THIRD DIVISION[G.R. No. 95641. September 22, 1994.]

SANTOS B. AREOLA and LYDIA D. AREOLA, petitioners-appellants, vs. COURT OF APPEALS and PRUDENTIAL GUARANTEE AND ASSURANCE, INC., respondents-appellees.

D E C I S I O N

ROMERO, J p:

On June 29, 1985, seven months after the issuance of petitioner Santos Areola's Personal Accident Insurance Policy No. PA-20015, respondent insurance company unilaterally cancelled the same since company records revealed that petitioner-insured failed to pay his premiums.

On August 3, 1985, respondent insurance company offered to reinstate same policy it had previously cancelled and even proposed to extend its lifetime to December 17, 1985, upon a finding that the cancellation was erroneous and that the premiums were paid in full by petitioner-insured but were not remitted by Teofilo M. Malapit, respondent insurance company's branch manager. LLphil

These, in brief, are the material facts that gave rise to the action for damages due to breach of contract instituted by petitioner-insured before Branch 40 RTC, Dagupan City against respondent insurance company.

There are two issues for resolution in this case:

(1)Did the erroneous act of cancelling subject insurance policy entitle petitioner-insured to payment of damages?

(2)Did the subsequent act of reinstating the wrongfully cancelled insurance policy by respondent insurance company, in an effort to rectify such error, obliterate whatever liability for damages it may have to bear, thus absolving it therefrom?

From the factual findings of the trial court, it appears that petitioner-insured, Santos Areola, a lawyer from Dagupan City, bought, through the Baguio City branch of Prudential Guarantee and Assurance, Inc. (hereinafter referred to as Prudential), a personal accident insurance policy covering the one-year period between noon of November 28, 1984 and noon of November 28, 1985. 1 Under the terms of the statement of account issued by respondent insurance company, petitioner-insured was supposed to pay the total amount of P1,609.65 which included the premium of P1,470.00, documentary stamp of P110.25 and 2% premium tax of P29.40. 2 At the lower left-hand corner of the statement of account, the following is legibly printed: llcd

"This Statement of Account must not be considered a receipt. Official Receipt will be issued to you upon payment of this account.

If payment is made to our representative, demand for a Provisional Receipt and if our Official Receipts is (sic) not received by your within 7 days please notify us.

If payment is made to our office, demand for an OFFICIAL RECEIPT."

On December 17, 1984, respondent insurance company issued collector's provisional receipt No. 9300 to petitioner-insured for the amount of P1,609.65. 3 On the lower portion of the receipt the following is written in capital letters:

"Note: This collector's provisional receipt will be confirmed by our official receipt. If our official receipt is not received by you within 7 days, please notify us." 4

On June 29, 1985, respondent insurance company, through its Baguio City manager, Teofilo M. Malapit, sent petitioner-insured Endorsement No. BG-002/85 which "cancelled flat" Policy No. PA BG-20015 "for non-payment of premium effective as of inception dated." 5 The same endorsement also credited "a return premium of P1,609.65 plus documentary stamps and premium tax" to the account of the insured.

Shocked by the cancellation of the policy, petitioner-insured confronted Carlito Ang, agent of respondent insurance company, and demanded the issuance of an official receipt. Ang told petitioner-insured that the cancellation of the policy was a mistake but he would personally see to its rectification. However, petitioner-insured failed to receive any official receipt from Prudential.

Hence, on July 15, 1985, petitioner-insured sent respondent insurance company a letter demanding that he be insured under the same terms and conditions as those contained in Policy No. PA-BG-20015 commencing rate of increase on the payment he had made under provisional receipt No. 9300 be returned within five days. 6Areola also warned that should his demands be unsatisfied, he would sue for damages.

On July 17, 1985, he received a letter from production manager Malapit informing him that the "partial payment" of P1,000.00 he had made on the policy had been "exhausted pursuant to the provisions of the Short Period Rate Scale" printed at the back of the policy. Malapit warned Areola that should he fail to pay the balance, the company's liability would cease to operate. 7

In reply to the petitioner-insured's letter of July 15, 1985, respondent insurance company, through its Assistant Vice-President Mariano M. Ampil III, wrote Areola a letter dated July 25, 1985 stating that the company was verifying whether the payment had in fact been remitted to said company and why no official receipt had been issued therefor. Ampil emphasized that the official receipt should have been issued seven days from the issuance of the provisional receipt but because no official receipt had been issued in Areola's name, there was reason to believe that no payment had been made. Apologizing for the inconvenience, Ampil expressed the company's concern by agreeing "to hold you cover (sic) under the terms of the referenced policy until such time that this matter is cleared." 8

On August 3, 1985, Ampil wrote Areola another letter confirming that the amount of P1,609.65 covered by provisional receipt No. 9300 was in fact received by Prudential on December 17, 1984. Hence, Ampil informed Areola that Prudential was "amenable to extending PGA-PA-BG-20015 up to December 17, 1985 or one year from the date when payment was received." Apologizing again for the inconvenience caused Areola, Ampil exhorted him to indicate his conformity to the proposal by signing on the space provided for in the letter. 9

The letter was personally delivered by Carlito Ang to Areola on August 13, 1985 10 but unfortunately, Areola and his wife, Lydia, as early as August 6, 1985 had filed a complaint for breach of contract with damages before the lower court.

In its Answer, respondent insurance company admitted that the cancellation of petitioner-insured's policy was due to the failure of Malapit to turn over the premiums collected, for which reason no official receipt was issued to him. However, it argued that, by acknowledging the inconvenience caused on petitioner-insured and after taking steps to rectify its omission by reinstating the cancelled policy prior to the filing of the complaint, respondent insurance company had complied with its obligation under the contract. Hence, it concluded that petitioner-insured no longer has a cause of action against it. It insists that it cannot be held liable for damages arising from breach of contract, having demonstrated fully well its fulfillment of its obligation. LLjur

The trial court, on June 30, 1987, rendered a judgment in favor of petitioner-insured, ordering respondent insurance company to pay the former the following:

"a)P1,703.65 as actual damages;

b)P200,000.00 as moral damages; and

c)P50,000.00 as exemplary damages;

2.To pay to the plaintiff, as and for attorney's fees the amount of P10,000.00; and

3.To pay the costs."

In its decision, the court below declared that respondent insurance company acted in bad faith in unilaterally cancelling subject insurance policy, having done so only after seven months from the time that it had taken force and effect and despite the fact of full payment of premiums and other charges on the issued insurance policy. Cancellation from the date of the policy's inception, explained the lower court, meant that the protection sought by petitioner-insured from the risks insured against was never extended by respondent insurance company. Had the insured met an accident at the time, the insurance company would certainly have disclaimed any liability because technically, the petitioner could not have been considered insured. Consequently, the trial court held that there was breach of contract on the part of respondent insurance company, entitling petitioner-insured to an award of the damages prayed for. cdll

This ruling was challenged on appeal by respondent insurance company, denying bad faith on its part in unilaterally cancelling subject insurance policy.

After consideration of the appeal, the appellate court issued a reversal of the decision of the trial court, convinced that the latter had erred in finding respondent insurance company in bad faith for the cancellation of petitioner-insured's policy. According to the Court of Appeals, respondent insurance company was not motivated by negligence, malice or bad faith in cancelling subject policy. Rather, the cancellation of the insurance policy was based on what the existing records showed, i.e., absence of an official receipt issued to petitioner-insured confirming payment of premiums. Bad faith, said the Court of Appeals, is some motive of self-interest or ill-will; a furtive design or ulterior purpose, proof of which must be established convincingly. On the contrary, it further observed, the following acts indicate that respondent insurance company did not act precipitately or willfully to inflict a wrong on petitioner-insured: (a) the investigation conducted by Alfredo Bustamante to verify if petitioner-insured had indeed paid the premium; (b) the letter of August 3, 1985 confirming that the premium had been paid on December 17, 1984; (c) the reinstatement of the policy with a proposal to extend its effective period to December 17, 1985; and (d) respondent insurance company's apologies for the "inconvenience" caused upon petitioner-insured. The appellate court added that respondent insurance company even relieved Malapit, its Baguio City manager, of his job by forcing him to resign.

Petitioner-insured moved for the reconsideration of the said decision which the Court of Appeals denied. Hence, this petition for review on certiorari anchored on these arguments:

"I

Respondent Court of Appeals is guilty of grave abuse of discretion and committed a serious and reversible error in not holding Respondent Prudential liable for the cancellation of the insurance contract which was admittedly caused by the fraudulent acts and bad faith of its own officers.

II

Respondent Court of Appeals committed serious and reversible error and abused its discretion in ruling that the defenses of good faith and honest mistake can co-exist with the admitted fraudulent acts and evident bad faith.

III

Respondent Court of Appeals committed a reversible error in not finding that even without considering the fraudulent acts of its own officer in misappropriating the premium payment, the act itself in cancelling the insurance policy was done with bad faith and/or gross negligence and wanton attitude amounting to bad faith, because among others, it was Mr. Malapit — the person who committed the fraud — who sent and signed the notice of cancellation.

IV

Respondent Court of Appeals has decided a question of substance contrary to law and applicable decision of the Supreme Court when it refused to award damages in favor of herein Petitioner-Appellants."

It is petitioner-insured's submission that the fraudulent act of Malapit, manager of respondent insurance company's branch office in Baguio, in misappropriating his premium payments is the proximate cause of the cancellation of the insurance policy. Petitioner-insured theorized that Malapit's act of signing and even sending the notice of cancellation himself, notwithstanding his personal knowledge of petitioner-insured's full payment of premiums, further reinforces the allegation of bad faith. Such fraudulent act committed by Malapit, argued petitioner-insured, is attributable to respondent insurance company, an artificial corporate being which can act only through its officers or employees. Malapit's actuation, concludes petitioner-insured, is therefore not separate and distinct from that of respondent-insurance company, contrary to the view held by the Court of Appeals. It must, therefore, bear the consequences of the erroneous cancellation of subject insurance policy caused by the non-remittance by its own employee of the premiums paid. Subsequent reinstatement, according to petitioner-insured, could not possibly absolve respondent insurance company from liability, there being an obvious breach of contract. After all, reasoned out petitioner-insured, damage had already been inflicted on him and no amount of rectification could remedy the same. LLphil

Respondent insurance company, on the other hand, argues that where reinstatement, the equitable relief sought by petitioner-insured was granted at an opportune moment i.e. prior to the filing of the complaint, petitioner-insured is left without a cause of action on which to predicate his claim for damages. Reinstatement, it further explained, effectively restored petitioner-insured to all his rights under the policy. Hence, whatever cause of action there might have been against it, no longer exists and the consequent award of damages ordered by the lower court is unsustainable.

We uphold petitioner-insured's submission. Malapit's fraudulent act of misappropriating the premiums paid by petitioner-insured is beyond doubt directly imputable to respondent insurance company. A corporation, such as respondent insurance company, acts solely thru its employees. The latters' acts are considered as its own for which it can be held to account. 11 The facts are clear as to the relationship between private respondent insurance company and Malapit. As admitted by private respondent insurance company in its answer, 12 Malapit was the manager of its Baguio branch. It is beyond doubt that he represented its interests and acted in its behalf. His act of receiving the premiums collected is well within the province of his authority. Thus, his receipt of said premiums is receipt by private respondent insurance company who, by provision of law, particularly under Article 1910 of the Civil Code, is bound by the acts of its agent.

Article 1910 thus reads:

"ART. 1910.The principal must comply with all the obligations which the agent may have contracted within the scope of his authority.

As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly."

Malapit's failure to remit the premiums he received cannot constitute a defense for private respondent insurance company; no exoneration from liability could result therefrom. The fact that private respondent insurance company was itself defrauded due to the anomalies that took place in its Baguio branch office, such as the non-accrual of said premiums to its account, does not free the same from its obligation to petitioner Areola. As held in Prudential Bank v. Court of Appeals 13 citing the ruling in McIntosh v. Dakota Trust Co.: 14

"A bank is liable for wrongful acts of its officers done in the interests of the bank or in the course of dealings of the officers in their representative capacity but not for acts outside the scope of their authority. A bank holding out its officers and agent as worthy of confidence will not be permitted to profit by the frauds they may thus be enable to perpetrate in the apparent scope of their employment; nor will it be permitted to shirk its responsibility for such frauds, even though no benefit may accrue to the bank therefrom. Accordingly, a banking corporation is liable to innocent third persons where the representation is made in the course of its business by an agent acting within the general scope of his authority even though, in the particular case, the agent is secretly abusing his authority and attempting to perpetrate a fraud upon his principal or some other person, for his own ultimate benefit."

Consequently, respondent insurance company is liable by way of damages for the fraudulent acts committed by Malapit that gave occasion to the erroneous cancellation of subject insurance policy. Its earlier act of reinstating the insurance policy can not obliterate the injury inflicted on petitioner-insured. Respondent company should be reminded that a contract of insurance creates reciprocal obligations for both insurer and insured. Reciprocal obligations are those which arise from the same cause and in which each party is both a debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the other. 15

Under the circumstances of instant case, the relationship as creditor and debtor between the parties arose from a common cause; i.e., by reason of their agreement to enter into a contract of insurance under whose terms, respondent insurance company promised to extend protection to petitioner-insured against the risk insured for a consideration in the form of premiums to be paid by the latter. Under the law governing reciprocal obligations, particularly the second paragraph of Article 1191,16 the injured party, petitioner-insured in this case, is given a choice between fulfillment or rescission of the obligation in case one of the obligors, such as respondent insurance company, fails to comply with what is incumbent upon him. However, said article entitles the injured party to payment of damages, regardless of whether he demands fulfillment or rescission of the obligation. Untenable then is respondent insurance company's argument, namely, that reinstatement being equivalent to fulfillment of its obligation, divests petitioner-insured of a rightful claim for payment of damages. Such a claim finds no support in our laws on obligations and contracts. cdphil

The nature of damages to be awarded, however, would be in the form of nominal damages 17 contrary to that granted by the court below. Although the erroneous cancellation of the insurance policy constituted a breach of contract, private respondent insurance company, within a reasonable time took steps to rectify the wrong committed by reinstating the insurance policy of petitioner. Moreover, no actual or substantial damage or injury was inflicted on petitioner Areola at the time the insurance policy was cancelled. Nominal damages are "recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind, or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown." 18

WHEREFORE, the petition for review on certiorari is hereby GRANTED and the decision of the Court of Appeals in CA-G.R. No. 16902 on May 31, 1990, REVERSED. The decision of Branch 40, RTC Dagupan City, in Civil Case No. D-7972 rendered on June 30, 1987 is hereby REINSTATED subject to the following modifications: (a) that nominal damages amounting to P30,000.00 be awarded petitioner in lieu of the damages adjudicated by court a quo; and (b) that in the satisfaction of the damages awarded therein, respondent insurance company is ORDERED to pay the legal rate of interest computed from date of filing of complaint until final payment thereof. SO ORDERED.

EN BANC

[G.R. No. L-12219. March 15, 1918.]

AMADO PICART, plaintiff-appellant, vs. FRANK SMITH, jr., defendant-appellee.

Alejo Mabanag for appellant.

G. E. Campbell for appellee.

SYLLABUS

1.NEGLIGENCE; CRITERION FOR DETERMINING EXISTENCE OF NEGLIGENCE. — The test for determining whether a person is negligent in doing an act whereby injury or damage results to the person or property of another is this: Would a prudent man, in the position of the person to whom negligence is attributed, foresee harm to the person injured as a reasonable consequence of the course about to be pursued. If so, the law imposes a duty on the actor to refrain from that course or to take precaution against its mischievous results, and the failure to do so constitutes negligence. Reasonable foresight of harm, followed by the ignoring of the admonition born of this prevision, is the constitutive fact in negligence.

2.ID.; CONTRIBUTORY NEGLIGENCE; SUCCESSIVE NEGLIGENT ACTS. — Where both parties are guilty of negligence, but the negligent act of one succeeds that of the other by an appreciable interval of time, the one who has the last reasonable opportunity 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.

3.ID.; ID.; CASE AT BAR. — The plaintiff was riding a pony on a bridge. Seeing an automobile ahead he improperly pulled his horse over to the railing on the right. The driver of the automobile, however, guided his car toward the plaintiff without diminution of speed until he was only a few feet away. He then turned to the right but passed so closely to the horse that the latter being frightened, jumped around and was killed by the passing car. Held: That although the plaintiff was guilty of negligence in being on the wrong side of the bridge, the defendant was nevertheless civilly liable for the legal damages resulting from the collision, as he had a fair opportunity to avoid the accident after he realized the situation created by the negligence of the plaintiff and failed to avail himself of that opportunity; while the plaintiff could by no means then place himself in a position of greater safety.

D E C I S I O N

STREET, J p:

In this action the plaintiff, Amado Picart, seeks to recover of the defendant, Frank Smith, jr., the sum of P31,100, 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 4.08 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 was 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 was 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 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 excited 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 reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the Roman law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that.

The question as to what would constitute the conduct of a prudent man in a given situation must of course be always determined in the light of human experience and in view of the facts involved in the particular case. Abstract speculation cannot here be of much value but his much can be profitably said: Reasonable men govern their conduct by the circumstances which are before them or known to them. They are not, and are not supposed to be, omniscient of the future. Hence they can be expected to take care only when there is something before them to suggest or warn of danger. Could a prudent man, in the case under consideration, foresee harm as a result of the course actually pursued? If so, it was the duty of the actor to take precautions to guard against that harm. Reasonable foresight of harm, followed by the ignoring of the suggestion born of this prevision, is always necessary before negligence can be held to exist. Stated in these terms, the proper criterion for determining the existence of negligence in a given case is this: Conduct is said to be

negligent when a prudent man in the position of the tortfeasor would have foreseen that an effect harmful to another was sufficiently probable to warrant his foregoing the conduct or guarding against its consequences.

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 rider as a 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 Rakes 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 recover, 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, 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 a 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 a 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 of 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 a 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 such 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 here rendered that the plaintiff recover of the defendant the sum of two hundred pesos (P200), with costs of both 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 characters as not to be recoverable. So ordered.

SECOND DIVISION

[G.R. No. 73998. November 14, 1988.]

PEDRO T. LAYUGAN, petitioner, vs. INTERMEDIATE APPELLATE COURT, GODOFREDO ISIDRO, and TRAVELLERS MULTI-INDEMNITY CORPORATION, respondents.

Edralin S. Mateo for petitioner.

Orlando L. Espinas for respondent Travellers Multi-Indemnity Corp.

Roberto T . Vallarta for respondent Godofredo Isidro.

SYLLABUS

1.REMEDIAL LAW; CIVIL PROCEDURE; APPEAL; FINDINGS OF FACT OF COURT OF APPEALS ARE ENTITLED TO GREAT RESPECT AND ORDINARILY NOT DISTURBED ON APPEAL. — It is an elementary rule in the review of decisions of the Court of Appeals that its findings of fact are entitled to great respect and will not ordinarily be disturbed by this Court. For if we have to review every question of fact elevated to us, we would hardly have any more time left for the weightier issues compelling and deserving our preferential attention.

2.ID.; ID.; ID.; ID.; EXCEPTIONS. — Surely there are established exceptions when the Court should review and rectify the findings of fact of the lower court, such as: 1) when the conclusion is a finding grounded entirely on speculation, surmise, or conjecture; 2) the inference made is manifestly mistaken; 3) there is grave abuse of discretion; 4) the judgment is based on misapprehension of facts; 5) the Court of Appeals went beyond the issues of the case if the findings are contrary to the admission of both the appellant and the appellee; 6) the findings of the Court of Appeals are contrary to those of the trial court; 7) the said findings of fact are conclusions without citation of specific evidence on which they are based; 8) the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondents; and 9) when the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted on record.

3.CIVIL LAW; CIVIL CODE; QUASI-DELICT; NEGLIGENCE; DEFINED. — 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, or as Judge Cooley defines it, "(T)he failure to observe for the protection of the interests of another person, that degree of care, precaution, and vigilance which the circumstances justly demand, whereby such other person suffers injury."

4.ID.; ID.; ID.; ID.; TEST TO DETERMINE EXISTENCE. — In Picart vs. Smith, decided more than seventy years ago but still a sound rule, we held: 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 thatreasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the Roman law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The Law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that.

5.ID.; ID.; ID.; ID.; DOCTRINE OF RES IPSA LOQUITUR; EXPLAINED. — The doctrine res ipsa loquitur is stated thus: "Where the thing which causes injury is shown to be under the management of the defendant, and the accident is such as in the ordinary course of things does not happen if those who have the management use proper care, it affords reasonable evidence, in the absence of an explanation by the defendant, that the accident arose from want of care." (Cocley on Torts, Vol. 3, 369)

6.ID.; ID.; ID.; ID.; ID.; APPLICATION. — The doctrine of res ipsa loquitur as a rule of evidence is peculiar to the law of negligence which recognizes that prima facie negligence may be established without direct proof and furnishes a substitute for specific proof of negligence. The doctrine is not a rule of substantive law but merely a mode of proof or a mere procedural convenience. The rule, when applicable to the facts and circumstances of a particular case, is not intended to and does not dispense with the requirement of proof of culpable negligence on the part of the party charged. It merely determines and regulates what shall be prima facie evidence thereof and facilitates the burden of plaintiff of proving a breach of the duty of due care. The doctrine can be invoked when and only when, under the circumstances involved, direct evidence is absent and not readily available.

7.ID.; ID.; ID.; ID.; DOCTRINE IS INAPPLICABLE WHERE THE ACTUAL CAUSE OF INJURY IS ESTABLISHED BEYOND CONTROVERSY. — It has generally been held that the presumption of inference arising from the doctrine cannot be availed of, or is overcome, where plaintiff has knowledge and testifies or presents evidence as to the specific act of negligence which is the cause of the injury complained of or where there is direct evidence as to the precise cause of the accident and all the facts and circumstances attendant on the occurrence clearly appear. Finally, once the actual cause of injury is established beyond controversy, whether by the plaintiff or by the defendant, no presumptions will be involved and the doctrine becomes inapplicable when the circumstances have been so completely eludicated that no inference of defendant's liability can reasonably be made, whatever the source of the evidence, as in this case.

8.ID.; ID.; ID.; ID.; DOCTRINE OF RESPONDENT SUPERIOR; MASTER OR EMPLOYER IS PRESUMED NEGLIGENT; PRESUMPTION IS OVERCOME OF A GOOD FATHER OF THE FAMILY. — The private respondent is sued under Art. 2176 in relation to Art. 2180, paragraph 5, of the Civil Code. In the latter, 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 master or employer either in the selection of the servant or employee, or in supervision over him after selection, or both. Such presumption is juris tantum and not juris et de jure and consequently, may be rebutted. If follows necessarily that if the employer shows to the satisfaction of the court that in the selection and in the supervision he has exercised the care and diligence of a good father of a family, the presumption is overcome and he is relieved from liability.

D E C I S I O N

SARMIENTO, J p:

Assailed in this petition for review on certiorari are 1) the decision 1 of the then Intermediate Appellate Court 2 in AC-G.R. CV No. 01055, entitled "Pedro T. Layugan, Plaintiff-Appellee, versus Godofredo Isidro, Defendant-Appellant and Third-Party Plaintiff-Appellee, versus Travellers Multi-Indemnity Corporation, Third Party Defendant-Appellant, "which reversed and set aside the decision 3 of the Regional Trial Court, Third Judicial Region, Branch XXVI, Cabanatuan City, and also dismissed the complaint, third party complaint, and the counter claims of the parties and 2) the resolution 4 denying the plaintiff-appellee's (herein petitioner) motion for reconsideration, for lack of merit.

The findings of fact by the trial court which were adopted by the appellate court are as follows: 5

xxx xxx xxx

"Pedro T. Layugan filed an action for damages against Godofredo Isidro, alleging that on May 15, 1979 while at Baretbet, Bagabag, Nueva Vizcaya, the Plaintiff and a companion were repairing the tire of their cargo truck with Plate No. SU-730 which was parked along the right side of the National Highway; that defendant's truck bearing Plate No. PW-583, driven recklessly by Daniel Serrano bumped the plaintiff; that as a result, plaintiff was injured and hospitalized at Dr. Paulino J. Garcia Research and Medical Center and the Our Lady of Lourdes Hospital; that he spent TEN THOUSAND PESOS (P10,000.00) and will incur more expenses as he recuperates from said injuries; that because of said injuries he would be deprived of a lifetime income in the sum of SEVENTY THOUSAND PESOS (P70,000.00); and that he agreed to pay his lawyer the sum of TEN THOUSAND PESOS (P10,000.00).

As prayed for by the plaintiffs counsel, the Court declared the defendant in default on October 12, 1979, and plaintiffs evidence was received ex-parte on January 11, 1978 and February 19, 1980. The decision on behalf of the plaintiff was set aside to give a chance to the defendant to file his answer and later on, a third-party complaint. prcd

Defendant admitted his ownership of the vehicle involved in the accident driven by Daniel Serrano. Defendant countered that the plaintiff was merely a bystander, not a truck helper being a brother-in-law of the driver of said truck; that the truck allegedly being repaired was parked, occupying almost half of the light lane towards Solano, Nueva Vizcaya, light after the curve; that the proximate cause of the incident was the failure of the driver of the parked truck in installing the early warning device, hence the driver of the parked car should be liable for damages sustained by the truck of the herein defendant in the amount of more than P20,000.00; that plaintiff being a mere bystander and hitchhiker must suffer all the damages he incurred. By way of counterclaim defendant alleged that due to plaintiffs baseless complaint he was constrained to engage the services of counsel for P5,000.00 and P200.00 per court appearance; that he suffered sleepless nights, humiliation, wounded feelings which may be estimated at P30.000.00.

On May 29, 1981, a third-party complaint was filed by the defendant against his insurer, the Travellers Multi Indemnity Corporation; that the third-party plaintiff, without admitting his liability to the plaintiff, claimed that the third-party defendant is liable to the former for contribution, indemnity and subrogation by virtue of their contract under Insurance Policy No. 11723 which covers the insurer's liability for damages arising from death, bodily injuries and damage to property.

Third-party defendant answered that, even assuming that the subject matter of the complaint is covered by a valid and existing insurance policy, its liability shall in no case exceed the limit defined under the terms and conditions stated therein; that the complaint is premature as no claim has been submitted to the third party defendant as prescribed under the Insurance Code; that the accident in question was approximately caused by the carelessness and gross negligence of the plaintiff; that by reason of the third-party complaint, third-party defendant was constrained to engage the services of counsel for a fee of P3,000.00. LexLib

Pedro Layugan declared that he is a married man with one (1) child. He was employed as security guard in Mandaluyong, Metro Manila, with a salary of SIX HUNDRED PESOS (600.00) a month. When he is off-duty, he worked as a truck helper and while working as such, he sustained injuries as a result of the bumping of the cargo truck they were repairing at Baretbet, Bagabag, Nueva Vizcaya by the driver of the defendant. He used to earn TWO HUNDRED PESOS (P200.00) to THREE HUNDRED PESOS (P300.00) monthly, at the rate of ONE HUNDRED PESOS (P100.00) per trip. Due to said injuries, his left

leg was amputated so he had to use crutches to walk. Prior to the incident, he supported his family sufficiently, but after getting injured, his family is now being supported by his parents and brother.

GODOFREDO ISIDRO, defendant/third-party plaintiff, testified that his truck involved in this vehicular accident is insured with the Travellers Multi Indemnity Corporation covering own damage and third-party liability, under vehicle policy No. 11723 (Exh. `1') dated May 30, 1978; that after he filed the insurance claim the insurance company paid him the sum of P18,000.00 for the damages sustained by this truck but not the third party liability.

DANIEL SERRANO, defendant driver, declared that he gave a statement before the municipal police of Bagabag, Nueva Vizcaya on May 16, 1979; that he knew the responsibilities of s driver; that before leaving, he checked the truck. The truck owner used to instruct him to be careful in driving. He bumped the truck being repaired by Pedro Layugan, plaintiff, while the same was at a stop position.

From the evidence presented, it has been established clearly that the injuries sustained by the plaintiff was caused by defendant's driver, Daniel Serrano. The police report confirmed the allegation of the plaintiff and admitted by Daniel Serrano on cross-examination. The collision dislodged the jack from the parked truck and pinned the plaintiff to the ground. As a result thereof, plaintiff sustained injuries on his left forearm and left foot. The left leg of the plaintiff from below the knee was later on amputated (Exh. 'C') when gangrene had set in, thereby rendering him incapacitated for work depriving him of his income." (pp. 118 to 120, Record on Appeal.)

xxx xxx xxx

Upon such findings, amply supported by the evidence on record, the trial court rendered its decision, the dispositive part of which reads as follows: 6

WHEREFORE, premises considered, the defendant is hereby ordered:

a)To pay the plaintiff SEVENTY THOUSAND (P70,000.00) PESOS actual and compensatory damages;

b)TWO THOUSAND (P2,000.00) PESOS for attorney's fees;

c)FIVE THOUSAND (P5,000.00) PESOS for moral damages; and

d)To pay the costs of this suit.

On the third-party complaint, the third-party defendant is ordered to indemnify the defendant/third party plaintiff:

a)The sum of FIFTY THOUSAND (P50,000.00) PESOS for actual and compensatory damages; and

b)The costs of this suit.

The Intermediate Appellate Court as earlier stated reversed the decision of the trial court and dismissed the complaint, the third-party complaint, and the counter-claims of both appellants. 7

Hence, this petition.

The petitioner alleges the following errors. 8

1.WHETHER UPON THE GIVEN FACTS, THE INTERMEDIATE APPELLATE COURT ACTED CORRECTLY IN REVERSING AND SETTING ASIDE AND DISMISSING THE PLAINTIFF-APPELLEE'S COMPLAINT.

2.WHETHER THE INTERMEDIATE APPELLATE COURT ACTED CORRECTLY IN APPLYING THE DOCTRINE OF "RES IPSA LOQUITUR" WITH PROPER JURIS-PRUDENTIAL (sic) BASIS.

The crux of the controversy lies in the correctness or error of the decision of the respondent court finding the petitioner negligent under the doctrine of Res ipsa loquitur (The thing speaks for itself). Corollary thereto, is the question as to who is negligent, if the doctrine is inapplicable.

The respondent corporation stresses that the issues raised in the petition being factual, the same is not reviewable by this Court in a petition for review by certiorari.9

Indeed, it is an elementary rule in the review of decisions of the Court of Appeals that its findings of fact are entitled to great respect and will not ordinarily be disturbed by this Court. 10 For if we have to review every question of fact elevated to us, we would hardly have any more time left for the weightier issues compelling and deserving our preferential attention. 11 Be that as it may, this rule is not inflexible. Surely there are established exceptions 12 — when the Court should review and rectify the findings of fact of the lower court, such as:

1)when the conclusion is a finding grounded entirely on speculation, surmise, or conjecture; 2) the inference made is manifestly mistaken; 3) there is grave abuse of discretion; 4) the judgment is based on misapprehension of facts; 5) the Court of Appeals went beyond the issues of the case if the findings are contrary to the admission of both the appellant and the appellee; 6) the findings of the Court of Appeals are contrary to those of the trial court; 7) the said findings of fact are conclusions without citation of specific evidence on which they are based; 8) the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondents; and 9) when the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted on record.

Exceptions 1, 2, 4, 6, 7, and 9 obtain in the instant case to warrant a deviation from the general rule.

From its finding that the parked truck was loaded with ten (10) big round logs, 13 the Court of Appeals inferred that because of its weight the truck could not have been driven to the shoulder of the road and concluded that the same was parked on a portion of the road 14 at the time of the accident. Consequently, the respondent court inferred that the mishap was due to the negligence of the driver of the parked truck.15 The inference or conclusion is manifestly erroneous. In a large measure, it is grounded on speculation, surmise, or conjecture. How the respondent court could have reversed the finding of the trial court that a warning device was installed 16 escapes us because it is evident from the record that really such a device, in the form of a lighted kerosene lamp, was installed by the driver of the parked truck three to four meters from the rear of his parked truck. 17 We see this negative finding of the respondent appellate court as a misreading of the facts and the evidence on record and directly contravening the positive finding of the trial court that an early warning device was in proper place when the accident happened and that the driver of the private respondent was the one negligent. On the other hand, the respondent court, in refusing to give its "imprimatur to the trial court's finding and conclusion that Daniel Serrano (private respondent Isidro's driver) was negligent in driving the truck that bumped the parked truck", did not cite specific evidence to support its conclusion. In cavalier fashion, it simply and nebulously adverted to unspecified "scanty evidence on record." 18

On the technical aspect of the case, the respondent corporation would want us to dismiss this petition on the ground that it was filed out of time. It must be noted that there was a motion for extension, 19 albeit filed erroneously with the respondent court, dated March 19, 1986, requesting for 30 days from March 20, 1986, to file the necessary petition or pleading before the Supreme Court". Also, on April 1, 1986, an appearance of a new lawyer for the petitioner before the Supreme Court" with motion 20 was filed, again erroneously, with the Court of Appeals, requesting for 20 days extension "to file the Petition for Review on Certiorari." Likewise a similar motion 21 was filed with this Court also on April 1, 1986. On the other hand, the

instant petition for review was filed on April 17, 1986 22 but it was only after three months, on August i, 1986, in its comment, 23 that the respondent corporation raised the issue of tardiness. The respondent corporation should not have waited in ambush before the comment was required and before due course was given. In any event, to exact its "a pound of flesh", so to speak, at this very late stage, would cause a grave miscarriage of justice. Parenthetically, it must be noted that private respondent Isidro did not raise this issue of late filing.

We now come to the merits of this petition.

The question before us is who was negligent? 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, 24 or as Judge Cooley defines it, "(T)he failure to observe for the protection of the interests of another person, that degree of care, precaution, and vigilance which the circumstances justly demand, whereby such other person suffers injury." 25

In Picart vs. Smith, 26 decided more than seventy years ago but still a sound rule, we held:

The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the Roman law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The Law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that.

Respondent Isidro posits that any immobile object along the highway, like a parked truck, poses serious danger to a moving vehicle which has the right to be on the highway. He argues that since the parked cargo truck in this case was a threat to life and limb and property, it was incumbent upon the driver as well as the petitioner, who claims to be a helper of the truck driver, to exercise extreme care so that the motorist negotiating the road would be properly forewarned of the peril of a parked vehicle. Isidro submits that the burden of proving that care and diligence were observed is shifted to the petitioner, for, as previously claimed, his (Isidro's) Isuzu truck had a right to be on the road, while the immobile cargo truck had no business, so to speak, to be there. Likewise, Isidro proffers that the petitioner must show to the satisfaction of a reasonable mind that the driver and he (petitioner) himself, provided an early warning device, like that required by law, or, by some other adequate means that would properly forewarn vehicles of the impending danger that the parked vehicle posed considering the time, place, and other peculiar circumstances of the occasion. Absent such proof of care, as in the case at bar, Isidro concludes, would, under the doctrine of Res ipsa loquitur, evoke the presumption of negligence on the part of the driver of the parked cargo truck as well as his helper, the petitioner herein, who was fixing the flat tire of the said truck. 27

Respondent Isidro's contention is untenable.

The evidence on record discloses that three or four meters from the rear of the parked truck, a lighted kerosene lamp was placed. 28 Moreover, there is the admission of respondent Isidro's driver, Daniel Serrano, to wit: 29

"Question No. 8 (by Patrolman Josefino Velasco) — Will you narrate to me in brief how the accident happens (sic) if you can still remember?

Answer:(by Daniel Serrano)

That on or about 10:40 p.m., 15 May 1979 while driving Isuzu truck at Baretbet, Bagabag, Nueva Vizcaya and at KM 285, I met another vehicle who (sic) did not dim his (sic) lights which cause (sic) me to be blinded with intense glare of the light that's why I did not notice a parked truck who (sic) was repairing a front flat tire. When I was a few meters away, I saw the truck which was loaded with round logs. I step (sic) on my foot brakes but it did not function with my many attempts. I have (sic) found out later that the fluid pipe on the rear right was cut that's why the breaks did not function." (Emphasis supplied).

Whether the cargo truck was parked along the road or on half the shoulder of the right side of the road would be of no moment taking into account the warning device consisting of the lighted kerosene lamp placed three or four meters from the back of the truck. 30 But despite this warning which we rule as sufficient, the Isuzu truck driven by Daniel Serrano, an employee of the private respondent, still bumped the rear of the parked cargo truck. As a direct consequence of such accident the petitioner sustained injuries on his left forearm and left foot. His left leg was later amputated from below the knee when gangrene had set in. 31

It is clear from the foregoing disquisition that the absence or want of care of Daniel Serrano has been established by clear and convincing evidence. It follows that in stamping its imprimatur upon the invocation by respondent Isidro of the doctrine of Res ipsa loquitur to escape liability for the negligence of his employee, the respondent court committed reversible error.

The respondent court ruled: 32

xxx xxx xxx

In addition to this, we agree with the following arguments of appellant Godofredo Isidro which would show that the accident was caused due to the negligence of the driver of the cargo truck:

xxx xxx xxx

". . . In the case at bar the burden of proving that care and diligence was (sic) observed is shifted evidently to the plaintiff, for, as adverted to, the motorists have the right to be on the road, while the immobile truck has no business, so to speak, to be there. It is thus for the plaintiff to show to the satisfaction of a reasonable mind that the driver and he himself did employ early warning device such as that required by law or by some other adequate means or device that would properly forewarn vehicles of the impending danger that the parked vehicle posed considering the time, place and other peculiar circumstances of the occasion. Absent such proof of care, as in the case at bar, will evoke the presumption of negligence under the doctrine of res ipsa loquitur, on the part of the driver of the parked cargo truck as well as plaintiff who was fixing the flat tire of said truck. (pp. 14-17, Appellant's Brief)." (Emphasis supplied).

At this juncture, it may be enlightening and helpful in the proper resolution of the issue of negligence to examine the doctrine of Res ipsa loquitur.

This doctrine is stated thus: "Where the thing which causes injury is shown to be under the management of the defendant, and the accident is such as in the ordinary course of things does not happen if those who have the management usde proper care, it affords reasonable evidence, in the absence of an explanation by the defendant, that the accident arose from want of care." 33 Or as Black's Law Dictionary 34 puts it:

Res ipsa loquitur. The thing speaks for itself Rebuttable presumption or inference that defendant was negligent, which arises upon proof that instrumentality causing injury was in defendant's exclusive control, and that the accident was one which ordinarily does not happen in absence of negligence. Res ipsa loquitur is rule of evidence whereby negligence of alleged wrongdoer may be inferred from mere

fact that accident happened provided character of accident and circumstances attending it lead reasonably to belief that in absence of negligence it would not have occurred and that thing which caused injury is shown to have been under management and control of alleged wrongdoer. Hillen v. Hooker Const. Co., Tex. Civ. App., 484 S.W. 2d 133, 155. Under doctrine of "res ipsa loquitur" the happening of an injury permits an inference of negligence where plaintiff produces substantial evidence that injury was caused by an agency or instrumentality under exclusive control and management of defendant, and that the occurrence was such that in the ordinary course of things would not happen if reasonable care had been used.

In this jurisdiction we have applied this doctrine in quite a number of cases, notably in Africa et al. vs. Caltex, Inc., et al., 35 and the latest is in the case of F.F. Cruz and Co., Inc. vs. C A . 36

The doctrine of Res ipsa loquitur as a rule of evidence is peculiar to the law of negligence which recognizes that prima facie negligence may be established without direct proof and furnishes a substitute for specific proof of negligence. 37 The doctrine is not a rule of substantive law 38 but merely a mode of proof or a mere procedural convenience. 39 The rule, when applicable to the facts and circumstances of a particular case, is not intended to and does not dispense with the requirement of proof of culpable negligence on the part of the party charged. 40 It merely determines and regulates what shall be prima facie evidence thereof and facilitates the burden of plaintiff of proving a breach of the duty of due care. 41 The doctrine can be invoked when and only when, under the circumstances involved, direct evidence is absent and not readily available. 42 Hence, it has generally been held that the presumption of inference arising from the doctrine cannot be availed of, or is overcome, where plaintiff has knowledge and testifies or presents evidence as to the specific act of negligence which is the cause of the injury complained of or where there is direct evidence as to the precise cause of the accident and all the facts and circumstances attendant on the occurrence clearly appear. 43 Finally, once the actual cause of injury is established beyond controversy, whether by the plaintiff or by the defendant, no presumptions will be involved and the doctrine becomes inapplicable when the circumstances have been so completely eludicated that no inference of defendant's liability can reasonably be made, whatever the source of the evidence, 44 as in this case.

