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CIVIL CODE: Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shall apply. Art. 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void. Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. V TOLENTINO pages 506 & 507


PICART V SMITH 37 Phil 809 Street March 15, 1918 FACTS y Amando Picart seeks to recover from the defendant Frank Smith the sum of Php 31,100 as damages alleged to have been caused by an automobile driven by Smith. The incident happened on Dec 12, 1912, at the Carlatan Bridge, San Fernando, La Union. y Picart was riding on his pony aver the said bridge. Before he had gotten half way across, Smith approached from the opposite direction driving his vehicle at 10 to 12 miles per hour. y Smith blew his horn to give warning as he observed that the man was not observing rules of the road. Smith continued his course and made two more blasts. y Picart was perturbed by the rapidity of the approach that he pulled his pony to the right side of the railing. y As the automobile approached, Smith guided the automobile to its left, that being the proper side of the road for the machine. y Smith noticed that the pony was not frightened so he continued without diminution of speed. y When he learned that there was no possibility for the pony to go on the other side, Smith drove his car to the right to avoid hitting the pony, but in so doing the vehicle passed in a close proximity to the horse that it became frightened and turned its belly across the bridge with its head towards the railing. y The horse was struck on the hock of the left hind leg by the flange of the car and the limb was broken. y The horse fell and its rider was thrown off with some violence.

It showed that the free space where the pony stood between the automobile and the railing was probably less than one half meters. y The horse died and Picart received contusions which caused temporary unconsciousness and required medical attention for several days. ISSUES & ARGUMENTS Whether or not Smith was guilty of negligence that gives rise to a civil obligation to repair the damage done to Picart and his pony. HOLDING & RATIO DECIDENDI Yes, the court ruled that Smith that he is liable to pay Picart the amount of P200. The sum is computed to include the value of the horse, medical expenses of the plaintiff, the loss or damage occasioned to articles of his apparel.  In the nature of things, this change in situation occurred while the automobile was still some distance away. From this moment it was no longer possible for Picart to escape being run down by going to a place for greater safety.  The control of the situation had then passed entirely to Smith, and it was his duty to bring his car to an immediate stop or seeing no other persons on the bridge, to take the other side and pass sufficiently far away from the horse to avoid collision. There was an appreciable risk that a horse not acquainted with vehicles would react that way.  The Test to Determine the Existence of Negligence in a particular case may be stated as follows: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used the same situation? If not then he is guilty of negligence.  The law 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.  A prudent man, placed in the position of Smith in the Courts opinion would 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 a reasonable consequence of that course.


1 Sangco, pages 7 & 8


TAYLOR V MANILA RAILROAD CARSON; March 22, 1910 NATURE An action to recover damages for the loss of an eye and other injuries, instituted by David Taylor, a minor, by his father, his nearest relative., the son of a mechanical engineer, more mature than the average boy of his age, and having considerable aptitude and training in mechanics.

FACTS: y The defendant is a foreign corporation engaged in the operation of a street railway and an electric light system in the city of Manila. Its power plant is situated at the eastern end of a small island in the Pasig River within the city of Manila, known as the Isla del Provisor. The power plant may be reached by boat or by crossing a footbridge, impassable for vehicles, at the westerly end of the island. y The plaintiff, David Taylor, was at the same time when he received the injuries complained of, 15 yrs of age. y On the 30th of September, 1905, plaintiff, with a boy named Manuel Claparols, about 12 years of age, crossed the footbridge of the Isla del Provisor, for the purpose of visiting one Murphy, an employee of the defendant, who had promised to make them a cylinder for a miniature engine. Finding on inquiry that Mr. Murphy was not in his quarters, the boys, impelled apparently by youthful curiosity and perhaps by the unusual interest which both seem to have taken in machinery, spent some time in wandering about the company's premises. The visit made on a Sunday afternoon, and it does not appear that they saw or spoke to anyone after leaving the power house where they had asked for Mr. Murphy. y After watching the operation of the traveling crane used in handling the defendant's coal, they walked across the open space in the neighborhood of the place where the company dumped the cinders and ashes from its furnaces. Here they found some twenty or thirty brass fulminating caps scattered on the ground. These caps are approximately of the size and appearance of small pistol cartridges and each has attached to it two long thin wires by means of which it may be discharged by the use of electricity. They are intended for use in the explosion of blasting charges of dynamite, and have in themselves considerable explosive power. After some discussion as to the ownership of caps, and their right to take them, the boys picked up all they could find, hung them of a stick, of which each took one end, and carried them home. After crossing the footbridge, they met a little girl named Jessie Adrian, less than 9 years old, and all three went to the home of the boy Manuel. The boys then made a series of experiments with the caps. They thrust the ends of the wires into an electric light socket and obtained no result. They next tried to break the cap with a stone and failed. Manuel looked for a hammer, but could not find one. They then opened one of the caps with a knife, and finding that it was filled with a yellowish substance they got matches, and David held the cap while Manuel applied a lighted match to the contents. An explosion followed, causing more or less serious injuries to all three. Jessie, who, when the boys proposed purring a match to the contents of the cap, became frightened and started to run away, received a slight cut in the neck. Manuel had his hand burned and wounded, and David was struck in the face by several particles of the metal capsule, one of which injured his right eye to such an extent as to necessitate its removal by the surgeons who were called in to care for his wounds. y The Defendant Companys defense that the caps were under the duty of independent contractors deserves scant consideration since these workers have been under the supervision of one of the companys foremen. y Plaintiff Taylor appears to have rested his case, as did the trial judge his decision in plaintiff's favor, upon the


provisions of article 1089 of the Civil Code read together with articles 1902, 1903, and 1908 of that Code. "ART. 1089. Obligations are created by law, by contracts, by quasicontracts, and by illicit acts and omissions or by those in which any kind of fault or negligence occurs." "ART. 1902. Any 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. "ART. 1903. The obligation imposed by the preceding article is demandable, not only for personal acts and omission, but also for those of the persons for whom they should be responsible. o "The father, and on his death or incapacity the mother, is liable for the damages caused by the minors who alive with them. xxx xxx xxx "Owners or directors of an establishment or enterprises are equally liable for the damages caused by their employees in the service of the branches in which the latter may be employed or on account 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." "ART. 1908.The owners shall be also be liable for the damages caused "1. By the explosion of machines which may not have been cared for with due diligence, and for kindling of explosive substance which may not have been placed in a safe and proper place." In support of his contention, counsel for plaintiff relied on the doctrine laid down in many of the courts of last result in the United States in the cases known as the "Torpedo" and "Turntable" cases, and the cases based thereon.In the typical cases, the question involved has been whether a railroad company is liable for an injury received by an infant of tender years, who from mere idle curiosity, or for purposes of amusement, enters upon the railroad company's premises, at a place where the railroad company's premises, at a place where the railroad company knew, or had a good reason to suppose, children who would likely to come, and there found explosive signal torpedoes left exposed by the railroad company's employees, one of which when carried away by the visitor, exploded and injured him; or where such infant found upon the premises a dangerous machine, such as a turntable left in such condition as to make it probable that children in playing with it would be exposed to accident or injury therefrom and where the infant did in fact suffer injury in playing with such machine. In these, and in a great variety of similar cases, the great weight of authority holds the owner of the premises liable. As laid down in Railroad Co. vs. Stout ( 17 Wall. (84 U.S.), 657), (wherein the principal question was whether a railroad company was liable for an injury received by an infant while upon its premises, from idle curiosity, or for purposed of amusement, if such injury was, under the circumstances, attributable to the negligence of the company), the principles on which these cases turn are that "while railroad company is not bound to the same degree of care in


