, and in accordance with such proof
escape or evade responsibility by and lay the same on
the person actually owning the vehicle? We hold with
the trial court that the law does not allow him to do so;
the law, with its aim and policy in mind, does not
relieve him directly of the responsibility that the law
fixes and places upon him as an incident or
consequence of registration. Were a registered owner
allowed to evade responsibility by proving who the
supposed transferee or owner is, it would be easy for
him, by collusion with others or otherwise, to escape
said responsibility and transfer the same to an indefinite
person, or to one who possesses no property with which
to respond financially for the damage or injury done. A
victim of recklessness on the public highways is usually
without means to discover or identify the person
actually causing the injury or damage. He has no means
other than by a recourse to the registration in the Motor
Vehicles Office to determine who is the owner. The
protection that the law aims to extend to him would
become illusory were the registered owner given the
opportunity to escape liability by disproving his
ownership. If the policy of the law is to be enforced and
carried out, the registered owner should not be allowed
to prove the contrary to the prejudice of the person
injured, that is, to prove that a third person or another
has become the owner, so that he may thereby be
relieved of the responsibility to the injured person.
The above policy and application of the law may appear
quite harsh and would seem to conflict with truth and
justice. We do not think it is so. A registered owner
who has already sold or transferred a vehicle has the
recourse to a third-party complaint, in the same action
brought against him to recover for the damage or injury
done, against the vendee or transferee of the vehicle.
The inconvenience of the suit is no justification for
relieving him of liability; said inconvenience is the
price he pays for failure to comply with the registration
that the law demands and requires.
In synthesis, we hold that the registered owner, the
defendant-appellant herein, is primarily responsible for
the damage caused to the vehicle of the plaintiff-
appellee, but he (defendant-appellant) has a right to be
indemnified by the real or actual owner of the amount
that he may be required to pay as damage for the injury
caused to the plaintiff-appellant.[8]
Petitioner insists that he is not liable for damages since
the driver of the vehicle at the time of the accident was
not an authorized driver of the new (actual) owner of
the vehicle. He claims that the ruling in First Malayan
Leasing and Finance Corporation vs. CA[9] implies
that to hold the registered owner liable for damages, the
driver of the vehicle must have been authorized,
allowed and permitted by its actual owner to operate
and drive it. Thus, if the vehicle is driven without the
knowledge and consent of the actual owner, then the
registered owner cannot be held liable for damages.
He further argues that this was the underlying theory
behind Duavit vs. CA[10] wherein the court absolved
the registered owner from liability after finding that the
vehicle was virtually stolen from the owners garage by
a person who was neither authorized nor employed by
the owner. Petitioner concludes that the ruling in Duavit
and not the one in First Malayan should be applicable
to him.
Petitioners argument lacks merit. Whether the driver is
authorized or not by the actual owner is irrelevant to
determining the liability of the registered owner who
the law holds primarily and directly responsible for any
accident, injury or death caused by the operation of the
vehicle in the streets and highways. To require the
driver of the vehicle to be authorized by the actual
owner before the registered owner can be held
accountable is to defeat the very purpose why motor
vehicle legislations are enacted in the first place.
Furthermore, there is nothing in First Malayan which
even remotely suggests that the driver must be
authorized before the registered owner can be held
accountable. In First Malayan, the registered owner,
First Malayan Corporation, was held liable for damages
arising from the accident even if the vehicle involved
was already owned by another party:
This Court has consistently ruled that regardless of who
the actual owner is of a motor vehicle might be, the
registered owner is the operator of the same with
respect to the public and third persons, and as such,
directly and primarily responsible for the consequences
of its operation. In contemplation of law, the
owner/operator of record is the employer of the driver,
the actual operator and employer being considered
merely as his agent (MYC-Agro-Industrial Corporation
vs. Vda. de Caldo, 132 SCRA 10, citing Vargas vs.
Langcay, 6 SCRA 174; Tamayo vs. Aquino, 105 Phil.
949).
We believe that it is immaterial whether or not the
driver was actually employed by the operator of record.
It is even not necessary to prove who the actual owner
of the vehicle and the employer of the driver is.
Granting that, in this case, the father of the driver is the
actual owner and that he is the actual employer,
following the well-settled principle that the operator of
record continues to be the operator of the vehicle in
contemplation of law, as regards the public and third
person, and as such is responsible for the consequences
incident to its operation, we must hold and consider
such owner-operator of record as the employer, in
contemplation of law, of the driver. And, to give effect
to this policy of law as enunciated in the above cited
decisions of this Court, we must now extend the same
and consider the actual operator and employer as the
agent of the operator of record.[11]
Contrary to petitioners position, the First Malayan
ruling is applicable to him since the case involves the
same set of facts ― the registered owner had previously
sold the vehicle to someone else and was being driven
by an employee of the new (actual) owner. Duavit is
inapplicable since the vehicle there was not transferred
to another; the registered and the actual owner was one
and the same person. Besides, in Duavit, the defense of
the registered owner, Gilberto Duavit, was that the
vehicle was practically stolen from his garage by Oscar
Sabiano, as affirmed by the latter:
103 | P a g e
Defendant Sabiano, in his testimony, categorically
admitted that he took the jeep from the garage of
defendant Duavit without the consent and authority of
the latter. He testified further that Duavit even filed
charges against him for the theft of the jeep but which
Duavit did not push through as his (Sabianos) parents
apologized to Duavit on his behalf.[12]