The private respondent is sued under Art. 2176 in relation to Art. 2180, paragraph 5, of the Civil Code. In the latter, 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 master or employer either in the selection of the servant or employee, or in supervision over him after selection, or both. Such presumption is juris tantum and not juris et de jure and consequently, may be rebutted. If follows necessarily that if the employer shows to the satisfaction of the court that in the selection and in the supervision he has exercised the care and diligence of a good father of a family, the presumption is overcome and he is relieved from liability. 45 In disclaiming liability for the incident, the private respondent stresses that the negligence of his employee has already been adequately overcome by his driver's statement that he knew his responsibilities as a driver and that the truck owner used to instruct him to be careful in driving. 46

We do not agree with the private respondent in his submission. In the first place, It is clear that the driver did not know his responsibilities because he apparently did not check his vehicle before he took it on the road. If he did he could have discovered earlier that the brake fluid pipe on the right was cut, and could have repaired it and thus the accident could have been avoided. Moreover, to our mind, the fact that the private respondent used to instruct his driver to be careful in his driving, that the driver was licensed, and the fact that he had no record of any accident, as found by the respondent court, are not sufficient to destroy the finding of negligence of the Regional Trial Court given the facts established at the trial 47 The private respondent or his mechanic, who must be competent, should have conducted a thorough inspection of his vehicle before allowing his driver to drive it. In the light of the circumstances obtaining in the case, we hold that Isidro failed to prove the diligence of a good father of a family in the supervision of his employees which would exculpate him from solidary liability with his driver to the petitioner. But even if we concede that the diligence of a good father of a family was observed by Isidro in the supervision of his driver, there is not an iota of evidence on record of the observance by Isidro of the same quantum of diligence in the supervision of his mechanic, if any, who would be directly in charge in maintaining the road worthiness of his (Isidro's) truck. But that is not all. There is paucity of proof that Isidro exercised the diligence of a good father of a family in the selection of his driver, Daniel Serrano, as well as in the selection of his mechanic, if any, in order to insure the safe operation of his truck and thus prevent damage to others. Accordingly, the responsibility of Isidro as employer treated in Article 2180, paragraph 5, of the Civil Code has not ceased. prLL

WHEREFORE, the petition is hereby GRANTED. The Decision of the respondent court as well as its Resolution denying the petitioner's motion for reconsideration are hereby SET ASIDE and the decision of the trial court, dated January 20, 1983, is hereby REINSTATED in toto. With costs against the private respondents.

SO ORDERED.

SECOND DIVISION

[G.R. No. 121739. June 14, 1999.]

PHILIPPINE NATIONAL BANK, petitioner, vs. COURT OF APPEALS, and SPOUSES EDILBERTO and ELENA NATIVIDAD, respondents.

The Chief Legal Counsel (PNB) for petitioner.

Emmanuel C. Lising for private respondent.

SYNOPSIS

Spouses Natividad were granted by PNB a loan of P34,000.00 and to secure payment thereof, a real estate mortgage over 9 parcels of individually titled lands in Sta. Maria, Pangasinan was executed in favor of PNB. The Bank appraised the said properties for loan purposes in the total amount of P49,000. The spouses were able to pay PNB P15,000.00, but thereafter, failed to pay the balance despite demands. Hence, the bank foreclosed the mortgaged properties extrajudicially. A public auction sale of the said properties was conducted and the bank as the highest bidder in the amount of P7,000.00 was thus awarded the properties. This amount, however, was short of P64,624.31, representing the balance of the principal obligation and related expenses. And for failure to redeem the properties within the period prescribed by law, PNB filed the instant deficiency claim. The spouses alleged, among others, that they should not be made to pay the deficit as the public auction sale was tainted with fraud and similar irregularities. The trial court DENIED the deficiency claim and held the total obligation of the spouses as fully paid. The Court of Appeals affirmed this ruling. Hence, this petition. cdasia

Both the trial court and the Court of Appeals held PNB to be estopped from pursuing its deficiency claim on the ground that the deficiency arose from the Bank's reappraisal of the properties in question for purposes of fixing the bid price thereof. From its initial appraisal of P49,000, PNB substantially downgraded its appraisal of the value of the properties at auction for only P7,000 as the sole bidder. PNB had lowered its appraisal of the properties for the purpose of acquiring the same and still collecting from the spouses a deficiency claim. The view of both courts was that the spouses relied in good faith on PNB's initial appraisal of the properties as worth P49,000 in mortgaging their properties on the theory that in case of their failure to pay their loan, their properties can answer for their obligation. However, there are several factors militating against this view. Based on the evidence, the reappraisal of the properties was their fair value and the original appraisal was made with the active participation of the spouses. Further, the spouses were benefited rather than harmed by the substantially lower reappraisal valued of their properties because there is a right to redeem and the spouses had several options to recover from their predicament but which they have failed to exercise. Hence, the Court reversed the appealed decision.

SYLLABUS

1.CIVIL LAW; OBLIGATIONS AND CONTRACTS; SPECIAL CONTRACTS; MORTGAGE; EXTRAJUDICIAL FORECLOSURE OF MORTGAGES; DEFICIENCY CLAIM THEREFROM IS ALLOWED. — To begin with, it is settled that if the proceeds of the sale are insufficient to cover the debt in an extrajudicial foreclosure of the mortgage, the mortgagee is entitled to claim the deficiency from the debtor. For when the legislature intends to deny the right of a creditor to sue for any deficiency resulting from foreclosure of security given to guarantee an obligation it expressly provides as in the case of pledges [Civil Code, Art. 2115]

and in chattel mortgages of a thing sold on installment basis [Civil Code, Art. 1484(3)]. Act No. 3135, which governs the extrajudicial foreclosure of mortgages, while silent as to the mortgagee's right to recover, does not, on the other hand, prohibit recovery of deficiency. Accordingly, it has been held that a deficiency claim arising from the extrajudicial foreclosure is allowed. cdasia

2.ID.; ID.; ESTOPPEL; ELEMENTS. — The essential elements of estoppel are: (1) conduct amounting to false representation or concealment of material facts or at least calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) intent, or at least expectation, that this conduct shall be acted upon by, or at least influence, the other party; and (3) knowledge, actual or constructive, of the real facts.

3.ID.; ID.; ID.; PARTY CLAIMING ESTOPPEL; ELEMENTS. — As related to the party claiming the estoppel, the essential elements are: (1) lack of knowledge and of the means of knowledge of the truth as to the facts in question; (2) reliance, in good faith, upon the conduct or statements of the party to be estopped; (3) action or inaction based thereon of such character as to change the position or status of the party claiming the estoppel, to his injury, detriment, or prejudice.

4.ID.; ID.; ID.; ID.; ID.; RELIANCE IN GOOD FAITH, UPON THE STATEMENTS OF THE PARTY TO BE ESTOPPED; NOT PRESENT IN CASE AT BAR. — There is no basis for supposing that respondent spouses did not know the true worth of their properties which were agricultural rather than residential with improvements thereon. Respondents could not, therefore, have been misled by any statement made by petitioner. Indeed, respondent spouses offered no evidence as to the worth of their properties, limiting themselves to their self-serving allegations that their properties were worth substantially more than petitioner bank's reappraisal and even its original appraisal.

5.ID.; ID.; SPECIAL CONTRACTS; MORTGAGE; EXTRA-JUDICIAL FORECLOSURE OF MORTGAGES; INADEQUACY OF PRICE; NOT MATERIAL WHEN THERE IS RIGHT TO REDEEM; CASE AT BAR. — Respondent spouses were benefited rather than harmed by the substantially lower reappraised value of their properties. As held in Velasquez v. Coronel: . . . "When there is the right to redeem, inadequacy of price should not be material, because the judgment debtor may reacquire the property or also sell his right to redeem and thus recover the loss he claims to have suffered by reason of the price obtained at the auction sale." Indeed, as pointed out by petitioner bank, respondents had several options. They could have participated in the public bidding or exercised their right of redemption or sold such right to redeem or simply settled their debt. However, they did none of these things despite due notice to them. Respondents are thus to blame for their predicament. Their claim of financial distress is not an excuse to evade their clear obligation to the bank.

6.ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — The amount of P64,624.31 is the amount of the deficiency claim of the bank as of March 31, 1983 before the filing of the present complaint on April 21, 1983. To the balance of P60,635.63 left after applying petitioner bank's winning bid of P7,000.00, the bank added interest, penalties, attorney's fees, and other charges totalling P3,988.68. This is in accordance with the terms of the promissory note. Petitioner also asked in its complaint for attorney's fees equal to 10% of the total amount due as of the time of payment, litigation expenses, and costs for purposes of the present action. The claim is proper. The proceedings for foreclosure is extrajudicial and summary in nature, while that for the deficiency is judicial. Hence, the efforts exerted by the lawyer in both should be recognized. Both the deed of mortgage and the promissory note provide for recovery of attorney's fees. AaITCH

D E C I S I O N

MENDOZA, J p:

This is a petition for review of the decision, dated July 31, 1995, of the Court of Appeals, 1 affirming the dismissal by the Regional Trial Court (RTC) of Quezon City, Branch 99 of the complaint filed by petitioner Philippine National Bank (PNB) to

recover the deficiency of the debt owed to it by respondent spouses Edilberto and Elena Natividad after the extrajudicial foreclosure of the properties given by respondent spouses as collateral for their loan. cda

The facts are stated in the following portion of the decision of the trial court:

Material facts culled from the records reveal that on December 29, 1975, [respondent spouses] were granted by the [petitioner] bank a one-year Time Loan Commercial (TLC) of THIRTY-FOUR THOUSAND PESOS (P34,000.00). To secure the payment of said loan, [respondent spouses] executed in favor of [petitioner] PNBa real estate mortgage over nine (9) parcels of individually titled lands located in Sta. Maria, Pangasinan with an aggregate area of THREE THOUSAND TWO HUNDRED NINETY-TWO (2,292) square meters. These properties were declared for taxation purposes in the names of [respondent spouses] (Exh. 4) with the Municipal Treasurer of Sta. Maria, Pangasinan. As a pre-requisite for the approval of [respondent spouses'] loan application, [petitioner] thru its duly authorized inspector conducted an ocular inspection of the premises of the mortgaged properties to ascertain the market value thereof. The properties after due inspection and evaluation was appraised by [petitioner] PNB for loan purposes in the total amount of FORTY-NINE THOUSAND PESOS (P49,000.00) thereby justifying the grant of the loan applied for.

Due to dire financial constraints, [respondent spouses] after paying FIFTEEN THOUSAND PESOS (P15,000.00) (Exhs. "5" and "5-A") failed to pay the balance despite repeated demands by [petitioner PNB] (Exhs. "E", "F", "G", "M", "N", and "O"). Thereafter, [petitioner] bank as a recourse foreclosed the mortgaged properties extrajudicially, after compliance with the required publications of notices (Exhs. "K" and "K-1").

On November 26, 1982, the public auction sale of the said properties were conducted in Pangasinan, where the properties are located, by the provincial sheriff. [Petitioner] bank as the highest bidder for SEVEN THOUSAND PESOS (P7,000.00), (Exh. "L") was thus awarded the herein properties. This amount, however, was short of SIXTY-FOUR THOUSAND SIX HUNDRED TWENTY-FOUR and 31/100 (P64,624.31) representing the balance on the principal obligation, accrued interest, penalties, attorney's fees, and expenses of litigation (Exhs. "D" and "D-2"). For failure to redeem the properties within the statutory period allowed by law, [petitioner] filed the instant deficiency claim.

[Respondent spouses] on the other hand interposed as justification of their inability to redeem the properties their continuing financial hardships. More than this, they professed that they should not be made to pay the deficit among other grounds as the aforesaid public auction sale was tainted with fraud and similar irregularities. 2

On the basis of these facts, the trial court rendered its decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the deficiency claim is hereby DENIED and the total obligation of the defendants is hereby considered fully paid. This action is DISMISSED with costs against the plaintiff.

SO ORDERED. 3

The RTC justified its decision, thus:

. . . The peculiar circumstances of this case is such that [petitioner] is estopped from recovering alleged deficiency judgment from the [respondents]. It must be noted from the records that prior to the approval of the [respondents'] loan application and as a pre-requisite therefor, [petitioner] thru its duly authorized inspector, conducted an inspection and evaluation of the properties offered as security for the purpose of determining its fair market value and came out with a report dated December 10, 1975 (Exh. 1) with an appraisal thereof of FORTY-NINE THOUSAND PESOS (P49,000.00). Asked on the general practice of all banks, on cross examination, Elizabeth Gonzales, [petitioner's] employee testified that banks get sixty or seventy per cent (60% or 70%) of market value of the properties (TSN, May 29, 1986, Exh. "P") as the loan value thereof; hence, the amount of THIRTY-FOUR THOUSAND PESOS (P34,000.00) was assigned and approved by [petitioner] unilaterally [as] its loanable worth. Apparently, with the high expectancy that [it] may be the lone bidder of the properties in the public auction sale in the event of foreclosure proceedings, [petitioner] re-appraised the same by assigning thereto the value of TWO THOUSAND PESOS (P2,000.00) as basis for fixing the bid price thereof, thus the herein properties were reclassified as plain agricultural lands without giving due regard to the certification of the Municipal Treasurer of Sta. Maria, Pangasinan that the subject lots were assessed as residential concerns on the basis of the subdivision plan of the premises duly approved by the Land Registration Commission (now Land Registration Authority).

Hence, it can thus be deduced from the foregoing that the downward valuation of the mortgaged property is questionable and unjust, if not dubiously schemed. The act of the [petitioner] in re-classifying the land for the purpose of deriving therefrom a lower valuation and establishing the basis for a deficiency claim to the detriment of the [respondents] can not be countenanced. Real estate properties almost always appreciate in value considering the high rate of inflation. It is thus quite improbable that after six (6) years, the assessed value of the nine (9) parcels of land could have depreciated drastically from FORTY-NINE THOUSAND PESOS (P49,000.00) to TWO THOUSAND PESOS (P2,000.00) according to [petitioner's] self-serving re-appraisal. We cannot gainsay the fact that had there been no reclassification nor re-assessment of the mortgaged properties, there could have been no deficiency liability to speak of. Were it not for the residential assessments of the properties, [petitioner] would not have granted the loan transaction of the properties, likewise, [respondents] would not have pushed through with their loan application. The [petitioner] in the instant case, through its act and declarations, intentionally led the [respondents] to believe that the valuation it assigned to the properties as security is its real market value, and the [respondents] relying upon such legitimate belief, acted in good faith with strong reliance on [petitioner's] aforesaid policy on real estate loan.

It is very evident, therefore, as in this case, that the principle of estoppel applies to the [petitioner]. Consequently, the [respondents] should not be made to suffer for [petitioner's] own doing by downgrading the price of the properties which resulted to an undue advantage over the [respondents] at the auction sale. Necessarily, in the spirit of fair play and observance of equity, [petitioner] bank must bear the loss it sustained as a consequence of its failure to justify its act which is diametrically opposed to sound business dealings. [Respondents] who are innocent of the scheme adopted by the [petitioner] bank in reducing the value of the properties resulting to its unwarranted gains shall not be permitted to suffer from unmeritorious claim. 4

On appeal, the Court of Appeals affirmed, stating: cdphil

It is, therefore, very evident to this Court the dubious scheme perpetrated by [petitioner] bank on [respondent spouses] was not only to keep the latter's P15,000.00 initial payments, but also to grab ownership of mortgaged properties through self-serving appraisal prejudicial to the rights of [respondent spouses], and much more still to hold [respondent spouses] liable for the deficiency amount of the extrajudicial foreclosure of mortgage. Such practice cannot be countenanced by the Court. 5

Hence, this petition. Petitioner contends that —

I

THE CA ERRED IN HOLDING THAT PNB CANNOT RECOVER ITS DEFICIENCY CLAIM AGAINST SPOUSES EDILBERTO AND ELENA NATIVIDAD ARISING FROM EXTRAJUDICIAL FORECLOSURE DESPITE CLEAR JURISPRUDENCE ALLOWING THE SAME.

II

THE CA ERRED IN HOLDING THAT PECULIAR CIRCUMSTANCES EXIST IN THE INSTANT CASE RENDERING PETITIONER BANK ESTOPPED FROM RECOVERING ITS DEFICIENCY CLAIM.

III

THE CA ERRED IN NOT HOLDING, ASSUMING ARGUENDO THAT THE MORTGAGED PROPERTY WAS SOLD AT AN AMOUNT LESS THAN ITS FAIR OR ACTUAL MARKET VALUE, THAT THERE WAS NO DISADVANTAGE GOING FOR THE MORTGAGORS. ON THE CONTRARY, THE NATIVIDAD'S STAND TO GAIN WITH A REDUCED PRICE BECAUSE THEY POSSESS THE RIGHT OF REDEMPTION. 6

To begin with, it is settled that if the proceeds of the sale are insufficient to cover the debt in an extrajudicial foreclosure of the mortgage, the mortgagee is entitled to claim the deficiency from the debtor. For when the legislature intends to deny the right of a creditor to sue for any deficiency resulting from foreclosure of security given to guarantee an obligation it expressly provides as in the case of pledges [Civil Code, Art. 2115] and in chattel mortgages of a thing sold on installment basis [Civil Code, Art. 1484(3)]. Act No. 3135, which governs the extrajudicial foreclosure of mortgages, while silent as to the mortgagee's right to recover, does not, on the other hand, prohibit recovery of deficiency. Accordingly, it has been held that a deficiency claim arising from the extrajudicial foreclosure is allowed. 7

The question in this case is whether, as held by both the trial and appellate courts, petitioner is estopped from pursuing its deficiency claim arising from the extrajudicial foreclosure against respondent spouses' properties.

The essential elements of estoppel are: (1) conduct amounting to false representation or concealment of material facts or at least calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) intent, or at least expectation, that this conduct shall be acted upon by, or at least influence, the other party; and (3) knowledge, actual or constructive, of the real facts. As related to the party claiming the estoppel, the essential elements are: (1) lack of knowledge and of the means of knowledge of the truth as to the facts in question; (2) reliance, in good faith, upon the conduct or statements of the party to be estopped; (3) action or inaction based thereon of such character as to change the position or status of the party claiming the estoppel, to his injury, detriment, or prejudice. 8

Both the trial court and the Court of Appeals held petitioner to be estopped from pursuing its deficiency claim on the ground that the deficiency arose from petitioner bank's reappraisal of the properties in question for purposes of fixing the bid price thereof. From its initial appraisal of P49,000.00 nearly seven years earlier, petitioner substantially downgraded its appraisal of the value of the properties prior to foreclosure and purchased the properties at auction for only P7,000.00 as the sole bidder (Exh. L). 9 Both courts held that petitioner had lowered its appraisal of the properties for the purpose of acquiring the properties and still collecting from respondent spouses a deficiency claim. In their view, respondent spouses relied in good faith on petitioner's initial appraisal of their properties as worth P49,000.00 in mortgaging their properties on the theory that in case of their failure to pay their loan, their properties can answer for their obligation.

There are, however, several factors militating against this view.

First. Based on the evidence presented, it does appear that the reappraisal of the properties was their fair value. As stated in the report (Exh. R), 10 dated January 17, 1980, of petitioner's credit investigator, Dionisio C. Damasco, Jr., who reappraised the properties at P7,000.00 only:

Per titles and current tax declarations, the collateral is situated in Bo. San Mariano, Sta. Maria, Pang., but actual location is in Bo. Balloy, Sta. Maria, Pang. These are two adjacent barrios. Distance of the property from the Bo. Boundary is about 250 m.

The property with a former area of 7,926 sq. ms. was bought by Mr. Edilberto Natividad from Mr. Esperidion Cabanayan, Sr. for P10,000.00 in 1975 and was later subdivided in the same year into Blocks 1 and 2 and 3 Road lots. These 3 road lots are nonexistent when inspected.

Lot 9 when plotted will not close & may be due to typographical error in point 4 to 1.

Though declared as residential per separate Tax Declarations, I am valuing it as agricultural for the following reasons:

1.Per our Bank Appraiser's Manual prepared by the Credit Dept. (2nd Edition - 1976, p. 62) [Exh. S 11 ], it states that if a residential subdivision is less than 60% of the projected development, it should be considered as raw land value. The collateral has no improvement at all (except for the agricultural crops). The current market value of agricultural lands in Bo. Balloy surrounding the property ranges from P15,000 to P25,000 per ha. or an ave. of P20,000, hence its pertinent market value is P7,000 (20,000 x 2392/10000 = P6,584,00 rounded to P7,000).

2.Actual use is agricultural planted to palay, mongo & beans

3.No visible concrete stone monuments to properly identify its subdivision into several lots

4.Distance from residential houses: N., about 860 ms.; S., about 250 ms.; E & W., even within a radius of one km. are agricultural lands. Surroundings are planted to palay and other secondary crops.

5.It is about 1.2 ms. below road level. It needs refilling to be fit for residential purposes and in order not to be flooded.

However, the provincial road leading to it is currently undergoing widening, elevation, leveling, and will possibly be asphalted. 12

Damasco, Jr. testified:

I observed that the property was plainly agricultural. There were no concrete stones, monuments or pavements to indicate that the property was subdivided. It was planted with palay and corn. And the property is below road level, surroundings to the property were purely agricultural lands . . . The surface of the area was plain soil, ideal for rice or palay. 13

Damasco, Jr.'s findings were corroborated by another PNB inspector, Romeo A. Taganas, Jr., who in his report, dated October 9, 1981 (Exh. Q), 14 stated that the properties were situated in a sparsely populated area, "being cultivated by Juaning Sison," and that palay harvested thereon had to be transported 1.5 kilometers in order to be brought for sale to the Sta. Maria town. Taganas, Jr. in fact appraised the properties at P2,000.00, which was P5,000.00 less than Damasco, Jr.'s appraisal and the winning bid of petitioner bank.

Edilberto Natividad himself impliedly admitted that the properties were actually agricultural land when he told the court that "these are classified as residential lots by the Assessor's Office in the meantime that they are not yet used as residential lots they will still be used as agricultural as in accordance with the decree of the President to produce palay or any productive use of the land." 15

There is thus no basis for supposing that respondent spouses did not know the true worth of their properties which were agricultural rather than residential with improvements thereon. Respondents could not, therefore, have been misled by any statement made by petitioner. 16 Indeed, respondent spouses offered no evidence as to the worth of their properties, limiting themselves to their self-serving allegations that their properties were worth substantially more than petitioner bank's reappraisal and even its original appraisal.

Second. Moreover, it appears that rather than being passive bystanders in the original appraisal of their properties, respondent spouses actually played an active part in the valuation.

According to the report of PNB credit investigator Dionisio C. Damasco, Jr. (Exh. R), 17 when respondent Edilberto Natividad bought the properties in 1975 (the year respondent spouses mortgaged them to the bank), he did so for only P10,000.00. Yet, a few months later, Edilberto Natividad obtained a loan from petitioner PNB for P34,000.00, 18 giving the same properties as collateral, now appraised at P49,000.00. The loan obtained was thus 69% of the appraised value of the collateral.

It seems that the increase in value of the properties from P10,000.00 to P49,000.00 in one year was due to their reclassification from agricultural to residential. 19 In his testimony, respondent Edilberto Natividad facetiously denied any knowledge why the Assessors' Office made a change in the classification of his properties from agricultural to residential. 20

As the person most likely to benefit from the reclassification, it is probable that he was the one who in fact declared the properties as residential to the Municipal Assessor's Office and had them assessed as such. Edilberto Natividad was formerly an appraiser of petitioner PNB. 21 More than anyone else, therefore, he knew that his chances of obtaining a substantial loan were directly related to the value of the properties he offered as collateral. In fact, he admitted that he subdivided the lots after acquiring them from Esperidion Cabanayan, Sr. and because of that the same were classified as residential. 22 The following testimony of Edilberto Natividad is revealing:

[COURT]

Q-I would like to ask this question. What was the original classification of this property before it was classified as residential property?

A-All lots there are formerly classified as agricultural lands.

Q-The question of the Court is when was it reclassified as residential.

A-I do not remember, Your Honor.

COURT:

Q-Was it immediately when you obtained the loan or was it after you obtained the loan?

A-I don't remember, Your Honor.

Q-Don't you have records counsel when the property was reclassified as residential.

ATTY. CAMITAN [counsel for petitioner PNB]:

According to the direct examination testimony of the witness, it was classified as residential when it was used as a collateral of the loan, Your Honor.

COURT:

That is what the Court is asking. . .

Q-The Court wants to know if the reclassification was effected immediately before the loan was acquired or after the loan was acquired because that is very material.

A-These lots were classified as residential before we obtained a loan as evidence[d] by the subdivision plan before we submitted to the Assessor's Office. I now remember that these lots were classified before we obtained the loan, Your Honor.

COURT:

Proceed, counsel.

ATTY. CAMITAN:

Q-Is it not true that you have classified residential in order to obtain your loan?

A-It is for the Philippine National Bank to determine whether it is approved whether they approve the loan or not . . .

ATTY. CAMITAN:

Q-After the loan was approved you received the amount, did you introduce improvements to the lots in order to obtain the loan.

A-No, I have plan in the future that these lots are for the construction of these small houses to be used by the employees of the municipality of Sta. Maria which is a project of the government to build and build. At that time we don't have the money yet but this time I can now introduce improvements like buildings, houses in that property based on the lending program of the government.

Q-Until now, no houses yet built.

A-Not yet, ma'am. 23

That the properties were classified as residential way back in 1975 but until 1989 not a single house had been built thereon and that they continued to be planted to agricultural crops like the surrounding areas which were agricultural 24highlight the irregularity of the first appraisal report (Exh. 1) 25 by PNB appraiser D.A. Candoc. This is in fact evident on the face of said report, which states "The propert[ies are] planted to tobacco . . . although [they are] ideal for residential site." Thus, if there appears to be a reason to question the reduced appraisal of the properties when they were offered for sale at auction, there is

greater reason to question their original appraisal at P49,000.00 which persuaded the bank to give Edilberto Natividad and his wife a loan of P34,000.00 which was three times the amount he paid for the properties just months earlier.

Third. Respondent spouses were benefited rather than harmed by the substantially lower reappraised value of their properties. As held in Velasquez v. Coronel: 26

. . . However, while in ordinary sales for reasons of equity a transaction may be invalidated on the ground of inadequacy of price, or when such inadequacy shocks one's conscience as to justify the courts to interfere, such does not follow when the law gives to the owner the right to redeem, as when a sale is made at public auction, upon the theory that the lesser the price the easier it is for the owner to effect the redemption. And so it was aptly said: "When there is the right to redeem, inadequacy of price should not be material, because the judgment debtor may reacquire the property or also sell his right to redeem and thus recover the loss he claims to have suffered by reason of the price obtained at the auction sale." 27

Indeed, as pointed out by petitioner bank, respondents had several options. They could have participated in the public bidding or exercised their right of redemption or sold such right to redeem or simply settled their debt. However, they did none of these things despite due notice to them. Respondents are thus to blame for their predicament. Their claim of financial distress is not an excuse to evade their clear obligation to the bank. 28

As to the amount for which respondent spouses should be held liable, the Court of Appeals said that "the remaining balance of [respondents'] loan before [petitioner] bank decided to foreclose their properties was P64,624.31, including interest, penalties, attorney's fees, and expenses of litigation." 29

This is not correct. The amount of P64,624.31 is the amount of the deficiency claim of the bank as of March 31, 1983 (Exh. D) 30 before the filing of the present complaint on April 21, 1983. 31 To the balance of P60,635.63 left after applying petitioner bank's winning bid of P7,000.00, the bank added interest, penalties, attorney's fees, and other charges totalling P3,988.68. This is in accordance with the terms of the promissory note. 32

Petitioner also asked in its complaint 33 for attorney's fees equal to 10% of the total amount due as of the time of payment, litigation expenses, and costs for purposes of the present action. The claim is proper. The proceedings for foreclosure is extrajudicial and summary in nature, while that for the deficiency is judicial. Hence, the efforts exerted by the lawyer in both should be recognized. 34 Both the deed of mortgage (Exh. B) 35 and the promissory note (Exh. A) 36provide for recovery of attorney's fees. Indeed, the latter provides that

Should it become necessary to collect this note through an attorney-at-law, I/we hereby expressly agree to pay, jointly and severally ten per cent (10%) of the total amount due on this note as attorney's fees which in no case shall be less than P100.00 exclusive of all fees allowed by law stipulated in the contract of real estate mortgage. 37

WHEREFORE, the decision of the Court of Appeals is REVERSED and respondent spouses Edilberto and Elena Natividad are ordered to pay petitioner Philippine National Bank the amount of P64,624.31 with interest thereon at the legal rate of twelve percent (12%) per annum from March 31, 1983 until fully paid and P6,462.43 in attorney's fees and expenses of litigation. No pronouncement as to costs. dctai

SO ORDERED.

Bellosillo, Quisumbing, and Buena, JJ., concur.

Puno, J., is on official leave.

SECOND DIVISION

[G.R. No. 157845. September 20, 2005.]

PHILIPPINE NATIONAL BANK, petitioner, vs. NORMAN Y. PIKE, respondent.

The Chief Legal Counsel (PNB) and Edwin B. Panganiban for petitioner.

Ifurung Law Offices for respondent.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; APPEALS; PETITION FOR REVIEW UNDER RULE 45 OF THE RULES OF COURT; LIMITED TO REVIEW OF QUESTIONS OF LAW. — Elementary is the rule that this Court is not the appropriate venue to consider anew the factual issues as it is not a trier of facts, and, it generally does not weigh anew the evidence already passed upon by the Court of Appeals. When this Court is tasked to go over once more the evidence presented by both parties, and analyze, assess and weigh them to ascertain if the trial court and the appellate court were correct in according superior credit to this or that piece of evidence of one party or the other, the Court cannot and will not do the same.

2. ID.; EVIDENCE; CREDIBILITY; FACTUAL FINDINGS OF THE COURT OF APPEALS ARE CONCLUSIVE ON THE PARTIES AND NOT REVIEWABLE BY THE SUPREME COURT. — We have oft "ruled that factual findings of the Court of Appeals are conclusive on the parties and not reviewable by this Court — and they carry even more weight when the Court of Appeals affirms the factual findings of the trial court," and in the absence of any showing that the findings complained of are totally devoid of support in the evidence on record, or that they are so glaringly erroneous as to constitute serious abuse of discretion, such findings must stand. The courts a quo are in a much better position to evaluate properly the evidence.

3. CIVIL LAW; OBLIGATIONS AND CONTRACTS; THE FIDUCIARY NATURE OF BANKING REQUIRES BANKS TO ASSUME A DEGREE OF DILIGENCE HIGHER THAN THAT OF A GOOD FATHER OF A FAMILY. — With banks, the degree of diligence required, contrary to the position of petitioner PNB, is more than that of a good father of a family considering that the business of banking is imbued with public interest due to the nature of their functions. The stability of banks largely depends on the confidence of the people in the honesty and efficiency of banks. Thus, the law imposes on banks a high degree of obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of banking. Section 2 of Republic Act No. 8791, which took effect on 13 June 2000, makes a categorical declaration that the State recognizes the "fiduciary nature of banking that requires high standards of integrity and performance." . . . The fiduciary nature of banking requires banks to assume a degree of diligence higher than that of a good father of a family. Article 1172 of the New Civil Code states that the degree of diligence required of an obligor is that prescribed by law or contract, and absent such stipulation then the diligence of a family. In every case, the depositor expects the bank to treat his account with the utmost fidelity, whether such accounts consist only of a few hundred pesos or of millions of pesos.

4. ID.; DAMAGES; MORAL DAMAGES; WHEN AWARDED. — In the case of Philippine Telegraph & Telephone Corporation v. Court of Appeals, we had the occasion to reiterate the conditions to be met in order that moral damages may be recovered. In said case we stated: "An award of moral damages would require, firstly, evidence of besmirched reputation, or physical, mental or psychological suffering sustained by the claimant; secondly, a culpable act or omission factually established; thirdly, proof that the wrongful act or omission of the defendant is the proximate cause of the damages sustained by the claimant; and fourthly, that the case is predicated on any of the instances expressed or envisioned by Articles 2219 and 2220 of the Civil Code."

5. ID.; OBLIGATIONS AND CONTRACTS; CULPA CONTRACTUAL OR BREACH OF CONTRACT; WARRANTS THE AWARD OF MORAL DAMAGES; CONDITIONS. — [I]n culpa contractual or breach of contract, as here, moral damages are recoverable only if the defendant has acted fraudulently or in bad faith, or is found guilty of gross negligence amounting to bad faith, or in wanton disregard of his contractual obligations. Verily, the breach must be wanton, reckless, malicious, or in bad faith, oppressive or abusive.

6. ID.; DAMAGES; EXEMPLARY DAMAGES AND ATTORNEY'S FEES; AWARDED IN CASE AT BAR. — The award of exemplary damages is also proper as a warning to petitioner PNB and all concerned not to recklessly disregard their obligation to exercise the highest and strictest diligence in serving their depositors. . . . [T]he aforestated grant of exemplary damages entitles respondent Pike the award of attorney's fees in the amount of P20,000.00 and the award of P10,000.00 for litigation expenses.

D E C I S I O N

CHICO-NAZARIO, J p:

This petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, seeks to reverse the Decision 1 dated 19 December 2002, and the Resolution 2 dated 02 April 2003, both of the Court of Appeals, in CA-G.R. CV No. 59389, which affirmed with modification the Decision 3 rendered by the Regional Trial Court (RTC), Branch 07 of Manila, dated 10 January 1997, in Civil Case No. 94-68821 in favor of herein respondent Norman Pike (Pike).

The case stemmed from a complaint 4 filed by herein respondent Pike for damages 5 against Philippine National Bank (PNB) on 04 January 1994.

Complainant Pike often traveled to and from Japan as a gay entertainer in said country. Sometime in 1991, he opened U.S. Dollar Savings Account No. 0265-704591-0 with herein petitioner PNB Buendia branch for which he was issued a corresponding passbook. The complaint alleged in substance that before complainant Pike left for Japan on 18 March 1993, he kept the aforementioned passbook inside a cabinet under lock and key, in his home; that on 19 April 1993, a few hours after he arrived from Japan, he discovered that some of his valuables were missing including the passbook; that he immediately reported the incident to the police which led to the arrest and prosecution of a certain Mr. Joy Manuel Davasol; that complainant Pike also discovered that Davasol made two (2) unauthorized withdrawals from his U.S. Dollar Savings Account No. 0265-704591-0, both times at the PNB Buendia branch on the following dates:

DATEAMOUNT

31 March 1993$3,500.00

05 April 19934,000.00

TOTAL$7,500.00

that on several occasions, complainant Pike went to defendant PNB's Buendia branch and verbally protested the unauthorized withdrawals and likewise demanded the return of the total withdrawn amount of U.S. $7,500.00, on the ground that he never authorized anybody to withdraw from his account as the signatures appearing on the subject withdrawal slips were clearly forgeries; that defendant PNB refused to credit said amount back to complainant's U.S. Dollar Savings Account without justifiable reason, and instead, defendant bank wrote him that it exercised due diligence in the handling of said account; and that on 06 May 1993, complainant Pike wrote defendant PNB simply to request that

the hold-account be lifted so that he may withdraw the remaining balance left in his U.S.$ Savings Account and nothing else. aCTHDA

On the other hand, defendant PNB alleged, in its Motion to Dismiss 6 of 18 April 1994, a counterstatement of facts. Its factual allegations read:

. . . On March 15, 1993 at PNB Buendia Branch, Mr. Norman Y. Pike, together with a certain Joy Davasol went to see PNB AVP Mr. Lorenzo T. Val (sic), Jr. purposely to withdraw the amount of $2,000.00. Mr. Pike also informed AVP Val that he is leaving for abroad (Japan) and made verbal instruction to honor all withdrawals to be transmitted by his Talent Manager and Choreographer, Joy Davasol who shall present pre-signed withdrawal slips bearing his (Pike's) signature. . .

On April 19, 1993, a certain Josephine Balmaceda, who claimed to be plaintiff's sister executed an affidavit . . . stating therein that they discovered today (April 19, 1993) the lost (sic) of her brother's passbook issued by PNB on account of robbery, committed in the residence/office of her brother, promptly reporting the matter to the police authorities and her brother cannot report the matter to the Bank because he was currently in Japan and therefore requesting the Bank to issue a hold-order on her brother's passbook.

But a copy of an alarm (Police) Report dated April 19, 1993 . . . stated that plaintiff (who was the one who reported the matter) after one month in Japan, he (complainant) arrived yesterday. . .

On April 26, 1993, Atty. Nathaniel Ifurung who claims to be plaintiff's counsel sent a demand letter to VP Violeta T. Suquila (then VP and Manager of PNBBuendia Branch) demanding the bank to credit back the amount of US$7,500.00 which were withdrawn on March 31, 1993 and April 5, 1993, because his client's signatures were forged and the withdrawal made thereon were unauthorized. . .

On May 5, 1993, Mr. Norman Y. Pike executed an affidavit of loss (sic) Dollar Account Passbook . . . and requested the PNB to replace the same and allow him to make withdrawals thereon. He stated that his passbook was stolen together with other valuables which he discovered only in the early morning of April 19, 1993. . .

On May 6, 1993, plaintiff Norman Y. Pike wrote a letter . . . addressed to the Manager of PNB, Buendia Branch the full contents of said letter hereto quoted as follows:

May 6, 1993

The Manager

Philippine National Bank

Buendia Branch

Paseo de Roxas cor. Gil Puyat Street

Makati, Metro Manila

Sir:

In connection with the request of my sister, Mrs. Josephine P. Balmaceda for the hold-order on my dollar savings passbook No. 265-704591-0, I am now requesting your good office to lift the same so I can withdraw the remaining balance of my passbook which was reported lost sometime in March of this year.

I also promise not to hold responsible the bank and its officers for the withdrawal made on my dollar savings passbook on March 19 and April 5, 1993 respectively as a result of the lost (sic) of my passbook.

Sgd. NORMAN Y. PIKE

Depositor

Philippine Passport

No. H918022

Issued at Manila on

Sept. 6, 1990

Place of Issuance

On the same day May 6, 1993 Plaintiff Norman Y. Pike was allowed by defendant bank to withdraw the remaining balance from his passbook . . . .

A letter dated May 18, 1993 was sent to Plaintiff's counsel . . . by PNB . . . stating that the Bank regrets that it cannot accede to such request inasmuch as the Bank exercised due diligence of a good father to his family in the handling of transactions covering the deposit account of Mr. Pike . . . . TIEHSA

On July 2, 1993, Plaintiff's counsel sent a letter to PNB Vice Pres. Suquila denying that his client made any such promise not to hold responsible the bank and its officers for the withdrawal made . . . .

A letter dated July 29, 1993 . . . was sent to Plaintiff's counsel by VP Suquila stating that plaintiff's withdrawal of the remaining balance of his account with the Bank effectively estops him from claiming on the alleged unauthorized withdrawals.

The trial court, in its decision dated 10 January 1997, made the following findings of fact:

. . . [T]hat the bank is responsible for such unauthorized withdrawals. The court is not impressed with the defense put up by the bank. Its contention that the withdrawals were authorized by the plaintiff because there was an arrangement between the bank represented by its Asst. Vice President Lorenzo Bal, Jr. and the depositor Norman Y. Pike to the effect that pre-signed withdrawal slips, that is, withdrawal slip signed by the depositor in the presence of Mr. Bal whereby it would be made to appear that it was the depositor himself who presented the same to the bank despite the fact that it was another person who presented the same should be honored by the bank cannot be sanctioned by the court. Firstly, the court is not satisfied that there was indeed such an arrangement. . . It is Mr. Bal's contention that such an arrangement although not ordinarily entered into is still a legal procedure of

the bank and is resorted to accommodate the depositors' specially honored and valued depositor at that.

xxx xxx xxx

The court compared the signatures in the questioned withdrawal slips with the known signatures of the depositor and is convinced that the signatures in the unauthorized withdrawal slips do not correspond to the true signatures of the depositor.

From the evidence that it received, the court is convinced that the bank was negligent in the performance of its duties such that unauthorized withdrawals were made in the deposit of plaintiff Norman Y. Pike. 7

The dispositive portion of the trial court's decision reads:

WHEREFORE and considering the foregoing, judgment is hereby rendered in favor of the plaintiff and against the defendant and ordering the defendant to pay the following:

1.US$7,500.00 plus interest thereon at the rate of 12% per annum until the full amount is paid;

2.P25,000.00 for and as attorney's fees;

3.P50,000.00 as moral damages and P50,000.00 as exemplary damages; and

4.Plus the costs of suit. 8

Defendant PNB's motion for reconsideration was subsequently denied by the court a quo. 9

On appeal, the Court of Appeals issued the assailed decision dated 19 December 2002, affirming the findings of the RTC that indeed defendant-appellant PNB was negligent in exercising the diligence required of a business imbued with public interest such as that of the banking industry, however, it modified the rate of interest and award for damages, to wit:

WHEREFORE, premises considered, the Decision dated January 10, 1997 issued by the Regional Trial Court of Manila, Branch 7, in Civil Case No. 94-68821, is hereby AFFIRMED with MODIFICATION, as follows:

1.Ordering appellant, the Philippine National Bank, Buendia Branch, to refund appellee the amount of $7,500.00 plus interest of 6% per annum to be computed from the date of the filing of the complaint which interest rate shall become 12% per annum from the time the judgment in this case becomes final and executory until its satisfaction; TaEIAS

2.The award for moral damages is reduced to P20,000.00; and

3.The award for exemplary damages is likewise reduced to P20,000.00.

Costs against appellant. 10

The appellate court held that:

Appellant claims that appellee personally talked to its officers to allow Joy Manuel Davasol to make withdrawals. Appellee even left pre-signed withdrawal slips before he went to Japan. However, appellant could have told appellee to authorize the withdrawal by a representative by indicating the same at the space provided at the back portion of the withdrawal slip. This operational flaw was observed by the trial court, when it ruled:

The court cannot also understand why the bank did not require the correct, proper and the usual procedure of requiring a depositor who is withdrawing the money through a representative to fill up the back portion of the withdrawal slips, which form was issued by the bank itself.