regard to mere strangers who are unlawfully upon its premises that it owes to passengers conveyed by it, it is not exempt from responsibility to such strangers for injuries arising from its negligence or from its tortious acts;" and that "the conduct of an infant of tender years is not to be judged by the same rule which governs that of an adult. While it is the general rule in regard to an adult that to entitle him to recover damages for an injury resulting from the fault or negligence of another he must himself have been free from fault, such is not the rule in regard to an infant of tender years. The care and caution required of a child is according to his maturity and capacity only, and this is to be determined in such case by the circumstances of the case." The doctrine of the case of Railroad Company vs. Stout was vigorously controverted and sharply criticized in severally state courts, saying that (1) That the owner of land is not liable to trespassers thereon for injuries sustained by them, not due to his wanton or willful acts; (2) that no exception to this rule exists in favor of children who are injured by dangerous machinery naturally calculated to attract them to the premises; (3) that an invitation of license to cross the premises of another can not be predicated on the mere fact that no steps have been taken to interfere with such practice; (4) that there is no difference between children and adults of an invitation or a license to enter upon another's premises. However, after an exhaustive and critical analysis and review of may of the adjudged cases, both English and America, formally declared that it adhered "to the principles announced in the case of Railroad Co. vs. Stout." Chief Justice Cooley, voicing the opinion of the supreme court of Michigan, in the case of Powers vs. Marlow, said that: Children, wherever they go, must be expected to act upon childlike instincts and impulses; and others who are chargeable with a duty of care and caution toward them must calculate upon this, and take precautions accordingly. If they leave exposed to the observation of children anything which would be tempting to them, and which they in their immature judgment might naturally suppose they were at liberty to handle or play with, they should expect that liberty to be taken." The owners of premises, therefore, whereon things attractive to children are exposed, or upon which the public are expressively or impliedly permitted to enter to or upon which the owner knows or ought to know children are likely to roam about for pastime and in play, "must calculate upon this, and take precautions accordingly." In such cases the owner of the premises can not be heard to say that because the child has entered upon his premises without his express permission he is a trespasser to whom the owner owes no duty or obligation whatever. The owner's failure to take reasonable precautions to prevent the child form entering premises at a place where he knows or ought to know that children are accustomed to roam about or to which their childish instincts and impulses are likely to attract them is at least equivalent to an implied license to enter, and where the child does not enter under such conditions the owner's failure to make reasonable precaution to guard the child against the injury from unknown or unseen dangers, placed upon such premises by the owner, is clearly a breach of duty, a negligent omission, for which he may and should be held responsible, if the child is actually injured, without

other fault on its part than that it had entered on the premises of a stranger without his express invitation or permission. To hold otherwise would be expose to all the children in the community to unknown perils and unnecessary danger at the whim of the owners or occupants of land upon which they might naturally and reasonably be expected to enter. ISSUE WON the defendants negligence was the proximate cause of the injuries, making the company liable HELD NO  Just because the kids trespassed doesnt mean that the company is not liable for anything bad that might happen to them. However, we also have to look at the proximate cause and the maturity of the plaintiff if it was his negligence that contributed to the principal occurrence of the tragedy. In the case at bar, the Court said that it is of the opinion that under all the circumstances of this case the negligence of the defendant in leaving the caps exposed on its premises was not the proximate cause of the injury received by the plaintiff, which therefore was not, properly speaking, "attributable to the negligence of the defendant," and, on the other hand, we are satisfied that plaintiff's action in cutting open the detonating cap and putting a match to its contents was the proximate cause of the explosion and of the resultant injuries inflicted upon the plaintiff, and that the defendant, therefore, is not civilly responsible for the injuries thus incurred. "While it is the general rule in regard to an adult that entitle him to recover damages for an injury resulting from the fault or negligence of another he must himself have been free from fault, such is not the rule in regard to an infant of tender years. The care and caution required of a child is according to his maturity and capacity only, and this is to be determined in each case by the circumstance of the case."  As regards the maturity of the child, this has to be examined on a case-to-case basis. In the case at bar, plaintiff at the time of the accident was wellgrown youth of 15, more mature both mentally and physically than the average boy of his age; he had been to sea as a cabin boy; was able to earn P2.50 a day as a mechanical draftsman thirty days after the injury was incurred; and the record discloses throughout that he was exceptionally well qualified to take care. The evidence of record leaves no room for doubt that, despite his denials on the witness stands, he well knew the explosive character of the cap with which he was amusing himself. The series of experiments made by him in his attempt to produce an explosion, as described by the little girl who was present, admit of no other explanation. His attempt to discharge the cap by the use of electricity, followed by his efforts to explode it with a stone or a hammer, and the final success of his endeavors brought about by the applications of a match to the contents of the cap, show clearly that he knew what he was about. Nor can there be any reasonable doubt that he had reason to anticipate that the explosion might be dangerous, in view of the fact that the little girl, 9 years of age, who was with him at the time when he put the match to the contents of the cap, became frightened and ran away.  We think it is quite clear that under the doctrine thus stated, the immediate cause of the explosion , the accident which resulted in plaintiff's injury, was his

own act of putting a match to the contents of the cap, and that having "contributed to the principal occurrence, as one of its determining factors, he can not recover." DISPOSITION The petition is DISMISSED. JARCO MARKETING CORP V CA (AGUILAR) DAVIDE; December 21, 1999 FACTS y Petitioner Jarco Marketing Corporation is the owner of Syvel's Department Store, Makati City. Petitioners Leonardo Kong, Jose Tiope and Elisa Panelo are the store's branch manager, operations manager, and supervisor, respectively. Private respondents are spouses and the parents of Zhieneth Aguilar. y On May 9, 1983, Criselda and Zhieneth were at the 2nd flr or Syvels Dept. Store. Criselda momentarily let go of her daughters hand to sign her credit card slip at the payment and verification counter. She suddenly felt a gust of wind and heard a loud thud. She looked behind her and saw her daughter on the floor, pinned by the gift-wrapping counter. Zhieneth was crying and screaming for help. Criselda was able to ask people to help her and bring her daughter to the hospital. y She was operated on immediately at the hospital. Gonzales, a former employee of Syvels Dept Store who helped bring Zhieneth to the hospital, heard her tell the doctor that she nothing. I did not come near the counter and the counter just fell on me, when asked what did you do? She died 14 days later, on the hospital bed. She was 6 years old. The cause of her death was attributed to the injuries she sustained. y After the burial of their daughter, the Aguilars demanded from the petitioners the reimbursement of hospital and medical bills, and wake and funeral expenses. Petitioners refused to pay. So the Aguilars filed a complaint for damages wherein they sought the payment of P157,522.86 for actual damages, P300,000 for moral damages, P20,000 for attorney's fees and an unspecified amount for loss of income and exemplary damages. y RTC for Jarco Marketing Corp, et al. RTC mfr for the Aguilars. CA and CA mfr for the Aguilars. y - Jarco Mktg Corp, et als side: Criselda was negligent in taking care of her daughter for allowing her to roam freely. Zhieneth was guilty of contributory negligence because she tried to climb the counter. The counter was made of sturdy wood with a strong base and was used without incident for the past 15 years. It was deliberately placed at a corner to avoid such accidents. The testimony of two former employees, Gonzales and Guevarra, should not be believed because he might have ill feelings towards petitioners. The testimony of the present employees (that Zhieneth climbed the counter so it fell) should instead be believed. y - The Aguilars side: While in the dept store, Criselda never let go of her daughter except to sign the credit card slip. Gonzales testified that the gift wrapping counter was right beside the verification counter where Criselda was signing. Both Gonzales and Guevarra testified to the structural instability and shakiness of the counter which is in the shape of and inverted L, with a base smaller than the top. The protruding part of the counter was at the costumer side. They both had informed management (while they were still working there) that the counter should be nailed to the floor. The management did nothing. ISSUE: WON the incident is accident or attributable to negligence. If negligence, who was negligent?