As correctly pointed out by the CA, the Duavit ruling is

not applicable to petitioners case since the circumstance
of unauthorized use was not present. He in fact
voluntarily delivered his car to Albert Jaucian as part of
the downpayment for a vehicle he purchased from
Jaucian. Thus, he could not claim that the vehicle was
stolen from him since he voluntarily ceded possession
thereof to Jaucian. It was the latter, as the new (actual)
owner, who could have raised the defense of theft to
prove that he was not liable for the acts of his employee
Ocfemia. Thus, there is no reason to apply the Duavit
ruling to this case.

The ruling in First Malayan has been reiterated in BA

Finance Corporation vs. CA[13] and more recently in
Aguilar, Sr. vs. Commercial Savings Bank.[14] In BA
Finance, we held the registered owner liable even if, at
the time of the accident, the vehicle was leased by
another party and was driven by the lessees employee.
In Aguilar, the registered owner-bank answered for
damages for the accident even if the vehicle was being
driven by the Vice-President of the Bank in his private
capacity and not as an officer of the Bank, as claimed
by the Bank. We find no reason to deviate from these
decisions.

The main purpose of vehicle registration is the easy

identification of the owner who can be held responsible
for any accident, damage or injury caused by the
vehicle. Easy identification prevents inconvenience and
prejudice to a third party injured by one who is
unknown or unidentified. To allow a registered owner
to escape liability by claiming that the driver was not
authorized by the new (actual) owner results in the
public detriment the law seeks to avoid.

Finally, the issue of whether or not the driver of the

vehicle during the accident was authorized is not at all
relevant to determining the liability of the registered
owner. This must be so if we are to comply with the
rationale and principle behind the registration
requirement under the motor vehicle law.

WHEREFORE, the petition is hereby DENIED. The

January 26, 2000 decision of the Court of Appeals is
AFFIRMED.

SO ORDERED.