A perusal of the records discloses that appellee had previously authorized withdrawals by a representative. However, these withdrawals were properly accompanied by a "withdrawal by a representative" form aside from a handwritten request by appellee to allow such withdrawals by his representative, or a typewritten letter-request for withdrawal by a representative. Certainly, appellant lacked the due care and caution required of managers and employees of a firm engaged in so sensitive and demanding business as banking. . . .

In its desire to be exonerated from liability, appellant advances the argument that, granting negligence on its part, appellee condoned this negligence as shown in his letter dated May 6, 1993, wherein appellee purportedly undertook, not to hold the bank and its officers responsible for the unauthorized withdrawals from his account.

We do not agree. It should be emphasized that while the appellee admitted signing the letter dated May 6, 1993, he, however, denied having undertook (sic) to exonerate the appellant from liability for the unauthorized withdrawals. Appellee questioned the second paragraph of the said letter as being superimposed so that his signature overlapped the text of the second paragraph of said letter. A waiver of right, in order to be valid, should be in a language that clearly manifests his desire to do so. . . . In the instant case, appellee's filing of the instant action is inconsistent with appellant's contention that he had waived his right to question appellant's negligent act of allowing the unauthorized withdrawals from his account. 11

Defendant-appellant PNB filed a motion for reconsideration. In a Resolution dated 02 April 2003, the Court of Appeals denied said motion.

Hence, this petition.

Petitioner PNB now seeks the review of the aforequoted decision and resolution of the Court of Appeals predicated on the following issues:

I.

WHETHER OR NOT THE PRINCIPLE OF ESTOPPEL WAS NOT PROPERLY APPLIED IN THIS CASE;

II.

WHETHER OR NOT RESPONDENT HAVE SUBSTANTIALLY PROVEN THAT THE SIGNATURES APPEARING ON THE TWO (2) QUESTIONED PRE-SIGNED WITHDRAWAL SLIP FORMS ARE ALL FORGERIES IN ACCORDANCE WITH SECTION 22, RULE 132 OF THE REVISED RULES OF COURT; and

III.

WHETHER OR NOT MORAL AND EXEMPLARY DAMAGES CAN BE AWARDED AGAINST A PARTY IN GOOD FAITH. TaCDIc

Petitioner PNB contends that due to the verbal instructions 12 of respondent Pike, a valued depositor, it allowed the withdrawal by another person. Plus, the fact that said respondent withdrew the remaining balance in his US Savings Account and executed a waiver releasing petitioner PNB from any liability due to the loss of the funds should rightly negate a finding of negligence on its part. Accordingly, petitioner PNB claims that the appellate court, as well as the trial court erred in holding that the withdrawals in question were unauthorized as the signatures appearing on the subject withdrawal slips were forgeries. Petitioner PNB, therefore, argues that it should not be held liable for the amount withdrawn from the account of respondent Pike in the sum of $7,500.00, as well as for moral and exemplary damages.

A priori, it is quite evident that the petition is anchored on a plea to review or re-examine the factual conclusions reached by the trial court and affirmed by the Court of Appeals, and for this Court to hold otherwise. Whether:

1)respondent Pike's signatures appearing on the pertinent withdrawal slips used by Joy Manuel Davasol 13 to withdraw the amount of $7,500.00, were forgeries, as found by the trial court and affirmed by the Court of Appeals, or were authentic as claimed by petitioner bank; and

2)respondent Pike in fact executed a waiver absolving petitioner bank from any legal responsibility due to the unauthorized withdrawals, as maintained by petitioner bank, or the paragraph containing said waiver was intercalated by some other person, thus, amounting no waiver at all, as held by the courts a quo.

are questions of fact and not of law. Inexorably, these issues call for an inquiry into the facts and evidence on record. This, as we have so often held, we cannot do.

Elementary is the rule that this Court is not the appropriate venue to consider anew the factual issues as it is not a trier of facts, and, it generally does not weigh anew the evidence already passed upon by the Court of Appeals. 14 When this Court is tasked to go over once more the evidence presented by both parties, and analyze, assess and weigh them to ascertain if the trial court and the appellate court were correct in according superior credit to this or that piece of evidence of one party or the other, the Court cannot and will not do the same. 15 Such task is foreclosed by the rule enunciated under Section 1 of Rule 45 16 of the Rules of Court:

SECTION 1.Filing of petition with Supreme Court. — . . . The petition shall raise only questions of law 17 which must be distinctly set forth.

We have oft "ruled that factual findings of the Court of Appeals are conclusive on the parties and not reviewable by this Court — and they carry even more weight when the Court of Appeals affirms the factual findings of the trial court," 18 and in the absence of any showing that the findings complained of are totally devoid of support in the evidence on record, or that they are so glaringly erroneous as to constitute serious abuse of discretion, such findings must stand. The courts a quo are in a much better position to evaluate properly the evidence.

Finding no other alternative but to affirm their finding that petitioner PNB negligently allowed the unauthorized withdrawals subject of the case at bar, the instant petition for review must necessarily fail.

At this juncture, it bears emphasizing that negligence of banking institutions should never be countenanced. The negligence here lies in the lackadaisical attitude exhibited by employees of petitioner PNB in their treatment of respondent Pike's US Dollar Savings Account that resulted in the unauthorized withdrawal of $7,500.00. Nevertheless, though its employees may be the ones negligent, a bank's liability as an obligor is not merely vicarious but primary, as banks are expected to exercise the highest degree of diligence in the selection and supervision of their employees, 19 and having such obligation, this Court cannot ignore the circumstances surrounding the case at bar — how the employees of petitioner PNB turned their heads, nay, closed their eyes to the suspicious circumstances enfolding the two withdrawals subject of the case at bar. It may even be said that they went out of their ways to disregard standard operating procedures formulated to ensure the security of each and every account that they are handling. Petitioner PNB does not deny that the withdrawal slips used were in breach of standard operating procedures of banks in the ordinary and usual course of banking operations as testified to by one of its witnesses, Mr. Lorenzo T. Bal, Assistant Vice President of Petitioner PNB's Buendia branch, on cross-examination 20 he stated thus:

Q:Mr. Witness, when the original of Exhibit "B"      21   was presented to you for approval, how many    signatures of depositor appears thereon? IcHTAa

A:Two (2) signatures appears (sic) on the face of the withdrawal slip.Q:When it (sic) was (sic) presented to you immediately?A:Yes, sir.Q:Are you sure of that?A:Yes, sir. Because it was pre signed withdrawal slip.Q:What does the signature appear, the word recipient means?A:Received.Q:So, what you are saying is that, the depositor here signed this even before receiving the amount?A:Because before the withdrawal was made, Mr. Pike, the depositor came to the bank when he

withdrew the $2,000.00 and instructed me or requested us even the supervisor to honor all withdrawal slip.

Q:And this is a regular procedure?A:Yes, sir.Q:Are you sure of that?A:Yes, sir.Q:Do you have written manual on this particular procedure, Mr. Witness?A:Of course, that includes in the Rules and regulations of the bank.Q:Are you are (sic) are very sure of that?A:And banking is a fast transaction between the depositor and the bank.Q:And then, is the use of the back portion of the withdrawal slip . . . with a heading of authorization?A:Normally, a depositor and the bank agrees on certain terms that if you allow withdrawal from his

account, his or her account, its enough that the signature of the depositor appears on both spaces in the front side of the withdrawal slip. Even if you do not have the back portion of the withdrawal slip.

Q:You are very sure of that?A:Yes, sir.Q:And that has been done with the other withdrawal slip of Norman Pike as stated or as shown in the

Statement of Account?A:Yes, sir.Q:That withdrawal made by representative?A:Yes, sir.

From the foregoing, petitioner PNB's witness was utterly remiss in protecting the bank's client, as well as the bank itself, when he allowed an account holder to make it appear as if he was the one actually withdrawing from an account and actually receiving the withdrawn amount. Ordinarily, banks allow withdrawal by someone who is not the account holder so long as the account holder authorizes his representative to withdraw and receive from his account by signing on the space provided particularly for such transactions, usually found at the back of withdrawal slips. As fittingly found by the courts a quo, if indeed, respondent Pike signed the withdrawal slips in the presence of Mr. Lorenzo Bal, petitioner PNB's AVP at its Buendia branch, why did he not call respondent Pike's attention and refer him to the space provided for authorizing representatives to

withdraw from and receive the proceeds of such withdrawal? Or, at the very least, sign or initial the same so that he could identify the pre-signed withdrawal slips made by Mr. Pike? DECcAS

Q:You are also saying that on March 15, 1993, you likewise met Joy Manuel Dabasol?A:Yes, sir.Q:And you (sic) also saying on March 15, 1993, you also met Norman Pike, the depositor,A:Yes, sir.Q:And when did you first met (sic) Norman      Pike   ?A:March 15 when he withdrew $2,000.00.Q:That was the first time?A:First time, yes.Q:And Mr. Norman      Pike      was already transacting with you long before that day, is this correct? For    

how long was he transacting with you?A:That was my first time.Q:That was the first time. What I mean is, that he was transacting with the      PNB   , Buendia Branch long    

before you met him?A:Maybe.

xxx xxx xxxQ:And the withdrawal made on April 5, 1993 which you approved, you did not look at Exhibit "C", the

Savings Signature Card Individual?A:We do not look at that, that is kept in the vault.Q:Yes or no?A:No, sir.

xxx xxx xxxQ:And Mr. witness, Exhibit "C-1" 22 which is being kept at your vault, also contains a picture?A:Yes, sir.Q:And the picture of the depositor?A:Yes, sir.Q:And are you familiar with the identity of the depositor Norman      Pike   ?A:What particular identity?Q:His appearance?A:He is gay looking fellow.COURT:Answer. You are familiar with his physical appearance?A:Not so much. Because there are so much depositor      (sic)      in the bank   . 23 [Emphasis ours.]

By his own testimony, the witness negated the very reason for the bank's bizarre "accommodation" of the alleged verbal request of respondent Pike — that he was a "valued client." From the aforequoted, it appears that the witness, Lorenzo Bal, was not even reasonably familiar with respondent Pike, yet, he was ready, willing and able to accommodate the verbal request of said depositor. Worse still, the witness still approved the withdrawal transaction without asking for any proof of identification for the reason that: 1) Davasol was in possession of a pre-signed withdrawal slip; and 2) the witness "recognized" the signature of respondent Pike — even after admitting that he did not bother to counter check the signature on the slip with the specimen signature card of respondent Pike and that he met respondent Pike just once so that he cannot seem to recall what the latter looks like. The ensuing quoted testimony of the same witness will justify a finding of negligence amounting to bad faith, to wit:

Q:And you also met Joy Manuel Dabasol on March 15? ACcHIaA:Yes, sir.Q:And can you describe Joy Manuel Dabasol?A:I cannot recall his face but then he is a Talent manager, because there are so many depositors in the

bank.xxx xxx xxx

Q:Mr. witness, you are saying that Mr. Pike, the depositor gave you verbal authority to honor withdrawal by Joy Manuel Dabasol?

A:Yes, sir.Q:Why did you not require then that Mr.      Pike      instead sign the authorization portion and that the name    

of Joy Manuel Dabasol appear thereon with his signature?xxx xxx xxx

A:I required Mr. Norman      Pike      to sign the withdrawal slip on the face of the withdrawal slip   .Q:But not the authorization portion of the said withdrawal slip?

xxx xxx xxxA:No, because that is sufficient already.Q:And is this your normal procedure, Mr. witness? This particular procedure that you conducted?A:I don't think so.Q:Mr. witness, when — on April 5, 1993, when Joy Dabasol came to the office and according to you, 

you do not remember him, is that correct?A:I cannot recall his face.

xxx xxx xxxQ:And he just showed you a withdrawal slip, is this correct?A:Yes, on April 5.Q:Did you require him to produce any Identification Card, yes or no?A:No.Q:And how did you know then that it was Joy Dabasol who was making the withdrawal on April 5?A:Because the presigned withdrawal slip was presented to me.Q:Is that all your basis?A:Yes, sir. Because his signature appears.

xxx xxx xxxQ:Mr. witness, this alleged authority given to you by Norman Pike to honor withdrawal by Joy Manuel

Dabasol, was that in writing?A:It was verbally requested.Q:And that is SPO (sic) of PNB, Buendia Branch to accept verbal authorities? aDcETCA:Yes.Q:Is that Standard Operating Procedure?A:It is not SPO, but when you knew the client, Your Honor, you have to honor also the trust and

confidence. Let us say if you. . .Q:According to you, you met Norman      Pike      only on March 15, 1993 and immediately you allowed him    

to withdraw through pre-signed withdrawal slip?A:Yes, Your Honor. Because a depositor requested you to honor his signature, you have to do that or 

else will . . . and besides the request is for purpose of expediency, Your Honor. Because most often than that, he is out of the country, in Japan. And his Talent Manager is the one managing the recruiting agency. The money will be used in the operating expenses.

xxx xxx xxxQ:You did not even bother to look at the Savings Signature Card Individual, yes or no?A:No, sir. 24 [Emphases supplied.]

Having admitted that pre-signed withdrawal slips do not constitute the normal procedure with respect to withdrawals by representatives should have already put petitioner PNB's employees on guard. Rather than readily validating and permitting said withdrawals, they should have proceeded more cautiously. Clearly, petitioner bank's employee, Lorenzo T. Bal, an Assistant Vice President at that, was exceedingly careless in his treatment of respondent Pike's savings account.

From the foregoing, the evidence clearly showed that the petitioner bank did not exercise the degree of diligence that it ought to have exercised in dealing with their clients.

With banks, the degree of diligence required, contrary to the position of petitioner PNB, is more than that of a good father of a family considering that the business of banking is imbued with public interest due to the nature of their functions. The stability of banks largely depends on the confidence of the people in the honesty and efficiency of banks. Thus, the law imposes on banks a high degree of obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of banking. Section 2 of Republic Act No. 8791, 25 which took effect on 13 June 2000, makes a categorical

declaration that the State recognizes the "fiduciary nature of banking that requires high standards of integrity and performance." 26

Though passed long after the unauthorized withdrawals in this case, the aforequoted provision is a statutory affirmation of Supreme Court decisions already in esse at the time of such withdrawals. We elucidated in the 1990 case of Simex International, Inc. v. Court of Appeals, 27 that "the bank is under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship." 28

Likewise, in the case of The Consolidated Bank and Trust Corporation v. Court of Appeals, 29 we clarified that said fiduciary relationship means that the bank's obligation to observe "highest standards of integrity and performance" is deemed written into every deposit agreement between a bank and its depositor. The fiduciary nature of banking requires banks to assume a degree of diligence higher than that of a good father of a family. Article 1172 of the New Civil Code states that the degree of diligence required of an obligor 30 is that prescribed by law or contract, and absent such stipulation then the diligence of a family. In every case, the depositor expects the bank to treat his account with the utmost fidelity, whether such accounts consist only of a few hundred pesos or of millions of pesos. 31

Anent the issue of the propriety of the award of damages in this case, petitioner PNB asseverates that there was no evidence to prove that respondent Pike "suffered anguish, embarrassment and mental sufferings" 32 due to its acts in allowing the alleged unauthorized withdrawals. And, having relied on the instructions of a valued depositor, petitioner PNB likewise avers that its actions were made in good faith, for this reason, there is no factual basis for said award. CASaEc

Petitioner PNB's assertions fail to impress us.

The award of moral and exemplary damages is left to the sound discretion of the court, and if such discretion is well exercised, as in this case, it will not be disturbed on appeal. 33 In the case of Philippine Telegraph & Telephone Corporation v. Court of Appeals, 34 we had the occasion to reiterate the conditions to be met in order that moral damages may be recovered. In said case we stated:

An award of moral damages would require, firstly, evidence of besmirched reputation, or physical, mental or psychological suffering sustained by the claimant; secondly, a culpable act or omission factually established; thirdly, proof that the wrongful act or omission of the defendant is the proximate cause of the damages sustained by the claimant; and fourthly, that the case is predicated on any of the instances expressed or envisioned by Articles 2219 35 and 2220 36of the Civil Code.

Specifically, in culpa contractual or breach of contract, as here, moral damages are recoverable only if the defendant has acted fraudulently or in bad faith, 37 or is found guilty of gross negligence amounting to bad faith, 38 or in wanton disregard of his contractual obligations. 39 Verily, the breach must be wanton, reckless, malicious, or in bad faith, oppressive or abusive. 40

There is no reason to disturb the trial court's finding of petitioner bank's employees' negligence in their treatment of respondent Pike's account. In the case on hand, the Court of Appeals sustained, and rightly so, that an award of moral damages is warranted. For, as found by said appellate court, citing the case of Prudential Bank v. Court of Appeals, 41 "the bank's negligence is a result of lack of due care and caution required of managers and employees of a firm engaged in so sensitive and demanding business, as banking, hence, the award of P20,000.00 as moral damages, is proper.

The award of exemplary damages is also proper as a warning to petitioner PNB and all concerned not to recklessly disregard their obligation to exercise the highest and strictest diligence in serving their depositors.

Finally, the aforestated grant of exemplary damages entitles respondent Pike the award of attorney's fees in the amount of P20,000.00 and the award of P10,000.00 for litigation expenses. 42

WHEREFORE, the instant petition is DENIED. The assailed Decision dated 19 December 2002, and the Resolution dated 02 April 2003, both of the Court of Appeals, in CA-G.R. CV No. 59389, which affirmed with modification the Decision rendered by the Regional Trial Court (RTC), Branch 07 of Manila, dated 10 January 1997, in Civil Case No. 94-68821, are hereby AFFIRMED with the MODIFICATION that petitioner PNB is directed to pay respondent Pike additional 1) P20,000.00 representing attorney's fees; and 2) P10,000.00 representing expenses of litigation. Costs against petitioner PNB. cIaCTS

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 108245 November 25, 1994

MANOLO P. SAMSON, petitioner, vs.COURT OF APPEALS, SANTOS & SONS, INC., and ANGEL SANTOS, respondents.

Clara Dumandan-Singh for petitioner.

Paterno A. Catacutan for private respondents.

PUNO, J.:

Petitioner MANOLO P. SAMSON prays for the reversal of the Decision of the Court of Appeals, dated November 27, 1992, 1 modifying the decision of the Regional Trial Court of Pasig, Branch 157, dated November 29, 1990, and absolving private respondent Angel Santos from liability for the damages sustained by petitioner.

The antecedent facts, as borne by the records, are as follows:

The subject matter of this case is a commercial unit at the Madrigal Building, located at Claro M. Recto Avenue, Sta. Cruz, Manila. The building is owned by Susana Realty Corporation and the subject premises was leased to private respondent Angel Santos. The lessee's haberdashery store, Santos & Sons, Inc., occupied the premises for almost twenty (20) years on a yearly basis. 2 Thus, the lease contract in force between the parties in the year 1983 provided that the term of the lease shall be one (1) year, starting on August 1, 1983 until July 31, 1984. 3

On June 28, 1984, the lessor Susana Realty Corporation, through its representative Mr. Jes Gal R. Sarmiento, Jr., informed respondents that the lease contract which was to expire on July 31, 1984 would not be renewed. 4

Nonetheless, private respondent's lease contract was extended until December 31, 1984. 5 Private respondent also continued to occupy the leased premises beyond the extended term.

On February 5, 1985, private respondent received a letter 6 from the lessor, through its Real Estate Accountant Jane F. Bartolome, informing him of the increase in rentals, retroactive to January 1985, pending renewal of his contract until the arrival of Ms. Ma. Rosa Madrigal (one of the owners of Susana Realty).

Four days later or on February 9, 1985, petitioner Manolo Samson saw private respondent in the latter's house and offered to buy the store of Santos & Sons and his right to lease the subject premises. 7 Petitioner was advised to return after a week.

On February 15, 1985, petitioner returned to private respondent's house to confirm his offer. On said occasion, private respondent presented petitioner with a letter containing his counter proposal, thus:

MANOLO SAMSONMarikina, Metro Manila

Sir:

In line with our negotiation to sell our rights in the Madrigal building at Recto, Rizal Avenue, I propose the following:

1. The lease contract between Santos and Sons, Inc. and Madrigal was impliedly renewed. It will be formally renewed this monthly (sic) when Tanya Madrigal arrives.

2. To avoid breach of contract with Madrigal, I suggest that you acquire all our shares in Santos and Sons, Inc.

3. I will answer and pay all obligations of Santos and Sons, Inc. as of February 28, 1985.

Very truly yours,

Angel C. Santos

Petitioner affixed his signature on the letter-proposal signifying his acceptance. 8 They agreed that the consideration for the sale of the store and leasehold right of Santos & Sons, Inc. shall be P300,000.00.

On February 20, 1985, petitioner paid P150,000.00 to private respondent representing the value of existing improvements in the Santos & Sons store. The parties agreed that the balance of P150,000.00 shall be paid upon the formal renewal of the lease contract between private respondent and Susana Realty. It was also a condition precedent to the transfer of the leasehold right of private respondent to petitioner. 9

In March 1985, petitioner began to occupy the Santos & Sons store. He utilized the store for the sale of his own goods. 10

All went well for a few months. In July 1985, however, petitioner received a notice from Susana Realty, addressed to Santos & Sons, Inc., directing the latter to vacate the leased premises on or before July 15, 1985. 11 Private respondent failed to renew his lease over the premises and petitioner was forced to vacate the same on July 16, 1985.

Petitioner then filed an action for damages against private respondent. He imputed fraud and bad faith against private respondent when the latter stated in his letter-proposal that his lease contract with Susana Realty has been impliedly renewed. Petitioner claimed that this misrepresentation induced him to purchase the store of Santos & Sons and the leasehold right of private respondent.

In defense, respondent alleged that their agreement was to the effect that the consideration for the sale was P300,000.00, broken down as follows: P150,000.00 shall be for the improvements in the store, and the balance of P150,000.00 shall be for the sale of the leasehold right of Santos & Sons over the subject premises. The balance shall be paid only after the formal renewal of the lease contract and its actual transfer to petitioner.

Trial on the merits ensued. On November 29, 1990, the trial court rendered a decision 12 in favor of petitioner. The dispositive portion reads:

WHEREFORE, AND IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered in favor of plaintiff Manolo P. Samson and against defendants Santos and Sons, Inc., and Angel C. Santos, ordering the said defendants to pay jointly and severally unto the plaintiff:

1. The sum of P150,000.00, representing the cash advance payment for the store and the right to occupy its leased premises subject matter of the sale involved, with interest thereon at the legal rate from the filing of the complaint on November 5, 1985 until the same is fully paid;

2. The sum of P70,000.00 representing the cost of additional improvements of the store sold, also with legal interest from November 5, 1985 until the full payment thereof;

3. The sum of P150,000.00, representing the loss that the plaintiff suffered from the sale at bargain prices of the goods taken out of the store, with legal interest thereon from the (d)ate of this decision until the same is fully paid;

4. The sum of P100,000.00 representing the profits which plaintiff failed to realize from the sale of the goods referred to above, with legal interest thereon from the date of the decision until said amount is fully paid;

5. The amounts of P100,000.00 and P50,000.00 as moral and exemplary damages, respectively, also with legal interest thereon, from the date of this judgment until fully paid; and

6. The sum of P45,000.00 as and for attorney's fees and expenses of litigation, in addition to judicial costs.

On the defendants' counterclaim, the plaintiff is ordered to return to the defendants the latter's steel filing cabinet, adding machine, typewriter and all its unused sales invoices, receipts and blank checks, if the plaintiff still has any of the said papers or documents.

SO ORDERED. 13

Private respondent appealed to the Court of Appeals. In a Decision dated November 27, 1992, 14 the appellate court modified the decision of the trial court after finding that private respondent did not exercise fraud or bad faith in its dealings with petitioner. The dispositive portion of the impugned decision reads:

WHEREFORE, the appealed decision is hereby MODIFIED by reducing the amounts the trial court awarded to appellee Manolo P. Samson in that appellants Santos & Sons, Inc. and Angel C. Santos are ordered to pay appellee, by way of reimbursement, the P150,000.00 which the latter gave appellants as advance payment for their store and lease right with legal interest to be reckoned from the

promulgation date of this decision; and AFFIRMED with respect to the trial court's judgment ordering appellee to return to appellants the latter's filing cabinet, adding machine, typewriter, and all their unused sales invoices, receipts and blank checks, if appellee still has any of these documents. No costs.

SO ORDERED. 15

Hence this petition for review with the following assigned errors:

I

WHETHER OR NOT THE COURT OF APPEALS ERRED IN DISREGARDING THE FOLLOWING FACTUAL FINDINGS OF THE TRIAL COURT:

1. THAT RESPONDENTS DELIBERATELY AND FRAUDULENTLY CONCEALED FROM THE PETITIONER THE FACT THAT THE LEASE ON THE SUBJECT STORE PREMISES HAD ALREADY EXPIRED AND WOULD NO LONGER BE RENEWED BY THE LESSOR.

2. THAT SOLELY BY REASON OF RESPONDENTS' FRAUDULENT CONDUCT AND BAD FAITH, PETITIONER EXERCISING THE DILIGENCE REQUIRED UNDER THE CIRCUMSTANCES, THE LATTER INCURRED DAMAGES AND LOSSES.

II

WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING RESPONDENTS FREE FROM LIABILITY TO PETITIONER FOR THE DAMAGES THE LATTER HAD INCURRED ON ACCOUNT OF THE RESPONDENTS' BAD FAITH.

The pivotal issue in the case at bench is whether or not private respondent Angel Santos committed fraud or bad faith in representing to petitioner that his contract of lease over the subject premises has been impliedly renewed by Susana Realty. Undoubtedly, it was this representation which induced petitioner to enter into the subject contract with private respondent.

We find the petition devoid of merit.

Bad faith is essentially a state of mind affirmatively operating with furtive design or with some motive of ill-will. 16 It does not simply connote bad judgment or negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of wrong. 17 Bad faith is thus synonymous with fraud and involves a design to mislead or deceive another, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive.18

In contracts, the kind of fraud that will vitiate consent is one where, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to. 19 This is known as dolo causante or causal fraud which is basically a deception employed by one party prior to or simultaneous to the contract in order to secure the consent of the other.

Petitioner claims that their agreement was that the amount of P300,000.00 is the consideration for the transfer of private respondent's leasehold right to him and he paid P150,000.00 as downpayment therefor. He insists that private respondent acted in bad faith in assuring him that his lease contract with Susana Realty has been impliedly renewed and would be formally renewed upon the arrival of Tanya Madrigal (representative of Susana Realty). As evidence of private respondent's bad faith, petitioner stresses that private respondent himself admitted that prior to February 15, 1985, he was informed by his lawyer that he could not yet sell his lease right to petitioner for his lease over the premises has not been renewed by Susana Realty Corporation.

After carefully examining the records, we sustain the finding of public respondent Court of Appeals that private respondent was neither guilty of fraud nor bad faith in claiming that there was implied renewal of his contract of lease with Susana Realty. The records will bear that the original contract of lease between the lessor Susana Realty and the lessee private respondent was for a period of one year, commencing on August 1, 1983 until July 31, 1984. Subsequently, however, private respondent's lease was extended until December 31, 1984. At this point, it was clear that the lessor had no intention to renew the lease contract of private respondent for another year. However, on February 5, 1985, the lessor, thru its Real Estate Accountant, sent petitioner a letter 20 of even date, worded as follows:

February 5, 1985

Mr. Angel Santos1609-1613 C.M. Recto AvenueSta. Cruz, Manila

Dear Mr. Santos:

This is to notify you that the rentals for the 1609-1613 C.M. Recto Avenue, Sta. Cruz, Manila, which you are leasing with (sic) us has been increased from P77.81 to P100.00 per square meter retroactive January 1985 (as you have not vacated the place) pending renewal of your contract until the arrival of Miss Ma. Rosa A.S. Madrigal.

Thus, your new rate will be PESOS: FOURTEEN THOUSAND TWO HUNDRED FIFTY ONLY (P14,250.00) since you are occupying One Hundred Forty-Two and 50/100 square meters.

Please note that we are charging the same for everybody and they all agreed to pay the new rate.

We do expect your full cooperation with regards (sic) to this matter.

Very truly yours,

(Sgd.) JANE F. BARTOLOMEAccountant-Real Estate

Clearly, this letter led private respondent to believe and conclude that his lease contract was impliedly renewed and that formal renewal thereof would be made upon the arrival of Tanya Madrigal. This much was admitted by petitioner himself when he testified during cross-examination that private respondent initially told him of the fact that his lease contract with Susana Realty has already expired but he was anticipating its formal renewal upon the arrival of Madrigal. 21 Thus, from the start, it was known to both parties that, insofar as the agreement regarding the transfer of private respondent's leasehold right to petitioner was concerned, the object thereof relates to a future right. 22 It is a conditional contract recognized in civil law, 23 the

efficacy of which depends upon an expectancy — the formal renewal of the lease contract between private respondent and Susana Realty.

The records would also reveal that private respondent's lawyer informed him that he could sell the improvements within the store for he already owned them but the sale of his leasehold right over the store could not as yet be made for his lease contract had not been actually renewed by Susana Realty. Indeed, it was precisely pursuant to this advice that private respondent and petitioner agreed that the improvements in the store shall be sold to petitioner for P150,000.00 24 while the leasehold right shall be sold for the same amount of P150,000.00, payable only upon the formal renewal of the lease contract and the actual transfer of the leasehold right to petitioner. 25The efficacy of the contract between the parties was thus made dependent upon the happening of this suspensive condition.

Moreover, public respondent Court of Appeals was correct when it faulted petitioner for failing to exercise sufficient diligence in verifying first the status of private respondent's lease. We thus quote with approval the decision of the Court of Appeals when it ruled, thus:

When appellant Angel C. Santos said that the lease contract had expired but that it was impliedly renewed, that representation should have put appellee on guard. To protect his interest, appellee should have checked with the lessor whether that was so, and this he failed to do; or he would have simply deferred his decision on the proposed sale until Miss Madrigal's arrival, and this appellee also failed to do. In short, as a buyer of the store and lease right in question — or as a buyer of any object of commerce for that matter — appellee was charged with the obligation of caution aptly expressed in the universal maxim caveat emptor. 26

Indeed, petitioner had every opportunity to verify the status of the lease contract of private respondent with Susana Realty. As held by this Court in the case of Caram, Jr. v. Laureta, 27 the rule caveat emptor requires the purchaser to be aware of the supposed title of the vendor and he who buys without checking the vendor's title takes all the risks and losses consequent to such failure. In the case at bench, the means of verifying for himself the status of private respondent's lease contract with Susana Realty was open to petitioner. Nonetheless, no effort was exerted by petitioner to confirm the status of the subject lease right. 28 He cannot now claim that he has been deceived.

In sum, we hold that under the facts proved, private respondent cannot be held guilty of fraud or bad faith when he entered into the subject contract with petitioner. Causal fraud or bad faith on the part of one of the contracting parties which allegedly induced the other to enter into a contract must be proved by clear and convincing evidence. This petitioner failed to do.

IN VIEW WHEREOF, the appealed decision is hereby AFFIRMED in toto. Costs against petitioner.

SO ORDERED.

Narvasa, C.J., Regalado and Mendoza, JJ., concur.

EN BANC[G.R. No. L-25906. May 28, 1970.]

PEDRO D. DIOQUINO, plaintiff-appellee, vs. FEDERICO LAUREANO, AIDA DE LAUREANO and JUANITO LAUREANO, defendants-appellants.Pedro D. Dioquino in his own behalf.

Arturo E. Valdomero, Jose L. Almario and Rolando S. Relova for defendants-appellants.

SYLLABUS

1.CIVIL LAW; OBLIGATIONS AND CONTRACTS; FORTUITOUS EVENT; NO RESPONSIBILITY THEREFOR. — The express language of Article 1174 of the present Civil Code which is a restatement of Article 1105 of the Old Civil Code, except for the addition of the nature of an obligation requiring the assumption of risk reads thus: "Except in cases expressly specified by law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which though foreseen were inevitable.

2.ID.; ID.; ID.; ID.; BASIS. — Its basis, as Justice Moreland stressed, is the Roman law principle major casus est, cui humana infirmintas resistere non potest.

3.ID.; ID.; ID.; CONCERNING OBLIGATION ARISING FROM CONTRACT. — Authorities of repute are in agreement, more specifically considering an obligation arising from contract "that some extraordinary circumstance independent of the will of the obligor, or of his employees, is an essential element of a caso fortuito." If it could be shown that such indeed was the case, liability is ruled out. There is no requirement of "diligence beyond what human care and foresight can provide."

4. ID.; ID.; ID.; INSTANT CASE. — Where, as in the instant case, the car borrowed by defendant from plaintiff and driven by the latter's driver and with defendant as the sole passenger while on the way to the P.C. Barracks at Masbate, was stoned by some mischievous boys and its windshield was broken, said defendant should not be liable for such damages for what happened was clearly unforeseen. It was fortuitous event resulting in a loss which must be borne by the owner of the car. An element of reasonableness in the law would be manifestly lacking if, on the circumstances as thus disclosed, legal responsibility could be imputed to an individual in the situation of defendant Laureano. Article 1174 of the Civil Code guards against the possibility of its being visited with such reproach.

5.ID.; ID.; ID.; ID.; ARTICLE 1174 PRESENT CIVIL CODE CONSTRUED. — The very wording of Article 1174, Civil Code of the Philippines dispels any doubt that what is therein contemplated is the resulting liability even if caused by a fortuitous event where the party charged may be considered as having assumed the risk incident in the nature of the obligation to be performed.

6.ID.; ID.; ID.; EXPLAINED. — Caso fortuito or force majeure (which in law are identical in so far as they exempt an obligor from liability) by definition, are extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which,

though foreseen, were or anticipated, as is commonly believed, but it must be one impossible to foresee or to avoid. The mere difficulty to foresee the happening is not impossibility to foresee the same: "un hecho no constituye caso fortuito por la sola circunstancia de que su existencia haga mas dificilo mas onerosa la accion diligente del presente ofensor." (Peirano Facio, Responsibilidad Extra-contractual, p. 465; Mezand, Traite dela Responsibilite Civile, Vol. 2, Sec. 1569)

7.ID.; ID.; ID.; ASSUMPTION OF RISK; CASE OF REPUBLIC vs. LUZON STEVEDORING CORP. DISTINGUISHED FROM INSTANT CASE. — In the case of Republic vs. Luzon Stevedoring Corp., appellant took all the precautions necessary for safety however, these very precautions completely destroy the appellant's defense force majeure. In that instant case then, the risk was quite evident and the nature of the obligation such that a party could rightfully be deemed as having assumed it. It is not so in the instant case. It is anything but that. If the lower court, therefore, were duly mindful of what this particular legal provision contemplates, it could not have reached the conclusion that defendant Federico Laureano could beheld liable. To repeat, that was clear error on its part.

8.ID.; ID.; RIGHT TO DAMAGES FOR WRONG INCLUSION OF PARTIES IN COMPLAINT; NOT ALLOWED IN INSTANT CASE. — As regards appellant's position to have plaintiff pay damages for having joined appellant's wife and father-in-law in the complaint, We are not disposed to view the matter thus: "Considering the equities of the situation, plaintiff having suffered a pecuniary loss which, while resulting from a fortuitous event, perhaps would not have occurred at all had not defendant Federico Laureano borrowed his car, we feel that he is not to be penalized further by his mistaken view of the law including them in his complaint.

9.REMEDIAL LAW; ACTIONS; COSTS; PART OF SOCIAL BURDEN. — Well worth paraphrasing is the thought expressed in a United States Supreme Court decision as to be existence of an abiding and fundamental principle that the expenses and annoyance of litigation from part of the social burden of living in a society which seeks to attain social control through law.

D E C I S I O N

FERNANDO, J p:

The present lawsuit had its origin in a relationship, if it could be called such, the use of a car owned by plaintiff Pedro D. Dioquino by defendant Federico Laureano, clearly of a character casual and temporary but unfortunately marred by an occurrence resulting in its windshield being damaged. A stone thrown by a boy who, with his other companions, was thus engaged in what undoubtedly for them must have been mistakenly thought to be a none-too-harmful prank did not miss its mark. Plaintiff would hold defendant Federico Laureano accountable for the loss thus sustained, including in the action filed the wife, Aida de Laureano, and the father, Juanito Laureano. Plaintiff prevailed in the lower court, the judgment however going only against the principal defendant, his spouse and his father being absolved of any responsibility. Nonetheless, all three of them appealed directly to us, raising two questions of law, the first being the failure of the lower court to dismiss such a suit as no liability could have been incurred as a result of a fortuitous event and the other being its failure to award damages against plaintiff for the unwarranted inclusion of the wife and the father in this litigation. We agree that the lower court ought to have dismissed the suit, but it does not follow that thereby damages for the inclusion of the above two other parties in the complaint should have been awarded appellants.

The facts as found by the lower court follow: "Attorney Pedro Dioquino, a practicing lawyer of Masbate, is the owner of a car. On March 31, 1964, he went to the office of the MVO, Masbate, to register the same. He met the defendant Federico Laureano, a patrol officer of said MVO office, who was waiting for a jeepney to take him to the office of the Provincial Commander. PC, Masbate. Attorney Dioquino requested the defendant Federico Laureano to introduce him to one of the clerks in the MVO Office, who could facilitate the registration of his ear and the request was graciously attended to. Defendant Laureano rode on the car of Atty. Dioquino on his way to the P.C. Barracks at Masbate. While about to reach their destination, the car driven by plaintiff's driver and with defendant Federico Laureano as the sole passenger, was stoned by

some 'mischievous boys,' and its windshield was broken. Defendant Federico Laureano chased the boys and he was able to catch one of them The boy was taken to Atty. Dioquino [and] admitted having thrown the stone that broke the car's windshield. The plaintiff and the defendant Federico Laureanowith the boy returned to the P.C. barracks and the father of the boy was called, but no satisfactory arrangements [were] made about the damage to the windshield."1

It was likewise noted in the decision now on appeal: "The defendant Federico Laureano refused to file any charges against the boy and his parents because he thought that the stone-throwing was merely accidental and that it was due to force majeure. So he did not want to take any action and after delaying the settlement, after perhaps consulting a lawyer, the defendant Federico Laureano refused to pay the windshield himself and challenged that the case be brought to court for judicial adjudication. There is no question that the plaintiff tried to convince the defendant, Federico Laureano just to pay the value of the windshield and he even came to the extent of asking the wife to convince her husband to settle the matter amicably but the defendant Federico Laureano refused to make any settlement, clinging [to] the belief that he could not be held liable because a minor child threw a stone accidentally on the windshield and therefore, the same was due to force majeure."2

1.The law being what it is, such a belief on the part of defendant Federico Laureano was justified. The express language of Art. 1174 of the present Civil Code which is a restatement of Art. 1105 of the Old Civil Code, except for the addition of the nature of an obligation requiring the assumption of risk, compels such a conclusion. It reads thus: "Except in cases expressly specified by the law, or when it is otherwise declared by stipulation or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable." Even under the old Civil Code then, as stressed by us in the first decision dating back to 1908, in an opinion by Justice Mapa, the rule was well-settled that in the absence of a legal provision or an express covenant, "no one should be held to account for fortuitous cases." 3 Its basis, as Justice Moreland stressed, is the Roman law principle major casus est, cui humana infirmitas resistere non potest. 4 Authorities of repute are in agreement, more specifically concerning an obligation arising from contract "that some extraordinary circumstance independent of the will of the obligor, or of his employees, is an essential element of a caso fortuito." 5 If it could be shown that such indeed was the case, liability is ruled out. There is no requirement of "diligence beyond what human care and foresight can provide." 6

The error committed by the lower court in holding defendant Federico Laureano liable appears to be thus obvious. Its own findings of fact repel the motion that he should be made to respond in damages to the plaintiff for the broken windshield. What happened was clear]y unforeseen. It was a fortuitous event resulting in a loss which must be borne by the owner of the car. An element of reasonableness in the law would be manifestly lacking if, on the circumstances as thus disclosed, legal responsibility could be imputed to an individual in the situation of defendant Laureano. Art. 1174 of the Civil Code guards against the possibility of its being visited with such a reproach. Unfortunately, the lower court was of a different mind and thus failed to heed its command.

It was misled, apparently, by the inclusion of the exemption from the operation of such a provision of a party assuming the risk, considering the nature of the obligation undertaken. A more careful analysis would have led the lower court to a different and correct interpretation. The very wording of the law dispels any doubt that what is therein contemplated is the resulting liability even if caused by a fortuitous event where the party charged may be considered as having assumed the risk incident in the nature of the obligation to be performed It would be an affront, not only to the logic but to the realities of the situation, if in the light of what transpired, as found by the lower court, defendant Federico Laureano could be held as bound to assume a risk of this nature. There was no such obligation on his part.