HELD: NEGLIGENCE.  An accident pertains to an unforeseen event in which no fault or negligence attaches to the defendant. It is "a fortuitous circumstance, event or happening; an event happening without any human agency, or if happening wholly or partly through human agency, an event which under the circumstances is unusual or unexpected by the person to whom it happens."  On the other hand, negligence is the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would not do. Negligence is "the failure to observe, for the protection of the interest of another person, that degree of care, precaution and vigilance which the circumstances justly demand, whereby such other person suffers injury."  Accident and negligence are intrinsically contradictory; one cannot exist with the other. Accident occurs when the person concerned is exercising ordinary care, which is not caused by fault of any person and which could not have been prevented by any means suggested by common prudence.  The test in determining the existence of negligence is enunciated in the landmark case of Picart v. Smith, thus: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinary prudent person would have used in the same situation? If not, then he is guilty of negligence.  Gonzales testimony about what Zhieneth said to the doctor should be accepted because at the time she said it, she was in so much pain and she answered right away. This means she wasnt making it up. It is axiomatic that matters relating to declarations of pain or suffering and statements made to a physician are generally considered declarations and admissions. All that is required for their admissibility as part of the res gestae is that they be made or uttered under the influence of a startling event before the declarant had the time to think and concoct a falsehood as witnessed by the person who testified in court. Under the circumstances thus described, it is unthinkable for ZHIENETH, a child of such tender age and in extreme pain, to have lied to a doctor whom she trusted with her life. We therefore accord credence to Gonzales' testimony on the matter, i.e., ZHIENETH performed no act that facilitated her tragic death. Sadly, petitioners did, through their negligence or omission to secure or make stable the counter's base.  JARCO MKTG, ET AL. Petitioner Panelo and another store supervisor were personally informed of the danger posed by the unstable counter. Yet, neither initiated any concrete action to remedy the situation nor ensure the safety of the store's employees and patrons as a reasonable and ordinary prudent man would have done. Thus, as confronted by the situation petitioners miserably failed to discharge the due diligence required of a good father of a family.  No contributory negligence from Zhieneth The conclusive presumption favors children below nine (9) years old in that they are incapable of contributory negligence. In our jurisdiction, a person under nine years of age is conclusively presumed to have acted without discernment, and is, on that account, exempt from criminal liability. The same

presumption and a like exemption from criminal liability obtains in a case of a person over nine and under fifteen years of age, unless it is shown that he has acted with discernment. Since negligence may be a felony and a quasi-delict and required discernment as a condition of liability, either criminal or civil, a child under nine years of age is, by analogy, conclusively presumed to be incapable of negligence; and that the presumption of lack of discernment or incapacity for negligence in the case of a child over nine but under fifteen years of age is a rebuttable one, under our law. The rule, therefore, is that a child under nine years of age must be conclusively presumed incapable of contributory negligence as a matter of law. (Sangco) o Even if we attribute contributory negligence to ZHIENETH and assume that she climbed over the counter, no injury should have occurred if we accept petitioners' theory that the counter was stable and sturdy. For if that was the truth, a frail six-year old could not have caused the counter to collapse. The physical analysis of the counter by both the trial court and Court of Appeals and a scrutiny of the evidence on record reveal that it was not durable after all. Shaped like aninverted "L" the counter was heavy, huge, and its top laden with formica. It protruded towards the customer waiting area and its base was not secured. No contributory negligence from Criselda CRISELDA too, should be absolved from any contributory negligence. Initially, ZHIENETH held on to CRISELDA's waist, later to the latter's hand. CRISELDA momentarily released the child's hand from her clutch when she signed her credit card slip. At this precise moment, it was reasonable and usual for CRISELDA to let go of her child. Further, at time ZHIENETH was pinned down by the counter, she was just a foot away from her mother; and the giftwrapping counter was just four meters away from CRISELDA. The time and distance were both significant. ZHIENETH was near her mother and did not loiter as petitioners would want to impress upon us. She even admitted to the doctor who treated her at the hospital that she did not do anything; the counter just fell on her. Disposition The instant petition is DENIED and the challenged decision of the Court of Appeals is hereby AFFIRMED


DEL ROSARIO V MANILA ELECTRIC CO. 57 PHIL 478 STREET; November 5, 1932 FACTS y This action was instituted by Julian del Rosario for the purpose of recovering damages from Meralco for the death of his son, Alberto, resulting from a shock from a wire used by the defendant for the transmission of electricity. y Aug 4, 1930 2pm: a wire used by the defendant on Dimas- Alang St for the purpose of conducting electricity used in lighting the City of Manila and its suburbs. y Jose Noguera saw that the wire was burning and its connections smoking. One of the ends of the wire fell to the ground among some shrubbery close to the way. y As soon as Noguera took cognizance of the trouble, he stepped into a garage which was located nearby and asked Jose Soco to telephone the Malabon station of

MERALCO that an electrical wire was burning at that place. y Soco transmitted the message at 2.25 p.m. and received answer from the station to the effect that they would send an inspector. y At the time that message was sent the wire had not yet parted, but from the testimony of Demetrio Bingao, one of the witnesses for the defense, it is clear that the end of the wire was on the ground shortly after 3 p.m. y At 4 p. m. the neighborhood school was dismissed and the children went home. y Alberto del Rosario, 9 yrs old, who was a few paces ahead of his classmates, Jose Salvador and Saturnino Endrina, all members of the second grade in the public school. y As the three neared the place where the wire was down, Saturnino made a motion as if it touch it. y Jose, who happened to be the son of an electrician, knew never to touch a broken electrical wire (as his dad told him so!)- stopped Saturnino- telling him that the wire might be charged. y Saturnino yielded to this admonition and stopped, but Alberto, who was somewhat ahead, said, I have for some time been in the habit of touching wires. y Jose rejoined that he should into touch wires as they carry a current, but Alberto, no doubt feeling that he was challenged in the matter, put out his index finger and touch the wire. y He immediately fell face downwards, exclaiming "Ay! madre". y The end of the wire remained in contact with his body which fell near the post. y A crowd soon collected, and some one cut the wire and disengaged the body. Upon being taken to St. Luke's Hospital the child was pronounced dead. y The wire was an ordinary number 6 triple braid weather proof wire, such as is commonly used by the defendant company for the purpose of conducting electricity for lighting. y The wire was cased in the usual covering, but this had been burned off for some distance from the point where the wire parted. y The engineer of the company says that it was customary for the company to make a special inspection of these wires at least once in six months, and that all of the company's inspectors were required in their daily rounds to keep a lookout for trouble of this kind. There is nothing in the record indicating any particular cause for the parting of the wire.l ISSUE: WON Manila Electric is liable HELD YES Reasoning  When notice was received at the Malabon station at 2.25 p. m., somebody should have been dispatched to the scene of the trouble at once, or other measures taken to guard the point of danger; but more than an 1 hours passed before anyone from MERALCO appeared on the scene, and in the meantime Alberto had been claimed as a victim.  The mere fact that the deceased ignored the caution of Jose (8 yrs old), doesnt alter the case.  But even supposing that contributory negligence could in some measure be properly imputed to the deceased, such negligence would not be wholly fatal to the right of action in this case, not having been the determining cause of