104 | P a g e
 [G.R. No. 122039. May 31, 2000]
VICENTE CALALAS, petitioner, vs. COURT OF
APPEALS, ELIZA JUJEURCHE SUNGA and
FRANCISCO SALVA, respondents.
D E C I S I ON
MENDOZA, J.:
This is a petition for review on certiorari of the
decision[1] of the Court of Appeals, dated March 31,
1991, reversing the contrary decision of the Regional
Trial Court, Branch 36, Dumaguete City, and awarding
damages instead to private respondent Eliza Jujeurche
Sunga as plaintiff in an action for breach of contract of
carriage.
The facts, as found by the Court of Appeals, are as
follows:
At 10 oclock in the morning of August 23, 1989,
private respondent Eliza Jujeurche G. Sunga, then a
college freshman majoring in Physical Education at the
Siliman University, took a passenger jeepney owned
and operated by petitioner Vicente Calalas. As the
jeepney was filled to capacity of about 24 passengers,
Sunga was given by the conductor an "extension seat,"
a wooden stool at the back of the door at the rear end of
the vehicle. Sclaw
On the way to Poblacion Sibulan, Negros Occidental,
the jeepney stopped to let a passenger off. As she was
seated at the rear of the vehicle, Sunga gave way to the
outgoing passenger. Just as she was doing so, an Isuzu
truck driven by Iglecerio Verena and owned by
Francisco Salva bumped the left rear portion of the
jeepney. As a result, Sunga was injured. She sustained a
fracture of the "distal third of the left tibia-fibula with
severe necrosis of the underlying skin." Closed
reduction of the fracture, long leg circular casting, and
case wedging were done under sedation. Her
confinement in the hospital lasted from August 23 to
September 7, 1989. Her attending physician, Dr. Danilo
V. Oligario, an orthopedic surgeon, certified she would
remain on a cast for a period of three months and would
have to ambulate in crutches during said period.
On October 9, 1989, Sunga filed a complaint for
damages against Calalas, alleging violation of the
contract of carriage by the former in failing to exercise
the diligence required of him as a common carrier.
Calalas, on the other hand, filed a third-party complaint
against Francisco Salva, the owner of the Isuzu truck.
Korte
The lower court rendered judgment against Salva as
third-party defendant and absolved Calalas of liability,
holding that it was the driver of the Isuzu truck who
was responsible for the accident. It took cognizance of
another case (Civil Case No. 3490), filed by Calalas
against Salva and Verena, for quasi-delict, in which
Branch 37 of the same court held Salva and his driver
Verena jointly liable to Calalas for the damage to his
jeepney. Rtcspped
On appeal to the Court of Appeals, the ruling of the
lower court was reversed on the ground that Sungas
cause of action was based on a contract of carriage, not
quasi-delict, and that the common carrier failed to
exercise the diligence required under the Civil Code.
The appellate court dismissed the third-party complaint
against Salva and adjudged Calalas liable for damages
to Sunga. The dispositive portion of its decision reads:
WHEREFORE, the decision appealed
from is hereby REVERSED and SET
ASIDE, and another one is entered
ordering defendant-appellee Vicente
Calalas to pay plaintiff-appellant:
(1) P50,000.00 as actual and
compensatory damages;
(2) P50,000.00 as moral damages;
(3) P10,000.00 as attorneys fees; and
(4) P1,000.00 as expenses of litigation;
and
(5) to pay the costs.
SO ORDERED.
Hence, this petition. Petitioner contends that the ruling
in Civil Case No. 3490 that the negligence of Verena
was the proximate cause of the accident negates his
liability and that to rule otherwise would be to make the
common carrier an insurer of the safety of its
passengers. He contends that the bumping of the
jeepney by the truck owned by Salva was a caso
fortuito. Petitioner further assails the award of moral
damages to Sunga on the ground that it is not supported
by evidence. Sdaadsc
The petition has no merit.
The argument that Sunga is bound by the ruling in Civil
Case No. 3490 finding the driver and the owner of the
truck liable for quasi-delict ignores the fact that she was
never a party to that case and, therefore, the principle of
res judicata does not apply. Missdaa