Reference to the leading case of Republic v. Luzon Stevedoring Corp. 7 will illustrate when the nature of the obligation is such that the risk could be considered as having been assumed. As noted in the opinion of Justice J.B.L. Reyes, speaking for the Court: "The appellant strongly stresses the precautions taken by it on the day in question: that it assigned two of its most powerful tugboats to tow down river its barge L-1892; that it assigned to the task the more competent and experienced among its patrons, had the towlines, engines and equipment double-checked and inspected; that it instructed its patrons to take extra precautions; and concludes that it had done all it was called to do, and that the accident, therefore, should be held due to force 

majeure or fortuitous event." Its next paragraph explained clearly why the defense of caso fortuito or force majeure does not lie. Thus: "These very precautions, however, completely destroy the appellant's defense. For caso fortuitoor force majeure (which in law are identical in so far as they exempt an obligor from liability) by definition, are extraordinary events not foreseeable or avoidable, 'events that could not be foreseen, or which, though foreseen, were inevitable' (Art. 1174, Civ. Code of the Philippines). It is, therefore, not enough that the event should not have been foreseen or anticipated, as is commonly believed, but it must be one impossible to foresee or to avoid. The mere difficulty to foresee the happening is not impossibility to foresee the same: 'un hecho no constituye caso fortuito por la sola circunstancia de que su existencia haga mas dificil o mas onerosa la accion diligente dal presenta ofensor' (Peirano Facio, Responsibilidad Extra-contractual, p. 465; Mazeaud, Traite de la Responsabilite Civile, Vol. 2, sec. 1569). The very measures adopted by appellant prove that the possibility of danger was not only foreseeable, but actual]y foreseen, and was not caso fortuito."

In that case then, the risk was quite evident and the nature of the obligation such that a party could rightfully be deemed as having assumed it. It is not so in the case before us. It is anything but that. If the lower court, therefore, were duly mindful of what this particular legal provision contemplates, it could not have reached the conclusion that defendant Federico Laureano could be held liable. To repeat, that was clear error on its part.

2.Appellants do not stop there. It does not suffice for them that defendant Federico Laureano would be freed from liability. They would go farther. They would take plaintiff to task for his complaint having joined the wife, Aida de Laureano, and the father, Juanito Laureano. They were far from satisfied with the lower court's absolving these two from any financial responsibility. Appellants would have plaintiff pay damages for their inclusion in this litigation. We are not disposed to view the matter thus.

It is to be admitted, of course, that plaintiff, who is a member of the bar, ought to have exercised greater care in selecting the parties against whom he would proceed. It may be said that his view of the law that would consider defendant Federico Laureano liable on the facts as thus disclosed, while erroneous, is not bereft of plausibility. Even the lower court, mistakenly of course, entertained a similar view. For plaintiff, however, to have included the wife and the father would seem to indicate that his understanding of the law is not all that it ought to have been.

Plaintiff apparently was not entirely unaware that their inclusion in the suit filed by him was characterized by unorthodoxy. He did attempt to lend some color of justification by explicitly setting forth that the father was joined as party defendant in the case as he was the administrator of the inheritance of an undivided property to which defendant Federico Laureano could lay claim and that the wife was likewise proceeded against because the conjugal partnership would be made to respond for whatever liability would be adjudicated against the husband.

It cannot be said that such an attempt at justification is impressed with a high persuasive quality. Far from it. Nonetheless, mistaken as plaintiff apparently was, it cannot be concluded that he was prompted solely by the desire to inflict needless and unjustified vexation on them. Considering the equities of the situation, plaintiff having suffered a pecuniary loss which, while resulting from a fortuitous event, perhaps would not have occurred at all had not defendant Federico Laureano borrowed his car, we feel that he is not to be penalized further by his mistaken view of the law in including them in his complaint. Well-worth paraphrasing is the thought expressed in a United States Supreme Court decision as to the existence of an abiding and fundamental principle that the expenses and annoyance of litigation form part of the social burden of living in a society which seeks to attain social control through law. 8

WHEREFORE, the decision of the lower court of November 2, 1965 insofar as it orders defendant Federico Laureano to pay plaintiff the amount of P30,000.00 as damages plus the payment of costs, is hereby reversed. It is affirmed insofar as it dismissed the case against the other two defendants, Juanito Laureano and Aida de Laureano, and declared that no moral damages should be awarded the parties. Without pronouncement as to costs.

EN BANC

[G.R. No. L-20761. July 27, 1966.]

LA MALLORCA, petitioner, vs. HONORABLE COURT OF APPEALS, MARIANO BELTRAN, ET AL., respondents.

G. E. Yabut, R. Monterey and M. C. Lagman for petitioner.

Achmed Garcia for respondents.

SYLLABUS

1. COMMON CARRIERS; CARRIER - PASSENGER RELATION CONTINUES UNTIL PASSENGER HAS REASONABLE TIME TO LEAVE CARRIER'S PREMISES. — The relation of carrier and passenger does not cease at the moment the passenger alights from the carrier's vehicle at a place selected by the carrier at the point of destination, but continues until the passenger has had a reasonable time or a reasonable opportunity to leave the carrier's premises (Ormond vs. Hayes, 60 Tex. 180, cited in 10 C.J. 626).

2. ID.; ID.; "REASONABLE TIME" CONSTRUED. — What is a reasonable time or a reasonable delay is to be determined from all the circumstances. Thus, a person who, after alighting from a train, walks along the station platform, is considered still a passenger (Keefe vs. Boston, etc. R. Co., 142 Mass. 251, 7 N.E. 874). So also, where a passenger has alighted at his destination and is proceeding by the usual way to leave the company's premises, but before actually doing so is halted by the report that his brother, a fellow passenger, has been shot, and he in good faith and without intent of engaging in the difficulty, returns to relieve his brother, he is deemed reasonably and necessarily delayed and thus continues to be a passenger entitled as such to the protection of the railroad and company and its agents (Layne vs. Chesapeake, etc., R. Co., 68 W. Va. 213, 69 S.E. 700, 31 L.R.A., [N.S.] 414).

3. ID.; ID.; CARRIER'S RESPONSIBILITY FOR NEGLIGENCE; CASE AT BAR. — In the present case, the father returned to the bus to get one of his baggages which was not unloaded when he end other members of his family alighted from the bus. The victim, one of his minor daughters, must have followed her father. However, although the father was still on the running board of the bus awaiting for the conductor to hand to him the bag or bayong, the bus started to run, so that even he (the father) had to jump down from the moving vehicle. It was at this instance that the child, who must be near the bus, was run over and killed. Held: In the circumstances, it cannot be claimed that the carrier's agent had exercised the "utmost diligence" of a "very cautious person" required by Article 1755 of the Civil Code to be observed by a common carrier in the discharge of its obligation to transport safely its passengers. In the first place, the driver, although stopping the bus, did not put off the engine. Secondly, he started to run the bus even before the bus conductor gave him the signal to go and while the latter was still unloading a baggage of some passengers. The presence of said passengers near the bus was not unreasonable and they are, therefore, to be considered still as passengers of the carrier, entitled to the protection under their contract of carriage.

4. ID.; ID.; ID.; AVERMENT FOR QUASI-DELICT, ALTHOUGH INCOMPATIBLE WITH CLAIM UNDER CONTRACT OF CARRIAGE, PERMISSIBLE. — The inclusion of the averment for quasi-delict in appellee's complaint in the court a quo, while incompatible with the other claim under the contract of carriage, is permissible under Section 2, Rule 8 of the new Rules of Court, which allows a plaintiff to allege causes of action in the alternative, be they compatible with each other or not, to the end that the real matter in controversy may be resolved and determined (Nelayan, et al. vs. Nelayan, et al., 109 Phil., 183).

5. ID.; ID.; ID.; ID.; EFFECT OF PRESENTATION OF PROOF OF CARRIER'S NEGLIGENCE; CASE AT BAR. - The presentation of proof of the negligence of its employee gave rise to the presumption that the defendant employer did not exercise the diligence of a good father of the family in the selection and supervision of its employees. This presumption not having been overcome, the employer must be adjudged pecuniarily liable for the death of the passenger.

6. ID.; ID.; ID.; ID.; ID.; SUFFICIENT ALLEGATION IN THE COMPLAINT; CASE AT BAR. — The allegation in the complaint to the effect that "the death of Raquel Beltran, plaintiffs' daughter, was caused by the negligence and want of exercise of the utmost diligence of a very cautious person on the part of the defendants and their agent," sufficiently pleads the culpa or negligence upon which the claim was predicated. This allegation was proved when it was established during the trial that the driver, even before receiving the proper signal from the conductor, and while there were still persons on the running board of the bus and near it, started to run off the vehicle.

7. APPEALS; WHAT CAN BE PASSED UPON ON APPEAL; CASE AT BAR. — Generally, the appellate court can only pass upon and consider questions or issues raised and argued in appellant's brief. In the case at bar, plaintiffs did not appeal from that portion of the judgment of the trial court awarding them only P3,000.00 as damages for the death of their daughter. Neither did they point out in their brief in the Court of Appeals that the award was inadequate, or that the inclusion of that figure was merely a clerical error, in order that the matter may be treated as an exception to the general rule (Section 7, Rule 51, new Rules of Court). The Court of Appeals therefore erred in raising the amount of the award.

D E C I S I O N

BARRERA, J .:

La Mallorca seeks the review of the decision of the Court of Appeals in CA- G. R. No. 23267-R, holding it liable for quasi-delict and ordering it to pay to respondents Mariano Beltran, et al. P6,000.00 for the death of his minor daughter Raquel Beltran, plus P400.00 as actual damages. cdrep

The facts of the case, as found by the Court of Appeals, briefly are:

"On December 20, 1953, at about noontime, plaintiffs, husband and wife, together with their minor daughters, namely Milagros, 13 years old, Raquel, about 4-1/2 years old, and Fe, over 2 years old, boarded the Pambusco Bus No. 352, bearing plate TPU No. 757 (1953 Pampanga), owned and operated by the defendant, at San Fernando, Pampanga, bound for Anao, Mexico, Pampanga. At the time, they were carrying with them four pieces of baggages containing their personal belongings. The conductor of the bus who happened to be a half-brother of plaintiff Mariano Beltran, issued three tickets (Exhs. A, B, & C) covering the full fares of the plaintiff and their eldest child, Milagros. No fare was charged on Raquel and Fe, since both were below the height at which fare is charged in accordance with the appellant's rules and regulations.

"After about an hour's trip, the bus reached Anao, whereat it stopped to allow the passengers bound therefor, among whom were the plaintiffs and their children to get off. With respect to the group of the plaintiffs, Mariano Beltran, then carrying some of their baggages, was the first to get down the bus, followed by his wife and his children. Mariano led his companions to a shaded spot on the left pedestrians side of the road about four or five meters away from the vehicle. Afterwards, he returned to the bus in controversy to get his other bayong, which he had left behind, but in so doing, his daughter Raquel followed him unnoticed by her father. While said Mariano Beltran was on the running board of the bus waiting for the conductor to hand him his bayong which he left under one of its seats near the door; the bus, whose motor was not shut off while unloading, suddenly started moving forward, evidently to resume its trip, notwithstanding the fact that the conductor has not given the driver the customary signal to start, since said conductor was still attending to the baggage left behind by Mariano Beltran. Incidentally, when the bus was again placed into a complete stop, it had travelled about ten meters from the point where the plaintiffs had gotten off.

"Sensing that the bus was again in motion, Mariano Beltran immediately jumped from the running board without getting his bayong from the conductor. He landed on the side of the road almost in front of the shaded place where he left his wife and children. At that precise time, he saw people beginning to gather around the body of the child lying prostrate on the ground, her skull, crushed, and without life. The child was none other than his daughter Raquel, who was run over by the bus in which she rode earlier together with her parents.

"For the death of their said child, the plaintiffs commenced the present suit against the defendant seeking to recover from the latter an aggregate amount of P6,000 to cover moral damages and actual damages sustained as a result thereof and attorney's fees. After trial on the merits the court below rendered the judgment in question."

On the basis of these facts, the trial court found defendant liable for breach of contract of carriage and sentenced it to pay P3,000.00 for the death of the child and P400.00 as compensatory damages representing burial expenses and costs. LLpr

On appeal to the Court of Appeals, La Mallorca claimed that there could not be a breach of contract in the case, for the reason that when the child met her death, she was no longer a passenger of the bus involved in the incident and, therefore, the contract of carriage had already terminated. Although the Court of Appealssustained this theory, it nevertheless found the defendant-appellant guilty of quasi- delict and held the latter liable for damages, for the negligence of its driver, in accordance with Article 2180 of the Civil Code. And, the Court of Appeals did not only find the petitioner liable, but increased the damages awarded the plaintiffs-appellees to P6,000.00, instead of P3,000.00 granted by the trial court.

In its brief now before us, La Mallorca contends that the Court of Appeals erred (1) in holding it liable for quasi- delict, considering that respondents' complaint was one for breach of contract, and (2) in raising the award of damages from P3,000.00 to P6,000.00 although respondents did not appeal from the decision of the lower court.

Under the facts as found by the Court of Appeals we have to sustain the judgment holding petitioner liable for damages for the death of the child, Raquel Beltran. It may be pointed out that although it is true that respondent Mariano Beltran, his wife, and their children (including the deceased child) had alighted from the bus at a place designated for disembarking or unloading of passengers, it was also established that the father had to return to the vehicle (which was still at a stop) to get one of his bags or bayong that was left under one of the seats of the bus. There can be no controversy that as far as the father is concerned, when he returned to the bus for his bayong which was not unloaded, the relation of passenger and carrier between him and the petitioner remained subsisting. For, the relation of carrier and passenger does not necessarily cease where the latter, after alighting from the car, aids the carrier's servant or employee in removing his baggage from the car. 1The issue to be determined here is whether as to the child, who was already led by the father to a place about 5 meters away from the bus, the liability of the carrier for her safety under the contract of carriage also persisted. LexLib

It has been recognized as a rule that the relation of carrier and passenger does not cease at the moment the passenger alights from the carrier's vehicle at a place selected by the carrier at the point of destination, but continues until the passenger has had a reasonable time or a reasonable opportunity to leave the carrier's premises. And, what is a reasonable time or a reasonable delay within this rule is to be determined from all the circumstances. Thus, a person who, after alighting from a train, walks along the station platform is considered still a passenger. 2 So also, where a passenger has alighted at his destination and is proceeding by the usual way to leave the company's premises, but before actually doing so is halted by the report that his brother, a fellow passenger, has been shot, and he in good faith and without intent of engaging in the difficulty, returns to relieve his brother, he is deemed reasonably and necessarily delayed and thus continues to be a passenger entitled as such to the protection of the railroad and company and its agents. 3

In the present case, the father returned to the bus to get one of his baggages which was not unloaded when they alighted from the bus. Raquel, the child that she was, must have followed the father. However, although the father was still on the running board of the bus awaiting for the conductor to hand him the bag or bayong,the bus started to run, so that even he (the father) had to jump down from the moving vehicle. It was at this instance that the child, who must be near the bus, was run over and killed. In the circumstances, it cannot be claimed that the carrier's agent had exercised the "utmost diligence" of a "very cautious person" required by Article 1755 of the Civil Code to be observed by a common carrier in the discharge of its obligation to transport safely its passengers. In the first place, the driver, although stopping the bus, nevertheless did not put off the engine. Secondly, he started to run the bus even before the bus conductor gave him the signal to go and while the latter was still unloading part of the baggages of the passengers Mariano Beltran and family. The presence of said passengers near the bus was not unreasonable and they are, therefore, to be considered still as passengers of the carrier, entitled to the protection under their contract of carriage.

But even assuming arguendo that the contract of carriage has already terminated, herein petitioner can be held liable for the negligence of its driver, as ruled by theCourt of Appeals, pursuant to Article 2180 of the Civil Code. Paragraph 7 of the complaint, which reads —

"That aside from the aforesaid breach of contract, the death of Raquel Beltran, plaintiff's daughter, was caused by the negligence and want of uxorious of the utmost diligence of a very cautious person on the part of the defendants and their agent, necessary to transport plaintiffs and their daughter safely as far as human and care and foresight can provide in the operation of their vehicle."

is clearly an allegation for quasi-delict. The inclusion of this averment for quasi-delict, while incompatible with the other claim under the contract of carriage, is permissible under Section 2 of Rule 8 of the New Rules of Court, which allows a plaintiff to allege causes of action in the alternative, be they compatible with each other or not, to the end that the real matter in controversy may be resolved and determined. 4

The plaintiffs sufficiently pleaded the culpa or negligence upon which the claim was predicated when it was alleged in the complaint that "the death of Raquel Beltran, plaintiffs' daughter, was caused by the negligence and want of exercise of the utmost diligence of a very cautious person on the part of the defendants and their agent." This allegation was also proved when it was established during the trial that the driver, even before receiving the proper signal from the conductor, and while there were still persons on the running board of the bus and near it, started to run off the vehicle. The presentation of proof of

the negligence of its employee gave rise to the presumption that the defendant employer did not exercise the diligence of a good father of the family in the selection and supervision of its employees. And this presumption, as the Court of Appeals found, petitioner had failed to overcome. Consequently, petitioner must be adjudged pecuniarily liable for the death of the child Raquel Beltran.

The increase of the award of damages from P3,000.00 to P6,000.00 by the Court of Appeals, however, cannot be sustained. Generally, the appellate court can only pass upon and consider questions or issues raised and argued in appellant's brief. Plaintiffs did not appeal from that portion of the judgment of the trial court awarding them only P3,000.00 damages for the death of their daughter. Neither does it appear that, as appellees in the Court of Appeals, plaintiffs have pointed out in their brief the inadequacy of the award, or that the inclusion of the figure P3,000.00 was merely a clerical error, in order that the matter may be treated as an exception to the general rule. 5 Herein petitioner's contention, therefore, that the Court of Appeals committed error in raising the amount of the award for damages is, evidently, meritorious. cdrep

WHEREFORE, the decision of the Court of Appeals is hereby modified by sentencing the petitioner to pay to the respondents Mariano Beltran, et al., the sum of P3,000.00 for the death of the child, Raquel Beltran, and the amount of P400.00 as actual damages. No costs in this instance. So ordered.

FIRST DIVISION

[G.R. No. L-46558 : July 31, 1981.]

PHILIPPINE AIR LINES, INC., Petitioner, vs. THE COURT OF APPEALS and JESUS V. SAMSON, Respondents.

D E C I S I O N

GUERRERO, J.:

This is a petition for review on Certiorari of the decision of the Court of Appeals 1 dated April 18, 1977, affirming with modification the decision of the Court of First Instance of Albay in Civil Case No. 1279, entitled “Jesus V. Samson, plaintiff, vs. Philippine Air Lines, Inc., defendant,” for damages.

The dispositive portion of the trial court’s decision reads:

“WHEREFORE, for all the foregoing considerations, judgment is hereby rendered in favor of the plaintiff and against the defendant ordering the defendant to pay the plaintiff, the following sums: P1988,000.00 as unearned income or damages; P50,000.00 for moral damages; P20,000.00 as attorney’s fees and P5,000.00 as expenses of litigation, or a total of P273,000.00. Costs against the defendant.”

The appellate court modified the above decision, to wit:

“However, Plaintiff-Appellee, who has been deprived of his job since 1954, is entitled to the legal rate of interest on the P198,000.00 unearned income from the filing of the complaint cranad(Sec. 8, Rule 51, Rules of Court).

WHEREFORE, with the modification indicated above, the judgment appealed from is affirmed, with costs against defendant-appellant.”

The complaint filed on July 1, 1954 by plaintiff Jesus V. Samson, private respondent herein, averred that on January 8, 1951, he flew as co-pilot on a regular flight from Manila to Legaspi with stops at Daet, Camarines Norte and Pili, Camarines Sur, with Captain Delfin Bustamante as commanding pilot of a C-47 plane belonging to defendant Philippine Air Lines, Inc., now the herein petitioner; that on attempting to land the plane at Daet airport, Captain Delfin Bustamante due to his very slow reaction and poor judgment overshot the airfield and as a result, notwithstanding the diligent efforts of the plaintiff co-pilot to avert an accident, the airplane crashlanded beyond the runway; that the jolt caused the head of the plaintiff to hit and break through

the thick front windshield of the airplane causing him severe brain concussion, wounds and abrasions on the forehead with intense pain and suffering cranad(par. 6, complaint).:onad

The complaint further alleged that instead of giving plaintiff expert and proper medical treatment called for by the nature and severity of his injuries, defendant simply referred him to a company physician, a general medical practitioner, who limited the treatment to the exterior injuries without examining the severe brain concussion of plaintiff cranad(par. 7, complaint); that several days after the accident, defendant Philippine Air Lines called back the plaintiff to active duty as co-pilot, and inspite of the latter’s repeated request for expert medical assistance, defendant had not given him anycranad(par. 8, complaint); that as a consequence of the brain injury sustained by plaintiff from the crash, he had been having periodic dizzy spells and had been suffering from general debility and nervousness cranad(par. 9, complaint); that defendant airline company instead of submitting the plaintiff to expert medical treatment, discharged the latter from its employ on December 21, 1953 on grounds of physical disability, thereby causing plaintiff not only to lose his job but to become physically unfit to continue as aviator due to defendant’s negligence in not giving him the proper medical attentioncranad(pars. 10-11, complaint). Plaintiff prayed for damages in the amount of P180,000.00 representing his unearned income, P50,000.00 as moral damages, P20,000.00 as attorney’s fees and P5,000.00 as expenses, or a total of P255,000.00.

In its answer filed on July 28, 1954, defendant PAL denied the substantial averments in the complaint, alleging among others, that the accident was due solely and exclusively to inevitable unforeseen circumstances whereby plaintiff sustained only superficial wounds and minor injuries which were promptly treated by defendant’s medical personnel cranad(par. 5, answer); that plaintiff did not sustain brain injury or cerebral concussion from the accident since he passed the annual physical and medical examination given thereafter on April 24, 1951; that the headaches and dizziness experienced by plaintiff were due to emotional disturbance over his inability to pass the required up-grading or promotional course given by defendant company cranad(par. 6, answer), and that, as confirmed by an expert neuro-surgeon, plaintiff was suffering-from neurosis and in view of this unfitness and disqualification from continuing as a pilot, defendant had to terminate plaintiff’s employment cranad(pars. 7, 9, answer).

Further, defendant alleged that by the very nature of its business as a common carrier, it is bound to employ only pilots who are proficient and in good mental, emotional and physical condition; that the pilot, Captain Delfin Bustamante, was a competent and proficient pilot, and although he was already afflicted with a tumor of the nasopharynx even before the accident of January 8, 1951, the Civil Aeronautics Administration, in passing upon the fitness of pilots, gave Capt. Bustamante a waiver of physical standards to enable him to retain his first class airman certificate since the affliction had not in the least affected his proficiency cranad(pars. 16-17, answer). By way of counterclaim, defendant prayed for P10,000.00 as expenses for the litigation.

On March 25, 1958, defendant filed a Motion to Dismiss on the ground that the complaint is essentially a Workmen’s Compensation claim, stating a cause of action not cognizable within the general jurisdiction of the court. The Motion to Dismiss was denied in the order of April 14, 1958. After the reception of evidence, the trial court rendered on January 15, 1973 the decision, the dispositive portion of which has been earlier cited.

The defendant Philippine Air Lines, Inc. appealed the decision to the Court of Appeals as being contrary to law and unsupported by the evidence. It raised as errors of the trial court cranad(a) the holding that the damages allegedly suffered by plaintiff are attributable to the accident of January 8, 1951 which was due to the negligence of defendant in having allowed Capt. Delfin Bustamante to continue flying despite his alleged slow reaction and poor judgment; cranad(b) the finding that defendant was negligent in not having given plaintiff proper and adequate expert medical treatment and assistance for the injuries allegedly sustained in the accident of January 8, 1951; andcranad(c) in ordering defendant to pay actual or compensatory damages, moral damages and attorney’s fees to the plaintiff.

On April 18, 1977, the Court of Appeals rendered its decision affirming the judgment of the lower court but modified the award of damages by imposing legal rate of interest on the P198,000.00 unearned income from the filing of the complaint, citing Sec. 8, Rule 51 of the Rules of Court.

Its motion for reconsideration of the above judgment having been denied, Philippine Air Lines, Inc. filed this instant petition for Certiorari on the ground that the decision is not in accord with law or with the applicable jurisprudence, aside from its being replete with findings in the nature of speculation, surmises and conjectures not borne out by the evidence on record thereby resulting to misapprehension of facts and amounting to a grave abuse of discretion cranad(p. 7, Petition).

Petitioner raises the fundamental question in the case at bar as follows: Is there a causal connection between the injuries suffered by private respondent during the accident on 8 January 1951 and the subsequent “periodic dizzy spells, headache and

general debility” of which private respondent complained every now and then, on the one hand, and such “periodic dizzy spells, headache and general debility” allegedly caused by the accident and private respondent’s eventual discharge from employment, on the other? PAL submits that respondent court’s award of damages to private respondent is anchored on findings in the nature of speculations, surmises and conjectures and not borne out by the evidence on record, thereby resulting in a misapprehension of facts and amounting to a grave abuse of discretion.

Petitioner’s submission is without merit.

As found by the respondent court, the following are the essential facts of the case:

“It appears that plaintiff, a licensee aviator, was employed by defendant a few years prior to January 8, 1951 as a regular co-pilot on a guaranteed basic salary of P750.00 a month. He was assigned to and/or paired with pilot Delfin Bustamante.

Sometime in December 1950, he complained to defendant through its authorized official about the slow reaction and poor judgment of pilot Delfin Bustamante. Notwithstanding said complaint, defendant allowed the pilot to continue flying.

On January 8, 1951, the two manned the regular afternoon flight of defendant’s plane from Manila to Legaspi, with stops at Daet, Camarines Norte, and Pili, Camarines Sur. Upon making a landing at Daet, the pilot, with his slow reaction and poor judgment, overshot the airfield and, as a result of and notwithstanding diligent efforts of plaintiff to avert an accident, the airplane crash-landed beyond the runway into a mangrove. The jolt and impact caused plaintiff to hit his head upon the front windshield of the plane thereby causing his brain concussions and wounds on the forehead, with concomittant intense pain.

Plaintiff was not given proper medical attention and treatment demanded by the nature and severity of his injuries. Defendant merely referred him to its clinic attended by general practitioners on his external injuries. His brain injury was never examined, much less treated. On top of that negligence, defendant recalled plaintiff to active duty as a co-pilot, completely ignoring his plea for expert medical assistance.

Suffering periodic dizzy spells, headache and general debility, plaintiff every now and then complained to defendant. To make matters worst for plaintiff, defendant discharged him from his employment on December 21, 1953. In consequence, plaintiff has been beset with additional worries, basically financial. He is now a liability instead of a provider, of his family.

On July 1, 1954, plaintiff filed a complaint for damages. Defendant vainly sought to dismiss the complaint after filing an answer. Then, the judgment and this appeal.”

Continuing, the respondent Court of Appeals further held:

“There is no question about the employment of plaintiff by defendant, his age and salary, the overshooting by pilot Bustamante of the airfield and crashlanding in a mangrove, his hitting his head on the front windshield of the plane, his intermittent dizzy spells, headache and general debility for which he was discharged from his employment on December 21, 1953. As the lower court aptly stated:

‘From the evidence adduced by the parties, the Court finds the following facts to be uncontroverted: That the plaintiff Jesus V. Samson, on January 8, 1951 and a few years prior thereto, December 21, 1953, was a duly licensed pilot employed as a regular co-pilot of the defendant with assignment in its domestic air service in the Philippines; that on January 8, 1951, the defendant’s airplane met an accident in crashlanding at the Daet Airport, Camarines Norte by overshooting the runway and reaching the mangroves at the edge of the landing strip; that the jolt caused plaintiff’s head to hit the front windshield of the airplane causing him to suffer wounds and abrasion on the forehead; that the defendant, instead of giving the plaintiff expert and proper medical treatment called for by the nature and severity of the injuries of the plaintiff, simply referred him to the clinic of the defendant’s physicians who are only general medical practitioners and not brain specialists; that the defendant’s physicians limited their treatment to the exterior injuries on the forehead of the plaintiff and made no examination of the severe concussion of the brain of the plaintiff; that the Medical Director and Flight Surgeon of the defendant were not able to definitely determine the cause of the complaint of the plaintiff as to the periodic attack of dizziness, spells and headache; that due to this laxity of the defendant’s physician and the continuous

suffering of the ailment of the plaintiff complained of, he demanded for expert medical assistance for his brain injury and to send him to the United States, which demand was turned down and in effect denied by the defendant; that instead the defendant referred the plaintiff to a neurologist, Dr. Victor Reyes; that from the time that said accident occurred on January 21, 1953, he was ordered grounded on several occasions because of his complaint of dizzy spells and headache; that instead of submitting the plaintiff to expert medical treatment as demanded by him and denied by the defendant, he was discharged from its employment on December 21, 1953 on the ground of physical disability, and that the plaintiff, at the time when the defendant’s plane met the accident, up to the time he was discharged, was regularly employed as a co-pilot and receiving a basic salary of P750.00 a month plus extra pay for flying time, and bonuses amounting to P300.00 a month.’

Even defendant-appellant itself admits as not controverted the following facts which generally admit what have been stated above as not controverted.

“In the case at bar, the following facts are not the subject of controversy:

‘(1) First, that from July 1950 to 21 December 1953, plaintiff was employed with defendant company as a first officer or co-pilot and served in that capacity in defendant’s domestic services.

(2) Second, that on January 1951, plaintiff did fly on defendant’s PI-C 94, as first officer or co-pilot, with the late Capt. Delfin Bustamante in command as pilot; that while making a landing at the Daet airport on that date, PI-C 94 did meet an accident as stated above.

(3) Third, that at or about the time of the discharge from defendant company, plaintiff had complained of “spells of dizziness,” “headaches” and “nervousness”, by reason of which he was grounded from flight duty. In short, that at that time, or approximately from November 1953 up to the date of his discharge on 21 December 1953, plaintiff was actually physically unfit to discharge his duties as pilot.

(4) Fourth, that plaintiff’s unfitness for flight duty was properly established after a thorough medical examination by competent medical experts.’cralaw cranad(pp. 11-12, appellant’s brief)

hence, there can hardly be an issue, factual, legal or medical.”

Taking exception from “the rest of the essential facts of the case as found by the respondent court” PAL claims said facts are not fully borne out by the evidence on record and insists that the injuries suffered by private respondent during the accident on January 8, 1951 were superficial in nature; that the “periodic spells, headache, and general debility” complaint of every now and then by private respondent subsequent to the Jan. 8, 1951 incident were due to emotional disturbances and that no negligence can be attributed to Capt. Delfin Bustamante much less to PAL for the occurrence on January 8, 1951, hence PAL cannot be held liable for damages.

Petitioner claims absence of any causal connection between private respondent’s superficial injuries and his alleged subsequent “periodic spells, headache and general debility,” pointing out that these subsequent ailments were found by competent physician, including an expert neuro-surgeon, to be due to emotional disturbances insights the conclusions of Dr. Trajano V. Bernardo that respondent’s complaints were “psychosomatic symptoms” on the basis of declarations made by respondent himself, which conclusions are supported by similar diagnosis made by Drs. Damaceno J. Ago and Villaraza stating that respondent Samson was suffering from neurosis as well as the report of Dr. Victor Reyes, a neurological specialist, indicating that the symptoms were probably, most probably due to psychogenic factors and have no organic basis.

In claiming that there is no factual basis for the finding of the respondent court that the crash-landing caused respondent’s “brain concussion . cra ., with concomittant intense pain, for on the contrary, testimonial evidence establish the superficiality of the injuries sustained by respondent during the accident of January 8, 1951,” petitioner quotes portions of the testimony of Dr. Manuel S. Sayas, who declared that he removed the band-aid on the forehead of respondent and that he found out after removal that the latter had two contussed superficial wounds over the supra orbiter regions or just above the eyes measuring one centimeter long and one millimeter deep. He examined and found his blood pressure normal, no discharges from the nose and ears. Dr. Trajano V. Bernardo also testified that when he examined respondent Samson three days after the accident, the wound was already healed and found nothing wrong with his ears, nose and throat so that he was declared fit for duty after the sixth day.

Petitioner goes further. It contends that there is no causal connection between respondent’s superficial injuries sustained during the accident on January 8, 1951 and plaintiff’s discharge from employment with PAL on December 21, 1953. According to PAL, it was the repeated recurrence of respondent’s neurasthenic symptoms cranad(dizzy spells, headache, nervousness) which prompted PAL’s Flight Surgeon, Dr. Bernardo, to recommend that plaintiff be grounded permanently as respondent was “psychologically unfit to resume his duties as pilot.” PAL concludes that respondent’s eventual discharge from employment with PAL was effected for absolutely valid reasons, and only after he was thoroughly examined and found unfit to carry out his responsibilities and duties as a pilot.:onad

We agree with the respondent court in finding that the dizzy spells, headache and general debility of private respondent Samson was an after-effect of the crash-landing and We find that such holding is supported by substantial evidence, which We quote from the court’s decision, to wit:

“Defendant would imply that plaintiff suffered only superficial wounds which were treated and not brain injury. It would, by the opinion of its company doctors, Dr. Bernardo and Dr. Reyes, attribute the dizzy spells and headache to organic or as phychosomatic, neurasthenic or psychogenic, which we find outlandishly exaggerated.

That plaintiff’s condition as psychosomatic rather than organic in nature is allegedly confirmed by the fact that on six cranad(6) separate occasions after the accident he passed the required CAA physical examination for airman’s certificate. cranad(Exhs. 78, 79, 80, 81, 83 and 92). We noticed, however, that there were other similar physical examinations conducted by the CAA on the person of plaintiff the report on which were not presented in evidence. Obviously, only those which suited defendants cause were hand-picked and offered in evidence.

We hesitate to accept the opinion of the defendant’s two physicians, considering that Dr. Bernardo admittedly referred to Dr. Reyes because he could not determine the cause of the dizzy spells and headache and the latter admitted that ‘it is extremely hard to be certain of the cause of his dizzy spells,’ and suggested a possibility that it ‘was due to postraumatic syndrome, evidently due to the injuries suffered by the plaintiff in hitting the forehead against the windshield of the plane during the accident.’ Judgment are not based on possibilities.

The admitted difficulty of defendant’s doctors in determining the cause of the dizzy spells and headache cannot be a sound basis for finding against the plaintiff and in favor of defendant. Whatever it might be, the fact is that such dizzy spells, headache and general debility was an after-effect of the crash-landing. Be it brain injury or psychosomatic, neurasthenic or psychogenic, there is no gainsaying the fact that it was caused by the crash-landing. As an effect of the cause, not fabricated or concocted, plaintiff has to be indemnified. The fact is that such effect caused his discharge.

We are prone to believe the testimony of the plaintiff’s doctors.

Dr. Morales, a surgeon, found that blood was coming from plaintiff’s ears and nose. He testified that plaintiff was suffering from cerebral concussion as a result of traumatic injury to the brain caused by his head hitting on the windshield of the plane during the crash-landing cranad(Exhibit “G”).

Dr. Conrado Aramil, a neurologist and psychiatrist with experience in two hospitals abroad, found abnormality reflected by the electroencephalogram examination in the frontal area on both sides of plaintiff’s head cranad(Exhibits “K”, “K-1”).

The opinion of these two specialist renders unnecessary that of plaintiff’s wife who is a physician in her own right and because of her relation to the plaintiff, her testimony and opinion may not be discussed here, although her testimony is crystallized by the opinions of Dr. Ador Dionisio, Dr. Marquez, Dr. Jose O. Chan, Dr. Yambao and Dr. Sandico.

Even the doctors presented by defendant admit vital facts about plaintiff’s brain injury. Dr. Bernardo admits that due to the incident, the plaintiff continuously complained of his fainting spells, dizziness and headache everytime he flew as a co-pilot and everytime he went to defendant’s clinic no less than 25 times cranad(Exhibits “15” to “36”), that he complained of the same to Dr. Reyes; that he promised to help send plaintiff to the United States for expert medical assistance provided that whatever finding thereat should not be attributed to the crash-landing incident to which plaintiff did not agree and that plaintiff was completely ignored by the defendant in his plea for expert medical assistance. They admitted that they could not determine definitely the cause of the fainting spells, dizziness and headache, which justifies the demand for expert medical assistance.”

We also find the imputation of gross negligence by respondent court to PAL for having allowed Capt. Delfin Bustamante to fly on that fateful day of the accident on January 8, 1951 to be correct, and We affirm the same, duly supported as it is by substantial evidence, clearly established and cited in the decision of said court which states as follows:

“The pilot was sick. He admittedly had tumor of the nasopharynx cranad(nose). He is now in the Great Beyond. The spot is very near the brain and the eyes. Tumor on the spot will affect the sinus, the breathing, the eyes which are very near it. No one will certify the fitness to fly a plane of one suffering from the disease.

“. cra . The fact First Pilot Bustamante has a long standing tumor of the Nasopharynx for which reason he was grounded since November 1947 is admitted in the letter cranad(Exh. 69-A) of Dr. Bernardo to the Medical Director of the CAA requesting waiver of physical standards. The request for waiver of physical standards is itself a positive proof that the physical condition of Capt. Bustamante is short of the standard set by the CAA. The Deputy Administrator of the CAA granted the request relying on the representation and recommendation made by Dr. Bernardo cranad(See Exh. 69). We noted, however, that the request cranad(Exh. 69-A) says that ‘it is believed that his continuing to fly as a co-pilot does not involve any hazard.’cralaw cranad(Italics supplied). Flying as a First Officer entails a very different responsibility than flying as a mere co-pilot. Defendant requested the CAA to allow Capt. Bustamante to fly merely as a co-pilot and it is safe to conclude that the CAA approved the request thus allowing Bustamante to fly only as a co-pilot. For having allowed Bustamante to fly as a First Officer on January 8, 1951, defendant is guilty of gross negligence and therefore should be made liable for the resulting accident.

As established by the evidence, the pilot used to get treatments from Dr. Sycangco. He used to complain of pain in the face more particularly in the nose which caused him to have sleepless nights. Plaintiff’s observation of the pilot was reported to the Chief Pilot who did nothing about it. Captain Carbonel of the defendant corroborated plaintiff of this matter. The complaint against the slow reaction of the pilot at least proved the observation. The observation could be disregarded. The fact that the complaint was not in writing does not detract anything from the seriousness thereof, considering that a miscalculation would not only cause the death of the crew but also of the passengers.

One month prior to the crash-landing, when the pilot was preparing to land in Daet, plaintiff warned him that they were not in the vicinity of Daet but above the town of Ligao. The plane hit outside the airstrip. In another instance, the pilot would hit the Mayon Volcano had not plaintiff warned him. These more than prove what plaintiff had complained of. Disregard thereof by defendant is condemnable.

To bolster the claim that Capt. Bustamante has not suffered from any kind of sickness which hampered his flying ability, appellant contends that for at least one or more years following the accident of January 8, 1951, Capt. Bustamante continued to fly for defendant company as a pilot, and did so with great skill and proficiency, and without any further accident or mishap, citing tsn. pp. 756-765, January 20, 1965. We have painstakingly perused the records, particularly the transcript of stenographic notes cited, but found nothing therein to substantiate appellant’s contention. Instead, We discovered that the citation covers the testimony of Dr. Bernardo on the physical condition of Bustamante and nothing about his skills or proficiency to fly nor on the mishaps or accidents, matters which are beyond Dr. Bernardo’s competence anyway.

Assuming that the pilot was not sick or that the tumor did not affect the pilot in managing the plane, the evidence shows that the overshooting of the runway and crash-landing at the mangrove was caused by the pilot for which acts the defendant must answer for damages caused thereby. And for this negligence of defendant’s employee, it is liable cranad(Joaquin vs. Aniceto, 12 SCRA 308). At least, the law presumes the employer negligent imposing upon it the burden of proving that it exercised the diligence of a good father of a family in the supervision of its employees.

Defendant would want to tie plaintiff to the report he signed about the crash-landing. The report was prepared by his pilot and because the latter pleaded that he had a family too and would have nowhere to go if he lost his job, plaintiff’s compassion would not upturn the truth about the crash-landing. We are for the truth not logic of any argumentation.

At any rate, it is incorrect to say that the Accident Report cranad(Exh. 12 & 12-A), signed by plaintiff, exculpated Capt. Bustamante from any fault. We observed that the Report does not categorically state that Capt. Bustamante was not at fault. It merely relates in chronological sequence what Capt. Bustamante and plaintiff did from the take-off from Manila to the landing in Daet which resulted in an accident. On the contrary, we may infer the negligence of Bustamante from the following portion of the Report, to wit:

“. cra . I felt his brakes strong but as we neared the intersection of the NE-SW runway, the brakes were not as strong and I glanced at the system pressure which indicated 900 lbs. per sq. m.”

It was during the above precise instance that Capt. Bustamante lost his bearing and disposition. Had he maintained the pressure on the brakes the plane would not have overshot the runway. Verily, Bustamante displayed slow reaction and poor judgment.cranad(CA decision, pp. 8-12).

This Court is not impressed by, much less can We accept petitioner’s invocation to calibrate once again the evidence testified to in detail and plucked from the voluminous transcript to support petitioner’s own conclusion. It is not the task of this Court to discharge the functions of a trier of facts much less to enter into a calibration of the evidence, notwithstanding petitioner’s wail that the judgment of the respondent court is based entirely on speculations, surmises and conjectures. We are convinced that respondent court’s judgment is supported by strong, clear and substantial evidence.:onad

Petitioner is a common carrier engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public, as defined in Art. 1732, New Civil Code. The law is clear in requiring a common carrier to exercise the highest degree of care in the discharge of its duty and business of carriage and transportation under Arts. 1733, 1755 and 1756 of the New Civil Code. These Articles provide:

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, and 1745, 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 passenger safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances.

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 in Articles 1733 and 1755.