the accident. (Rakes vs. Atlantic, Gulf and Pacific Co., 7 Phil., 359.)  With respect to the amount of damages recoverable, Julian is entitled to recover P250 for expenses incurred in connection with the death and burial of the boy.  Citing Astudillo vs. Manila Electric Company: Julian should recover the sum of P1,000 as general damages for loss of service. Disposition judgment reversed SEPARATE OPINION ABAD SANTOS [concur in part and dissent in part] - He concurs that MERALCO is held liable for the death of Alberto, but dissents in so far as the decision allows the recovery of the father of the sum of P1,250 only as damages. It should be P 2250. - His reasoning: It is well settled in this jurisdiction that an action will lie to recover damages for death caused by the wrongful act. (Manzanares vs. Moreta, 38 Phil., 821.) - In criminal cases- indemnity to the heirs of the deceased is equivalent to P1,000 - Whatever may be the reasons for the rule followed in criminal cases, I am of the opinion that those reasons do not obtain in fixing the amount of the damages recoverable in the present case. - The indemnity allowed in criminal case is merely incidental to the main object sought, which is the punishment of the guilty party. - In a civil action, the principal object is the recovery of damages for wrongful death; and where, as in this case, the defendant is a corporation, not subject to criminal prosecution for the act complained of, the question assumes a vastly different aspect. - There should be a distinction between the civil liability of an ordinary person who, by wrongful act, has caused the death of another; and the civil liability of a corporation, organized primarily for profit, which has caused the death of a person by failure to exercise due care in the prosecution of its business. - The liability of such a corporation for damages must be regarded as a part of the risks which it assumes when it undertakes to promote its own business; and just as it is entitled to earn adequate profits from its business, so it should be made adequately to compensate those who have suffered damage by its negligence. YLARDE V AQUINO GANCAYCO; July 29, 1988 NATURE: Petition for review on certiorari FACTS y Soriano was principal. Aquino was a teacher. The school was littered with concrete blocks. Teacher Banez started burying them. Aquino gathered 18 male pupils to help. He ordered them to dig. Work was unfinished. y Ff day, Aquino called 4 of the 18 to continue. Aquino continued digging while the pupils remained inside the pit throwing out the loose soil. Aquino left the children to level the loose soil and borrowed a key from Banez. Aquino told the kids not to touch the stone. y 3 of the 4 kids jumped into the pit. The remaining Abaga jumped on the concrete block causing it to slide down. 2 were able to escape but student Ylarde sustained injuries. 3 days later he died. y Parents filed suit against Aquino and Soriano. Lower court dismissed and CA affirmed and said child Ylarde was negligent. ISSUE WON Aquino and Soriano can be held liable for damages HELD  Principal Soriano cannot be held liable, being head of academic school and not school of arts and trades, in line

with Amadora case and Art 2180 of Civil Code. It is only the teacher who should answer for torts committed by their students. Besides, Soriano did not order the digging. Based on Article 2180, Aquino can be held liable. However, petition is based on Article 2176. Did the acts/omissions of Aquino cause the death of Ylarde? Yes. He is liable for damages. The work required adult laborers. He required the children to remain in the pit after they finished digging. He ordered them to level the soil when a huge stone was at brink of falling. He went to another place and left the kids. Left by themselves, IT WAS BUT NATURAL FOR THE CHILDREN TO PLAY AROUND. IN RULING THAT YLARDE WAS IMPRUDENT, THE LOWER COURT DID NOT CONSIDER HIS AGE AND MATURITY. A MINOR SHOULD NOT BE HELD TO THE SAME DEGREE OF CARE AS AN ADULT. Aquino also said the digging was part of Work Education. This is unacceptable. Work is too dangerous and it was not even in the lesson plan.

Art. 2187 of CC. Manufacturers and processors of foodstuffs, drinks, toilet articles and similar goods shall be liable for death or injuries caused by any noxious or harmful substances used, although no contractual relation exists between them and the consumers. CULION ICE, FISH AND ELECTRIC CO V PHILIPPINE MOTORS CORPORATION STREET; November 3, 1930 NATURE: Appeal from decision of the CFI FACTS y Cranston was the representative of the plaintiff in Manila and plaintiff was the registered owner of the motor schooner Gwendoline. y Cranston decided to have the engine on the Gwendoline changed from a gasoline consumer to a crude oil burner. He had a conference with Quest, Phil. Motors manager, who agreed to do the job, with the understanding that payment should be made upon completion of the work. y The work was begun and conducted under the supervision of Quest, chiefly by a mechanic whom Quest took with him to the boat. Quest had the assistance of the members of the crew of the Gwendoline, who had been directed by Cranston to place themselves under Quest's directions. y Upon preliminary inspection of the engine, Quest concluded that a new carburetor was needed and thus installed a Zenith carburetor. The engine was tried with gasoline and the result was satisfactory. The next problem was to introduce into the carburetor the baser fuel, consisting of a low grade of oil mixed with distillate. A temporary tank to contain the mixture was placed on deck above and at a short distance from the compartment covering the engine. This tank was connected with the carburetor by a piece of tubing, which was apparently not well fitted at the point where it was connected with the tank. The fuel mixture leaked from the tank and dripped sown into the engine compartment. The new fuel line and that already in use between the gasoline tank and carburetor were so fixed that it was possible to change from the gasoline fuel to the mixed fuel. This arrangement enables the operator to start the engine on gasoline and then, after the engine had been operating for a few moments, to switch to the new fuel supply. y It was observed that the carburetor was flooding, and that the gasoline, or other fuel, was trickling freely from the lower part to the carburetor to the floor. This fact was



called to Quest's attention, but he said that, when the engine had gotten to running well, the flooding would disappear. y The boat was taken out into the bay for a trial run. The engine stopped a few times during the first part of the course, owing to the use of an improper mixture of fuel. In the course of the trial, Quest remained outside of the engine compartment and occupied himself with making distillate, with a view to ascertaining what proportion of the two elements would give best results in the engine. y As the boat was coming in from this run, the engine stopped, and connection again had to be made with the gasoline line to get a new start. After this had been done the mechanic, or engineer, switched to the tube connecting with the new mixture. A moment later a back fire occurred in the cylinder chamber. This caused a flame to shoot back into the carburetor, and instantly the carburetor and adjacent parts were covered with a mass of flames, which the members of the crew were unable to subdue. The salvage from, the wreck, when sold, brought only the sum of P150. The value of the boat, before the accident occured, as the court found, was P10,000. y CFI gave judgment in favor of the plaintiff to recover of the defendant the sum of P9,850, with interest at 6 per centum per annum from the date of the filing of the complaint, until satisfaction of the judgment, with costs. ISSUE WON the loss of the boat is chargeable to the negligence and lack of skill of Quest HELD YES Ratio When a person holds himself out as being competent to do things requiring professional skill, he will be held liable for negligence if he fails to exhibit the care and skill of one ordinarily skilled in the particular work which he attempts to do. Reasoning  The temporary tank in which the mixture was prepared was apparently at too great an elevation from the carburetor, so that when the fuel line was opened, the hydrostatic pressure in the carburetor was greater than the delicate parts of the carburetor could sustain. This was the cause of the flooding of the carburetor; and the result was that; when the back fire occurred, the external parts of the carburetor, already saturated with gasoline, burst into flames, whence the fire was quickly communicated to the highly inflammable material near-by. The leak along the pipe line and the flooding of the carburetor had created a dangerous situation, which a prudent mechanic, versed in repairs of this nature, would have taken precautions to avoid. The back fire may have been due either to the fact that the spark was too advanced or the fuel improperly mixed.  Proof shows that Quest had had ample experience in fixing the engines of automobiles and tractors, but it does not appear that he was experienced in the doing of similar work on boats. Possibly the dripping of the mixture form the tank on deck and the flooding of the carburetor did not convey to his mind an adequate impression of the danger of fire. Quest did not use the skill that would have been exhibited by one ordinarily expert in repairing gasoline engines on boats. There was here, on the part of Quest, a blameworthy antecedent inadvertence to possible harm, and this constitutes negligence. The burning of the Gwendoline may be said to have resulted from accident, but this accident was in no sense an unavoidable accident. It would not have occured but for Quest's carelessness or lack of skill. The test of liability is not whether the injury was accidental in a sense, but whether Quest was free from blame.