Nor are the issues in Civil Case No. 3490 and in the
present case the same. The issue in Civil Case No. 3490
was whether Salva and his driver Verena were liable for
quasi-delict for the damage caused to petitioners
jeepney. On the other hand, the issue in this case is
whether petitioner is liable on his contract of carriage.
The first, quasi-delict, also known as culpa aquiliana or
culpa extra contractual, has as its source the negligence
of the tortfeasor. The second, breach of contract or
culpa contractual, is premised upon the negligence in
the performance of a contractual obligation.
105 | P a g e
Consequently, in quasi-delict, the negligence or fault
should be clearly established because it is the basis of
the action, whereas in breach of contract, the action can
be prosecuted merely by proving the existence of the
contract and the fact that the obligor, in this case the
common carrier, failed to transport his passenger safely
to his destination.[2] In case of death or injuries to
passengers, Art. 1756 of the Civil Code provides that
common carriers are presumed to have been at fault or
to have acted negligently unless they prove that they
observed extraordinary diligence as defined in Arts.
1733 and 1755 of the Code. This provision necessarily
shifts to the common carrier the burden of proof.
Slxmis
There is, thus, no basis for the contention that the ruling
in Civil Case No. 3490, finding Salva and his driver
Verena liable for the damage to petitioners jeepney,
should be binding on Sunga. It is immaterial that the
proximate cause of the collision between the jeepney
and the truck was the negligence of the truck driver.
The doctrine of proximate cause is applicable only in
actions for quasi-delict, not in actions involving breach
of contract. The doctrine is a device for imputing
liability to a person where there is no relation between
him and another party. In such a case, the obligation is
created by law itself. But, where there is a pre-existing
contractual relation between the parties, it is the parties
themselves who create the obligation, and the function
of the law is merely to regulate the relation thus
created. Insofar as contracts of carriage are concerned,
some aspects regulated by the Civil Code are those
respecting the diligence required of common carriers
with regard to the safety of passengers as well as the
presumption of negligence in cases of death or injury to
passengers. It provides: Slxsc
Art. 1733. Common carriers, from the
nature of their business and for reasons
of public policy, are bound to observe
extraordinary diligence in the vigilance
over the goods and for the safety of the
passengers transported by them,
according to all the circumstances of
each case.
Such extraordinary diligence in the
vigilance over the goods is further
expressed in articles 1734, 1735, and
1746, Nos. 5,6, and 7, while the
extraordinary diligence for the safety of
the passengers is further set forth in
articles 1755 and 1756.
Art. 1755. A common carrier is bound
to carry the passengers safely as far as
human care and foresight can provide,
using the utmost diligence of very
cautious persons, with due regard for
all the circumstances.
Art. 1756. In case of death of or
injuries to passengers, common carriers
are presumed to have been at fault or to
have acted negligently, unless they
prove that they observed extraordinary
diligence as prescribed by articles 1733
and 1755.
In the case at bar, upon the happening of the accident,
the presumption of negligence at once arose, and it
became the duty of petitioner to prove that he had to
observe extraordinary diligence in the care of his
passengers. Scslx
Now, did the driver of jeepney carry Sunga "safely as
far as human care and foresight could provide, using the
utmost diligence of very cautious persons, with due
regard for all the circumstances" as required by Art.
1755? We do not think so. Several factors militate
against petitioners contention. Slx
First, as found by the Court of Appeals, the jeepney was
not properly parked, its rear portion being exposed
about two meters from the broad shoulders of the
highway, and facing the middle of the highway in a
diagonal angle. This is a violation of the R.A. No. 4136,