The duty to exercise the utmost diligence on the part of common carriers is for the safety of passengers as well as for the members of the crew or the complement operating the carrier, the airplane in the case at bar. And this must be so for any omission, lapse or neglect thereof will certainly result to the damage, prejudice, nay injuries and even death to all aboard the plane, passengers and crew members alike.

Now to the damages. The Court of Appeals affirmed the award of damages made by the trial court, stating that “the damages awarded plaintiff by the lower court are in accordance with the facts, law and jurisprudence.” The court further observed that “defendant-appellant is still fortunate, considering that the unearned income was reckoned with only up to 1968 and not up to the present as plaintiff-appellee is still living. Whatever mathematical error defendant-appellant could show by abstract argumentation, the same must be compensated by such deficiency of the damages awarded to plaintiff-appellee.”

As awarded by the trial court, private respondent was entitled to P198,000.00 as unearned income or compensatory damages; P50,000.00 for moral damages, P20,000.00 as attorney’s fees and P5,000.00 as expenses of litigation, or a total of P273,000.00.

The trial court arrived at the sum of P198,000.00 as unearned income or damages by considering that respondent Samson “could have continued to work as airline pilot for fifteen more years, he being only 38 years at the time the services were terminated by the defendant cranad(PAL) and he would have earned P120,000.00 from 1954 to 1963 or a period of ten cranad(10) years at the rate of one thousand per month cranad(P750.00 basic salary plus P300.00 extra pay for extra flying time and bonuses; and considering further that in 1964 the basic pay of defendant’s pilot was increased to P12,000.00 annually, the plaintiff could have earned from 1964 to 1968 the sum of P60,000.00 in the form of salaries and another P18,000.00 as bonuses and extra pay for extra flying time at the same rate of P300 a month, or a grand total of P198,000.00 for the entire period. This claim of the plaintiff for loss or impairment of earning capacity is based on the provision of Article 2205 of the New Civil Code of the Philippines which provides that “damages may be recovered for loss or impairment of earning capacity in cases of temporary or permanent personal injury.” This provision of law has been construed and interpreted in the case of Aureliano Ropato, et al. vs. La Mallorca General Partnership, 56 O.G., 7812, which rules that law allows the recovery of damages for loss or impairment of earning capacity in cases of temporary or permanent personal injury.” chanroblesvirtualawlibrary(Decision, CFI, pp. 98-99, Record on Appeal)

The respondent appellate court modified the above award by ordering payment of legal interest on the P198,000.00 unearned income from the filing of the claim, citing Sec. 8, Rule 51 of the Rules of Court.

Petitioner assails the award of the total sum of P198,000.00 as unearned income up to 1968 as being tenuous because firstly, the trial court’s finding affirmed by the respondent court is allegedly based on pure speculation and conjecture and secondly, the award of P300.00 a month as extra pay for extra flying time from 1954 to 1968 is likewise speculative. PAL likewise rejects the award of moral damages in the amount of P50,000.00 on the ground that private respondent’s action before the trial court does not fall under any of the cases enumerated in the law cranad(Art. 2219 of the New Civil Code) for which moral damages are recoverable and that although private respondent’s action gives the appearance that it is covered under quasi-delict as provided in Art. 21 of the New Civil Code, the definition of quasi-delict in Art. 2176 of the New Civil Code expressly excludes cases where there is a pre-existing contractual relation between the parties, as in the case under consideration, where an employer-employee relationship existed between PAL and private respondent. It is further argued that private respondent’s action cannot be deemed to be covered by Art. 21, inasmuch as there is no evidence on record to show that PAL “wilfully cause(d) loss or injury tocranad(private respondent) in a manner that is contrary to morals, good customs or public policy . cra .” Nor can private respondent’s action be considered “analogous” to either of the foregoing, for the reasons are obvious that it is not.” chanroblesvirtualawlibrary(Memorandum of petitioner, pp. 418-421, Records)

Having affirmed the gross negligence of PAL in allowing Capt. Delfin Bustamante to fly the plane to Daet on January 8, 1951 whose slow reaction and poor judgment was the cause of the crash-landing of the plane which resulted in private respondent Samson hitting his head against the windshield and causing him injuries for which reason PAL terminated his services and employment as pilot after refusing to provide him with the necessary medical treatment of respondent’s periodic spells, headache and general debility produced from said injuries, We must necessarily affirm likewise the award of damages or compensation under the provisions of Art. 1711 and Art. 1712 of the New Civil Code which provide:

Art. 1711. Owners of enterprises and other employers are obliged to pay compensation for the death or injuries to their laborers, workmen, mechanics or other employees, even though the event may have been purely accidental or entirely due to a fortuitous cause, if the death or personal injury arose out of and in the course of the employment. The employer is also liable for compensation if the employee contracts any illness or disease caused by such employment or as the result of the nature of the employment. If the mishap was due to the employee’s own notorious negligence, or voluntary act, or drunkenness, the employer shall not be liable for compensation. When the employee’s lack of due care contributed to his death or injury, the compensation shall be equitably reduced.

Art. 1712. If the death or injury is due to the negligence of a fellow-worker, the latter and the employer shall be solidarily liable for compensation. If a fellow-worker’s intentional or malicious act is the only cause of the death or injury, the employer shall not be answerable, unless it should be shown that the latter did not exercise due diligence in the selection or supervision of the plaintiffs fellow-worker.

The grant of compensatory damages to the private respondent made by the trial court and affirmed by the appellate court by computing his basic salary per annum at P750.00 a month as basic salary and P300.00 a month for extra pay for extra flying time including bonus given in December every year is justified. The correct computation however should be P750 plus P300 x 12 months = P12,600 per annum x 10 years = P126,000.00 cranad(not P120,000.00 as computed by the court a quo). The further grant of increase in the basic pay of the pilots to P12,000 annually for 1964 to 1968 totalling P60,000.00 and another P18,000.00 as bonuses and extra pay for extra flying time at the same rate of P300.00 a month totals P78,000.00. Adding P126,000.00 cranad(1964 to 1968 compensation) makes a grand total of P204,000.00 cranad(not P198,000.00 as originally computed).

As to the grant of moral damages in the sum of P50,000.00 We also approve the same. We have noted and considered the holding of the appellate court in the matter of bad faith on the part of PAL, stated hereunder, this wise:

“None of the essential facts material to the determination of the case have been seriously assailed: the overshooting of runway and crash-landing into the mangroves; the hitting of plaintiff’s head to the front windshield of the plane; the oozing of blood out of his ears, nose and mouth; the intermittent dizzy spells, headaches and general debility thereafter for which he was discharged from his employment; the condition of not to attribute the cause of the ailment to the crash-landing imposed in bad faith for a demanded special medical service abroad; and the resultant brain injury which defendant’s doctors could not understand nor diagnose.”

x x x

“The act of defendant-appellant in unjustly refusing plaintiff-appellee’s demand for special medical service abroad for the reason that plaintiff-appellee’s deteriorating physical condition was not due to the accident violates the

provisions of Article 19 of the Civil Code on human relations “to act with justice, give everyone his due, and observe honesty and good faith.” chanroblesvirtualawlibrary(CA Resolution, pp. 151-152, Records)

We reject the theory of petitioner that private respondent is not entitled to moral damages. Under the facts found by the trial court and affirmed by the appellate court and under the law and jurisprudence cited and applied, the grant of moral damages in the amount of P50,000.00 is proper and justified.

The fact that private respondent suffered physical injuries in the head when the plane crash-landed due to the negligence of Capt. Bustamante is undeniable. The negligence of the latter is clearly a quasi-delict and therefore Article 2219, cranad(2) New Civil Code is applicable, justifying the recovery of moral damages.

Even from the standpoint of the petitioner that there is an employer-employee relationship between it and private respondent arising from the contract of employment, private respondent is still entitled to moral damages in view of the finding of bad faith or malice by the appellate court, which finding We hereby affirm, applying the provisions of Art. 2220, New Civil Code which provides that willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith.

The justification in the award of moral damages under Art. 19 of the New Civil Code on Human Relations which requires that 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, as applied by respondent court is also well-taken and We hereby give Our affirmance thereto.

With respect to the award of attorney’s fees in the sum of P20,000.00 the same is likewise correct. As pointed out in the decision of the Court of Appeals, “the plaintiff is entitled to attorney’s fees because he was forced to litigate in order to enforce his valid claim cranad(Ganaban vs. Bayle, 30 SCRA 365; De la Cruz vs. De la Cruz, 22 SCRA 33; and many others); defendant acted in bad faith in refusing plaintiff’s valid claimcranad(Filipino Pipe Foundry Corporation vs. Central Bank, 23 SCRA 1044); and plaintiff was dismissed and was forced to go to court to vindicate his right cranad(Nadura vs. Benguet Consolidated, Inc., 5 SCRA 879).”

We also agree with the modification made by the appellate court in ordering payment of legal interest from the date judicial demand was made by Pilot Samson against PAL with the filing of the complaint in the lower court. We affirm the ruling of the respondent court which reads:

“Lastly, the defendant-appellant claims that the legal rate of interest on the unearned compensation should be computed from the date of the judgment in the lower court, not from the filing of the complaint, citing a case where the issue raised in the Supreme Court was limited to when the judgment was rendered in the lower court or in the appellate court, which does not mean that it should not be computed from the filing of the complaint.

Articles 1169, 2209 and 2212 of the Civil Code govern when interest shall be computed. Thereunder interest begins to accrue upon demand, extrajudicial or judicial. A complaint is a judicial demand cranad(Cabarroguis vs. Vicente, 107 Phil. 340). Under Article 2212 of the Civil Code, interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent upon this point.” chanroblesvirtualawlibrary(CA Resolution, pp. 153-154, Records).

The correct amount of compensatory damages upon which legal interest shall accrue from the filing of the complaint is P204,000.00 as herein computed and not P198,000.00.

WHEREFORE, in view of all the foregoing, the judgment of the appellate court is hereby affirmed with slight modification in that the correct amount of compensatory damages is P204,000.00. With costs against petitioner.

SO ORDERED.

Makasiar and De Castro, JJ., concur.

Teehankee and Melencio-Herrera, JJ., concur in the result.

SECOND DIVISION

[G.R. No. 159270. August 22, 2005]

PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, petitioner, vs. HON. COURT OF APPEALS, RODRIGO ARNAIZ, REGINA LATAGAN, RICARDO GENERALAO and PAMPANGA SUGAR DEVELOPMENT COMPANY, INC., CORPORATION, respondents.

D E C I S I O N

CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 47699 affirming, with modification, the decision of the Regional Trial Court (RTC) of Manila in Civil Case No. 93-64803.

The Antecedents

Pampanga Sugar Development Company, Inc. (PASUDECO) transports sugarcane from Mabalacat and Magalang, Pampanga. When the Mount Pinatubo eruption of 1991 heavily damaged the national bridges along Abacan-Angeles and Sapang Maragul via Magalang, Pampanga, it requested permission from the Toll Regulatory Board (TRB) for its trucks to enter and pass through the North Luzon Expressway (NLEX) viaDau-Sta. Ines from Mabalacat, and via Angeles from Magalang, and exit at San Fernando going to its milling factory. [2] The TRB furnished the Philippine National Construction Corporation (PNCC) (the franchisee that operates and maintains the toll facilities in the North and South Luzon Toll Expressways) with a copy of the said request for it to comment thereon.[3]

On November 5, 1991, TRB and PASUDECO entered into a Memorandum of Agreement [4] (MOA), where the latter was allowed to enter and pass through the NLEX on the following terms and conditions:

1. PASUDECO trucks should move in convoy;

2. Said trucks will stay on the right lane;3. A vehicle with blinking lights should be assigned at the rear end of the convoy with a sign which should read

as follows: Caution: CONVOY AHEAD!!!;4. Tollway safety measures should be properly observed;5. Accidents or damages to the toll facilities arising out of any activity related to this approval shall be the

responsibility of PASUDECO;6. PASUDECO shall be responsible in towing their stalled trucks immediately to avoid any inconvenience to the

other motorists;7. This request will be in force only while the national bridges along Abacan-Angeles and Sapang

Maragul via Magalang remain impassable.

PASUDECO furnished the PNCC with a copy of the MOA.[5] In a Letter[6] dated October 22, 1992, the PNCC informed PASUDECO that it interposed no objection to the MOA.

At around 2:30 a.m. on January 23, 1993, Alex Sendin, the PNCC security supervisor, and his co-employees Eduardo Ducusin and Vicente Pascual were patrolling Km. 72 going north of the NLEX. They saw a pile of sugarcane in the middle portion of the north and southbound lanes of the road.[7] They placed lit cans with diesel oil in the north and southbound lanes, including lane dividers with reflectorized markings, to warn motorists of the obstruction. Sendin, Ducusin and Pascual proceeded to the PASUDECO office, believing that the pile of sugarcane belonged to it since it was the only milling company in the area. They requested for a payloader or grader to clear the area. However, Engineer Oscar Mallari, PASUDECO’s equipment supervisor and transportation superintendent, told them that no equipment operator was available as it was still very early.[8] Nonetheless, Mallari told them that he would send someone to clear the affected area. Thereafter, Sendin and company went back to Km. 72 and manned the traffic. At around 4:00 a.m., five (5) PASUDECO men arrived, and started clearing the highway of the sugarcane. They stacked the sugarcane at the side of the road. The men left the area at around 5:40 a.m., leaving a few flattened sugarcanes scattered on the road. As the bulk of the sugarcanes had been piled and transferred along the roadside, Sendin thought there was no longer a need to man the traffic. As dawn was already approaching, Sendin and company removed the lighted cans and lane dividers.[9] Sendin went to his office in Sta. Rita, Guiguinto, Bulacan, and made the necessary report.[10]

At about 6:30 a.m., Rodrigo S. Arnaiz, a certified mechanic and marketing manager of JETTY Marketing, Inc., [11] was driving his two-door Toyota Corolla with plate number FAG 961 along the NLEX at about 65 kilometers per hour. [12] He was with his sister Regina Latagan, and his friend Ricardo Generalao; they were on their way to Baguio to attend their grandmother’s first death anniversary.[13] As the vehicle ran over the scattered sugarcane, it flew out of control and turned turtle several times. The accident threw the car about fifteen paces away from the scattered sugarcane.

Police Investigator Demetrio Arcilla investigated the matter and saw black and white sugarcanes on the road, on both lanes, which appeared to be flattened.[14]

On March 4, 1993, Arnaiz, Latagan and Generalao filed a complaint [15] for damages against PASUDECO and PNCC in the RTC of Manila, Branch 16. The case was docketed as Civil Case No. 93-64803. They alleged, inter  alia, that through its negligence, PNCC failed to keep and maintain the NLEX safe for motorists when it allowed PASUDECO trucks with uncovered and unsecured sugarcane to pass through it; that PASUDECO negligently spilled sugarcanes on the NLEX, and PNCC failed to put up emergency devices to sufficiently warn approaching motorists of the existence of such spillage; and that the combined gross negligence of PASUDECO and PNCC was the direct and proximate cause of the injuries sustained by Latagan and the damage to Arnaiz’s car. They prayed, thus:

WHEREFORE, it is respectfully prayed that, after due hearing, judgment be rendered for the plaintiffs, ordering the defendants jointly and severally:

(a) To pay unto plaintiff Rodrigo Arnaiz the sum of P100,000.00 representing the value of his car which was totally wrecked;

(b) to pay unto plaintiff Regina Latagan the sum of P100,000.00 by way of reimbursement for medical expenses, the sum of P50,000.00 by way of moral damages, and the sum of P30,000.00 by way of exemplary damages;

(c) To pay unto plaintiffs Rodrigo Arnaiz and Ricardo Generalao the sum of P5,000.00 by way of reimbursement for medical expenses; and

(d) To pay unto the plaintiffs the sum of P30,000.00 by way of attorney’s fees; plus the costs of suit.

Plaintiffs pray for other reliefs which the Honorable Court may find due them in the premises.[16]

In its Answer,[17] PNCC admitted that it was under contract to manage the North Luzon Expressway, to keep it safe for motorists. It averred that the mishap was due to the “unreasonable speed” at which Arnaiz’s car was running, causing it to turn turtle when it passed over some pieces of flattened sugarcane. It claimed that the proximate cause of the mishap was PASUDECO’s gross negligence in spilling the sugarcane, and its failure to clear and mop up the area completely. It also alleged that Arnaiz was guilty of contributory negligence in driving his car at such speed.

The PNCC interposed a compulsory counterclaim [18] against the plaintiffs and cross-claim[19] against its co-defendant PASUDECO.

PASUDECO adduced evidence that aside from it, there were other sugarcane mills in the area, like the ARCAM Sugar Central (formerly known as Pampanga Sugar Mills) and the Central Azucarrera de Tarlac; [20] it was only through the expressway that a vehicle could access these three (3) sugar centrals; [21] and PASUDECO was obligated to clear spillages whether the planters’ truck which caused the spillage was bound for PASUDECO, ARCAM or Central Azucarera.[22]

On rebuttal, PNCC adduced evidence that only planters’ trucks with “PSD” markings were allowed to use the tollway;[23] that all such trucks would surely enter the PASUDECO compound. Thus, the truck which spilled sugarcane in January 1993 in Km. 72 was on its way to the PASUDECO compound.[24]

On November 11, 1994, the RTC rendered its decision [25] in favor of Latagan, dismissing that of Arnaiz and Generalao for insufficiency of evidence. The case as against the PNCC was, likewise, dismissed. The decretal portion of the decision reads:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered:

I. ORDERING defendant PASUDECO:

1. To pay plaintiff Regina Latagan:

a. P25,000 = for actual damagesb. P15,000 = for moral damagesc. P 10,000 = for attorney’s fees P50,000

2. To pay costs of suit.

II. The case is DISMISSED as to defendant PNCC. No pronouncement as to costs. Its counterclaim is, likewise, DISMISSED.

III. The claims for damages of plaintiffs Rodrigo Arnaiz and Ricardo Generalao are hereby DISMISSED for insufficiency of evidence.

SO ORDERED.[26]

Both the plaintiffs Arnaiz, Latagan and Generalao and defendant PASUDECO appealed the decision to the CA. Since the plaintiffs failed to file their brief, the CA dismissed their appeal.[27]

Resolving PASUDECO’s appeal, the CA rendered judgment on April 29, 2003, affirming the RTC decision with modification. The appellate court ruled that Arnaiz was negligent in driving his car, but that such negligence was merely contributory to the cause of the mishap, i.e.,PASUDECO’s failure to properly supervise its men in clearing the affected area. Its supervisor, Mallari, admitted that he was at his house while their men were clearing Km. 72. Thus, the appellate court held both PASUDECO and PNCC, jointly and severally, liable to Latagan. The decretal portion of the decision reads:

WHEREFORE, premises considered, the assailed DECISION is hereby MODIFIED and judgment is hereby rendered declaring PASUDECO and PNCC, jointly and solidarily, liable:

1. To pay plaintiff Regina Latagan:

a. P25,000 = for actual damagesb. P15,000 = for moral damagesc. P10,000 = for attorney’s fees

2. To pay costs of suit.

SO ORDERED. [28]

The PNCC, now the petitioner, filed a petition for review on certiorari under Rule 45 of the Revised Rules of Court, alleging that:

THE HONORABLE COURT OF APPEALS ERRED IN MODIFYING THE DECISION OF THE TRIAL COURT AND MAKING PETITIONER PNCC, JOINTLY AND [SOLIDARILY], LIABLE WITH PRIVATE RESPONDENT PASUDECO.[29]

The petitioner asserts that the trial court was correct when it held that PASUDECO should be held liable for the mishap, since it had assumed such responsibility based on the MOA between it and the TRB. The petitioner relies on the trial court’s finding that only PASUDECO was given a permit to pass through the route.

The petitioner insists that the respondents failed to prove that it was negligent in the operation and maintenance of the NLEX. It maintains that it had done its part in clearing the expressway of sugarcane piles, and that there were no more piles of sugarcane along the road when its men left Km. 72; only a few scattered sugarcanes flattened by the passing motorists were left. Any liability arising from any mishap related to the spilled sugarcanes should be borne by PASUDECO, in accordance with the MOA which provides that “accidents or damages to the toll facilities arising out of any activity related to this approval shall be the responsibility of PASUDECO.”

The petitioner also argues that the respondents should bear the consequences of their own fault or negligence, and that the proximate and immediate cause of the mishap in question was respondent Arnaiz’s reckless imprudence or gross negligence.

The Court notes that the issues raised in the petition are factual in nature. Under Rule 45 of the Rules of Court, only questions of law may be raised in this Court, and while there are exceptions to the rule, no such exception is present in this case. On this ground alone, the petition is destined to fail. The Court, however, has reviewed the records of the case, and finds that the petition is bereft of merit.

The petitioner is the grantee of a franchise, giving it the right, privilege and authority to construct, operate and maintain toll facilities covering the expressways, collectively known as the NLEX. [30] Concomitant thereto is its right to collect toll fees for the use of the said expressways and its obligation to keep it safe for motorists.

There are three elements of a quasi-delict: (a) damages suffered by the plaintiff; (b) fault or negligence of the defendant, or some other person for whose acts he must respond; and (c) the connection of cause and effect between the fault or negligence of the defendant and the damages incurred by the plaintiff.[31] Article 2176 of the New Civil Code provides:

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

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 do.[32] It also refers to the conduct which creates undue risk of harm to another, the failure to observe that degree of care, precaution and vigilance that the circumstance justly demand, whereby that other person suffers injury. [33] The Court declared the test by which to determine the existence of negligence in Picart v. Smith,[34]viz:

The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the Roman law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that.

The test for determining whether a person is negligent in doing an act whereby injury or damage results to the person or property of another is this: could a prudent man, in the position of the person to whom negligence is attributed, foresee harm to the person injured as a reasonable consequence of the course actually pursued? If so, the law imposes a duty on the actor to refrain from that course or to take precautions to guard against its mischievous results, and the failure to do so constitutes negligence. Reasonable foresight of harm, followed by the ignoring of the admonition born of this provision, is always necessary before negligence can be held to exist.[35]

In the case at bar, it is clear that the petitioner failed to exercise the requisite diligence in maintaining the NLEX safe for motorists. The lighted cans and lane dividers on the highway were removed even as flattened sugarcanes lay scattered on the ground.[36] The highway was still wet from the juice and sap of the flattened sugarcanes. [37] The petitioner should have foreseen that the wet condition of the highway would endanger motorists passing by at night or in the wee hours of the morning.

The petitioner cannot escape liability under the MOA between PASUDECO and TRB, since respondent Latagan was not a party thereto. We agree with the following ruling of the CA:

Both defendants, appellant PASUDECO and appellee PNCC, should be held liable. PNCC, in charge of the maintenance of the expressway, has been negligent in the performance of its duties. The obligation of PNCC should not be relegated to, by virtue of a private agreement, to other parties.

PNCC declared the area free from obstruction since there were no piles of sugarcane, but evidence shows there were still pieces of sugarcane stalks left flattened by motorists. There must be an observance of that degree of care, precaution, and vigilance which the situation demands. There should have been sufficient warning devices considering that there were scattered sugarcane stalks still left along the tollway.

The records show, and as admitted by the parties, that Arnaiz’s car ran over scattered sugarcanes spilled from a hauler truck.[38]

Moreover, the MOA refers to accidents or damages to the toll   facilities.   It  does not cover damages to property or injuries caused to motorists on the NLEX who are not privies to the MOA.

PASUDECO’s negligence in transporting sugarcanes without proper harness/straps, and that of PNCC in removing the emergency warning devices, were two successive negligent acts which were the direct and proximate cause of Latagan’s injuries. As such, PASUDECO and PNCC are jointly and severally liable. As the Court held in the vintage case of Sabido v. Custodio:[39]

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. ...

In Far Eastern Shipping Company v. Court of Appeals,[40] 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 plaintiff's, 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 actor's 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.

There is no contribution between joint tortfeasors whose liability is solidary since both of them are liable for the total damage. Where the concurrent or successive negligent acts or omissions of two or more persons, although acting independently, are in combination with the direct and proximate cause of a single injury to a third person, it is impossible to determine in what proportion each contributed to the injury and either of them is responsible for the whole 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.

Thus, with PASUDECO’s and the petitioner’s successive negligent acts, they are joint tortfeasors who are solidarily liable for the resulting damage under Article 2194 of the New Civil Code.[41]

Anent respondent Arnaiz’s negligence in driving his car, both the trial court and the CA agreed that it was only contributory, and considered the same in mitigating the award of damages in his favor as provided under Article 2179 [42] of the New Civil Code. Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to the harm he has suffered, which falls below the standard to which he is required to conform for his own protection. [43] Even the petitioner itself described Arnaiz’s negligence as contributory. In its Answer to the complaint filed with the trial court, the petitioner asserted that “the direct and proximate cause of the accident was the gross negligence of PASUDECO personnel which resulted in the spillage of sugarcane and the apparent failure of the PASUDECO workers to clear and mop up the area completely, coupled with the contributory negligence of Arnaiz in driving his car at an unreasonable speed.” [44] However, the petitioner changed its theory in the present recourse, and now claims that the proximate and immediate cause of the mishap in question was the reckless imprudence or gross negligence of respondent Arnaiz.[45] Such a change of theory cannot be allowed. When a party adopts a certain theory in the trial court, he will not be permitted to change his theory on appeal, for to permit him to do so would not only be unfair to the other party but it would also be offensive to the basic rules of fair play, justice and due process.[46]

IN LIGHT OF ALL THE FOREGOING, the present petition is hereby DENIED for lack of merit. The Decision of the Court of Appeals in CA-G.R. CV No. 47699, dated April 29, 2003, is AFFIRMED. Costs against the petitioner.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

Republic of the Philippines

SUPREME COURT

Manila

EN BANC

DECISION

February 2, 1924

G.R. No. L-19495

HONORIO LASAM, ET AL., plaintiffs-appellants,

vs.

FRANK SMITH, JR., defendant-appellant.

Palma and Leuterio for plaintiffs-appellants.

Mariano Alisangco for defendant-appellant.

Ostrand, J.:

The plaintiff are husband and wife and this action is brought to recover damages in the sum of P20,000 for physical injuries

sustained by them in an automobile accident. The trial court rendered a judgment in their favor for the sum of P1,254.10, with

legal interest from the date of the judgment. Both the plaintiffs and the defendant appeal, the former maintaining that the

damages awarded are insufficient while the latter denies all liability for any damages whatever.

It appears from the evidence that on February 27, 1918, the defendant was the owner of a public garage in the town of San

Fernando, La Union, and engaged in the business of carrying passengers for hire from the one point to another in the Province

of La Union and the surrounding provinces. On the date mentioned, he undertook to convey the plaintiffs from San Fernando

to Currimao, Ilocos Norte, in a Ford automobile. On leaving San Fernando, the automobile was operated by a licensed

chauffeur, but after having reached the town of San Juan, the chauffeur allowed his assistant, Remigio Bueno, to drive the car.

Bueno held no driver’s license, but had some experience in driving, and with the exception of some slight engine trouble while

passing through the town of Luna, the car functioned well until after the crossing of the Abra River in Tagudin, when, according

to the testimony of the witnesses for the plaintiffs, defects developed in the steering gear so as to make accurate steering

impossible, and after zigzagging for a distance of about half a kilometer, the car left the road and went down a steep

embankment.

The defendant, in his testimony, maintains that there was no defect in the steering gear, neither before nor after the accident,

and expresses the opinion that the swaying or zigzagging of the car must have been due to its having been driven at an

excessive rate of speed. This may possibly be true, but it is, from our point of view, immaterial whether the accident was

caused by negligence on the part of the defendant’s employees, or whether it was due to defects in the automobile; the result

would be practically the same in either event.

In going over the bank of the road, the automobile was overturned and the plaintiffs pinned down under it. Mr. Lasam escaped

with a few contusions and a “dislocated” rib , but his wife, Joaquina Sanchez, received serious injuries, among which was a

compound fracture of one of the bones in her left wrist. She also appears to have suffered a nervous breakdown from which

she had not fully recovered at the time of the trial.

The complaint in the case was filed about a year and a half after the occurrence above related. It alleges, among other things,

that the accident was due to defects in the automobile as well as to the incompetence and negligence of the chauffeur, and

the case appears to have been tried largely upon the theory that it sounds in tort and that the liability of the defendant is

governed by article 1903 of the Civil Code. The trial court held, however, that the cause of action rests on the defendant’s

breach of the contract of carriage and that, consequently, articles 1101-1107 of the Civil Code, and not article 1903, are

applicable. The court further found that the breach of the contract was not due to fortuitous events and that, therefore, the

defendant was liable in damages.

In our opinion, the conclusions of the court below are entirely correct. That upon the facts stated the defendant’s liability, if

any, is contractual, is well settled by previous decisions of the court, beginning with the case of Rakes vs. Atlantic, Gulf & Pacific

Co. (7 Phil., 359), and the distinction between extra-contractual liability and contractual liability has been so ably and

exhaustively discussed in various other cases, that nothing further need here be said upon that subject. (See Cangco vs. Manila

Railroad Co., 38 Phil., 768; Manila Railroad Co. vs. Compania Trasatlantica and Atlantic, Gulf & Pacific Co., 38 Phil., 875; De Guia

vs. Manila Electric Railroad & Light Co., 40 Phil., 706.) It is sufficient to reiterate that the source of the defendant’s legal liability

is the contract of carriage; that by entering into that contract he bound himself to carry the plaintiffs safely and securely to

their destination; and that having failed to do so he is liable in damages unless he shows that the failure to fulfill his obligation

was due to causes mentioned in article 1105 of the Civil Code, which reads as follows:

No one shall be liable for events which could not be foreseen or which, even if foreseen, were inevitable, with the exception of

the cases in which the law expressly provides otherwise and those in which the obligation itself imposes such liability.

This brings us to the principal question in the case:

What is meant by “events which cannot be foreseen and which, having been foreseen, are inevitable?” The Spanish authorities

regard the language employed as an effort to define the term caso fortuito and hold that the two expressions are synonymous.

(Manresa, Comentarios al Codigo Civil Español, vol. 8, pp. 88 et seq.; Scævola, Codigo Civil, vol. 19, pp. 526 et seq.)

The antecedent to article 1105 is found in Law 11, Title 33, Partida 7, which defines caso fortuito as “occasion que a case por

aventura de que non se puede ante ver. E son estos, derrivamientos de casas e fuego que se enciende a so ora, e

quebrantamiento de navio, fuerca de ladrones. . . . (An event that takes place by accident and could not have been foreseen.

Examples of this are destruction of houses, unexpected fire, shipwreck, violence of robbers. . . .)”

Escriche defines caso fortuito as “an unexpected event or act of God which could either be foreseen nor resisted, such as

floods, torrents, shipwrecks, conflagrations, lightning, compulsion, insurrections, destructions, destruction of buildings by

unforseen accidents and other occurrences of a similar nature.”

In discussing and analyzing the term caso fortuito the Enciclopedia Juridica Española says: “In a legal sense and, consequently,

also in relation to contracts, a caso fortuito presents the following essential characteristics: (1) The cause of the unforeseen

and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human

will. (2) It must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must be

impossible to avoid. (3) The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a

normal manner. And (4) the obligor (debtor) must be free from any participation in the aggravation of the injury resulting to

the creditor.” (5 Enciclopedia Juridica Española, 309.)

As will be seen, these authorities agree that some extraordinary circumstance independent of the will of the obligor, or of his

employees, is an essential element of a caso fortuito. Turning to the present case, it is at once apparent that this element is

lacking. It is not suggested that the accident in question was due to an act of God or to adverse road conditions which could

not have been foreseen. As far as the records shows, the accident was caused either by defects in the automobile or else

through the negligence of its driver. That is not a caso fortuito.

We agree with counsel that neither under the American nor Spanish law is a carrier of passengers an absolute insurer against

the risks of travel from which the passenger may protect himself by exercising ordinary care and diligence. The case of Alba vs.

Sociedad Anonima de Tranvias, Jurisprudencia Civil, vol. 102, p. 928, cited by the defendant in support of his contentions,

affords a good illustration of the application of this principle. In that case Alba, a passenger on a street car, was standing on the

platform of the car while it was in motion. The car rounded a curve causing Alba to lose his balance and fall off the platform,

sustaining severe injuries. In an action brought by him to recover damages, the supreme court of Spain held that inasmuch as

the car at the time of the accident was travelling at a moderate rate of speed and there was no infraction of the regulations,

and the plaintiff was exposed to no greater danger than that inherent in that particular mode of travel, the plaintiff could not

recover, especially so since he should have been on his guard against a contingency as natural as that of losing his balance to a

greater or less extent when the car rounded the curve.

But such is not the present case; here the passengers had no means of avoiding the danger or escaping the injury.

The plaintiffs maintain that the evidence clearly establishes that they are entitled to damages in the sum of P7,832.80 instead

of P1,254.10 as found by the trial court, and their assignments of error relate to this point only.

There can be no doubt that the expenses incurred by the plaintiffs as a result of the accident greatly exceeded the amount of

the damages awarded. But bearing in mind that in determining the extent of the liability for losses or damages resulting from

negligence in the fulfillment of a contractual obligation, the courts have “a discretionary power to moderate the liability

according to the circumstances” (De Guia vs. Manila Electric Railroad & Light Co., 40 Phil., 706; art. 1103, Civil Code), we do not

think that the evidence is such as to justify us in interfering with the discretion of the court below in this respect. As pointed

out by that court in its well-reasoned and well-considered decision, by far the greater part of the damages claimed by the

plaintiffs resulted from the fracture of a bone in the left wrist of Joaquina Sanchez and from her objections to having a

decaying splinter of the bone removed by a surgical operation. As a consequence of her refusal to submit such an operation, a

series of infections ensued and which required constant and expensive medical treatment for several years. We agree with the

court below that the defendant should not be charged with these expenses.

For the reasons stated, the judgment appealed from is affirmed, without costs in this instance. So ordered.

Araullo, C.J., Street, Malcolm, Johns and Romualdez, JJ., concur.

EN BANC

[G.R. No. L-22533. February 9, 1967.]

PLACIDO C. RAMOS and AUGUSTO L. RAMOS, petitioners, vs. PEPSI-COLA BOTTLING CO. OF THE P.I. and ANDRES BONIFACIO,respondents.

Placido B. Ramos and Renato L. Ramos for petitioners.

Trinidad & Borromeo for respondents.

SYLLABUS

1.APPEAL; CREDIBILITY OF WITNESS NOT FOR THE SUPREME COURT TO RE- EXAMINE. — This Court has consistently respected the findings of fact of the Court of Appeals with some few exceptions which do not obtain herein.

2.APPEAL; QUESTIONS OF LAW AND FACT DISTINGUISHED. — For a question to be one of law it must involve no examination of the probative value of the evidence presented by the litigants or any of them. And the distinction is well known. There is a question of law in a given case when the doubt or difference arises as to what the law is on a certain state of facts; there is a question of fact when the doubt or difference arises as to the truth or falsehood of alleged facts.

3.CIVIL LAW; DUE DILIGENCE IN THE SELECTION OF A DRIVER ILLUSTRATED. — The uncontradicted testimony of (the) personnel manager of defendant company, was to the effect that defendant driver was first hired as a member of the bottle crop in the production department: that when he was hired as a driver, defendant company had size him by looking into his background, asking him to submit clearances, and later on, he was sent to the pool house to take the usual driver's examination, consisting of, first, theoretical examination and second, the practical driving examination, all of which he had undergone, and that the defendant company was a member of the Safety Council. In view therefore, we are of sense that defendant company had exercised the diligence of a good father of a family in the choice or selection of defendant driver.

4.ID.; DUE DILIGENCE IN THE SUPERVISION OF EMPLOYEE DISCUSSED; ARTICLE 2180 OF THE CIVIL CODE CONSTRUED. — From Article 2180, 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 master or employer either in the selection of the servant or employee, or in supervision over him after the selection; or both; and (2) that the 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 relieved from liability.

5.APPEAL; MATTERS NOT RAISED AND ARGUED IN THE LOWER COURT CANNOT BE VENTILATED IN THE SUPREME COURT FOR THE FIRST TIME. — Appellant's other assignment of errors are likewise outside the purview of this Court's reviewing power. Thus, the question of whether PEPSI-COLA violated the Revised Motor Vehicles Law and rules and regulations related thereto, not having been raised and argued in the Court of Appeals, cannot be ventilated herein for the first time.

D E C I S I O N

BENGZON, J.P., J p:

On June 30, 1958 Placido and Augusto Ramos sued Pepsi-Cola Bottling Co. of the P.I. 1 and Andres Bonifacio in the Court of First Instance of Manila as a consequence of a collision, on May 10, 1958, involving the car of Placido Ramos and a tractor-truck and trailer of PEPSI-COLA. Said car was at the time of the collision driven by Augusto Ramos, son and co-plaintiff of Placido. PEPSI-COLA's tractor- truck was then driven by its driver and co-defendant Andres Bonifacio.

After trial, the Court of First Instance rendered judgment on April 15, 1961, finding Bonifacio negligent and declaring that PEPSI- COLA had not sufficiently proved its having exercised the due diligence of a good father of a family to prevent the damage. PEPSI- COLA and Bonifacio, solidarily, were ordered to pay the plaintiffs P2,638.50 actual damages; P2,000.00 moral damages; P2,000.00 as exemplary damages; and, P1,000.00 attorney's fees with costs.

Not satisfied with this decision, the defendants appealed to the Court of Appeals.

Said Court, on January 15, 1964, affirmed the trial court's judgment insofar as it found defendant Bonifacio negligent, but modified it by absolving defendant PEPSI-COLA from liability, finding that, contrary to the plaintiff's contention, PEPSI-COLA sufficiently proved due diligence in the selection of its driver Bonifacio.

Plaintiffs thereupon appealed to Us through this petition for review of the Court of Appeals' decision. And appellants would argue before this Court that defendantPEPSI-COLA's evidence failed to show that it had exercised due diligence n the selection of its driver in question.

Said point, as stated, was resolved by the Court of Appeals in PEPSI-COLA's favor, thus:

"The uncontradicted testimony of Juan T. Añasco, personnel manager of defendant company, was to the effect that defendant driver was first hired as a member of the bottle crop in the production department; that when he was hired as a driver, 'we had size [sic] him by looking into his background, asking him to submit clearances, previous experience, physical examination and later on, he was sent to the pool house to take the usual driver's examination, consisting of: 'First, theoretical examination and second, the practical driving examination,' all of which he had undergone, and that the defendant company was a member of the Safety Council. In view hereof, we are of the sense that defendant company had exercised the diligence of a good father of a family in the choice or selection of defendant driver. In the case of Campo vs. Camarote, No. L-9147 (1956), 53 O.G.

2794, cited in appellee's brief, our Supreme Court had occasion to put it down as a rule that 'In order that the defendant may be considered as having exercised all the diligence of a good father of a family, he should have been satisfied with the mere possession of a professional driver's license; he should have carefully examined the applicant for employment as to his qualifications, his experiences and record of service.' Defendant Company has taken all these steps. 2

Appellants herein seek to assail the foregoing portion of the decision under review by taking issue with the testimony of Añasco upon which the findings of due diligence aforestated are rested. Thus, it is now contended that Añasco, being PEPSI-COLA's employee, is a biased and interested witness; and that his testimony is not believable.

It is rather clear, therefore, that appellants would raise herein an issue of fact and credibility, something as to which this Court has consistently respected the findings of the Court of Appeals, with some few exceptions, which do not obtain herein. 3

Stated differently, Añasco's credibility is not for this Court now to re-examine. And said witness having been found credible by the Court of Appeals, his testimony, as accepted by said Court, cannot at this stage be assailed. As We said in Co Tao vs. Court of Appeals, L-9194, April 25, 1957, assignments of error involving the credibility of witnesses and which in effect dispute the findings of fact of the Court of Appeals, cannot be reviewed in these proceedings. For a question to be one of law it must involve no examination of the probative value of the evidence presented by the litigants or any of them. 4 And the distinction is well-known: There is a question of law in a given case when the doubt or difference arises as to what the law is on a certain state of facts; there is a question of fact when the doubt or difference arises as to the truth or the falsehood of alleged facts. 5

From all this it follows that for the purposes of this appeal, it must be taken as established that, as testified to by Añasco, PEPSI- COLA did in fact carefully examine the driver-applicant Bonifacio as to his qualifications, experiences and record of service, taking all steps mentioned by the Court of Appeals in its decision already quoted.

Such being the case, there can be no doubt that PEPSI-COLA exercised the required due diligence in the selection of its driver. As ruled by this Court in Campo vs. Camarote, 53 O.G. 2794, 2797: "In order that the defendant may be considered as having exercised all diligence of a good father of a family, he should not be satisfied with the mere possession of a professional driver's license; he should have carefully examined the applicant for employment as to his qualifications, his experience and record of service."

It should perhaps be stated that in the instant case no question is raised as to due diligence in the supervision by PEPSI-COLA of its driver. Article 2180 of the Civil Code provides inter alia:

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

xxx xxx xxx

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

And construing a similar provision of the old Civil Code, this Court said in Bahia vs. Litonjua, 30 Phil. 624, 627:

"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 master or employer either in the selection of the

servant or employee, or in supervision over him after the selection, or both; and (2) that the presumption is juris tantum and not jure et de juris, 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 relieved from liability."