The trial judge seems to have proceeded on the idea that, inasmuch as Quest had control of the Gwendoline during the experimental run, the defendant corporation was in the position of a bailee and that, as a consequence, the burden of proof was on the defendant to exculpate itself from responsibility by proving that the accident was not due to the fault of Quest. As a rule workmen who make repairs on a ship in its owner's yard, or a mechanic who repairs a coach without taking it to his shop, are not bailees, and their rights and liabilities are determined by the general rules of law, under their contract. The true bailee acquires possession and what is usually spoken of as special property in the chattel bailed. As a consequence of such possession and special property, the bailee is given a lien for his compensation. These ideas seem to be incompatible with the situation now under consideration.  This action was instituted about two years after the accident had occured, and after Quest had ceased to be manager and had gone back to the US. Upon these facts, the defendant bases the contention that the action should be considered stale. It is sufficient reply to say that the action was brought within the period limited by the statute of limitations and the situation is not one where the defense of laches can be properly invoked. DISPOSITION Judgment appealed from affirmed. UNITED STATES V PINEDA 37 Phil 456 MALCOLM; January 22, 1918 NATURE Appeal requiring a construction and an application, for the first time, of the penal provisions of the Pharmacy Law. FACTS  Santiago Pineda is a registered pharmacist of long standing and the owner of a drug store located at Calle Santo Cristo, Manila. Feliciano Santos, having some sick horses, presented a copy of a prescription obtained from Dr. Richardson, and which on other occasions Santos had given to his horses with good results, at Pineda's drug store for filling. The prescription read: "clorato de potasa 120 gramos - en seis papelitos de 20 gramos, para caballo." Under the supervision of Pineda, the prescription was prepared and returned to Santos in the form of six papers marked, "Botica Pineda - Clorato potasa - 120.00 en seis papeles - Para caballo- Sto. Cristo , Binondo, Manila." Santos, under the belief that he had purchased the potassium chlorate which he had asked for, put two of the packages in water and gave the doses to two of his sick horses. Another package was mixed with water for another horse, but was not used. The two horses, to which had been given the preparation, died shortly afterwards. Santos, thereupon, took the three remaining packages to the Bureau of Science for examination. Drs. Pea and Darjuan, of the Bureau of Science, found that the packages contained not potassium chlorate but barium chlorate. At the instance of Santos, the two chemists also went to the drug store of the defendant and bought potassium chlorate, which when analyzed was found to be barium chlorate. (Barium chlorate, it should be noted, is a poison; potassium chlorate is not.) Dr. Buencamino, a veterinarian, performed an autopsy on the horses, and found that death was the result of poisoning. ISSUES 1. WON the lower court erred in admitting the testimony of the chemist Pea and Darjuan as to their purchase of potassium chlorate at the drug store of the accused, which proved to be barium chlorate 2. WON the lower court erred in finding that the substance sold


by the accused to Feliciano Santos was barium chlorate and not potassium chlorate 3. WON the lower court erred in finding that the accused has been proved guilty beyond a reasonable doubt of an infraction of the Pharmacy Law, Act No. 597, section 17, as amended HELD 1. NO Ratio On the trial of a criminal case where the question relates to the tendency of certain testimony to throw light upon a particular fact, or to explain the conduct of a particular person, there is a certain discretion on the part of the trial judge which a court of errors will not interfere with, unless it manifestly appear that the testimony has no legitimate bearing upon the question at issue, and is calculated to prejudice the accused. Reasoning  What appellant is relying on is the maxim res inter alios acta. As a general rule, the evidence of other offenses committed by a defendant is inadmissible. But appellant has confused this maxim and this rule with certain exceptions thereto. The effort is not to convict the accused of a second offense. Nor is there an attempt to draw the mind away from the point at issue and thus to prejudice defendant's case. The purpose is to ascertain defendant's knowledge and intent, and to fix his negligence. If the defendant has on more than one occasion performed similar acts, accident in good faith is possibly excluded, negligence is intensified and fraudulent intent may even be established. It has been said that there is no better evidence of negligence than the frequency of accidents. 2. NO Reasoning The proof demonstrates the contrary. 3. NO Ratio In view of the tremendous and imminent danger to the public from the careless sale of poisons and medicines, we do not deem it too rigid a rule to hold that the law penalizes any druggist who shall sell one drug for another whether it be through negligence or mistake. Reasoning  The care required must be commensurate with the danger involved, and the skill employed must correspond with the superior knowledge of the business which the law demands.  Turning to the law, certain points therein as bearing on our present facts must be admitted. Thus, defendant is a pharmacist. As a pharmacist, he is made responsible for the quality of all drugs and poisons which he sells. And finally it is provided that it shall be unlawful for him to sell any drug or poison under any "fraudulent name." It is the word "fraudulent" which has given the court trouble. What did the Legislature intend to convey by this restrictive adjective?  Were we to adhere to the technical definition of fraud it would be difficult, if not impossible, to convict any druggist of a violation of the law. The prosecution would have to prove to a reasonable degree of certainty that the druggist made a material representation; that it was false; that when he made it he knew that it was false or made it recklessly without any knowledge of its truth and as a positive assertion; that he made it with the intention that it should be acted upon by the purchaser; that the purchaser acted in reliance upon it, and that the purchaser suffered injury. Such a construction with a literal following of wellknown principles on the subject of fraud would strip the law of at least much of its force. It would leave the innocent purchaser of drugs, who must blindly trust in the good faith and vigilance of the pharmacist, at the mercy of any unscrupulous vendor. We should not, therefore, without good reason so devitalize the law.