as amended, or the Land Transportation and Traffic
Code, which provides:
Sec. 54. Obstruction of Traffic. - No
person shall drive his motor vehicle in
such a manner as to obstruct or impede
the passage of any vehicle, nor, while
discharging or taking on passengers or
loading or unloading freight, obstruct
the free passage of other vehicles on
the highway.
Second, it is undisputed that petitioners driver took in
more passengers than the allowed seating capacity of
the jeepney, a violation of 32(a) of the same law. It
provides: Mesm
Exceeding registered capacity. - No
person operating any motor vehicle
shall allow more passengers or more
freight or cargo in his vehicle than its
registered capacity.
The fact that Sunga was seated in an "extension seat"
placed her in a peril greater than that to which the other
passengers were exposed. Therefore, not only was
petitioner unable to overcome the presumption of
negligence imposed on him for the injury sustained by
Sunga, but also, the evidence shows he was actually
negligent in transporting passengers. Calrky
106 | P a g e
We find it hard to give serious thought to petitioners
contention that Sungas taking an "extension seat"
amounted to an implied assumption of risk. It is akin to
arguing that the injuries to the many victims of the
tragedies in our seas should not be compensated merely
because those passengers assumed a greater risk of
drowning by boarding an overloaded ferry. This is also
true of petitioners contention that the jeepney being
bumped while it was improperly parked constitutes
caso fortuito. A caso fortuito is an event which could
not be foreseen, or which, though foreseen, was
inevitable.[3] This requires that the following
requirements be present: (a) the cause of the breach is
independent of the debtors will; (b) the event is
unforeseeable or unavoidable; (c) the event is such as to
render it impossible for the debtor to fulfill his
obligation in a normal manner, and (d) the debtor did
not take part in causing the injury to the creditor.[4]
Petitioner should have foreseen the danger of parking
his jeepney with its body protruding two meters into the
highway. Kycalr
Finally, petitioner challenges the award of moral
damages alleging that it is excessive and without basis
in law. We find this contention well taken.
In awarding moral damages, the Court of Appeals
stated: Kyle
Plaintiff-appellant at the time of the
accident was a first-year college
student in that school year 1989-1990
at the Silliman University, majoring in
Physical Education. Because of the
injury, she was not able to enroll in the
second semester of that school year.
She testified that she had no more
intention of continuing with her
schooling, because she could not walk
and decided not to pursue her degree,
major in Physical Education "because
of my leg which has a defect already."
As a general rule, moral damages are not recoverable in
actions for damages predicated on a breach of contract
for it is not one of the items enumerated under Art.
2219 of the Civil Code.[5] As an exception, such
damages are recoverable: (1) in cases in which the
mishap results in the death of a passenger, as provided
in Art. 1764, in relation to Art. 2206(3) of the Civil
Code; and (2) in the cases in which the carrier is guilty
of fraud or bad faith, as provided in Art. 2220.[6]
In this case, there is no legal basis for awarding moral
damages since there was no factual finding by the
appellate court that petitioner acted in bad faith in the
performance of the contract of carriage. Sungas
contention that petitioners admission in open court that
the driver of the jeepney failed to assist her in going to
a nearby hospital cannot be construed as an admission
of bad faith. The fact that it was the driver of the Isuzu
truck who took her to the hospital does not imply that
petitioner was utterly indifferent to the plight of his
injured passenger. If at all, it is merely implied
recognition by Verena that he was the one at fault for
the accident. Exsm
WHEREFORE, the decision of the Court of Appeals,
dated March 31, 1995, and its resolution, dated
September 11, 1995, are AFFIRMED, with the
MODIFICATION that the award of moral damages is
DELETED.
SO ORDERED.