As pointed out, what appellants here contend as not duly proved by PEPSI-COLA is only due diligence in the selection of its driver. And, parenthetically, it is not surprising that appellants thus confine their arguments to this aspect of due diligence, since the record — as even appellants' brief (pp. 13-17) reflects in quoting in part the testimony of PEPSI-COLA's witness — would show sufficient evidence to establish due diligence in the supervision by PEPSI-COLA of its drivers, including Bonifacio.

Appellants' other assignment of errors are likewise outside the purview of this Courts' reviewing power. Thus, the question of whether PEPSI-COLA violated the Revised Motor Vehicle Law. and rules and regulations related thereto, not having been raised and argued in the Court of Appeals, cannot be ventilated herein for the first time. 6 And the matter of whether or not PEPSI-COLA did acts to ratify the negligent act of its driver is a factual issue not proper herein.

Wherefore, the decision of the Court of Appeals is hereby affirmed, with costs against appellants. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and Ruiz Castro, JJ., concur.

RESOLUTION ON MOTION FOR RECONSIDERATION

May 16, 1967

BENGZON, J.P., J p:

Petitioners seek a reconsideration 1 of Our decision 2 in the instant case affirming in toto the challenged decision of the Court of Appeals absolving respondent PEPSI-COLA from liability. In Our decision, We refrained from passing on the merits of the question whether PEPSI-COLA in operating the tractor-truck and trailer, violated the Rev. Motor Vehicles Law 3 and the rules and regulations related thereto, for the procedural reason that it did not appear to have been raised before the Court of Appeals.

It now appears, however, that said question was raised in a motion to reconsider filed with the Court of Appeals which resolved the same against petitioners. Due consideration of the matter on its merits, convinces Us that the decision of the Court of Appeals should still be affirmed in toto.

Petitioners impute to PEPSI-COLA the violation of subpars. I and 4(d), par. (a), Sec. 27 of M.V.O. Administrative Order No. 1, dated Sept. 1, 1951, in that at the time of the collision the trailer-truck, which had a total weight of 30,000 k. gms., was (a) being driven at a speed of about 30 k.p.h., or beyond the 15 k.p.h. limit set and (b) was not equipped with a rear-vision mirror nor provided with a helper for the driver.

The cited provisions read:

"SECTION 27. — Registration, operation, and inspection of truck-trailer combinations, semi-trailers, and tractors.

"(a)No trailer or semi-trailer having a gross weight of more than 2,000 kilograms and is not equipped with effective brakes on at least two opposite wheels of the rear axle and are so controlled that the brakes will act in unison with or preceding the effective action of the brakes of the tractor-truck shall be registered for operation for public highways of the Philippines; provided, that the trailers without brakes may be registered from year to year for operation under the following conditions:

"1.No such trailer shall be operated at any time at a speed, in excess of 15 kilometers per hour in conjunction with a tractor-truck, the actual gross weight of which is less than twice the weight of the trailer.

xxx xxx xxx

"4(d)Tractor-trucks shall be either equipped with rear-vision mirror to enable the driver to see vehicles approaching from the rear or shall carry a helper who shall be so stationed on the truck or trailer that he will constantly have a view of the rear. He shall be provided with means of effectively signalling to the driver to give way to overtaking vehicles.

"4(e)No truck and trailer combination shall be operated at a speed greater than 30 kilometers per hours."

It will be noted that the 15 k.p.h. limit in subpar. 1, supra, refers only to trailers or semi-trailers having a gross weight of more than 2,000 kgms., AND which are "not equipped with effective brakes on at least two opposite wheels of the rear axle and are so controlled that the brakes will act in unison with or preceding the effective action of the brakes of the tractor-truck . . ." This is the condition set in the proviso in par. (a), supra, wherein "trailers without [such] brakes may be registered from year to year for operation . . .", i.e., they should not "be operated at any time at a speed in excess of 15 kilometers per hour in conjunction with a tractor-truck . . ." But there was no finding by the Court of Appeals that the truck-trailer here did not have such brakes. In the absence of such fact, it is subpar. 4 (e), supra, that will apply. And petitioners admit that the truck-trailer was being driven at about 30 k.p.h.

It is a fact that driver Bonifacio was not accompanied by a helper on the night of the collision since he was found to be driving alone. However, there is no finding that the tractor-truck did not have a rear-vision mirror. To be sure, the records disclose that Pat. Rodolfo Pahate, the traffic policeman who went to the collision scene, testified that he saw the tractor-truck there but he does not remember if it had any rear-vision mirror. 4 This cannot prove lack of rear- vision mirror. And the cited provision — subpar. 4(d) — is complied if either of the two alternatives, i.e., having a rear-vision mirror or a helper, is present. Stated otherwise, said provision is violated only where there is a positive finding that the tractor-truck did not have both rear-vision mirror and a helper for the driver.

Petitioners also charge PEPSI-COLA with having violated par. (b) of Sec. 8-A of the Rev. Motor Vehicles Law, providing that:

"No motor vehicle operating as a single unit shall exceed the following dimensions:

"Over all width . . . 2.5 meters"

xxx xxx xxx

since there was an express finding that the truck-trailer was 3 meters wide. However, Sec. 9(d) of the same law, as amended, providing that —

"SEC. 9.Special permits, fees for. — The chief of the Motor Vehicles Office with the approval of the Secretary of Public Works and Communications shall establish regulations and a tariff of additional fees under which special permits may be issued in the discretion of the Chief of the Motor Vehicles Office or his deputies, for each of the following special cases, and without such special permit, no such motor vehicles shall be operated on the public highways . . .

xxx xxx xxx

"(d)For registration or fees of a motor vehicle exceeding the limit of permissible dimensions specified in subsections (b) and (c) of section eight-A hereof." (Emphasis supplied)

xxx xxx xxx

expressly allows the registration or use of motor vehicles exceeding the limits of permissible dimensions specified in subsec. (b) of Sec. 8-A. So, to conclude that there was a violation of law — which indisputably constitutes negligence, at the very least — it is not enough that the width of the tractor-truck exceed the limit in Sec. 8-A; in addition, it must also appear that there was no special permit granted under Sec. 9. Unfortunately for petitioners, that vital factual link is missing. There was no proof much less any finding to that effect. And it was incumbent upon petitioners-appellants to have proved lack of such permit since the tractor-truck and the trailer were registered. 5 Compliance with law and regularity in the performance of official duty — in this case, the issuance of proper registration papers — are presumed 6 and prevail over mere surmises. Having charged a violation of law, the onus of substantiating the same fell upon petitioners-appellants. Hence, the conclusion that there was a violation of the law lacks factual basis.

Petitioners would also have Us abandon the Bahia ruling. 7 In its stead, We are urged to apply the Anglo-American doctrine, of respondent superior. We cannot however, abandon the Bahia ruling without going against the explicit mandate of the law. A motor vehicle owner is not an absolute insurer against all damages caused by its driver. Article 2180 of our Civil Code is very explicit that the owner's responsibility shall cease once it proves that it has observed the diligence of a good father of a family to prevent damage. The Bahia case merely clarified what that diligence consists of, namely, diligence in the selection and supervision of the driver-employee.

Neither could We apply the respondent superior principle. Under Article 2180 of the Civil Code, the basis of an employer's liability is his own negligence, not that of his employees. The former is made responsible for failing to properly and diligently select and supervise his erring employees. We do not - and have never - followed therespondent superior rule. 8 So, the American rulings cited by petitioners, based as they are on said doctrine, are not authoritative here.

In view of the foregoing, the motion for reconsideration is hereby denied.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. Nos. L-21477-81 April 29, 1966

FRANCISCA VILUAN, petitioner, vs.THE COURT OF APPEALS, PATRICIO HUFANA and GREGORIO HUFANA, respondents.

Jose A. Solomon, for petitioner.Lourdes M. Garcia, for respondents.

REGALA, J.:

Seven persons were killed and thirteen others were injured in Bangar, La Union, on February 16, 1958, when a passenger bus on which they were riding caught fire after hitting a post and crashing against a tree. The bus, owned by petitioner and driven by Hermenegildo Aquino, came from San Fernando, La Union and was on its way to Candon, Ilocos Sur.

It appears that, as the bus neared the gate of the Gabaldon school building in the municipality of Bangar, another passenger bus owned by Patricio Hufana and driven by Gregorio Hufana tried to overtake it but that instead of giving way, Aquino increased the speed of his bus and raced with the overtaking bus. Aquino lost control of his bus as a result of which it hit a post, crashed against a tree and then burst into flames.

Among those who perished were Timoteo Mapanao, Francisca Lacsamana, Narcisa Mendoza and Gregorio Sibayan, whose heirs sued petitioner and the latter's driver, Hermenegildo Aquino, for damages for breach of contract of carriage. Carolina Sabado, one of those injured, also sued petitioner and the driver for damages. The complaints were filed in the Court of First Instance of La Union.

In their answer, petitioner and her driver blamed respondent Gregorio Hufana for the accident. With leave of court, they filed third party complaints against Hufana and the latter's employer, Patricio Hufana.

After trial, the court found that the accident was due to the concurrent negligence of the drivers of the two buses and held both, together with their respective employers, jointly and severally liable for damages.

The dispositive portion of its decision reads:

IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered, declaring the plaintiff's entitled to damages to be paid jointly and severally by the defendants and third-party defendants as follows:

(1) For plaintiff Juliana C. Vda. de Mapanao for the death of her son Timoteo Mapanao, the sum of P5,000.00 for actual damages, P1,000.00 as moral damages and P250.00 as attorney's fees;

(2) For plaintiff Leon Lacsamana for the death of his daughter Francisca Lacsamana, the sum of P4,000.00 as actual damages, P1,000.00 as moral damages and P250.00 as attorney's fees;

(3) For plaintiffs Juan Mendoza and Magdalena Mendoza for the death of their mother Narcisa Mendoza, the sum of P4,000.00 for actual damages, P1,000.00 for moral damages and P250.00 as attorney's fees;

(4) For plaintiffs Agustina Sabado, Quintin Sibayan, Julita Sibayan, Primitivo Sibayan and Avelina Sibayan, the sum of P4,000.00 for actual damages, P1,500.00 for moral damages and P250.00 as attorney's fees;

(5) For the injured passenger Carolina Sabado, P649.00 for actual damages, P1,000.00 for moral damages and P250.00 for attorney's fees.

All such amounts awarded as damages shall bear interest at the legal rate of six per cent (6%) per annum from the date of this decision until the same shall have been duly paid in full.

Defendants and third-party defendants are further ordered to pay proportionate costs."

Both petitioner and her driver and the respondents herein appealed to the Court of Appeals. While affirming the finding that the accident was due to the concurrent negligence of the drivers of both the Viluan and the Hufana buses, the Court of Appeals differed with the trial court in the assessment of liabilities of the parties. In its view only petitioner Francisca Viluan, as operator of the bus, is liable for breach of contract of carriage. The driver, Hermenegildo Aquino, cannot be made jointly and severally liable with petitioner because he is merely the latter's employee and is in no way a party to the contract of carriage. The court added, however —

Hermenegildo Aquino is not entirely free from liability. He may be held liable, criminally and civilly, under the Revised Penal Code (Articles 100 and 103), but not in a civil suit for damages predicated upon a breach of contract, such as this one (Aguas, et al. vs. Vargas, et al., CA-G.R. No. 27161-R, Jan. 22, 1963). Furthermore, the common carrier, Francisca Viluan could recover from Aquino any damages that she might have suffered by reason of the latter's negligence.

Neither may respondents Patricio Hufana and Gregorio Hufana be held liable in the opinion of the appellate court because the plaintiffs did not amend complaints in the main action so as to assert a claim against the respondents as third party defendants.

The appellate court likewise disallowed the award of moral damages for P1,000.00 to Carolina Sabado, there being no showing that the common carrier was guilty of fraud or bad faith in the performance of her obligation. Accordingly, it rendered judgment as follows:

IN VIEW OF ALL THE FOREGOING, we hereby find defendant-appellant Francisca Viluan solely liable to the plaintiffs-appellees for the damages and attorney's fees awarded to them by the court below and further declare null and void the lower court's award of moral damages in the amount of P1,000.00 in favor of plaintiff Carolina Sabado. Thus modified, the judgment appealed from is affirmed in all other respects, with costs in this instance against defendant-appellant Francisca Viluan.

From this judgment petitioner brought this appeal. In brief, her position is that since the proximate cause of the accident was found to be the concurrent negligence of the drivers of the two buses, then she and respondent Patricio and Gregorio Hufana should have been held equally liable to the plaintiffs in the damage suits. The fact that the respondents were not sued as principal defendants but were brought into the cases as third party defendants should not preclude a finding of their liability.

We agree with petitioner's contention. To begin with, the Court of Appeals' ruling is based on section 5 of Rule 12 of the former Rules of Court, 1 which was adopted from Rule 14-a of the Federal Rules of Civil Procedure. While the latter provision has indeed been held to preclude a judgment in favor of a plaintiff and against a third party defendant where the plaintiff has not amended his complaint to assert a claim against a third party defendant, 2yet, as held in subsequent decisions, this rule applies only to cases where the third party defendant is brought in on an allegation of liability to the defendants. The rule does not apply where a third-party defendant is impleaded on the ground of direct liability to the plaintiffs, in which case no amendment of the plaintiffs complaint is necessary. 3 As explained in the Atlantic Coast Line R. Co. vs. U. S. Fidelity & Guaranty Co., 52 F. Supp. 177 (1943):

From the sources of Rule 14 and the decisions herein cited, it is clear that this rule, like the admiralty rule, "covers two distinct subjects, the addition of parties defendant to the main cause of action, and the bringing in of a third party for a defendant's remedy over." x x x

If the third party complaint alleges facts showing a third party's direct liability to plaintiff on the claim set out in plaintiff's petition, then third party "shall" make his defenses as provided in Rule 12 and his counterclaims against plaintiff as provided in Rule 13. In the case of alleged direct liability, no amendment is necessary or required. The subject-matter of the claim is contained in plaintiff's complaint, the ground of third party's liability on that claim is alleged in third party complaint, and third party's defense to set up in his an to plaintiff's complaint. At that point and without amendment, the plaintiff and third party are at issue as to their rights respecting the claim.

The provision in the rule that, "The third-party defendant may assert any defenses which the third-party plaintiff may assert to the plaintiff's claim," applies to the other subject, namely, the alleged liability of third party defendant. The next sentence in the rule, "The third-party defendant is bound by the adjudication of the third party plaintiff's liability to the plaintiff, as well as of his own to the plaintiff or to the third-party plaintiff," applies to both subjects. If third party is brought in as liable only to defendant and judgment is rendered adjudicating plaintiff's right to recover against defendant and defendant's rights to recover against third party, he is bound by both adjudications. That part of the sentence refers to the second subject. If third party is brought in as liable to plaintiff, then third party is bound by the adjudication as between him and plaintiff. That refers to the first subject. If third party is brought in as liable to plaintiff and also over to defendant, then third party is bound by both adjudications. The next sentence in the rule, "The plaintiff may amend his pleadings to assert against the third-party defendant any claim which the plaintiff might have asserted against the third-party defendant had he been joined originally as a defendant," refers to the second subject, that is, to bringing in third party as liable to defendant only, and does not apply to the alleged liability of third party directly to plaintiff."

In this case the third-party complaints filed by petitioner and her driver charged respondents with direct liability to the plaintiffs. It was contended that the accident was due "to the fault, negligence, carelessness and imprudence of the third party defendant Gregorio Hufana" and, in petitioner's motion for leave to file a third party complaint, it was stated that "Patricio Hufana and Gregorio Hufana were not made parties to this action, although the defendants are entitled to indemnity and/or subrogation against them in respect of plaintiff's claim."

It should make no difference therefore whether the respondents were brought in as principal defendants or as third-party defendants. As Chief Justice Moran points out, since the liability of the third-party defendant is already asserted in the third-party complaint, the amendment of the complaint to assert such liability is merely a matter of form, to insist on which would not be in keeping with the liberal spirit of the Rules of Court. 4

Nor should it make any difference that the liability of petitioner springs from contract while that of respondents arises from quasi-delict. As early as 1913, we already ruled in Gutierrez vs. Gutierrez, 56 Phil. 177,5 that in case of injury to a passenger due

to the negligence of the driver of the bus on which he was riding and of the driver of another vehicle, the drivers as well as the owners of the two vehicles are jointly and severally liable for damages. Some members of the Court, though, are of the view that under the circumstances they are liable on quasi-delict.

Wherefore, the decision appealed from is hereby modified in the sense that petitioner as well as respondents Patricio Hufana and Gregorio Hufana are jointly and severally liable for the damages awarded by the trial court. The disallowance of moral damages in the amount of P1,000.00 is correct and should be affirmed. No costs.

Bengzon, C.J., Bautista Angelo, Concepcion, Dizon, Makalintal, Zaldivar and Sanchez, JJ., concur.Reyes, J.B.L., and Barrera, JJ., took no part.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. L-24803 May 26, 1977

PEDRO ELCANO and PATRICIA ELCANO, in their capacity as Ascendants of Agapito Elcano, deceased,plaintiffs-appellants, vs.REGINALD HILL, minor, and MARVIN HILL, as father and Natural Guardian of said minor, defendants-appellees.

Cruz & Avecilla for appellants.

Marvin R. Hill & Associates for appellees.

BARREDO, J.:

Appeal from the order of the Court of First Instance of Quezon City dated January 29, 1965 in Civil Case No. Q-8102, Pedro Elcano et al. vs. Reginald Hill et al. dismissing, upon motion to dismiss of defendants, the complaint of plaintiffs for recovery of damages from defendant Reginald Hill, a minor, married at the time of the occurrence, and his father, the defendant Marvin Hill, with whom he was living and getting subsistence, for the killing by Reginald of the son of the plaintiffs, named Agapito Elcano, of which, when criminally prosecuted, the said accused was acquitted on the ground that his act was not criminal, because of "lack of intent to kill, coupled with mistake."

Actually, the motion to dismiss based on the following grounds:

1. The present action is not only against but a violation of section 1, Rule 107, which is now Rule III, of the Revised Rules of Court;

2. The action is barred by a prior judgment which is now final and or in res-adjudicata;

3. The complaint had no cause of action against defendant Marvin Hill, because he was relieved as guardian of the other defendant through emancipation by marriage.

(P. 23, Record [p. 4, Record on Appeal.])

was first denied by the trial court. It was only upon motion for reconsideration of the defendants of such denial, reiterating the above grounds that the following order was issued:

Considering the motion for reconsideration filed by the defendants on January 14, 1965 and after thoroughly examining the arguments therein contained, the Court finds the same to be meritorious and well-founded.

WHEREFORE, the Order of this Court on December 8, 1964 is hereby reconsidered by ordering the dismissal of the above entitled case.

SO ORDERED.

Quezon City, Philippines, January 29, 1965. (p. 40, Record [p. 21, Record on Appeal.)

Hence, this appeal where plaintiffs-appellants, the spouses Elcano, are presenting for Our resolution the following assignment of errors:

THE LOWER COURT ERRED IN DISMISSING THE CASE BY UPHOLDING THE CLAIM OF DEFENDANTS THAT -

I

THE PRESENT ACTION IS NOT ONLY AGAINST BUT ALSO A VIOLATION OF SECTION 1, RULE 107, NOW RULE 111, OF THE REVISED RULES OF COURT, AND THAT SECTION 3(c) OF RULE 111, RULES OF COURT IS APPLICABLE;

II

THE ACTION IS BARRED BY A PRIOR JUDGMENT WHICH IS NOW FINAL OR RES-ADJUDICTA;

III

THE PRINCIPLES OF QUASI-DELICTS, ARTICLES 2176 TO 2194 OF THE CIVIL CODE, ARE INAPPLICABLE IN THE INSTANT CASE; and

IV

THAT THE COMPLAINT STATES NO CAUSE OF ACTION AGAINST DEFENDANT MARVIN HILL BECAUSE HE WAS RELIEVED AS GUARDIAN OF THE OTHER DEFENDANT THROUGH EMANCIPATION BY MARRIAGE. (page 4, Record.)

It appears that for the killing of the son, Agapito, of plaintiffs-appellants, defendant- appellee Reginald Hill was prosecuted criminally in Criminal Case No. 5102 of the Court of First Instance of Quezon City. After due trial, he was acquitted on the ground that his act was not criminal because of "lack of intent to kill, coupled with mistake." Parenthetically, none of the parties has favored Us with a copy of the decision of acquittal, presumably because appellants do not dispute that such indeed was the basis stated in the court's decision. And so, when appellants filed their complaint against appellees Reginald and his father, Atty. Marvin Hill, on account of the death of their son, the appellees filed the motion to dismiss above-referred to.

As We view the foregoing background of this case, the two decisive issues presented for Our resolution are:

1. Is the present civil action for damages barred by the acquittal of Reginald in the criminal case wherein the action for civil liability, was not reversed?

2. May Article 2180 (2nd and last paragraphs) of the Civil Code he applied against Atty. Hill, notwithstanding the undisputed fact that at the time of the occurrence complained of. Reginald, though a minor, living with and getting subsistenee from his father, was already legally married?

The first issue presents no more problem than the need for a reiteration and further clarification of the dual character, criminal and civil, of fault or negligence as a source of obligation which was firmly established in this jurisdiction in Barredo vs. Garcia, 73 Phil. 607. In that case, this Court postulated, on the basis of a scholarly dissertation by Justice Bocobo on the nature of culpa aquiliana in relation to culpa criminal or delito and mereculpa or fault, with pertinent citation of decisions of the Supreme Court of Spain, the works of recognized civilians, and earlier jurisprudence of our own, that the same given act can result in civil liability not only under the Penal Code but also under the Civil Code. Thus, the opinion holds:

The, above case is pertinent because it shows that the same act machinist. come under both the Penal Code and the Civil Code. In that case, the action of the agent killeth 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. (pp. 615-616, 73 Phil.). 1

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 individuality 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. (p. 617, 73 Phil.) 2

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. (p. 618, 73 Phil.) 3

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 he inappropriate to indicate their foundations.

Firstly, the Revised Penal Code in articles 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, accordingly 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 Idemnified 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.

Secondary, 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 Idemnified remedium." (p. 620,73 Phil.)

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 harms 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 or private rights because it realtor, 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. (p. 621, 73 Phil.)

Contrary to an immediate impression one might get upon a reading of the foregoing excerpts from the opinion in Garcia that the concurrence of the Penal Code and the Civil Code therein referred to contemplate only acts of negligence and not intentional voluntary acts - deeper reflection would reveal that the thrust of the pronouncements therein is not so limited, but that in fact it actually extends to fault or culpa. This can be seen in the reference made therein to the Sentence of the Supreme Court of Spain of February 14, 1919, supra, which involved a case of fraud or estafa, not a negligent act. Indeed, Article 1093 of the Civil Code of Spain, in force here at the time of Garcia, provided textually that obligations "which are derived from acts or omissions in which fault or negligence, not punishable by law, intervene shall be the subject of Chapter II, Title XV of this book (which refers to quasi-delicts.)" And it is precisely the underline qualification, "not punishable by law", that Justice Bocobo emphasized could lead to an ultimo construction or interpretation of the letter of the law that "killeth, rather than the spirit that giveth lift- hence, the ruling that "(W)e 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 orquasi-delito, which is conserved and made enduring in articles 1902 to 1910 of the Spanish Civil Code." And so, because Justice Bacobo was Chairman of the Code Commission that drafted the original text of the new Civil Code, it is to be noted that the said Code, which was enacted after the Garcia doctrine, no longer uses the term, 11 not punishable by law," thereby making it clear that the concept of culpa aquiliana includes acts which are criminal in character or in violation of the penal law, whether voluntary or matter. Thus, the corresponding provisions to said Article 1093 in the new code, which is Article 1162, simply says, "Obligations derived from quasi-delicto shall be governed by the provisions of Chapter 2, Title XVII of this Book, (on quasi-delicts) and by special laws." More precisely, a new provision, Article 2177 of the new code provides:

ART. 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.

According to the Code Commission: "The foregoing provision (Article 2177) through at first sight startling, is not so novel or extraordinary when we consider the exact nature of criminal and civil negligence. The former is a violation of the criminal law, while the latter is a "culpa aquiliana" or quasi-delict, of ancient origin, having always had its own foundation and individuality, separate from criminal negligence. Such distinction between criminal negligence and "culpa extracontractual" or "cuasi-delito" has been sustained by decision of the Supreme Court of Spain and maintained as clear, sound and perfectly tenable by Maura, an outstanding Spanish jurist. Therefore, under the proposed Article 2177, acquittal from an accusation of criminal negligence,

whether on reasonable doubt or not, shall not be a bar to a subsequent civil action, not for civil liability arising from criminal negligence, but for damages due to a quasi-delict or 'culpa aquiliana'. But said article forestalls a double recovery.", (Report of the Code) Commission, p. 162.)

Although, again, this Article 2177 does seem to literally refer to only acts of negligence, the same argument of Justice Bacobo about construction that upholds "the spirit that giveth lift- rather than that which is literal that killeth the intent of the lawmaker should be observed in applying the same. And considering that the preliminary chapter on human relations of the new Civil Code definitely establishes the separability and independence of liability in a civil action for acts criminal in character (under Articles 29 to 32) from the civil responsibility arising from crime fixed by Article 100 of the Revised Penal Code, and, in a sense, the Rules of Court, under Sections 2 and 3 (c), Rule 111, contemplate also the same separability, it is "more congruent with the spirit of law, equity and justice, and more in harmony with modern progress"- to borrow the felicitous relevant language in Rakes vs. Atlantic. Gulf and Pacific Co., 7 Phil. 359, to hold, as We do hold, that Article 2176, where it refers to "fault or negligencia 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 a quasi-delict only and not as a crime is not estinguished 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, thatculpa aquiliana includes voluntary and negligent acts which may be punishable by law.4

It results, therefore, that the acquittal of Reginal Hill in the criminal case has not extinguished his liability for quasi-delict, hence that acquittal is not a bar to the instant action against him.

Coming now to the second issue about the effect of Reginald's emancipation by marriage on the possible civil liability of Atty. Hill, his father, it is also Our considered opinion that the conclusion of appellees that Atty. Hill is already free from responsibility cannot be upheld.

While it is true that parental authority is terminated upon emancipation of the child (Article 327, Civil Code), and under Article 397, emancipation takes place "by the marriage of the minor (child)", it is, however, also clear that pursuant to Article 399, emancipation by marriage of the minor is not really full or absolute. Thus "(E)mancipation by marriage or by voluntary concession shall terminate parental authority over the child's person. It shall enable the minor to administer his property as though he were of age, but he cannot borrow money or alienate or encumber real property without the consent of his father or mother, or guardian. He can sue and be sued in court only with the assistance of his father, mother or guardian."

Now under Article 2180, "(T)he 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. 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." In the instant case, it is not controverted that Reginald, although married, was living with his father and getting subsistence from him at the time of the occurrence in question. Factually, therefore, Reginald was still subservient to and dependent on his father, a situation which is not unusual.

It must be borne in mind that, according to Manresa, the reason behind the joint and solidary liability of presuncion with their offending child under Article 2180 is that is the obligation of the parent to supervise their minor children in order to prevent them from causing damage to third persons. 5 On the other hand, the clear implication of Article 399, in providing that a minor emancipated by marriage may not, nevertheless, sue or be sued without the assistance of the parents, is that such emancipation does not carry with it freedom to enter into transactions or do any act that can give rise to judicial litigation. (See Manresa, Id., Vol. II, pp. 766-767, 776.) And surely, killing someone else invites judicial action. Otherwise stated, the marriage of a minor child does not relieve the parents of the duty to see to it that the child, while still a minor, does not give answerable for the borrowings of money and alienation or encumbering of real property which cannot be done by their minor married child without their consent. (Art. 399; Manresa, supra.)

Accordingly, in Our considered view, Article 2180 applies to Atty. Hill notwithstanding the emancipation by marriage of Reginald. However, inasmuch as it is evident that Reginald is now of age, as a matter of equity, the liability of Atty. Hill has become milling, subsidiary to that of his son.

WHEREFORE, the order appealed from is reversed and the trial court is ordered to proceed in accordance with the foregoing opinion. Costs against appellees.

Fernando (Chairman), Antonio, and Martin, JJ., concur.

Concepcion Jr., J, is on leave.

Martin, J, was designated to sit in the Second Division.

FIRST DIVISION

[G.R. No. 116624. September 20, 1996]

BALIWAG TRANSIT, INC., petitioner, vs. COURT OF APPEALS, DIVINA VDA. DE DIONISIO, for herself and in behalf of her minor children MARK ANGELO and MA. LIZA, both surnamed DIONISIO, respondents.

D E C I S I O N

BELLOSILLO, J.:

The wages earned by Mario Dionisio were the lifeblood of his family - his wife Divina and their children Mark Angelo and Ma. Liza, both minors. A work-related disruption unfortunately abruptly ended the means of livelihood of Mario prompting his dependent family to sue his employer and a co-employee for damages.

On 2 November 1990, at about 3:30 in the afternoon, petitioner's Baliwag Transit Bus No. 117 was driven by Juanito Fidel to its terminal on2nd Avenue, Caloocan City, for repair of its brake system. Juanito Fidel told mechanic Mario Dionisio to inform the headman about the matter so that proper order to the mechanics could be made. Fidel then alighted from the bus and told the gasman to fill up the gas tank.

Shortly after, Juanito Fidel returned to the bus and sat on the driver's seat. Suddenly the bus moved; he felt something was hit. When he went down to investigate he saw Mario Dionisio lying on the ground bleeding and convulsive, sandwiched between Bus No. 117 and another bus parked thereat owned by the same petitioner. Fidel summoned his co-employees and they all helped to extricate Mario Dionisio. They rushed him to St. Luke's Hospital in Quezon City. On 6 November 1990 however he expired as evidenced by his Certificate of Death issued 22 November 1990.

Thereafter a complaint for damages was lodged by private respondents Divina Vda. de Dionisio, for herself and in behalf of her minor children Mark Angelo and Ma. Liza as heirs of the deceased, before the Regional Trial Court of Quezon City. On 3 February 1993 the trial court rendered a decision ordering petitioner Baliwag Transit, Inc., and its employee Juanito Fidel jointly and severally to pay the heirs of Mario Dionisio the following amounts: P50,000.00 as death indemnity, P6,691.00 as litigation expenses, P10,000.00 as attorney's fees, P3,000.00 as funeral expenses, and costs of suit.[1]

Private respondents appealed to the Court of Appeals which on 23 March 1994 rendered a decision modifying the appealed judgment and ordering petitioners instead to pay jointly and severally P50.000.00 as death indemnity, P1,429,050.00 for loss of earning capacity, P3,000.00 for funeral expenses, P 60,000.00 for moral damages, P30,000.00 for exemplary damages, P50,000.00 for attorney's fees, plus the costs of suit. [2] On 8 August 1994 the motion to reconsider the decision was denied.[3] Hence, this petition.

Petitioners maintain that respondent Court of Appeals erred in affirming the appealed judgment despite the contributory negligence of the deceased Mario Dionisio, i.e., in failing to take the necessary precaution while doing repair work on the brake system of Bus No. 117, and that the increase of the award of damages is unreasonable being unsupported by law and the evidence.

The petition must fail. The circumstances clearly show that the proximate cause of the death of Mario Dionisio was the negligence of driver Juanito Fidel when he failed to take the necessary precaution to prevent the accident. He boarded his bus, sat on the driver's seat and was at the steering wheel when the bus moved pinning down the deceased who was repairing the defective brake system below. Driver Fidel should have known that his brake system was being repaired as he was in fact the one who told Dionisio to do the repair. Fidel should have parked the bus properly and safely. After alighting from the bus to tell the gasman to fill the tank, he should have placed a stopper or any hard object against a tire or two of the bus. But without taking the necessary precaution he boarded Bus No. 117 causing it to move and roll, pinning down the deceased which resulted in his serious injuries and eventual death. The reckless imprudence of Juanito Fidel makes him liable to the heirs of offended party for damages together with his employer. Article 2176 of the Civil Code provides -

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.

Complementing Art. 2176 is Art. 2180 which states -

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 x x x x

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

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

Article 2180, in relation to Art. 2176, of the Civil Code provides that the employer of a negligent employee is liable for the damages caused by the latter. When an injury is caused by the negligence of an employee there instantly arises a presumption of the law that there was negligence on the part of the employer either in the selection of his employee or in the supervision over him after such selection. The presumption however may be rebutted by a clear showing on the part of the employer that it had exercised the care and diligence of a good father of a family in the selection and supervision of his employee. Hence, to escape solidary liability for quasi-delict committed by an employee, the employer must adduce sufficient proof that it exercised such degree of care. [4] Petitioner's failure to prove that it exercised the due diligence of a good father of a family in the selection and supervision of its driver Juanito Fidel will make it solidarily liable with the latter for damages caused by him.

As regards the reasonableness of the damages awarded, under Art. 1764, in conjunction with Art. 2206, of the Civil Code, as well as established jurisprudence, several factors are considered, namely: (a) life expectancy (considering the health of the deceased and the mortality table being deemed conclusive) and loss of earning capacity; (b) pecuniary loss, loss of support and service; and, (c) moral and mental sufferings. The loss of earning capacity is based mainly on two factors, namely, the number of years on the basis of which the damages shall be computed, and the rate at which the loss sustained by the heirs should be fixed.[5]

Finding discrepancies in the computation of respondent Court of Appeals, we here opine that the correct computation of the loss of earning capacity of the deceased, considering that he was the sole bread-winner of the family and only 29 years old when he met his untimely death, should be based on the formula: 2/3 x 51 (80 - 29 [age at time of death]) = life expectancy. Thus -

P33,273.60 - gross annual income (P2,772.80 x 12 mos.)Add: 4,244.64 - gross annual allowance (P353.72 x 12 mos.)

3,199.00 - 13th month payP40,717.24 - total annual income

Less: 6,000.00 - annual expenses (P500.00 x 12 mos.) 13,776.00 - annual pension (P1,148.00 x 12 mos.)

P20,941.24 - total annual net incomeMultiply: 34 - life expectancy of Mario (2/3 x 51 [80 - 29 age at time of death])

P712,002.16 - total loss of earning capacity

Article 2206 grants the spouse, legitimate and illegitimate descendants and ascendants of the deceased moral damages for mental anguish by reason of death. Indisputably, the heirs of Mario suffered no small amount of mental anguish brought about by the manner he died and bearing in mind that he was the sole breadwinner of the family.

Article 2231 also awards exemplary damages if the defendant acted with gross negligence, as Juanito did, when he moved Bus No. 117 without first ascertaining if the repair of its break system was already undertaken. Exemplary damages having been awarded, recovery of attorney's fees follows under Art. 2208, par. (1), of the Civil Code.

WHEREFORE, the decision and resolution of respondent Court of Appeals subject of the instant petition are MODIFIED as follows: petitioner BALIWAG TRANSIT, INC., and JUANITO FIDEL are ordered to pay jointly and severally the heirs of Mario Dionisio (a) P50,000.00 for death indemnity, (b) P712,002.16 for loss of earning capacity, (c) P3,000.00 for funeral expenses, (d) P40,000.00 for moral damages, (e)P15,000.00 for exemplary damages (f) P20,000.00 for attorney's fees, and, (g) to pay the costs of suit.

SO ORDERED.

Padilla, (Chairman), Vitug, Kapunan, and Hermosisima, Jr., JJ., concur

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 104408 June 21, 1993

METRO MANILA TRANSIT CORPORATION, petitioner, vs.THE COURT OF APPEALS AND NENITA CUSTODIA, respondents.

Office of the Government Corporate Counsel for petitioner.

Renato P. Decena and Restituto Abjero for private respondent.

REGALADO, J.:

This appeal calls for a review of the legal validity and sufficiency of petitioner's invocation of due diligence in the selection and supervision of employees as its defense against liability resulting from a vehicular collision. With the facility by which such a defense can be contrived and our country having reputedly the highest traffic accident rate in its geographical region, it is indeed high time for us to once again address this matter which poses not only a litigation issue for the courts but affects the very safety of our streets.

The facts of the case at bar are recounted for us by respondent court, thus —

At about six o'clock in the morning of August 28, 1979, plaintiff-appellant Nenita Custodio boarded as a paying passenger a public utility jeepney with plate No. D7 305 PUJ Pilipinas 1979, then driven by defendant Agudo Calebag and owned by his co-defendant Victorino Lamayo, bound for her work at Dynetics Incorporated located in Bicutan, Taguig, Metro Manila, where she then worked as a machine operator earning P16.25 a day. While the passenger jeepney was travelling at (a) fast clip along DBP Avenue, Bicutan, Taguig, Metro Manila another fast moving vehicle, a Metro Manila Transit Corp. (MMTC, for short) bus bearing plate no. 3Z 307 PUB (Philippines) "79 driven by defendant Godofredo C. Leonardo was negotiating Honeydew Road, Bicutan, Taguig, Metro Manila bound for its terminal at Bicutan. As both vehicles approached the intersection of DBP Avenue and Honeydew Road they failed to slow down and slacken their speed; neither did they blow their horns to warn approaching vehicles. As a consequence, a collision between them occurred, the passenger jeepney ramming the left side portion of the MMTC bus. The collision impact caused plaintiff-appellant Nenita Custodio to hit the front windshield of the passenger jeepney and (she) was thrown out therefrom, falling onto the pavement unconscious

with serious physical injuries. She was brought to the Medical City Hospital where she regained consciousness only after one (1) week. Thereat, she was confined for twenty-four (24) days, and as a consequence, she was unable to work for three and one half months (31/2). 1

A complaint for damages 2 was filed by herein private respondent, who being then a minor was assisted by her parents, against all of therein named defendants following their refusal to pay the expenses incurred by the former as a result of the collision.

Said defendants denied all the material allegations in the complaint and pointed an accusing finger at each other as being the party at fault. Further, herein petitioner Metro Manila Transit Corporation (MMTC), a government-owned corporation and one of the defendants in the court a quo, along with its driver, Godofredo Leonardo, contrarily averred in its answer with cross-claim and counterclaim 3 that the MMTC bus was driven in a prudent and careful manner by driver Leonardo and that it was the passenger jeepney which was driven recklessly considering that it hit the left middle portion of the MMTC bus, and that it was defendant Lamayo, the owner of the jeepney and employer of driver Calebag, who failed to exercise due diligence in the selection and supervision of employees and should thus be held solidarily liable for damages caused to the MMTC bus through the fault and negligence of its employees.

Defendant Victorino Lamayo, for his part, alleged in his answer with cross-claim and counterclaim 4 that the damages suffered by therein plaintiff should be borne by defendants MMTC and its driver, Godofredo Leonardo, because the latter's negligence was the sole and proximate cause of the accident and that MMTC failed to exercise due diligence in the selection and supervision of its employees.

By order of the trial court, defendant Calebag was declared in default for failure to file an answer. 5 Thereafter, as no amicable settlement was reached during the pre-trial conference, 6 trial on the merits ensued with the opposing parties presenting their respective witnesses and documentary evidence.

Herein private respondent Nenita Custodia, along with her parents, were presented as witnesses for the prosecution. In addition, Dr. Edgardo del Mundo, the attending physician, testified on the cause, nature and extent of the injuries she sustained as a result of the vehicular mishap. 7 On the other hand, defendant MMTC presented as witnesses Godofredo Leonardo, Christian Bautista and Milagros Garbo. Defendant Lamayo, however, failed to present any witness.

Milagros Garbo testified that, as a training officer of MMTC, she was in charge of the selection of the company's bus drivers, conducting for this purpose a series of training programs and examinations. According to her, new applicants for job openings at MMTC are preliminarily required to submit certain documents such as National Bureau of Investigation (NBI) clearance, birth or residence certificate, ID pictures, certificate or diploma of highest educational attainment, professional driver's license, and work experience certification. Re-entry applicants, aside from the foregoing requirements, are additionally supposed to submit company clearance for shortages and damages and revenue performance for the preceding year. Upon satisfactory compliance with said requisites, applicants are recommended for and subjected to a Preliminary interview, followed by a record check to find out whether they are included in the list of undesirable employees given by other companies.

Thereafter, she continued, if an applicant is found to be acceptable, a final interview by the Chief Supervisor is scheduled and followed by a training program which consists of seminars and actual driving and Psycho-physical tests and X-ray examinations. The seminars, which last for a total of eighteen (18) days, include familiarization with assigned routes, existing traffic rules and regulations, Constabulary Highway Patrol Group (CHPG) seminar on defensive driving, preventive maintenance, proper vehicle handling, interpersonal relationship ,and administrative rules on discipline and on-the-job training. Upon completion of all the seminars and tests, a final clearance is issued, an employment contract is executed and the driver is ready to report for duty. 8

MMTC's Transport Supervisor, Christian Bautista, testified that it was his duty to monitor the daily operation of buses in the field, to countercheck the dispatcher on duty prior to the operation of the buses in the morning and to see to it that the bus crew follow written guidelines of the company, which include seeing to it that its employees are in proper uniform, briefed in traffic rules and regulations before the start of duty, fit to drive and, in general, follow other rules and regulations of the Bureau of Land Transportation as well as of the company. 9

The reorganized trial court, in its decision of August 1, 1989, 10 found both drivers of the colliding vehicles concurrently negligent for non-observance of appropriate traffic rules and regulations and for failure to take the usual precautions when approaching an intersection. As joint tortfeasors, both drivers, as well as defendant Lamayo, were held solidarily liable for damages sustained by plaintiff Custodio. Defendant MMTC, on the bases of the evidence presented was, however, absolved from liability for the accident on the ground that it was not only careful and diligent in choosing and screening applicants for job openings but was also strict and diligent in supervising its employees by seeing to it that its employees were in proper uniforms, briefed in traffic rules and regulations before the start of duty, and that it checked its employees to determine whether or not they were positive for alcohol and followed other rules and regulations and guidelines of the Bureau of Land Transportation and of the company.