The rule of caveat emptor cannot apply to the purchase and sale of drugs. The vendor and the vendee do not stand at arms length as in ordinary transactions. An imperative duty is on the druggist to take precautions to prevent death or serious injury to anyone who relies on his absolute honesty and peculiar learning. The nature of drugs is such that examination would not avail the purchaser any thing. It would be idle mockery for the customer to make an examination of a compound of which he can know nothing. Consequently, it must be that the druggist warrants that he will deliver the drug called for.  Remembering particularly the care and skill which are expected of druggists, that in some jurisdictions they are liable even for their mistake and in others have the burden placed upon them to establish that they were not negligent, it cannot be that the Philippine Legislature intended to use the word "fraudulent" in all its strictness. A plea of accident and mistake cannot excuse for they cannot take place unless there be wanton and criminal carelessness and neglect. How the misfortune occurs is unimportant, if under all the circumstances the fact of occurrence is attributable to the druggist as a legal fault. Rather considering the responsibility for the quality of drugs which the law imposes on druggists and the position of the word "fraudulent" in juxtaposition to "name," what is made unlawful is the giving of a false name to the drug asked for. This view is borne out by the Spanish translation, which we are permitted to consult to explain the English text. In the Spanish "supuesto" is used, and this word is certainly not synonymous with "fraudulent." The usual badges of fraud, falsity, deception, and injury must be present - but not scienter. Dispositive Judgment of the lower court, sentencing the defendant to pay a fine of P100, with subsidiary imprisonment in case of insolvency, and to pay the costs, is affirmed with the costs of this instance against the appellant, without prejudice to any civil action which may be instituted. BPI V CA 216 SCRA 51 GUTIERREZ; November 26, 1992 FACTS y In the afternoon of October 9, 1981, a person purporting to be Eligia G. Fernando, who had a money market placement as evidenced by a promissory note with a maturity date of November 11, 1981 and a maturity value of P2,462,243.19, called BPI's Money Market Department. The caller wanted to preterminate the placement, but Reginaldo Eustaquio, Dealer Trainee in BPI's Money Market Department, told her "trading time" was over for the day, which was a Friday, and suggested that she call again the following week. The promissory note the caller wanted to preterminate was a roll-over of an earlier 50-day money market placement that had matured on September 24, 1981. y Later that afternoon, Eustaquio conveyed the request for pretermination to the officer who before had handled Eligia G. Fernando's account, Penelope Bulan, but Eustaquio was left to attend to the pretermination process. y On October 12, 1981, the caller of the previous Friday followed up with Eustaquio, merely by phone again, on the pretermination of the placement. Although not familiar with the voice of the real Eligia G. Fernando, Eustaquio "made certain" that the caller was the real Eligia G. Fernando by "verifying" that the details the caller gave about the placement tallied with the details in "the ledger/folder" of the account. Eustaquio knew the real Eligia G. Fernando to be the Treasurer of Philippine American Life Insurance Company (Philamlife) since he was handling Philamlife's


corporate money market account. But neither Eustaquio nor Bulan who originally handled Fernando's account, nor anybody else at BPI, bothered to call up Fernando at her Philamlife office to verify the request for pretermination. Informed that the placement would yield less than the maturity value because of its pretermination, the caller insisted on the pretermination just the same and asked that two checks be issued for the proceeds, one for P1,800,000.00 and the second for the balance, and that the checks be delivered to her office at Philamlife. Eustaquio, thus, proceeded to prepare the "purchase order slip" for the requested pretermination as required by office procedure, and from his desk, the papers, following the processing route, passed through the position analyst, securities clerk, verifier clerk and documentation clerk, before the two cashier's checks, nos. 021759 and 021760 for P1,800,000.00 and P613,215.16, respectively, both payable to Eligia G. Fernando, covering the preterminated placement, were prepared. The two cashier's checks, together with the papers consisting of the money market placement was to be preterminated and the promissory note (No. 35623) to be preterminated, were sent to Gerlanda E. de Castro and Celestino Sampiton, Jr., Manager and Administrative Assistant, respectively, in BPI's Treasury Operations Department, both authorized signatories for BPI, who signed the two checks that very morning. Thereafter, the checks went to the dispatcher for delivery. Later in the same morning, however, the same caller changed the delivery instructions; instead of the checks being delivered to her office at Philamlife, she would herself pick up the checks or send her niece, Rosemarie Fernando, to pick them up. Eustaquio then told her that if it were her niece who was going to get the checks, her niece would have to being a written authorization from her to pick up the checks. This telephone conversation ended with the caller's statement that "definitely" it would be her niece, Rosemarie Fernando, who would pick up the checks. Thus, Eustaquio had to hurriedly go to the dispatcher, Bernardo Laderas, to tell him of the new delivery instructions for the checks; in fact, he changed the delivery instruction on the purchase order slip, writing thereon "Rosemarie Fernando release only with authority to pick up. It was, in fact Rosemarie Fernando who got the two checks from the dispatcher, as shown by the delivery receipt. As it turned out, the same person impersonated both Eligia G. Fernando and Rosemarie Fernando. Although the checks represented the termination proceeds of Eligia G. Fernando's placement, not just a roll-over of the placement, the dispatcher failed to get or to require the surrender of the promissory note evidencing the placement. There is also no showing that Eligia G. Fernando's purported signature on the letter requesting the pretermination and the latter authorizing Rosemarie Fernando to pick up the two checks, both of which letters were presumably handed to the dispatcher by Rosemarie Fernando, was compared or verified with Eligia G. Fernando's signature in BPI's file. Such purported signature has been established to be forged although it has a "close similarity" to the real signature of Eligia G. Fernando. In the afternoon of October 13, 1981, a woman who represented herself to be Eligia G. Fernando applied at China Banking Corporation's Head Office for the opening of a current account. She was accompanied and introduced to Emily Sylianco Cuaso, Cash Supervisor, by Antonio Concepcion whom Cuaso knew to have opened, earlier that year, an account upon the introduction of Valentin Co, a long-standing "valued client" of CBC. What

Cuaso indicated in the application form, however, was that the new client was introduced by Valentin Co, and with her initials on the form signifying her approval, she referred the application to the New Accounts Section for processing. As finally proceeds, the application form shows the signature of "Eligia G. Fernando", "her" date of birth, sex, civil status, nationality, occupation ("business woman"), tax account number, and initial deposit of P10,000.00. This final approval of the new current account is indicated on the application form by the initials of Regina G. Dy, Cashier, who did not interview the new client but affixed her initials on the application form after reviewing it. On October 14, 1981, the woman holding herself out as Eligia G. Fernando deposited the two checks in controversy with Current Account No. 126310-3. Her endorsement on the two checks was found to conform with the depositor's specimen signature. CBC's guaranty of prior endorsements and/or lack of endorsement was then stamped on the two checks, which CBC forthwith sent to clearing and which BPI cleared on the same day. Two days after, withdrawals began on Current Account No. 26310-3: On October 16, 1981, by means of Check No. 240005 dated the same day for P1,000,000.00, payable to "cash", which the woman holding herself out as Eligia G. Fernando encashed over the counter, and Check No. 240003 dated October 15, 1981 for P48,500.00, payable to "cash" which was received through clearing from PNB Pasay Branch; on October 19, 1981, by means of Check No. 240006 dated the same day for P1,000,000.00, payable to "cash," which the woman identifying herself as Eligia G. Fernando encashed over the counter; on October 22, 1981, by means of Check No. 240007 dated the same day for P370,000.00, payable to "cash" which the woman herself also encashed over the counter; and on November 4, 1981, by means of Check No. 240001 dated November 3, 1981 for P4,100.00, payable to "cash," which was received through clearing from Far East Bank. The last withdrawal on November 4, 1981 left Current Account No. 26310-3 with a balance of only P571.61. On November 11, 1981, the maturity date of Eligia G. Fernado's money market placement with BPI, the real Eligia G. Fernando went to BPI for the roll-over of her placement. She disclaimed having preterminated her placement on October 12, 1981. She executed an affidavit stating that while she was the payee of the two checks in controversy, she never received nor endorsed them and that her purported signature on the back of the checks was not hers but forged. With her surrender of the original of the promissory note (No. 35623 with maturity value of P2,462,243.19) evidencing the placement which matured that day, BPI issued her a new promissory note (No. 40314 with maturity date of December 23, 1981 and maturity value of P2,500.266.77) to evidence a roll-over of the placement. On November 12, 1981, supported by Eligia G. Fernando's affidavit, BPI returned the two checks in controversy to CBC for the reason "Payee's endorsement forged". CBC, in turn, returned the checks for reason "Beyond Clearing Time". These incidents led to the filing of this case with the Arbitration Committee. The Arbitration Committee ruled in favor of BPI and ordered CBC to pay the former the amount of P1,206,607.58 with interest thereon at 12% per annum from August 12, 1983. However, upon CBCs motion for reconsideration, the Board of Directors of the PCHC reversed the Arbitration Committee's decision and dismissed the complaint of BPI while ordering it to pay CBC the sum of P1,206,607.58.