Plaintiff-appellant likewise testified

that even while she was under
confinement, she cried in pain because
of her injured left foot. As a result of
her injury, the Orthopedic Surgeon also
certified that she has "residual bowing
of the fracture side." She likewise
decided not to further pursue Physical
Education as her major subject,
because "my left leg x x x has a defect
already."

Those are her physical pains and moral

sufferings, the inevitable bedfellows of
the injuries that she suffered. Under
Article 2219 of the Civil Code, she is
entitled to recover moral damages in
the sum of P50,000.00, which is fair,
just and reasonable.

107 | P a g e
G.R. No. L-12219 March 15, 1918
AMADO PICART, plaintiff-appellant,
vs.
FRANK SMITH, JR., defendant-appellee.
STREET, J.:
In this action the plaintiff, Amado Picart, seeks to
recover of the defendant, Frank Smith, jr., the sum of
P31,000, as damages alleged to have been caused by an
automobile driven by the defendant. From a judgment
of the Court of First Instance of the Province of La
Union absolving the defendant from liability the
plaintiff has appealed.
The occurrence which gave rise to the institution of this
action took place on December 12, 1912, on the
Carlatan Bridge, at San Fernando, La Union. It appears
that upon the occasion in question the plaintiff was
riding on his pony over said bridge. Before he had
gotten half way across, the defendant approached from
the opposite direction in an automobile, going at the
rate of about ten or twelve miles per hour. As the
defendant neared the bridge he saw a horseman on it
and blew his horn to give warning of his approach. He
continued his course and after he had taken the bridge
he gave two more successive blasts, as it appeared to
him that the man on horseback before him was not
observing the rule of the road.
The plaintiff, it appears, saw the automobile coming
and heard the warning signals. However, being
perturbed by the novelty of the apparition or the
rapidity of the approach, he pulled the pony closely up
against the railing on the right side of the bridge instead
of going to the left. He says that the reason he did this
was that he thought he did not have sufficient time to
get over to the other side. The bridge is shown to have a
length of about 75 meters and a width of 4.80 meters.
As the automobile approached, the defendant guided it
toward his left, that being the proper side of the road for
the machine. In so doing the defendant assumed that the
horseman would move to the other side. The pony had
not as yet exhibited fright, and the rider had made no
sign for the automobile to stop. Seeing that the pony
was apparently quiet, the defendant, instead of veering
to the right while yet some distance away or slowing
down, continued to approach directly toward the horse
without diminution of speed. When he had gotten quite
near, there being then no possibility of the horse getting
across to the other side, the defendant quickly turned
his car sufficiently to the right to escape hitting the
horse alongside of the railing where it as then standing;
but in so doing the automobile passed in such close
proximity to the animal that it became frightened and
turned its body across the bridge with its head toward
the railing. In so doing, it as struck on the hock of the
left hind leg by the flange of the car and the limb was
broken. The horse fell and its rider was thrown off with
some violence. From the evidence adduced in the case
we believe that when the accident occurred the free
space where the pony stood between the automobile
and the railing of the bridge was probably less than one
and one half meters. As a result of its injuries the horse
died. The plaintiff received contusions which caused
temporary unconsciousness and required medical
attention for several days.
The question presented for decision is whether or not
the defendant in maneuvering his car in the manner
above described was guilty of negligence such as gives
rise to a civil obligation to repair the damage done; and
we are of the opinion that he is so liable. As the
defendant started across the bridge, he had the right to
assume that the horse and the rider would pass over to
the proper side; but as he moved toward the center of
the bridge it was demonstrated to his eyes that this
would not be done; and he must in a moment have
perceived that it was too late for the horse to cross with
safety in front of the moving vehicle. In the nature of
things this change of situation occurred while the
automobile was yet some distance away; and from this
moment it was not longer within the power of the
plaintiff to escape being run down by going to a place
of greater safety. The control of the situation had then
passed entirely to the defendant; and it was his duty
either to bring his car to an immediate stop or, seeing
that there were no other persons on the bridge, to take
the other side and pass sufficiently far away from the
horse to avoid the danger of collision. Instead of doing
this, the defendant ran straight on until he was almost
upon the horse. He was, we think, deceived into doing
this by the fact that the horse had not yet exhibited
fright. But in view of the known nature of horses, there
was an appreciable risk that, if the animal in question
was unacquainted with automobiles, he might get exited
and jump under the conditions which here confronted
him. When the defendant exposed the horse and rider to
this danger he was, in our opinion, negligent in the eye
of the law.
The test by which to determine the existence of
negligence in a particular case may be stated as follows:
Did the defendant in doing the alleged negligent act use
that person would have used in the same situation? If
not, then he is guilty of negligence. The law here in
effect adopts the standard supposed to be supplied by
the imaginary conduct of the discreet paterfamilias of
the Roman law. The existence of negligence in a given
case is not determined by reference to the personal
judgment of the actor in the situation before him. The
law considers what would be reckless, blameworthy, or
negligent in the man of ordinary intelligence and
prudence and determines liability by that.
108 | P a g e
The question as to what would constitute the conduct of
a prudent man in a given situation must of course be