The trial court accordingly ruled:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered dismissing the complaint against the Metro Manila Transit Corporation and ordering defendants Agudo P. Calebag, Victorino Lamayo and Godofredo C. Leonardo to pay plaintiffs, jointly and severally, the following:

a) the sum of P10,000.00 by way of medical expenses;

b) the sum of P5,000.00 by way of expenses of litigation;

c) the sum of P15,000.00 by way of moral damages;

d) the sum of P2,672.00 by way of loss of earnings;

e) the sum of P5,000.00 by way of exemplary damages;

f) the sum of P6,000.00 by way of attorney's fees; and

g) costs of suit.

SO ORDERED. 11

Plaintiff's motion to have that portion of the trial court's decision absolving MMTC from liability reconsidered 12having been denied for lack of merit, 13 an appeal was filed by her with respondent appellate court. After consideration of the appropriate pleadings on appeal and finding the appeal meritorious, the Court of Appeals modified the trial court's decision by holding MMTC solidarily liable with the other defendants for the damages awarded by the trial court because of their concurrent negligence, concluding that while there is no hard and fast rule as to what constitutes sufficient evidence to prove that an employer has exercised the due diligence required of it in the selection and supervision of its employees, based on the quantum of evidence adduced the said appellate court was not disposed to say that MMTC had exercised the diligence required of a good father of a family in the selection and supervision of its driver, Godofredo Leonardo. 14

The Court of Appeals was resolute in its conclusion and denied the motions for reconsideration of appellee Custodio and appellant MMTC in a resolution dated February 17, 1982, 15 thus prompting MMTC to file the instant petition invoking the review powers of this Court over the decision of the Court of Appeals, raising as issues for resolution whether or not (1) the documentary evidence to support the positive testimonies of witnesses Garbo and Bautista are still necessary; (2) the testimonies of witnesses Garbo and Bautista may still be disturbed on appeal; and (3) the evidence presented during the trial with respect to the proof of due diligence of petitioner MMTC in the selection and supervision of its employees, particularly driver Leonardo, is sufficient.

Prefatorily, private respondent questions the timeliness of the filing of the petition at bar in view of the procedural stricture that the timely perfection of an appeal is both a mandatory and jurisdictional requirement. This is a legitimate concern on the part of private respondent and presents an opportune occasion to once again clarify this point as there appears to be some confusion in the application of the rules and interpretative rulings regarding the computation of reglementary periods at this stage of the proceedings.

The records of this case reveal that the decision of respondent Court of Appeals, dated October 31, 1991, was received by MMTC on November 18, 1991 16 and it seasonably filed a motion for the reconsideration thereof on November 28, 1991. 17 Said motion for reconsideration was denied by respondent court in its resolution dated February 17, 1992, which in turn was received by MMTC on March 9, 1992. 18 Therefore, it had, pursuant to Section 1, Rule 45 of the Rules of Court, fifteen (15) days therefrom or up to March 24, 1992 within which to file its petition, for review on certiorari. Anticipating, however, that it may not be able to file said petition before the lapse of the reglementary period therefor, MMTC filed a motion on March 19, 1992 for an extension of thirty (30) days to file the present petition, with proof of service of copies thereof to respondent court and the adverse parties. The Court granted said motion, with the extended period to be counted from the expiration of the reglementary period.19 Consequently, private respondent had thirty (30) days from March 24, 1992 within which to file its petition, or up to April 23, 1992, and the eventual filing of said petition on April 14, 1992 was well within the period granted by the Court.

We digress to reiterate, in view of erroneous submissions that we continue to receive, that in the case of a petition for review on certiorari from a decision rendered by the Court of Appeals, Section 1, Rule 45 of the Rules of Court, which has long since been clarified in Lacsamana vs. The Hon. Second Special Cases Division of the Intermediate Appellate Court, et al., 20 allows the same to be filed "within fifteen (15) days from notice of judgment or of the denial of the motion for reconsideration filed in due time, and paying at the same time to the corresponding docket fee." In other words, in the event a motion for reconsideration is filed and denied, the period of fifteen (15) days begins to run all over again from notice of the denial resolution. Otherwise put, if a motion for reconsideration is filed, the reglementary period within which to appeal the decision of the Court of Appeals to the Supreme Court is reckoned from the date the party who intends to appeal received the order denying the motion for reconsideration.21 Furthermore, a motion for extension of time to file a petition for review may be filed with this Court within said reglementary period, paying at the same time the corresponding docket fee.

1. The first two issues raised by petitioner shall be correlatively discussed in view of their interrelation.

In its present petition, MMTC insists that the oral testimonies of its employees were presented as witnesses in its behalf sufficiently prove, even without the presentation documentary evidence, that driver Leonardo had complied with all the hiring and clearance requirements and had undergone all trainings, tests and examinations preparatory to actual employment, and that said positive testimonies spell out the rigid procedure for screening of job applicants and the supervision of its employees in the field. It underscored the fact that it had indeed complied with the measure of diligence in the selection and supervision of its employees as enunciated in Campo, et al. vs. Camarote, et al. 22 requiring an employer, in the exercise of the diligence of a good father of a family, to carefully examine the applicant for employment as to his qualifications, experience and record service, and not merely be satisfied with the possession of a professional driver's license.

It goes on to say since the testimonies of these witnesses were allegedly neither discredited nor impeached by the adverse party, they should be believed and not arbitrarily disregarded or rejected nor disturbed on appeal. It assiduously argues that inasmuch as there is no law requiring that facts alleged by petitioner be established by documentary evidence, the probative force and weight of their testimonies should not be discredited, with the further note that the lower court having passed upon the relevancy of the oral testimonies and considered the same as unrebutted, its consideration should no longer be disturbed on appeal. 23

Private respondent, on the other hand, retorts that the factual findings of respondent court are conclusive upon the High Court which cannot be burdened with the task of analyzing and weighing the evidence all over again. 24

At this juncture, it suffices to note that factual findings of the trial court may be reversed by the Court of Appeals, which is vested by law with the power to review both legal and factual issues, if on the evidence of record, it appears that the trial court

may have been mistaken 25 particularly in the appreciation of evidence, which is within the domain of the Court of Appeals. 26 The general rule laid down in a plethora of cases is that such findings of fact by the Court of Appeals are conclusive upon and beyond the power of review of the Supreme Court. 27However, it is now well-settled that while the findings of fact of the Court of Appeals are entitled to great respect, and even finality at times, that rule is not inflexible and is subject to well established exceptions, to wit: (1) when the conclusion is a finding grounded entirely on speculation, surmises and conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) where there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee; (7) when the findings of the Court of Appeals are contrary to those of the trial court; (8) when the findings of fact are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition, as well as in the petitioner's main and reply briefs are not disputed by the respondents and (10) when the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and are contradicted by the evidence on record. 28

When as in this case, the findings of the Court of Appeals and the trial court are contrary to each other, this court may scrutinize the evidence on record, 29 in order to arrive at a correct finding based thereon. 30

A perusal of the same shows that since there is no dispute as to the finding of concurrent negligence on the part of the defendant Calebag, the driver of the passenger jeepney, and co-defendant Leonardo, the bus driver of petitioner MMTC, both of whom were solidarily held liable with defendant Lamayo, the owner of the jeepney, we are spared the necessity of determining the sufficiency of evidence establishing the fact of negligence. 31 The contrariety is in the findings of the two lower courts, and which is the subject of this present controversy, with regard to the liability of MMTC as employer of one the erring drivers.

The trial court, in absolving MMTC from liability ruled that —

On the question as to whether defendant MMTC was successful in proving its defense that indeed it had exercised the due diligence of a good father of a family in the selection and supervision of defendant Leonardo, this Court finds that based on the evidence presented during the trial, defendant MMTC was able to prove that it was not only careful and diligent in choosing and screening applicants for job openings but also strict (and) diligent in supervising its employees by seeing to it that its employees were in proper uniforms, briefed in traffic rules and regulations before the start of duty, checked employees to determine whether they were positive for alcohol and followed other rules and regulations and guidelines of the Bureau of Land Transportation as well as its company. Having successfully proven such defense, defendant MMTC therefore, cannot be held liable for the accident.

Having reached this conclusion, the Court now, holds that defendant MMTC be totally absolved from liability and that the complaint against it be dismissed. . . . 32

whereas respondent court was of the opinion that —

It is surprising though that witness Milagros Garbo did not testify nor present any evidence that defendant-appellee's driver, defendant Godofredo Leonardo has complied with or has undergone all clearances and trainings she referred to. The clearances, result of seminars and tests which Godofredo Leonardo submitted and complied with, if any, were not presented in court despite the fact that they are obviously in the possession and control of defendant-appellee. Instead, it resorted to generalities. The Court has ruled that due diligence in (the) selection and supervision of employee(s) are not proved by mere testimonies to the effect that its applicant has complied with all the company requirements before one is admitted as an employee but without proof thereof. . . .

On the part of Christian Bautista, the transport supervisor of defendant-appellee, he testified that it is his duty to monitor the operation of buses in the field; to countercheck the dispatchers' duty prior to the operation of the buses in the morning; to see to it that bus crew follows written guidelines of the company (t.s.n., April 29, 1988, pp. 4-5), but when asked to present in court the alleged written guidelines of the company he merely stated that he brought with him a "wrong document" and defendant-appellee's counsel asked for reservation to present such written guidelines in the next hearing but the same was (sic) never presented in court. 33

A thorough and scrupulous review of the records of this case reveals that the conclusion of respondent Court of Appeals is more firmly grounded on jurisprudence and amply supported by the evidence of record than that of the court below.

It is procedurally required for each party in a case to prove his own affirmative assertion by the degree of evidence required by law. 34 In civil cases, the degree of evidence required of a party in order to support his claim is preponderance of evidence, or that evidence adduced by one party which is more conclusive and credible than that of the other party. It is, therefore, incumbent on the plaintiff who is claiming a right to prove his case. Corollarily, defendant must likewise prove own allegation to buttress its claim that it is not liable. 35

In fine, the party, whether plaintiff or defendant, who asserts the affirmative of the issue has the burden of presenting at the trial such amount of evidence required by law to obtain a favorable judgment. 36 It is entirely within each of the parties discretion, consonant with the theory of the case it or he seeks to advance and subject to such procedural strategy followed thereby, to present all available evidence at its or his disposal in the manner which may be deemed necessary and beneficial to prove its or his position, provided only that the same shall measure up to the quantum of evidence required by law. In making proof in its or his case, it is paramount that the best and most complete evidence be formally entered. 37

Coming now to the case at bar, while there is no rule which requires that testimonial evidence, to hold sway, must be corroborated by documentary evidence, or even subject evidence for that matter, inasmuch as the witnesses' testimonies dwelt on mere generalities, we cannot consider the same as sufficiently persuasive proof that there was observance of due diligence in the selection and supervision of employees. 38 Petitioner's attempt to prove itsdiligentissimi patris familias in the selection and supervision of employees through oral evidence must fail as it was unable to buttress the same with any other evidence, object or documentary, which might obviate the apparent biased nature of the testimony. 39

Our view that the evidence for petitioner MMTC falls short of the required evidentiary quantum as would convincingly and undoubtedly prove its observance of the diligence of a good father of a family has its precursor in the underlying rationale pronounced in the earlier case of Central Taxicab Corp. vs. Ex-Meralco Employees Transportation Co., et al., 40 set amidst an almost identical factual setting, where we held that:

. . . . This witness spoke of an "affidavit of experience" which a driver-applicant must accomplish before he is employed by the company, a written "time schedule" for each bus, and a record of the inspections and thorough checks pertaining to each bus before it leaves the car barn; yet no attempt was ever made to present in evidence any of these documents, despite the fact that they were obviously in the possession and control of the defendant company.

xxx xxx xxx

Albert also testified that he kept records of the preliminary and final tests given him as well as a record of the qualifications and experience of each of the drivers of the company. It is rather strange, therefore, that he failed to produce in court the all important record of Roberto, the driver involved in this case.

The failure of the defendant company to produce in court any "record" or other documentary proof tending to establish that it had exercised all the diligence of a good father of a family in the selection and

supervision of its drivers and buses, notwithstanding the calls therefor by both the trial court and the opposing counsel, argues strongly against its pretensions.

We are fully aware that there is no hard-and-fast rule on the quantum of evidence needed to prove due observance of all the diligence of a good father of a family as would constitute a valid defense to the legal presumption of negligence on the part of an employer or master whose employee has by his negligence, caused damage to another. . . . (R)educing the testimony of Albert to its proper proportions, we do not have enough trustworthy evidence left to go by. We are of the considered opinion, therefore, that the believable evidence on the degree of care and diligence that has been exercised in the selection and supervision of Roberto Leon y Salazar, is not legally sufficient to overcome the presumption of negligence against the defendant company.

Whether or not the diligence of a good father of a family has been observed by petitioner is a matter of proof which under the circumstances in the case at bar has not been clearly established. It is not felt by the Court that there is enough evidence on record as would overturn the presumption of negligence, and for failure to submit all evidence within its control, assuming the putative existence thereof, petitioner MMTC must suffer the consequences of its own inaction and indifference.

2. In any event, we do not find the evidence presented by petitioner sufficiently convincing to prove the diligence of a good father of a family, which for an employer doctrinally translates into its observance of due diligence in the selection and supervision of its employees but which mandate, to use an oft-quoted phrase, is more often honored in the breach than in the observance.

Petitioner attempted to essay in detail the company's procedure for screening job applicants and supervising its employees in the field, through the testimonies of Milagros Garbo, as its training officer, and Christian Bautista, as its transport supervisor, both of whom naturally and expectedly testified for MMTC. It then concluded with its sweeping pontifications that "thus, there is no doubt that considering the nature of the business of petitioner, it would not let any applicant-drivers to be (sic) admitted without undergoing the rigid selection and training process with the end (in) view of protecting the public in general and its passengers in particular; . . . thus, there is no doubt that applicant had fully complied with the said requirements otherwise Garbo should not have allowed him to undertake the next set of requirements . . . and the training conducted consisting of seminars and actual driving tests were satisfactory otherwise he should have not been allowed to drive the subject vehicle. 41

These statements strike us as both presumptuous and in the nature of petitio principii, couched in generalities and shorn of any supporting evidence to boost their verity. As earlier observed, respondent court could not but express surprise, and thereby its incredulity, that witness Garbo neither testified nor presented any evidence that driver Leonardo had complied with or had undergone all the clearances and trainings she took pains to recite and enumerate. The supposed clearances, results of seminars and tests which Leonardo allegedly submitted and complied with were never presented in court despite the fact that, if true, then they were obviously in the possession and control of petitioner. 42

The case at bar is clearly within the coverage of Article 2176 and 2177, in relation to Article 2180, of the Civil Code provisions on quasi-delicts as all the elements thereof are present, to wit: (1) damages suffered by the plaintiff, (2) fault or negligence of the defendant or some other person for whose act he must respond, and (3) the connection of cause and effect between fault or negligence of the defendant and the damages incurred by plaintiff. 43 It is to be noted that petitioner was originally sued as employer of driver Leonardo under Article 2180, the pertinent parts of which provides that:

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

xxx xxx xxx

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

xxx xxx xxx

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

The basis of the employer's vicarious liability has been explained under this ratiocination:

The responsibility imposed by this article arises by virtue of a presumption juris tantum of negligence on the part of the persons made responsible under the article, derived from their failure to exercise due care and vigilance over the acts of subordinates to prevent them from causing damage. Negligence is imputed to them by law, unless they prove the contrary. Thus, the last paragraph of the article says that such responsibility ceases if is proved that the persons who might be held responsible under it exercised the diligence of a good father of a family (diligentissimi patris familias) to prevent damage. It is clear, therefore, that it is not representation, nor interest, nor even the necessity of having somebody else answer for the damages caused by the persons devoid of personality, but it is the non-performance of certain duties of precaution and prudence imposed upon the persons who become responsible by civil bond uniting the actor to them, which forms the foundation of such responsibility. 44

The above rule is, of course, applicable only where there is an employer-employee relationship, although it is not necessary that the employer be engaged in business or industry. Whether or not engaged in any business or industry, the employer under Article 2180 is liable for torts committed by his employees within the scope of their assigned tasks. But, it is necessary first to establish the employment relationship. Once this is done, the plaintiff must show, to hold the employer liable, that the employee was acting within the scope of his assigned task when the tort complained of was committed. It is only then that the defendant, as employer, may find it necessary to interpose the defense of due diligence in the selection and supervision of employees. 45 The diligence of a good father of a family required to be observed by employers to prevent damages under Article 2180 refers to due diligence in the selection and supervision of employees in order to protect the public. 46

With the allegation and subsequent proof of negligence against the defendant driver and of an employer-employee relation between him and his co-defendant MMTC in this instance, the case in undoubtedly based on aquasi-delict under Article 2180 47 When the employee causes damage due to his own negligence while performing his own duties, there arises the juris tantum presumption that the employer is negligent, 48 rebuttable only by proof of observance of the diligence of a good father of a family. For failure to rebut such legal presumption of negligence in the selection and supervision of employees, the employer is likewise responsible for damages, 49the basis of the liability being the relationship of pater familias or on the employer's own negligence. 50

As early as the case of Gutierrez vs. Gutierrez, 51 and thereafter, we have consistently held that where the injury is due to the concurrent negligence of the drivers of the colliding vehicles, the drivers and owners of the said vehicles shall be primarily, directly and solidarily liable for damages and it is immaterial that one action is based onquasi-delict and the other on culpa contractual, as the solidarily of the obligation is justified by the very nature thereof. 52

It should be borne in mind that the legal obligation of employers to observe due diligence in the selection and supervision of employees is not to be considered as an empty play of words or a mere formalism, as appears to be the fashion of the times, since the non-observance thereof actually becomes the basis of their vicarious liability under Article 2180.

On the matter of selection of employees, Campo vs. Camarote, supra, lays down this admonition:

. . . . In order tat the owner of a vehicle may be considered as having exercised all diligence of a good father of a family, he should not have been satisfied with the mere possession of a professional driver's license; he should have carefully examined the applicant for employment as to his qualifications, his experience and record of service. These steps appellant failed to observe; he has therefore, failed to exercise all due diligence required of a good father of a family in the choice or selection of driver.

Due diligence in the supervision of employees, on the other hand, 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. 53 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.

In order that the defense of due diligence in the selection and supervision of employees may be deemed sufficient and plausible, it is not enough to emptily invoke the existence of said company guidelines and policies on hiring and supervision. As the negligence of the employee gives rise to the presumption of negligence on the part of the employer, the latter has the burden of proving that it has been diligent not only in the selection of employees but also in the actual supervision of their work. The mere allegation of the existence of hiring procedures and supervisory policies, without anything more, is decidedly not sufficient to overcome presumption.

We emphatically reiterate our holding, as a warning to all employers, that "(t)he mere formulation of various company policies on safety without showing that they were being complied with is not sufficient to exempt petitioner from liability arising from negligence of its employees. It is incumbent upon petitioner to show that in recruiting and employing the erring driver the recruitment procedures and company policies on efficiency and safety were followed." 54 Paying lip-service to these injunctions or merely going through the motions of compliance therewith will warrant stern sanctions from the Court.

These obligations, imposed by the law and public policy in the interests and for the safety of the commuting public, herein petitioner failed to perform. Respondent court was definitely correct in ruling that ". . . due diligence in the selection and supervision of employee (is) not proved by mere testimonies to the effect that its applicant has complied with all the company requirements before one is admitted as an employee but without proof thereof." 55 It is further a distressing commentary on petitioner that it is a government-owned public utility, maintained by public funds, and organized for the public welfare.

The Court it is necessary to once again stress the following rationale behind these all-important statutory and jurisprudential mandates, for it has been observed that despite its pronouncement in Kapalaran Bus Line vs. Coronado, et al., supra, there has been little improvement in the transport situation in the country:

In requiring the highest possible degree of diligence from common carriers and creating a presumption of negligence against them, the law compels them to curb the recklessness of their drivers. While the immediate beneficiaries of the standard of extraordinary diligence are, of course, the passengers and owners of the cargo carried by a common carrier, they are not the only persons that the law seeks to benefit. For if common carriers carefully observe the statutory standard of extraordinary diligence in respect of their own passengers, they cannot help but simultaneously benefit pedestrians and the owners and passengers of other vehicles who are equally entitled to the safe and convenient use of our roads and highways. The law seeks to stop and prevent the slaughter and maiming of people (whether passengers or not) and the destruction of property (whether freight or not) on our highways by buses, the very size and power of which seem often to inflame the minds of their drivers. . . .

Finally, we believe that respondent court acted in the exercise of sound discretion when it affirmed the trial court's award, without requiring the payment of interest thereon as an item of damages just because of delay in the determination thereof, especially since private respondent did not specifically pray therefor in her complaint. Article 2211 of the Civil Code provides that in quasi-delicts, interest as a part of the damages may be awarded in the discretion of the court, and not as a matter of right. We do not perceive that there have been international dilatory maneuvers or any special circumstances which would justify that additional award and, consequently, we find no reason to disturb said ruling.

WHEREFORE, the impugned decision of respondent Court of Appeals is hereby AFFIRMED.

SO ORDERED.

SECOND DIVISION[G.R. No. 122039. May 31, 2000.]

VICENTE CALALAS, petitioner, vs. COURT OF APPEALS, ELIZA JUJEURCHE SUNGA and FRANCISCO SALVA, respondents.

Leo B. Diocos for petitioner.Enrique S. Empleo for E.J. Sunga.Eduardo T. Sedillo for F. Salva.

SYNOPSIS

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 that bumped their passenger jeepney. 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. On appeal, the Court of Appeals reversed the ruling of the lower court on the ground that Sunga's 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. Hence, this petition.

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. 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 observed extraordinary diligence in the care of his passengers. 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 showed he was actually negligent in transporting passengers. The decision of the Court of Appeals was, affirmed, with the modification that the award of moral damages was deleted.

SYLLABUS

1.CIVIL LAW; TORTS AND DAMAGES; QUASI-DELICT AND BREACH OF CONTRACT; DISTINGUISHED; CASE AT BAR. — The issue in Civil Case No. 3490 was whether Salva and his driver Verena were liable for quasi-delict for the damage caused to petitioner's 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. Consequently, inquasi-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. 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.

2.ID.; ID.; ID.; DOCTRINE OF PROXIMATE CAUSE; NOT APPLICABLE IN ACTIONS INVOLVING BREACH OF CONTRACT; RATIONALE. — 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.

3.ID.; ID.; ID.; CASO FORTUITO; DEFINED; REQUIREMENTS THEREOF. — A caso fortuito is an event which could not be foreseen, or which, though foreseen, was inevitable. This requires that the following requirements be present: (a) the cause of the breach is independent of the debtor's 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. Petitioner should have foreseen the danger of parking his jeepney with its body protruding two meters into the highway.

4.ID.; DAMAGES; MORAL DAMAGES; WHEN IT MAY BE RECOVERED. — 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. 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. SCDaET

D E C I S I O N

MENDOZA, J p:

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. prLL

The facts, as found by the Court of Appeals, are as follows:

At 10 o'clock 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.

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. dctai

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.

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.

On appeal to the Court of Appeals, the ruling of the lower court was reversed on the ground that Sunga's cause of action was based on a contract of carriage, notquasi-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 attorney's 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. prLL

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.

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 forquasi-delict for the damage caused to petitioner's 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.

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.

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 petitioner's 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: llcd

ARTICLE 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. LLjur

ARTICLE 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.

ARTICLE 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.

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 petitioner's contention.

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:

SECTION 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. LLpr

Second, it is undisputed that petitioner's driver took in more passengers than the allowed seating capacity of the jeepney, a violation of §32(a) of the same law. It provides:

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.

We find it hard to give serious thought to petitioner's contention that Sunga's 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 petitioner's 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 debtor's 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. dctai

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:

Plaintiff-appellant at the time of the accident was a first-year college student in that school year 1989-1990 at the Siliman 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."

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 . . . has a defect already." LLphil

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.

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. Sunga's contention that petitioner's 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. LLpr

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.

EN BANC

[G.R. No. L-21438. September 28, 1966.]

AIR FRANCE, petitioner, vs. RAFAEL CARRASCOSO and THE HONORABLE COURT OF APPEALS, respondents.

Lichauco, Picazo & Agcaoili for petitioner.

Bengzon, Villegas & Zarraga for respondent R. Carrascoso.

SYLLABUS

1.JUDGMENT; FINDINGS OF FACT; REQUIREMENT OF LAW. — Courts of justice are not burdened with the obligation to specify in the sentence every bit and piece of evidence presented by the parties upon the issues raised. The law solely insists that a decision state the "essential ultimate facts" upon which the court's conclusion is drawn.

2.ID.; ID.; ID.; APPEAL AND ERROR; FAILURE TO MAKE FINDINGS ON EVIDENCE AND CONTENTIONS OF ONE PARTY, EFFECT OF; DECISION NOT TO BE CLOGGED WITH DETAILS. — The mere failure to make specific findings of fact on the evidence presented for the defense or to specify in the decision the contentions of the appellant and the reasons for refusing to believe them is not sufficient to hold the same contrary to the requirement of the law and the Constitution. There is no law that so requires. A decision is not to be clogged with details such that prolixity, if not confusion, may result.

3.ID.; ID.; ID.; FINDINGS OF FACT BY COURTS DEFINED. — Findings of fact may be defined as the written statement of the ultimate facts as found by the court and essential to support the decision and judgment rendered thereon; they consist of the court's "conclusions with respect to the determinative facts on issue."

4.ID.; ID.; ID.; QUESTION OF LAW EXPLAINED. — A question of law is "one which does not call for an examination of the probative value of the evidence presented by the parties."

5.PLEADING AND PRACTICE; APPEAL; WHAT MAY BE RAISED ON APPEAL FROM COURT OF APPEALS. — It is not appropriately the business of the Supreme Court to alter the facts or to review the questions of fact because, by statute, only questions of law may be raised in an appeal by certiorari from a judgment of the Court of Appeals, which judgment is conclusive as to the facts.

6.ID.; ID.; EFFECT OF AFFIRMANCE BY COURT OF APPEALS OF TRIAL COURT'S DECISION. — When the Court of Appeals affirms a judgment of the trial court, and the findings of fact of said appellate court are not in any way at war with those of the trial court, nor is said affirmance upon a ground or grounds different from those which were made the basis of the trial court's conclusions, such judgment of affirmance is (1) a determination by the Court of Appeals that the proceeding in the lower court

was free from prejudicial error; (7) that all questions raised by the assignments of error and all questions that might have been so raised have been finally adjudicated as free from all error.

7.ID.; COMPLAINT; SPECIFIC MENTION OF THE TERM "BAD FAITH" IN THE COMPLAINT NOT REQUIRED. — Although there is no specific mention of the term bad faith in the complaint, the inference of bad faith may be drawn from the facts and circumstances set forth therein. 8. EVIDENCE; FINDING OF COURT OF APPEALS THAT RESPONDENT WAS ENTITLED TO A FIRST CLASS SEAT. — The Court of Appeals properly found that a first class-ticket holder is entitled to first class seat, given the fact that seat availability in specific flights is therein confirmed; otherwise, an air passenger will be placed in the hollow of the hands of an airline, because it will always be easy for an airline to strike out the very stipulations in the ticket and say that there was verbal agreement to the contrary. If only to achieve stability in the relations between passenger and air carrier, adherence to the ticket so issued is desirable.

9.ID.; LACK OF SPECIFIC AVERMENT OF BAD FAITH CURED BY NOTICE TO DEFENDANT OF WHAT PLAINTIFF INTENDS TO PROVE AND BY EVIDENCE PRESENTED WITHOUT OBJECTION; AMENDMENT OF COMPLAINT TO CONFORM TO EVIDENCE UNNECESSARY. — If there was lack of specific averment of bad faith in the complaint, such deficiency was cured by notice, right at the start of the trial, by plaintiff's counsel to defendant as to what plaintiff intended to prove: while in the plane in Bangkok, plaintiff was ousted by defendant's manager who gave his seat to a white man; and by evidence of bad faith in the fulfillment of the contract presented without objection on the part of the defendant. An amendment of the complaint to conform to the evidence is not even required.

10.ID.; ADMISSIBILITY OF TESTIMONY ON AN ENTRY IN A NOTEBOOK; TESTIMONY NOT COVERED BY BEST EVIDENCE RULE. — The testimony of a witness that the purser made an entry in his notebook reading "First Class passenger was forced to go to the tourist class against his will and that the captain refused to intervene," is competent and admissible because the subject of the inquiry is not the entry but the ouster incident. It does not come within the prescription of the best evidence rule.

11.CONTRACT OF CARRIAGE; QUASI-DELICT; LIABILITY OF COMMON CARRIERS; CASE AT BAR. — Neglect or malfeasance of the carrier's employees could give ground for an action for damages. Damages here are proper because the stress of respondent's action is placed upon his wrongful expulsion, which is a violation of a public duty by petitioner- aircarrier — a case of quasi-delict.

12.ID.; ID.; ID.; AWARD OF MORAL DAMAGES FOR BREACH OF CONTRACT. — Award of moral damages is proper, despite petitioner's argument that respondent's action is planted upon breach of contract, where the stress of the action is put on wrongful expulsion, the contract having been averred only to establish the relation between the parties.

13.ID.; ID.; ID.; EMPLOYER IS RESPONSIBLE FOR TORTIOUS ACTS OF HIS EMPLOYEE; CASE AT BAR. — The responsibility of an employer for the tortious act of his employees is well settled in law. (Art. 2130, Civil Code). Petitioner-aircarrier must answer for the willful, malevolent act of its manager.

14.ID.; ID.; ID.; LIABILITY FOR EXEMPLARY DAMAGES; POWER OF COURTS TO GRANT; CASE AT BAR. — The Civil Code gives the court ample power to grant exemplary damages, the only condition being that defendant should have "acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner." As the manner of ejectment of plaintiff from his first class seat fits into this legal precept, exemplary damages are well awarded, in addition to moral damages.

15.ID.; ID.; LIABILITY FOR ATTORNEY'S FEES; COURT DISCRETION WELL EXERCISED SHOULD NOT BE DISTURBED. — The grant of exemplary damages justifies a similar judgment for attorney's fees. The court below felt that it is but just and equitable that attorney's fees be given and the Supreme Court does not intend to break faith with the tradition that discretion well-exercised — as it is here should not be disturbed.

16.ID.; RIGHTS OF PASSENGERS. — Passengers do not contract merely for transportation. They have a right to be treated by the carrier's employees with kindness, respect, courtesy and due consideration. They are entitled to be protected against

personal misconduct, injurious language, indignities and abuses from such employees. So, any rude or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier. (4 R. C. L-1174-1175).

17.ID.; BREACH OF CONTRACT MAY BE A TORT. — Although the relation of passenger and carrier is contractual both in origin and nature, nevertheless, the act that breaks the contract may also be a tort.

18.WORDS AND PHRASES; BAD FAITH DEFINED. — "Bad faith", as understood in law, contemplates a state of mind affirmatively operating with furtive design or with some motive of self-interest or ill will or for ulterior purpose

D E C I S I O N

SANCHEZ, J p:

The Court of First Instance of Manila 1 sentenced petitioner to pay respondent Rafael Carrascoso P25,000.00 by way of moral damages; P10,000.00 as exemplary damages; P393.20 representing the difference in fare between first class and tourist class for the portion of the trip Bangkok-Rome, these various amounts with interest at the legal rate, from the date of the filing of the complaint until paid; plus P3,000.00 for attorneys' fees; and the costs of suit.

On appeal, 2 the Court of Appeals slightly reduced the amount of refund on Carrascoso's plane ticket from P393.20 to P383.10, and voted to affirm the appealed decision "in all other respects", with costs against petitioner.

The case is now before us for review on certiorari.

The facts declared by the Court of Appeals as "fully supported by the evidence of record", are:

"Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila for Lourdes on March 30, 1958.

On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines, Inc., issued to plaintiff a 'first class' round trip airplane ticket from Manila to Rome. From Manila to Bangkok, plaintiff traveled in 'first class', but at Bangkok, the Manager of the defendant airline forced plaintiff to vacate the 'first class' seat that he was occupying because, in the words of the witness Ernesto G. Cuento, there was a 'white man', who, the Manager alleged, had a 'better right to the seat. When asked to vacate his 'first class' seat, the plaintiff, as was to be expected, refused, and told defendant's Manager that his seat would be taken over his dead body; a commotion ensued, and, according to said Ernesto G. Cuento, many of the Filipino passengers got nervous in the tourist class; when they found out that Mr. Carrascoso was having a hot discussion with the white man [manager], they came all across to Mr. Carrascoso and pacified Mr. Carrascoso to give his seat to the 'white man' (Transcript, p. 12, Hearing of May 26, 1959); and plaintiff reluctantly gave his 'first class' seat in the plane." 3

1.The thrust of the relief petitioner now seeks is that we review "all the findings" 4 of respondent Court of Appeals. Petitioner charges that respondent court failed to make complete findings of fact on all the issues properly laid before it. We are asked to consider facts favorable to petitioner, and then, to overturn the appellate court's decision.

Coming into focus is the constitutional mandate that "No decision shall be rendered by any court of record without expressing therein clearly and distinctly the facts and the law on which it is based". 5 This is echoed in the statutory demand that a judgment determining the merits of the case shall state "clearly and distinctly the facts and the law on which it is based", 6 and that "Every decision of the Court of Appeals shall contain complete findings of fact on all issues properly raised before it." 7

A decision with absolutely nothing to support it is a nullity. It is open to direct attack. 8 The law, however, solely insists that a decision state the "essential ultimate facts" upon which the court's conclusion is drawn. 9 A court of justice is not hidebound to write in its decision every bit and piece of evidence 10 presented by one party and the other upon the issues raised. Neither is it to be burdened with the obligation "to specify in the sentence the facts" which a party "considered as proved". 11 This is but a part of the mental process from which the Court draws the essential ultimate facts. A decision is not to be so clogged with details such that prolixity, if not confusion, may result. So long as the decision of the Court of Appeals contains the necessary facts to warrant its conclusions, it is no error for said court to withhold therefrom "any specific finding of facts with respect to the evidence for the defense". Because, as this Court well observed, "There is no law that so requires". 12 Indeed, "the mere failure to specify (in the decision) the contentions of the appellant and the reasons for refusing to believe them is not sufficient to hold the same contrary to the requirements of the provisions of law and the Constitution". It is in this setting that in Manigque, it was held that the mere fact that the findings "were based entirely on the evidence for the prosecution without taking into consideration or even mentioning the appellant's side in the controversy as shown by his own testimony", would not vitiate the judgment. 13 If the court did not recite in the decision the testimony of each witness for, or each item of evidence presented by, the defeated party, it does not mean that the court has overlooked such testimony or such item of evidence. 14 At any rate, the legal presumptions are that official duty has been regularly performed, and that all the matters within an issue in a case were laid before the court and passed upon by it. 15

Findings of fact, which the Court of Appeals is required to make, may be defined as "the written statement of the ultimate facts as found by the court . . . and essential to support the decision and judgment rendered thereon". 16 They consist of the court's "conclusions with respect to the determinative facts in issue" 17 A question of law, upon the other hand, has been declared as "one which does not call for an examination of the probative value of the evidence presented by the parties." 18

2.By statute, "only questions of law may be raised" in an appeal by certiorari from a judgment of the Court of Appeals 19 That judgment is conclusive as to the facts. It is not appropriately the business of this Court to alter the facts or to review the questions of fact. 20

With these guideposts, we now face the problem of whether the findings of fact of the Court of Appeals support its judgment.

3.Was Carrascoso entitled to the first class seat he claims?

It is conceded in all quarters that on March 28, 1958 he paid to and received from petitioner a first class ticket. But petitioner asserts that said ticket did not represent the true and complete intent and agreement of the parties; that said respondent knew that he did not have confirmed reservations for first class on any specific flight, although he had tourist class protection; that, accordingly, the issuance of a first class ticket was no guarantee that he would have a first class ride, but that such would depend upon the availability of first class seats.

These are matters which petitioner has thoroughly presented and discussed in its brief before the Court of Appeals under its third assignment of error, which reads: "The trial court erred in finding that plaintiff had confirmed reservations for, and a right to, first class seats on the 'definite' segments of his journey, particularly that from Saigon to Beirut." 21

And, the Court of Appeals disposed of this contention thus:

"Defendant seems to capitalize on the argument that the issuance of a first-class ticket was no guarantee that the passenger to whom the same had been issued, would be accommodated in the first-class compartment, for as in the case of plaintiff he had yet to make arrangements upon arrival at every station for the necessary first class reservation. We are not impressed by such a reasoning. We

cannot understand how a reputable firm like defendant airplane company could have the indiscretion to give out ticket it never meant to honor at all. It received the corresponding amount in payment of first-class tickets end yet it allowed the passenger to be at the mercy of its employees. It is more in keeping with the ordinary course of business that the company should know whether or not the tickets it issues are to be honored or not." 22

Not that the Court of Appeals is alone. The trial court similarly disposed of petitioner's contention, thus:

"On the fact that plaintiff paid for, and was issued a 'First class ticket, there can be no question. Apart from his testimony, see plaintiffs Exhibits 'A', 'A-1' 'B', 'B-1', 'B-2', 'C' and 'C-1', and defendant's own witness, Rafael Altonaga, confirmed plaintiff's testimony and testified as follows:

Q.In these tickets there are marks 'O.K.' From what you know, what does this O.K. mean?

A.That the space is confirmed.

Q.Confirmed for first class?

A.Yes, 'first class'. (Transcript, p. 169)

xxx xxx xxx

"Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga that although plaintiff paid for, and was issued a 'first class' airplane ticket, the ticket was subject to confirmation in Hongkong. The court cannot give credit to the testimony of said witnesses. Oral evidence cannot prevail over written evidence, and plaintiff's Exhibits 'A', 'A1', 'B', 'B-1', 'C' and 'C- 1' belie the testimony of said witnesses, and clearly show that the plaintiff was issued, and paid for, a first class ticket without any reservation whatever.

Furthermore, as hereinabove shown, defendant's own witness Rafael Altonaga testified that the reservation for a 'first class' accommodation for the plaintiff was confirmed. The court cannot believe that after such confirmation ,defendant had a verbal understanding with plaintiff that the 'first class' ticket issued to him by defendant would be subject to confirmation in Hongkong." 23

We have heretofore adverted to the fact that except for a slight difference of a few pesos in the amount refunded on Carrascoso's ticket, the decision of the Court of First Instance was affirmed by the Court of Appeals in all other respects. We hold the view that such a judgment of affirmance has merged the judgment of the lower court. 24 Implicit in that affirmance is a determination by the Court of Appeals that the proceeding in the Court of First Instance was free from prejudicial error and that 'all questions raised by the assignments of error and all questions that might have been so raised are to be regarded as finally adjudicated against the appellant". So also, the judgment affirmed "must be regarded as free from all error" 25 We reached this policy construction because nothing in the decision of the Court of Appeals on this point would suggest that its findings of fact are in any way at war with those of the trial court. Nor was said affirmance by the Court of Appeals upon a ground or grounds different from those which were made the basis of the conclusions of the trial court. 26

If, as petitioner underscores, a first-class-ticket holder is not entitled to a first class seat, notwithstanding the fact that seat availability in specific flights is therein confirmed, then an air passenger is placed in the hollow of the hands of an airline. What security then can a passenger have? It will always be an easy matter for an airline aided by its employees, to strike out the very stipulations in the ticket, and say that there was a verbal agreement to the contrary. What if the passenger had a schedule to fulfill? We have long learned that, as a rule, a written document speaks a uniform language; that spoken word could be

notoriously unreliable. If only to achieve stability in the relations between passenger and air carrier, adherence to the ticket so issued is desirable. Such is the case here. The lower courts refused to believe the oral evidence intended to defeat the covenants in the ticket.

The foregoing are the considerations which point to the conclusion that there are facts upon which the Court of Appeals predicated the finding that respondentCarrascoso had a first class ticket and was entitled to a first class seat at Bangkok, which is a stopover in the Saigon to Beirut leg of the flight, 27 We perceive no "welter of distortions by the Court of Appeals of petitioner's statement of its position", as charged by petitioner. 28 Nor do we subscribe to petitioners accusation that respondent Carrascoso "surreptitiously took a first class seat to provoke an issue". 29 And this because, as petitioner states, Carrascoso went to see the Manager at his office in Bangkok "to confirm my seat and because from Saigon I was told again to see the Manager. 30 Why, then, was he allowed to take a first class seat in the plane at Bangkok, if he had no seat? Or, if another had a better right to the seat?