BPI then filed a petition for review with the Regional Trial Court of Makati who dismissed said petition but modified the award by including a provision for attorneys fees in favor of CBC, among others. y The court of appeals affirmed the trial courts decision. ISSUES 1. WON the collecting bank has absolute liability on a warranty of the validity of all prior endorsements stamped at the back of the checks 2. In the event that the payee's signature is forged, WON the drawer/drawee bank (in this case BPI) may claim reimbursement from the collecting bank which earlier paid the proceeds of the checks after the same checks were cleared HELD 1. NO  BPI contends that respondent CBC's clear warranty that "all prior endorsements and/or lack of endorsements guaranteed" stamped at the back of the checks was an unrestrictive clearing guaranty that all prior endorsements in the checks are genuine. Under this premise petitioner BPI asserts that the presenting or collecting bank, respondent CBC, had an unquestioned liability when it turned out that the payee's signature on the checks were forged. With these circumstances, petitioner BPI maintains that considerations of relative negligence become totally irrelevant.  In presenting the checks for clearing and for payment, the collecting bank made an express guarantee on the validity of "all prior endorsements." Thus, stamped at the back of the checks are the clear warranty: ALL PRIOR ENDORSEMENTS AND/OR LACK OF ENDORSEMENTS GUARANTEED. Without such warranty, the drawee bank would not have paid on the checks. No amount of legal jargon can reverse the clear meaning of the warranty. As the warranty has proven to be false and inaccurate, the defendant is liable for any damage arising out of the falsity of its representation.  Apropos the matter of forgery in endorsements, this Court has emphasized that the collecting bank or last endorser generally suffers the loss because it has the duty to ascertain the genuineness of all prior endorsements considering that the act of presenting the check for payment to the drawee is an assertion that the party making the presentment has done its duty to ascertain the genuineness of the endorsements. If the drawee-bank discovers that the signature of the payee was forged after it has paid the amount of the check to the holder thereof, it can recover the amount paid from the collecting bank. However, the point that comes uppermost is whether the drawee bank was negligent in failing to discover the alteration or the forgery.  The general rule under Section 23 of the Negotiable Instruments Law is to the effect that a forged signature is "wholly inoperative", and payment made "through or under such signature" is ineffectual or does not discharge the instrument. The exception to this rule is when the party relying in the forgery is "precluded from setting up the forgery or want of authority. In this jurisdiction we recognize negligence of the party invoking forgery as an exception to the general rule.  In the present petition the payee's names in the checks were forged. Following the general rule, the checks are "wholly inoperative" and of no effect. However, the underlying circumstances of the case show that the general rule on forgery is not applicable. The issue as to who between the parties should bear the loss in the payment of the forged checks necessities the determination of the rights and liabilities of the parties involved in the controversy in relation to the forged checks.


The records show that petitioner BPI as drawee bank and respondent CBC as representing or collecting bank were both negligent resulting in the encashment of the forged checks. The Arbitration Committee in its decision analyzed the negligence of the employees of petitioner BPI involved in the processing of the pre-termination of Eligia G. Fernando's money market placement and in the issuance and delivery of the subject checks in this wise: a) The impostor could have been readily unmasked by a mere telephone call, which nobody in BPI bothered to make to Eligia G. Fernando, a vice-president of Philamlife; b) The officer who used to handle Eligia G. Fernando's account did not do anything about the account's pre-termination; c) Again no verification appears to have been made on Eligia G. Fernando's purported signature on the letter requesting the pre-termination and the letter authorizing her niece to pick-up the checks, yet, her signature was in BPI's file; and d) Another step that could have foiled the fraud, but which BPI neglected to take, was requiring before the two checks in controversy were delivered, the surrender of the promissory note evidencing the money market placement that was supposedly pre-terminated. The Arbitration Committee, however, belittled petitioner BPI's negligence compared to that of respondent CBC which it declared as graver and the proximate cause of the loss of the subject checks to the impostor who impersonated Eligia G. Fernando. The PCHC Board of Directors, however, stated that these withdrawals, without any further showing that the CBC employees had actual knowledge of the infirmity or defect, or knowledge of such facts (Sec. 56, Negotiable Instruments Law) that their action in accepting their checks for deposit and allowing the withdrawals against the same amounted to bad faith cannot be considered as basis for holding CBC liable. Banks handle daily transactions involving millions of pesos. By the very nature of their work the degree of responsibility, care and trustworthiness expected of their employees and officials is far greater than those of ordinary clerks and employees. For obvious reasons, the banks are expected to exercise the highest degree of diligence in the selection and supervision of their employees. In the present case, there is no question that the banks were negligent in the selection and supervision of their employees. The Arbitration Committee, the PCHC Board of Directors and the lower court, however disagree in the evaluation of the degree of negligence of the banks. While the Arbitration Committee declared the negligence of respondent CBC graver, the PCHC Board of Directors and the lower courts declared that petitioner BPI's negligence was graver. To the extent that the degree of negligence is equated to the proximate cause of the loss, we rule that the issue as to whose negligence is graver is relevant. No matter how many justifications both banks present to avoid responsibility, they cannot erase the fact that they were both guilty in not exercising extraordinary diligence in the selection and supervision of their employees. NO The next issue hinges on whose negligence was the proximate cause of the payment of the forged checks by an impostor. Petitioner BPI insists that the doctrine of last clear chance should have been applied considering the circumstances of this case. Under this doctrine, where both parties were negligent and such negligence were not contemporaneous, 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. Applying these principles, petitioner BPI's reliance on the doctrine of last clear chance to clear it from liability is not well-taken. CBC had no prior notice of the fraud perpetrated by BPI's employees on the pretermination of Eligia G. Fernando's money market placement. Moreover, Fernando is not a depositor of CBC. Hence, a comparison of the signature of Eligia G. Fernando with that of the impostor Eligia G. Fernando, which respondent CBC did, could not have resulted in the discovery of the fraud. Hence, respondent CBC had no way to discover the fraud at all. In fact the records fail to show that respondent CBC had knowledge, actual or implied, of the fraud perpetrated by the impostor and the employees of BPI. BPI further argues that the acts and omissions of respondent CBC are the cause "that set into motion the actual and continuous sequence of events that produced the injury and without which the result would not have occurred." Petitioner BPI anchors its argument on its stance that there was "a gap, a hiatus, an interval between the issuance and delivery of said checks by petitioner BPI to the impostor and their actual payment of CBC to the impostor. Petitioner BPI points out that the gap of one (1) day that elapsed from its issuance and delivery of the checks to the impostor is material on the issue of proximate cause. At this stage, according to petitioner BPI, there was yet no loss and the impostor could have decided to desist from completing the same plan and could have held to the checks without negotiating them. Petitioner BPI's contention that CBC alone should bear the loss must fail. The gap of one (1) day between the issuance and delivery of the checks bearing the impostor's name as payee and the impostor's negotiating the said forged checks by opening an account and depositing the same with respondent CBC is not controlling. It is not unnatural or unexpected that after taking the risk of impersonating Eligia G. Fernando with the connivance of BPI's employees, the impostor would complete her deception by encashing the forged checks. There is therefore, greater reason to rule that the proximate cause of the payment of the forged checks by an impostor was due to the negligence of petitioner BPI. This finding, notwithstanding, we are not inclined to rule that petitioner BPI must solely bear the loss of P2,413,215.16, the total amount of the two (2) forged checks. Due care on the part of CBC could have prevented any loss. The Court cannot ignore the fact that the CBC employees closed their eyes to the suspicious circumstances of huge over-the-counter withdrawals made immediately after the account was opened. The opening of the account itself was accompanied by inexplicable acts clearly showing negligence. And while we do not apply the last clear chance doctrine as controlling in this case, still the CBC employees had ample opportunity to avoid the harm which befell both CBC and BPI. They let the opportunity slip by when the ordinary prudence expected of bank employees would have sufficed to seize it. Both banks were negligent in the selection and supervision of their employees resulting in the encashment of the forged checks by an impostor. Both banks were not able to overcome the presumption of negligence in the selection and supervision of their employees. It was the gross negligence of the employees of both banks which resulted in the fraud and the subsequent loss. While it is true that petitioner BPI's negligence may have been the proximate cause of the loss, respondent CBC's negligence contributed equally to the success of the impostor in encashing the proceeds of the forged checks. Under these