always determined in the light of human experience and
in view of the facts involved in the particular case.
Abstract speculations cannot here be of much value but
this much can be profitably said: Reasonable men
govern their conduct by the circumstances which are
before them or known to them. They are not, and are
not supposed to be, omniscient of the future. Hence
they can be expected to take care only when there is
something before them to suggest or warn of danger.
Could a prudent man, in the case under consideration,
foresee harm as a result of the course actually pursued?
If so, it was the duty of the actor to take precautions to
guard against that harm. Reasonable foresight of harm,
followed by ignoring of the suggestion born of this
prevision, is always necessary before negligence can be
held to exist. Stated in these terms, the proper criterion
for determining the existence of negligence in a given
case is this: Conduct is said to be negligent when a
prudent man in the position of the tortfeasor would
have foreseen that an effect harmful to another was
sufficiently probable to warrant his foregoing conduct
or guarding against its consequences.
Applying this test to the conduct of the defendant in the
present case we think that negligence is clearly
established. A prudent man, placed in the position of
the defendant, would in our opinion, have recognized
that the course which he was pursuing was fraught with
risk, and would therefore have foreseen harm to the
horse and the rider as reasonable consequence of that
course. Under these circumstances the law imposed on
the defendant the duty to guard against the threatened
harm.
It goes without saying that the plaintiff himself was not
free from fault, for he was guilty of antecedent
negligence in planting himself on the wrong side of the
road. But as we have already stated, the defendant was
also negligent; and in such case the problem always is
to discover which agent is immediately and directly
responsible. It will be noted that the negligent acts of
the two parties were not contemporaneous, since the
negligence of the defendant succeeded the negligence
of the plaintiff by an appreciable interval. Under these
circumstances the law is that the person who has the
last fair chance to avoid the impending harm and fails
to do so is chargeable with the consequences, without
reference to the prior negligence of the other party.
The decision in the case of Rkes vs. Atlantic, Gulf and
Pacific Co. (7 Phil. Rep., 359) should perhaps be
mentioned in this connection. This Court there held that
while contributory negligence on the part of the person
injured did not constitute a bar to recovery, it could be
received in evidence to reduce the damages which
would otherwise have been assessed wholly against the
other party. The defendant company had there
employed the plaintiff, as a laborer, to assist in
transporting iron rails from a barge in Manila harbor to
the company's yards located not far away. The rails
were conveyed upon cars which were hauled along a
narrow track. At certain spot near the water's edge the
track gave way by reason of the combined effect of the
weight of the car and the insecurity of the road bed. The
car was in consequence upset; the rails slid off; and the
plaintiff's leg was caught and broken. It appeared in
evidence that the accident was due to the effects of the
typhoon which had dislodged one of the supports of the
track. The court found that the defendant company was
negligent in having failed to repair the bed of the track
and also that the plaintiff was, at the moment of the
accident, guilty of contributory negligence in walking at
the side of the car instead of being in front or behind. It
was held that while the defendant was liable to the
plaintiff by reason of its negligence in having failed to
keep the track in proper repair nevertheless the amount
of the damages should be reduced on account of the
contributory negligence in the plaintiff. As will be seen
the defendant's negligence in that case consisted in an
omission only. The liability of the company arose from
its responsibility for the dangerous condition of its
track. In a case like the one now before us, where the
defendant was actually present and operating the
automobile which caused the damage, we do not feel
constrained to attempt to weigh the negligence of the
respective parties in order to apportion the damage
according to the degree of their relative fault. It is
enough to say that the negligence of the defendant was
in this case the immediate and determining cause of the
accident and that the antecedent negligence of the
plaintiff was a more remote factor in the case.
A point of minor importance in the case is indicated in
the special defense pleaded in the defendant's answer,
to the effect that the subject matter of the action had
been previously adjudicated in the court of a justice of
the peace. In this connection it appears that soon after
the accident in question occurred, the plaintiff caused
criminal proceedings to be instituted before a justice of
the peace charging the defendant with the infliction of
serious injuries (lesiones graves). At the preliminary
investigation the defendant was discharged by the
magistrate and the proceedings were dismissed.
Conceding that the acquittal of the defendant at the trial
upon the merits in a criminal prosecution for the
offense mentioned would be res adjudicata upon the
question of his civil liability arising from negligence --
a point upon which it is unnecessary to express an
opinion -- the action of the justice of the peace in
dismissing the criminal proceeding upon the
preliminary hearing can have no effect. (See U. S. vs.
Banzuela and Banzuela, 31 Phil. Rep., 564.)
From what has been said it results that the judgment of
the lower court must be reversed, and judgment is her
rendered that the plaintiff recover of the defendant the
sum of two hundred pesos (P200), with costs of other
instances. The sum here awarded is estimated to include
the value of the horse, medical expenses of the plaintiff,
the loss or damage occasioned to articles of his apparel,
and lawful interest on the whole to the date of this
recovery. The other damages claimed by the plaintiff
are remote or otherwise of such character as not to be
recoverable. So ordered.
109 | P a g e