circumstances, we apply Article 2179 of the Civil Code to the effect that while respondent CBC may recover its losses, such losses are subject to mitigation by the courts. Disposition The questioned Decision and Resolution are MODIFIED. BPI shall be responsible for 60% while CBC shall share 40% of the loss of P2,413,215.16

E.M. WRIGHT V MANILA ELECTRIC R.R. & LIGHT CO. 28 Phil 122 MORELAND; October 1, 1914 NATURE An action to recover damages for injuries sustained in an accident FACTS y Defendant Manila Electric is a corporation engaged in operating an electric street railway y Plaintiffs residence in Caloocan fronts on the street along which defendants tracks run. To enter his premises from the street, plaintiff must cross defendants tracks. y One night, plaintiff drove home in a calesa and, in crossing the tracks to enter his premises, the horse stumbled, leaped forward, and fell, throwing the plaintiff from the vehicle and causing injuries y At the point where plaintiff crossed the tracks, the rails were above-gruond, and the ties upon which the rails rested projected from one-third to one-half of their depth out of the ground, making the tops of the rails some 5 or 6 inches or more above the level of the street. y It is admitted that the defendant was negligent in maintaining its tracks, but defendant claims the plaintiff was also negligent in that he was so intoxicated, and such intoxication was the primary cause of the accident y Trial court held that both parties were negligent, but that plaintiffs negligence was not as great as defendants, awarded plaintiff P1,000. ISSUE WON the negligence of plaintiff contributed to the principal occurrence or only to his own injury. (If the former, he cannot recover; if the latter, the trial court was correct in apportioning damages) HELD NO Ratio Intoxication in itself is not negligence. It is but a circumstance to be considered with the other evidence tending to prove negligence. Reasoning  Intoxication in itself is not negligence, and no facts, other than the fact that Wright was intoxicated, are stated which warrant the conclusion that the plaintiff was negligent. The conclusion that if he had been sober he would not have been injured is not warranted by the facts as found. It is impossible to say that a sober man would not have fallen from the vehicle under the conditions described.  A horse crossing the railroad tracks with not only the rails but a portion of the ties themselves aboveground, stumbling by reason of the unsure footing and falling, the vehicle crashing against the rails with such force as to break a wheel, might be sufficient to throw a person from the vehicle no matter what his condition; and to conclude that, under such circumstances, a sober man would not have fallen while a drunken man did, is to draw a conclusion which enters the realm of speculation and guesswork. DISPOSITION Plaintiff not negligent. No facts to merit a higher award of damages to plaintiff.


Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible. The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the minor children who live in their company. Guardians are liable for damages caused by the minors or incapacitated persons who are under their authority and live in their company. The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions. Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry. The State is responsible in like manner when it acts through a special agent; but not when the damage has been caused by the official to whom the task done properly pertains, in which case what is provided in Article 2176 shall be applicable. Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and students or apprentices, so long as they remain in their custody. 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. Art. 2181. Whoever pays for the damage caused by his dependents or employees may recover from the latter what he has paid or delivered in satisfaction of the claim. Art. 2182. If the minor or insane person causing damage has no parents or guardian, the minor or insane person shall be answerable with his own property in an action against him where a guardian ad litem shall be appointed. US V BAGGAY 20 PHIL 142 TORRES; September 1, 1911 NATURE Appeal by the defendant from the judgment rendered on April 28, 1910, whereby he was declared exempt from criminal liability but was obliged to indemnify the heirs if the murdered woman, Bil-liingan, in the sum of P1,000, to pay the costs in the case and to be confined in an institution for the insane until further order of the court. FACTS y About the 4th of October, 1909, several persons were assembled in the defendant's house in the township of Penarrubia, Abra, Province of Ilocos Sur, for the purpose of holding a song service called "buni" according to the Tinguian custom, when he, the non-Christian Baggay, without provocation suddenly attacked the woman Billiingan with a bolo, inflicting a serious wound on her head from which she expired immediately; and with the same bolo he like wise inflicted various wounds on the women named Calabayan, Agueng, Quisamay, Calapini, and on his own mother, named Dioalan. y For this reason the provincial fiscal filed a complaint in the

court of Ilocos Sur, dated February 15, charging the nonChristian Baggay, jr., with murder, because of the violent death of the woman Bil-liingan. This cause was instituted separately from the other, No. 1109, for lesiones. After trial and proof that the defendant was suffering from mental aberration, the judge on April 28 rendered the judgment cited above, whereupon the defendant's counsel appealed to this court. ISSUE WON an insane person, exempt from criminal liability can still be civilly liable HELD YES Ratio Civil liability accompanies criminal liability, because every person liable criminally for a crime or misdemeanor is also liable for reparation of damage and for indemnification of the harm done, but there may be civil liability because of acts ordinarily punishable, although the law has declared their perpetrators exempt from criminal liability. Reasoning  Such is the case of a lunatic or insane person who, in spite of his irresponsibility on account of the deplorable condition of his deranged mind, is still reasonably and justly liable with his property for the consequences of his acts, even though they be performed unwittingly, for the reason that his fellows ought not to suffer for the disastrous results of his harmful acts more than is necessary, in spite of his unfortunate condition. Law and society are under obligation to protect him during his illness and so when he is declared to be liable with his property for reparation and indemnification, he is still entitled to the benefit of what is necessary for his decent maintenance, but this protection does not exclude liability for damage caused to those who may have the misfortune to suffer the consequences of his acts.  Article 17 of the Penal Code states: Every person criminally liable for a crime or misdemeanor is also civilly liable.  Article 18 of the same code says: The exemption from criminal liability declared in Nos. 1, 2, 3, 7, and 10 of article 8 does not include exemption from civil liability, which shall be enforced, subject to the following:  In cases 1, 2, and 3, the persons who are civilly liable for acts committed by a lunatic or imbecile, or a person under 9 years of age, or over this age and under 15, who has not acted with the exercise of judgment, are those who have them under their authority, legal guardianship or power, unless they prove that there was no blame or negligence on their part.  Should there be no person having them under his authority, legal guardian, or power, if such person be insolvent, the said lunatics, imbeciles, or minors shall answer with their own property, excepting that part which is exempted for their support in accordance with the civil law. DISPOSITION Therefore, the judgment appealed from being in accordance with law, affirmation thereof is proper, and it is hereby affirmed, with costs against the appellant.