4.Petitioner assails respondent court's award of moral damages. Petitioner's trenchant claim is that Carrascoso's action is planted upon breach of contract; that to authorize an award for moral damages there must be an averment of fraud or bad faith; 31 and that the decision of the Court of Appeals fails to make a finding of bad faith. The pivotal allegations in the complaint bearing on this issue are:

"3.That . . . plaintiff entered into a contract of air carriage with the Philippine Air Lines for a valuable consideration, the latter acting as general agents for and in behalf of the defendant, under which aid contract, plaintiff was entitled to, as defendant agreed to furnish plaintiff, First Class passage on defendant's plane during the entire duration of plaintiff's tour of Europe with Hongkong as starting point up to and until plaintiff's return trip to Manila, . . .

4.That during the first two legs of the trip from Hongkong to Saigon and from Saigon to Bangkok, defendant furnished to the plaintiff First Class accommodation but only after protestations, arguments and/or insistence were made by the plaintiff with defendant's employees.

5.That finally, defendant failed to provide First Class passage, but instead furnished plaintiff only Tourist Class accommodations from Bangkok to Teheran and/or Casablanca, . . . the plaintiff has been compelled by defendant's employees to leave the First Class accommodation berths at Bangkok after he was already seated.

6.That consequently, the plaintiff, desiring no repetition of the inconvenience and embarrassments brought by defendant's breach of contract was forced to take a Pan American World Airways plane on his return trip from Madrid to Manila. 32

xxx xxx xxx

2.That likewise, as a result of defendant's failure to furnish First Class accommodations aforesaid, plaintiff suffered inconveniences, embarrassments, and humiliations, thereby causing plaintiff mental anguish, serious anxiety, wounded feelings, social humiliation, and the like injury, resulting in moral damages in the amount of P30,000.00." 33

xxx xxx xxx

The foregoing, in our opinion, substantially aver: First, That there was a contract to furnish plaintiff a first class passage covering, amongst others, the Bangkok-Teheran leg; Second, That said contract was breached when petitioner failed to furnish

first class transportation at Bangkok; and Third, That there was bad faith when petitioner's employee compelled Carrascoso to leave his first class accommodation berth "after he was already seated" and to take a seat in the tourist class, by reason of which he suffered inconvenience, embarrassments and humiliations, thereby causing him mental anguish, serious anxiety, wounded feelings and social humiliation, resulting in moral damages. It is true that there is no specific mention of the term bad faith in the complaint. But, the inference of bad faith is there; it may be drawn from the facts and circumstances set forth therein. 34 The contract was averred to establish the relation between the parties. But the stress of the action is put on wrongful expulsion.

Quite apart from the foregoing is that (a) right at the start of the trial, respondent's counsel placed petitioner on guard on what Carrascoso intended to prove: That while sitting in the plane in Bangkok, Carrascoso was ousted by petitioner's manager who gave his seat to a white man; 35 and (b) evidence of bad faith in the fulfillment of the contract was presented without objection on the part of the petitioner. It is, therefore, unnecessary to inquire as to whether or not there is sufficient averment in the complaint to justify an award for moral damages. Deficiency in the complaint, if any, was cured by the evidence. An amendment thereof to conform to the evidence is not even required. 36 On the question of bad faith, the Court of Appeals declared:

"That the plaintiff was forced out of his seat in the first class compartment of the plane belonging to the defendant Air France while at Bangkok, and was transferred to the tourist class not only without his consent but against his will, has been sufficiently established by plaintiff in his testimony before the court, corroborated by the corresponding entry made by the purser of the plane in his notebook which notation reads as follows:

'First-class passenger was forced to go to the tourist class against his will and that the captain refused to intervene',

and by the testimony of an eye-witness Ernesto G. Cuento, who was a co-passenger. The captain of the plane who was asked by the manager of defendant company at Bangkok to intervene even refused to do so. It is noteworthy that no one on behalf of defendant ever contradicted or denied this evidence for the plaintiff. It could have been easy for defendant to present its manager at Bangkok to testify at the trial of the case, or yet to secure his deposition; but defendant did neither. 37

The Court of Appeals further stated —

"Neither is there evidence as to whether or ,not a prior reservation was made by the white man. Hence, if the employees of the defendant at Bangkok sold a first-class ticket to him when all the seats had already been taken, surely the plaintiff should not have been picked out as the one to suffer the consequences and to be subjected to the humiliation and indignity of being ejected from his seat in the presence of others. Instead of explaining to the white man the improvidence committed by defendant's employees, the manager adopted the more drastic step of ousting the plaintiff who was then safely ensconced in his rightful seat. We are strengthened in our belief that this probably was what happened there, by the testimony of defendant's witness Rafael Altonaga who, when asked to explain the meaning of the letters 'O.K., appearing on the tickets of plaintiff, said that 'the space is confirmed' for first class. Likewise, Zenaida Faustino, another witness for defendant, who was the chief of the Reservation Office of defendant, testified as follows:

'Q.How does the person in the ticket-issuing office know what reservation the passenger has arranged with you?

A.They call us up by phone and ask for the confirmation.' (t.s.n., p. 247, June 19, 1959)

In this connection, we quote with approval what the trial Judge has said on this point:

'Why did the, using the words of witness Ernesto G. Cuento, 'white man' have a 'better right' to the seat occupied by Mr. Carrascoso? The record is silent. The defendant airline did not prove 'any better', nay, any right on the part of the 'white man' to the 'First class' seat that the plaintiff was occupying and for which he paid and was issued a corresponding 'first class' ticket.

'If there was a justified reason for the action of the defendant's Manager in Bangkok, the defendant could have easily proven it by having taken the testimony of the said Manager by deposition, but defendant did not do so; the presumption is that evidence willfully suppressed would be adverse if produced [Sec. 69, par. (e) Rules of Court]; and, under the circumstances, the Court is constrained to find, as it does find, that the Manager of the defendant airline in Bangkok not merely asked but threatened the plaintiff to throw him out of the plane if he did not give up his 'first class' seat because the said Manager wanted to accommodate using the words of the witness Ernesto G. Cuento, the 'white man'." 38

It is really correct to say that the Court of Appeals in the quoted portion first transcribed did not use the term "bad faith". But can it be doubted that the recital of facts therein points to bad faith? The manager not only prevented Carrascoso from enjoying his right to a first class seat; worse, he imposed his arbitrary will; he forcibly ejected him from his seat, made him suffer the humiliation of having to go to the tourist class compartment — just to give way to another passenger whose right thereto has not been established. Certainly, this is bad faith. Unless, of course, bad faith has assumed a meaning different from what is understood in law. For, "bad faith" contemplates a "state of mind affirmatively operating with furtive design or with some motive of self-interest or ill will or for ulterior purposes." 39

And if the foregoing were not yet sufficient, there is the express finding of bad faith in the judgment of the Court of First Instance, thus:

"The evidence shows that defendant violated its contract of transportation with plaintiff in bad faith, with the aggravating circumstances that defendant's Manager in Bangkok went to the extent of threatening the plaintiff in the presence of many passengers to have him thrown out of the airplane to give the 'first class' seat that he was occupying to, again using the words of witness Ernesto G. Cuento, a 'white man' whom he (defendant's Manager) wished to accommodate, and the defendant has not proven that this 'white man' had any 'better right' to occupy the 'first class' seat that the plaintiff was occupying, duly paid for, and for which the corresponding 'first class' ticket was issued by the defendant to him." 40

5.The responsibility of an employer for the tortuous act of its employees-need not be essayed. It is well settled in law. 41 For the willful malevolent act of petitioner's manager, petitioner's his employer, must answer. Article 21 of the Civil Code says:

"Art. 21.Any person who willfully 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."

In parallel circumstances, we applied the foregoing legal precept; and, we held that upon the provisions of Article 2219 (10), Civil Code, moral damages are recoverable. 42

6.A contract to transport passengers is quite different in kind and degree from any other contractual relation. 43 And this, because of the relation which an air-carrier sustains with the public. Its business is mainly with the travelling public. It invites people to avail of the comforts and advantages it offers. The contract of aircarriage, therefore, generates a relation attended with a public duty. Neglect or malfeasance of the carrier's employees, naturally, could give ground for an action for damages.

Passengers do not contract merely for transportation. They have a light to be treated by the carrier's employees with kindness, respect, courtesy and due consideration. They are entitled to be protected against personal misconduct, injurious language, indignities and abuses from such employees. So it is, that any rude or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier. 44

Thus, "Where a steamship company 45 had accepted a passenger's check, it was a breach of contract and a tort, giving a right of action for its agent in the presence of third persons to falsely notify her that the check was worthless and demand payment under threat of ejection, though the language used was not insulting and she was not ejected. 46 And this, because, altho the relation of passenger and carrier is "contractual both in origin and nature" nevertheless "the act that breaks the contract may be also a tort". 47 And in another case, "Where a passenger on a railroad train, when the conductor came to collect his fare, tendered him the cash fare to a point where the train was scheduled not to stop, and told him that as soon as the train reached such point he would pay the cash fare from that point to destination, there was nothing in the conduct of the passenger which justified the conductor in using insulting language to him, as by calling him a lunatic," 48 and the Supreme Court of South Carolina there held the carrier liable for the mental suffering of said passenger.

Petitioner's contract with Carrascoso is one attended with public duty. The stress of Carrascoso's action as we have said, is placed upon his wrongful expulsion. This is a violation of public duty by the petitioner-air carrier — a case of quasi-delict. Damages are proper.

7.Petitioner draws our attention to respondent Carrascoso's testimony, thus —

"Q.You mentioned about an attendant. Who is that attendant and purser?

A.When we left already — that was already in the trip — I could not help it. So one of the flight attendants approached me and requested from me my ticket and I said, What for? and she said, 'We will note that you were transferred to the tourist class'. I said, 'Nothing of that kind. That is tantamount to accepting my transfer.' And I also said, You are not going to note anything there because I am protesting to this transfer.

Q.Was she able to note it?

A.No, because I did not give my ticket.

Q.About that purser?

A.Well, the seats there are so close that you feel uncomfortable and you don't have enough leg room, I stood up and I went to the pantry that was next to me and the purser was there. He told me, 'I have recorded the incident in my notebook.' He read it and translated it to me — because it was recorded in French — 'First class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene.'

MR. VALTE —

I move to strike out the last part of the testimony of the witness because the best evidence would be the notes. Your Honor.

COURT —

I will allow that as part of his testimony." 49

Petitioner charges that the finding of the Court of Appeals that the purser made an entry in his notebooks reading "First class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene" is predicated upon evidence [Carrascoso's testimony above] which is incompetent. We do not think so. The subject of inquiry is not the entry, but the ouster incident. Testimony of the entry does not come within the proscription of the best evidence rule. Such testimony is admissible. 49

Besides, from a reading of the transcript just quoted, when the dialogue happened, the impact of the startling occurrence was still fresh and continued to be felt. The excitement had not as yet died down. Statements then, in this environment, are admissible as part of the res gestae. 50 For, they grow "out of the nervous excitement and mental and physical condition of the declarant". 51 The utterance of the purser regarding his entry in the notebook was spontaneous, and related to the circumstances of the ouster incident. Its trustworthiness has been guaranteed. 52 It thus escapes the operation of the hearsay rule. It forms part of the res gestae.

At all events, the entry was made outside the Philippines. And, by an employee of petitioner. It would have been an easy matter for petitioner to have contradictedCarrascoso's testimony. If it were really true that no such entry was made, the deposition of the purser could have cleared up the matter.

We, therefore, hold that the transcribed testimony of Carrascoso is admissible in evidence.

8.Exemplary damages are well awarded. The Civil Code gives the Court ample power to grant exemplary damages — in contracts and quasi-contracts. The only condition is that defendant should have "acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner". 53 The manner of ejectment of respondentCarrascoso from his first class seat fits into this legal precept. And this, in addition to moral damages. 54

9.The right to attorneys' fees is fully established. The grant of exemplary damages justifies a similar judgment for attorneys' fees. The least that can be said is that the courts below felt that it is but just and equitable that attorneys' fees be given. 55 We do not intend to break faith with the tradition that discretion well exercised — as it was here —should not be disturbed.

10.Questioned as excessive are the amounts decreed by both the trial court and the Court of Appeals, thus: P25,000.00 as moral damages; P10,000.00, by way of exemplary damages, and P3,000.00 as attorney's fees. The task of fixing these amounts is primarily with the trial-court. 56 The Court of Appeals did not interfere with the same. The dictates of good sense suggest that we give our imprimatur thereto. Because, the facts and circumstances point to the reasonableness thereof. 57

On balance, we say that the judgment of the Court of Appeals does not suffer from reversible error. We accordingly vote to affirm the same. Costs against petitioner. So ordered.

EN BANC

[G.R. No. 48006. July 8, 1942.]

FAUSTO BARREDO, petitioner, vs. SEVERINO GARCIA and TIMOTEA ALMARIO, respondents.

Celedonio P. Gloria and Antonio Barredo for petitioner.

Jose G. Advincula for respondents.

SYLLABUS

1.DAMAGES; QUASI-DELICT OR "CULPA AQUILIANA"; PRIMARY AND DIRECT RESPONSIBILITY OF EMPLOYERS UNDER ARTICLES 1902-1910 OF THE CIVIL CODE. — A head-on collision between a taxi and a carretela resulted in the death of a 16-year-old boy, one of the passengers of the carretela. A criminal action was filed against the taxi driver and he was convicted and sentenced accordingly. The court in the criminal case granted the petition that the right to bring a separate civil action be reserved. Thereafter the parents of the deceased brought suit for damages against the proprietor of the taxi, the employer of the taxi driver, under article 1903 of the Civil Code. Defendant contended that his liability was governed by the Revised Penal Code, according to which his responsibility was only secondary, but no civil action had been brought against the taxi driver. Held: That this separate civil action lies, the employer being primarily and directly responsible in damages under articles 1902 and 1903 of the Civil Code.

2.ID.; ID.; ID. — 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 a delict or crime. Upon this principle, and on the wording and spirit of article 1903 of the Civil Code, the primary and direct responsibility of employers may be safely anchored.

3.ID.; ID.; ID. — 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 el daño al otro, pero acaescio por su culpa."

4.ID.; ID.; ID. — 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 1902-1910. This portion of the Civil Code is exclusively devoted to the legal institution of culpa aquiliana.

5.ID.; ID.; ID.; DISTINCTION BETWEEN CRIMES UNDER THE PENAL CODE AND THE "CULPA AQUILIANA" OR "CUASI-DELITO" UNDER THE CIVIL CODE. — A distinction exists 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. Plaintiffs were free to choose which remedy to enforce. Some of the differences between crimes under the Penal Code and the culpa aquiliana or cuasi-delito under the Civil Code are enumerated in the decision.

6.ID.; ID.; ID.; OPINIONS OF JURISTS. — The decision sets out extracts from opinions of jurists on the separate existence of cuasi- delicts and the employer's primary and direct liability under article 1903 of the Civil Code.

7.ID.; ID.; ID.; SENTENCES OF THE SUPREME TRIBUNAL OF SPAIN. — The decision cites sentences of the Supreme Tribunal of Spain upholding the principles above set forth: that a cuasi-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.

8.ID.; ID.; ID.; DECISIONS OF THIS COURT. — Decisions of this Court are also cited holding that, in this jurisdiction, the separate individuality of acuasi-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 his civil liability arising from his crime.

9.ID.; ID.; ID.; FOUNDATIONS OF DOCTRINES ABOVE SET FORTH; LITERAL MEANING OF THE LAW. — The Revised Penal Code punishes not only reckless but also simple negligence; if it should be held that articles 1902-1910, Civil Code, apply only to negligence not punishable by law, culpa aquiliana would have very little application in actual life. The literal meaning of the law will not be used to smother a principle of such ancient origin and such full-grown development as culpa aquiliana.

10.ID.; ID.; ID.; ID.; DEGREE OF PROOF. — 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, defendant can and should be made responsible in a civil action under articles 1902 to 1910, Civil Code. Ubi jus ibi remedium.

11.ID.; ID.; ID.; ID.; EXPEDITIOUS REMEDY. — The primary and direct responsibility of employer under article 1903, Civil Code, is more likely to facilitate remedy for civil wrongs. Such primary and direct responsibility of employers is calculated to protect society.

12.ID.; ID.; ID.; ID.; PRACTICE OF RELYING SOLELY ON CIVIL RESPONSIBILITY FOR A CRIME. — The harm done by such practice is pointed out, and the principle of responsibility for fault or negligence under articles 1902 et seq., of the Civil Code is restored to its full vigor.

D E C I S I O N

BOCOBO, J p:

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 Dimapilis. 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 FaustoBarredo 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 no proof that he exercised the diligence of a good father of a family to prevent the 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) — violations which appeared in the records of the Bureau of Public Works available to the 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 this 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 this 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 inapplicable 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 omissions 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 delitosand 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 this 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 considerations 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 a delict or crime. Upon this principle, and on the wording and spirit of 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: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 and 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 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 subject to the following rules:

"First. In cases of subdivisions 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 persons 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 corporations 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.

"Innkeepers are also subsidiarily liable for the restitution of goods taken by robbery or theft within their houses from guests lodging therein, 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 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 ofarresto 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 article 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 el 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 ofcuasi-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 1902-1910. 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 kind 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 "Responsabilidad" 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 caso lleva aparejada responsabilidad criminal alguna, y otra que es consecuencia indeclinable de la penal que nace de todo delito o falta."

"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 tienen 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 diferenciones 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 caractersubsidiario, 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."

"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 distributing 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 Compañia 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 loses 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 oncuasi-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:"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 cuasi 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 whom 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 se 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 article, 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 Electrica 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, praying 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:.

"Considerando que el primer motivo del recurso se funda en el equivocado supuesto de que el Tribunal a quo, al condenar a la Compañia Electrica Madrileña al pago del daño causado con la muerte de Ramon Lafuente Izquierdo, desconoce el valor y efectos juridicos de la sentencia absolutoria dictada 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 aspectos, y como la de lo criminal declaro 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 calificadas, fuente de obligaciones civiles segun el articulo 1902 del Codigo Civil, y que alcanzan, segun el 1903, entre otras personas, a los Directores de establecimientos o empresas por los daños causados por sus dependientes en determinadas condiciones, es manifiesto que la de lo civil, al conocer del mismo hecho bajo este ultimo aspecto y al condenar a la Compañia recurrente a la indemnizacion del daño causado por uno de sus empleados, lejos de infringir los mencionados textos, en relacion con el articulo 116 de la Ley de Enjuiciamiento 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 not 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 jurisdiction 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." (Italics 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 plaintiffs chose 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:

"Considerando que la sentencia discutida reconoce, en virtud de los hechos que consigna con relacion a las pruebas del pleito: 1.°, 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.°, que llegadas a su destino tales mercancias no se quisieron entregar a dicho consignatario por el jefe de la estacion sin motivo justificado y con intencion dolosa, y 3.°, 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 reparacion 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 jerarquia 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-fulfilment 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 itself 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:

" '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 preceding 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 out 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 consequences 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. 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 or 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 individuality 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 defendant 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 court 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.

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 he 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 master or employer either in the selection of the servant or employee, or in supervision over him after the selection, or both; and (2) that 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 relieved 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. 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."

xxx xxx xxx"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 1902 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 of 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 due 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.

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 aquilianawould 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 forcuasi-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 conveyances 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.

EN BANC

[G.R. No. L-8171. August 16, 1956.]

EMILIO MANALO and CLARA SALVADOR, plaintiffs-appellees, vs. ROBLES TRANSPORTATION COMPANY, INC., defendant-appellant.

Cornelio S. Ruperto and Lazaro Pormarejo for appellant.

San Juan, Africa, Yñiguez & Benedicto for appellees.

SYLLABUS

1.CRIMINAL PROCEDURE; JUDGMENT OF CONVICTION; BINDING UPON PARTY SUBSIDIARILY LIABLE. — The judgment convicting the driver of a vehicle of homicide through reckless imprudence, in the absence of any collusion between the defendant and offended party, is binding upon the party subsidiarily liable.

2.ID.; EVIDENCE; SHERIFF'S RETURN; PROBATIVE VALUE OF. — A sheriff's return is an official statement by a public official in the performance of a duty specially enjoined by law and forming part of official records, and is prima facie evidence of the facts stated therein. (Rule 39, section 11 and Rule 123, section 35, Rules of Court.) The sheriff making the return need not testify in court as to the facts stated in his entry.

3.DAMAGES; CIVIL LIABILITY ARISING FROM NEGLIGENCE UNDER THE REVISED PENAL CODE AND NEW CIVIL CODE. — Articles 102 and 103 of the Revised Penal Code have not been repealed by the New Civil Code whose Article 2177 expressly recognizes civil liabilities arising from negligence under the Penal Code (Articles 102 and 103), only that it provides that plaintiff may not recover damages twice for the same negligence.

4.PLEADING AND PRACTICE; ACTION BASED UPON JUDGMENT; PRESCRIPTION OF. — An action based upon a judgment prescribes in ten years.

D E C I S I O N

MONTEMAYOR, J p:

Robles Transportation Company, Inc., later referred to as the Company, is appealing from the decision of the Court of First Instance of Rizal, civil case No. 2013, ordering it to pay plaintiffs Emilio Manalo and his wife, Clara Salvador, the sum of P3,000 with interest at 12 per cent per annum from November 14, 1952 plus the amount of P600 for attorney's fees and expenses of litigation, with costs.

The facts involved in this case are simple and without dispute. On August 9, 1947, a taxicab owned and operated by defendant appellant Company and driven by Edgardo Hernandez its driver, collided with a passenger truck at Parañaque, Rizal. In the course of and as a result of the accident, the taxicab ran over Armando Manalo, an eleven year old, causing him physical injuries which resulted in his death several days later. Edgardo Hernandez was prosecuted for homicide through reckless imprudence and after trial was found guilty of the charge and sentenced to one year prision correccional, to indemnify the heirs of the deceased in the amount of P3,000, in case of insolvency to suffer subsidiary imprisonment, and to pay costs. Edgardo Hernandez served out his sentence but failed to pay the indemnity. Two writs of execution were issued against him to satisfy the amount of the indemnity, but both writs were returned unsatisfied by the sheriff who certified that no property, real or personal, in Hernandez' name could be found.

On February 17, 1953, plaintiffs Emilio Manalo and his wife Clara Salvador, father and mother respectively of Armando, filed the present action against the Company to enforce its subsidiary liability, pursuant to Articles 102 and 103 of the Revised Penal Code. The Company filed its appearance and answer and later an amended answer with special defenses and counterclaim. It also filed a motion to dismiss the complaint unless and until the convicted driver Hernandez was included as a party defendant, the Company considering him an indispensable party. The trial court denied the motion to dismiss, holding that Hernandez was not an indispensable party defendant. Dissatisfied with this ruling, the Company filed certiorari proceedings with the Court of Appeals, but said appellate court held that Hernandez was not an indispensable party defendant, and consequently, the trial court in denying the motion to dismiss acted within the proper limits of its discretion. Eventually, the trial court rendered judgment sentencing the defendant Company to pay to plaintiffs damages in the amount of P3,000 with interest at 12 per cent per annum from November 14, 1952, plus P600 for attorney's fees and expenses for litigation, with costs. As aforestated, the Company is appealing from this decision.

To prove their case against the defendant Company, the plaintiffs introduced a copy of the decision in the criminal case convicting Hernandez of homicide through reckless imprudence, the writs of execution to enforce the civil liability, and the returns of the sheriff showing that the two writs of execution were not satisfied because of the insolvency of Hernandez, the sheriff being unable to locate any property in his name. Over the objections of the Company, the trial court admitted this evidence and based its decision in the present case on the same.

Defendant-appellant now contends that this kind of evidence is inadmissible and cites in support of its contention the cases of City of Manila vs. Manila Electric Company (52 Phil., 586), and Arambulo vs. Manila Electric Company (15 Phil., 75). This point has already been decided by this tribunal in the case of Martinez vs. Barredo (81 Phil., 1). After considering the same two cases now cited by appellant, this court held that the judgment of conviction, in the absence of any collusion between the defendant and offended party, is binding upon the party subsidiarily liable.

The appellant also claims that in admitting as evidence the sheriff's return of the writs of execution to prove the insolvency of Hernandez, without requiring said official's appearance in court, it was deprived of the opportunity to cross-examine said sheriff. A sheriff's return is an official statement made by a public official in the performance of a duty specially enjoined by law and forming part of official records, and is prima facie evidence of the facts stated therein. (Rule 39, section 11 and Rule 123, section 35, Rules of Court.) The sheriff making the return need not testify in court as to the facts stated in his entry. In the case of Antillon vs. Barcelon, 37 Phil., 151, citing Wigmore on Evidence, this court said:

"To the foregoing rules with reference to the method of proving private documents an exception is made with reference to the method of proving public documents executed before and certified to, under the hand and seal of certain public officials. The courts and the legislature have recognized the valid reason for such an exception. The litigation is unlimited in which testimony by officials is daily needed, the occasions in which the officials would be summoned from his ordinary duties to declare as a witness are numberless. The public officers are few in whose daily work something is not done in which testimony is not needed from official sources. Were there no exception to official statements, hosts of officials would be found devoting the greater part of their time to attending as witnesses in court or delivering their depositions before an officer. The work of Administration of government and the interest of the public having business with officials would alike suffer in consequence."

And this Court added:"The law reposes a particular confidence in public officers that it presumes they will

discharge their several trusts with accuracy and fidelity; and, therefore, whatever acts they do in discharge of their public duty may be given in evidence and shall be taken to be true under such a degree of caution as the nature and circumstances of each case may appear to require."The appellant also contends that Articles 102 and 103 of the Revised Penal Code were repealed by the New

Civil Code, promulgated in 1950, particularly, by the repealing clause under which comes Article 2270 of the said code. We find the contention untenable. Article 2177 of the New Civil Code expressly recognizes civil liabilities arising from negligence under the Penal Code, only that it provides that plaintiff cannot recover damages twice for the same act of omission of the defendant.

"ART. 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 of omission of the defendant."Invoking prescription, appellant claims that the present action is barred by the Statute of Limitations for the

reason that it is an action either upon an injury to the rights of the plaintiff, or upon a quasi delict, and that according to Article 1146 of the New Civil Code, such action must be instituted within four years. We agree with the appellee that the present action is based upon a judgment, namely, that in the criminal case, finding Hernandez guilty of homicide through reckless imprudence and sentencing him to indemnify the heirs of the deceased in the sum of P3,000, and, consequently may be instituted within ten years.

As regards the other errors assigned by appellant, we find it unnecessary to discuss and rule upon them.Finding the decision appealed from to be in accordance with law, the same is hereby affirmed, with costs.

FIRST DIVISION

[G.R. No. L-46179. January 31, 1978.]

CANDIDA VIRATA, TOMAS VIRATA, MANOLITO VIRATA, EDERLINDA VIRATA, NAPOLEON VIRATA, ARACELY VIRATA, ZENAIDA VIRATA, LUZMINDA VIRATA, PACITA VIRATA, and EVANGELINA VIRATA, petitioners, vs. VICTORIO OCHOA, MAXIMO BORILLA and THE COURT OF FIRST INSTANCE OF CAVITE, 7th JUDICIAL DISTRICT, BRANCH V, stationed at BACOOR, CAVITE, respondents.

Remulla, Estrella & Associates for petitioners.

Exequil C. Masangkay for respondents.

SYNOPSIS

A criminal action for reckless imprudence was filed against a driver of a jeepney. Before the criminal case could be decided, the heirs of the victim manifested that they were filing and they so did file a separate civil action for damages against the owner and the driver of the jeepney based on quasi-delict. The driver was subsequently acquitted of the crime charge. The defendants in the civil case then moved to dismiss the same, which motion the trial court granted.

The principal issue before the Supreme Court is whether the heirs of the victim can prosecute an action for damages based on quasi-delict against the driver and owner.

The Supreme Court held that the acquittal of the driver of the crime charged is not a bar to the prosecution of a civil case for damages based on quasi-delict.

Order of dismissal set aside and case remanded to the lower court for further proceedings.

SYLLABUS

1.ACTIONS; CULPA AQUILIANA; AGGRIEVED PARTY MAY FILE SEPARATE ACTION BASED ON CULPA AQUILIANA. — In negligence cases the aggrieved parties may choose between an action under the Revised Penal Code or for quasi-delict under Article 2176 of the Civil Code of the Philippines. What is prohibited by Article 2177 of the Civil Code is to recover twice for the same negligent act.

2.ID.; ID.; ACQUITTAL OF ACCUSED NOT A BAR TO PROSECUTION FOR DAMAGES BASED ON QUASI-DELICT. — The acquittal of the accused of the crime of homicide through reckless imprudence is not a bar to the prosecution of a civil case for damages based on quasi-delict. The source of obligation sought to be enforced in the civil action is quasi-delict, not an act or omission punishable by law. Under Article 1157 of the Civil Code of the Philippines, quasi-delict and an act or omission punishable by law are two different sources of obligation. Moreover, to prevail in the action for damages, plaintiff have only be establish its cause of action by preponderance of evidence.

D E C I S I O N

FERNANDEZ, J p:

This is an appeal by certiorari, from the order of the Court of First Instance of Cavite, Branch V, in Civil Case No. B-134 granting the motion of the defendants to dismiss the complaint on the ground that there is another action pending between the same parties for the same cause 1

The record shows that on September 24, 1975 one Arsenio Virata died as a result of having been bumped while walking along Taft Avenue, Pasay City by a passenger jeepney driven by Maximo Borilla and registered in the name of Victorio Ochoa; that Borilla is the employee driver of Ochoa; that for the death of Arsenio Virata, a criminal action for homicide through reckless imprudence was instituted on September 25, 1975 against Maximo Borilla in the Court of First Instance of Rizal at Pasay City, docketed as Criminal Case No. 3162-P of said court; that at the hearing of the said criminal case on December 12, 1975, Atty. Julio Francisco, the private prosecutor, made a reservation to face a separate civil action for damages against the driver on his criminal liability; that on February 19, 1976 Atty. Julio Francisco filed a motion in said criminal case to withdraw the reservation to file a separate civil action; that thereafter, the private prosecutor actively participated in the trial and presented evidence on the damages; that on June 29, 1976 the heirs of Arsenio Virata again reserved their right to institute in separate civil action; that on July 29, 1977 the heirs of Arsenio Virata, petitioners herein, commenced Civil No. B-134 in the Court of First Instance of Cavite at Bacoor, Branch V, for damages based on quasi-delict against the driver Maximo Borilla and the registered owner of the jeepney, Victorio Ochoa; that on August 13, 1976 the defendants, private respondents herein, filed a motion to dismiss on the ground that there is another action, Criminal Case No. 3162-P, pending between the same parties for the same cause; that on September 8, 1976 the Court of First Instance of Rizal at Pasay City rendered in decision in Criminal Case No. 3612-P acquitting the accused, Maximo Borilla, on the ground that he caused an injury by mere accident; and that on January 31, 1977, the Court of First Instance of Cavite at Bacoor granted the motion to dismiss Civil Case No. B-134 for damages 2

The principal issue is whether or not the petitioners, heirs of the deceased Arsenio Virata, can prosecute an action for damages based on quasi-delict against Maximo Borilla and Victorio Ochoa, driver and owner, respectively of the passenger jeepney that bumped Arsenio Virata.

It is settled that in negligence cases the aggrieved parties may choose between an action under the Revised Penal Code or for quasi-delict under Article 2176 of the Civil Code of the Philippines. What is prohibited by Article 2177 of the Civil Code of the Philippines is to recover twice for the same negligent act. LLpr

The Supreme Court has held that:

"According to the Code Commission: 'The foregoing provision (Article 2177) though at first sight startling, is not so novel or extraordinary when we consider the exact nature of criminal and civil negligence. The former is a violation of the criminal law, while the latter is a 'culpa aquiliana' or quasi-delict, of ancient origin, having always had its own foundation and individuality, separate from criminal negligence. Such distinction between criminal negligence and 'culpa extra-contractual' or 'quasi-delito' has been sustained by decision of the Supreme Court of Spain and maintained as clear, sound and perfectly tenable by Maura, an outstanding Spanish jurist. Therefore, under the proposed Article 2177, acquittal from an accusation of criminal negligence, whether on reasonable doubt or not, shall not be a bar to a subsequent civil action, not for civil liability arising from criminal negligence, but for damages due to a quasi-delict or 'culpa aquiliana'. But said article forestalls a double recovery." (Report of the Code Commission, p. 162.)

Although, again, this Article 2177 does seem to literally refer to only acts of negligence, the same argument of Justice Bocobo about construction that upholds 'the spirit that giveth life' rather than that which is literal that killeth the intent of the lawmaker should be observed in applying the same. And considering that the preliminary chapter on human relations of the new Civil Code definitely establishes the separability and independence of liability in a civil action for acts criminal in character (under Articles 29 to 32) from the civil responsibility arising from crime fixed by Article 100 of the Revised Penal Code, and, in a sense, the Rules of Court, under Sections 2 and 3(c), Rule 111, contemplate also the same separability, it is 'more congruent with the spirit of law, equity and justice, and more in harmony with modern progress', to borrow the felicitous relevant language in Rakes vs. Atlantic Gulf and Pacific Co., 7 Phil. 359, to hold, as We do hold, that 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 a 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. 3

The petitioners are not seeking to recover twice for the same negligent act. Before Criminal Case No. 3162-P was decided, they manifested in said criminal case that they were filing a separate civil action for damages against the owner and driver of the passenger jeepney based on quasi-delict. This acquittal of the driver, Maximo Borilla, of the crime charged in Criminal Case No. 3162-P is not a bar to the prosecution of Civil Case No. B-134 for damages based on quasi-delict. The source of the obligation sought to be enforced in Civil Case No. B-134 is quasi-delict, not an act or omission punishable by law. Under Article 1157 of the Civil Code of the Philippines, quasi-delict and an act or omission punishable by law are two different sources of obligation.

Moreover, for the petitioners to prevail in the action for damages, Civil Case No. B-134, they have only to establish their cause of action by preponderance of the evidence.

WHEREFORE, the order of dismissal appealed from is hereby set aside and Civil Case No. B-134 is reinstated and remanded to the lower court for further proceedings, with costs against the private respondents.

SO ORDERED.

FIRST DIVISION

[G.R. Nos. 66102-04. August 30, 1990.]PHILIPPINE RABBIT BUS LINES, INC., petitioner, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT AND CASIANO PASCUA, ET AL.* , respondents.Santiago & Santiago for petitioner.Federico R. Vinluan for private respondents.

D E C I S I O N

MEDIALDEA, J p:

This is a petition for review on certiorari of the decision of the Intermediate Appellate Court (now Court of Appeals) dated July 29, 1983 in AC-G.R. Nos. CV-65885, CV-65886 and CV-65887 which reversed the decision of the Court of First Instance (now Regional Trial Court) of Pangasinan dated December 27, 1978; and its resolution dated November 28, 1983 denying the motion for reconsideration.

It is an established principle that the factual findings of the Court of Appeals are final and may not be reviewed by this Court on appeal. However, this principle is subject to certain exceptions. One of these is when the findings of the appellate court are contrary to those of the trial court (see Sabinosa v. The Honorable Court of Appeals, et al., G.R. No. L-47981, July 24, 1989) in which case, a re-examination of the facts and evidence may be undertaken. This is Our task now.

The antecedent facts are as follows:

About 11:00 o'clock in the morning on December 24, 1966, Catalina Pascua, Caridad Pascua, Adelaida Estomo, Erlinda Meriales, Mercedes Lorenzo, Alejandro Morales and Zenaida Parejas boarded the jeepney owned by spouses Isidro Mangune and Guillerma Carreon and driven by Tranquilino Manalo at Dau, Mabalacat, Pampanga bound for Carmen, Rosales, Pangasinan to spend Christmas at their respective homes. Although they usually ride in buses, they had to ride in a jeepney that day because the buses were full. Their contract with Manalo was for them to pay P24.00 for the trip. The private respondents' testimonial evidence on this contractual relationship was not controverted by Mangune, Carreon and Manalo, nor by Filriters Guaranty Assurance Corporation, Inc., the insurer of the jeepney, with contrary evidence. Purportedly riding on the front seat with Manalo was Mercedes Lorenzo. On the left rear passenger seat were Caridad Pascua, Alejandro Morales and Zenaida Parejas. On the right rear passenger seat were Catalina Pascua, Adelaida Estomo, and Erlinda Meriales. After a brief stopover at Moncada, Tarlac for refreshment, the jeepney proceeded towards Carmen, Rosales, Pangasinan. LLpr

Upon reaching barrio Sinayoan, San Manuel, Tarlac, the right rear wheel of the jeepney was detached, so it was running in an unbalanced position. Manalo stepped on the brake, as a result of which, the jeepney which was then running on the eastern lane (its right of way) made a U-turn, invading and eventually stopping on the western lane of the road in such a manner that the jeepney's front faced the south (from where it came) and its rear faced the north (towards where it was going). The jeepney practically occupied and blocked the greater portion of the western lane, which is the right of way of vehicles coming from the north, among which wasBus No. 753 of petitioner Philippine Rabbit Bus Lines, Inc. (Rabbit) driven by Tomas delos Reyes. Almost at the time when the jeepney made a sudden U-turn and encroached on the western lane of the highway as claimed by Rabbit and delos Reyes, or after stopping for a couple of minutes as claimed by Mangune, Carreon and Manalo, the bus bumped from behind the right rear portion of the jeepney. As a result of the collision, three passengers of the jeepney

(Catalina Pascua, Erlinda Meriales and Adelaida Estomo) died while the other jeepney passengers sustained physical injuries. What could have been a festive Christmas turned out to be tragic.

The causes of the death of the three jeepney passengers were as follows (p. 101, Record on Appeal):

"The deceased Catalina Pascua suffered the following injuries, to wit: fracture of the left parietal and temporal regions of the skull; fracture of the left mandible; fracture of the right humenous; compound fracture of the left radius and ulna, middle third and lower third; fracture of the upper third of the right tibia and fillnea; avulsion of the head, left internal; and multiple abrasions. The cause of her death was shock, secondary to fracture and multiple hemorrhage. The fractures were produced as a result of the hitting of the victim by a strong force. The abrasions could be produced when a person falls from a moving vehicles (sic) and rubs parts of her body against a cement road pavement. . . .

"Erlinda Mariles (sic) sustained external lesions such as contusion on the left parietal region of the skull; hematoma on the right upper lid; and abrasions (sic) on the left knee. Her internal lesions were: hematoma on the left thorax; multiple lacerations of the left lower lobe of the lungs; contusions on the left lower lobe of the lungs; and simple fractures of the 2nd, 3rd, 4th, 5th, 6th, 7th, and 8th ribs, left. The forcible impact of the jeep caused the above injuries which resulted in her death. . . .

"The cause of death of Erlinda or Florida Estomo (also called Adelaida) as per autopsy of Dr. Panlasiqui was due to shock due to internal hemorrhage, ruptured spleen and trauma. . . ."

Caridad Pascua suffered physical injuries as follows (p. 101, Record on Appeal):

". . . lacerated wound on the forehead and occipital region, hematoma on the forehead, multiple abrasions on the forearm, right upper arm, back and right leg. . . ."

The police investigators of Tacpal and policemen of San Manuel, Tarlac, Tarlac, upon arrival at the scene of the mishap, prepared a sketch (common exhibit "K" for private respondents and "19" for Rabbit) showing the relative positions of the two vehicles as well as the alleged point of impact (p. 100, Record on Appeal):

". . . The point of collision was a cement pave-portion of the Highway, about six (6) meters wide, with narrow shoulders with grasses beyond which are canals on both sides. The road was straight and points 200 meters north and south of the point of collision are visible and unobstructed. Purportedly, the point of impact or collision (Exh. `K-4'-Pascua, on the sketch Exh. `K'-Pascua) was on the western lane of the highway about 3 feet (or one yard) from the center line as shown by the '(sic), dirt and soil (obviously from the undercarriage of both vehicles) as well as paint, marron (sic) from the Rabbit bus and greenish from the jeepney. The point of impact encircled and marked with the letter `X' in Exh. `K'-4, Pascua, had a diameter of two meters, the center of which was about two meters from the western edge of cement pavement of the roadway. Pictures taken by witness Bisquera in the course of the investigation showed the relative positions of the point of impact and center line (Exh. `P'-Pascua) the back of the Rabbit bus (Exh. `P-1-Pascua'), the lifeless body of Catalina Pascua (Exh. `P-2-Pascua'), and the damaged front part of the Rabbit bus (Exh `P-3-Pascua'). No skid marks of the Rabbit bus was found in the vicinity of the collision, before or after the point of impact. On the other hand, there was a skid mark about 45 meters long purportedly of the jeepney from the eastern shoulder of the road south of, and extending up to the point of impact."

At the time and in the vicinity of the accident, there were no vehicles following the jeepney, neither were there oncoming vehicles except the bus. The weather condition of that day was fair. LibLex

After conducting the investigation, the police filed with the Municipal Court of San Manuel, Tarlac, a criminal complaint against the two drivers for Multiple Homicide. At the preliminary investigation, a probable cause was found with respect to the case of Manalo, thus, his case was elevated to the Court of First Instance. However, finding no sufficiency of evidence as regards the case of delos Reyes, the Court dismissed it. Manalo was convicted and sentenced to suffer imprisonment. Not having appealed, he served his sentence.

Complaints for recovery of damages were then filed before the Court of First Instance of Pangasinan. In Civil Case No. 1136, spouses Casiano Pascua and Juana Valdez sued as heirs of Catalina Pascua while Caridad Pascua sued in her behalf. In Civil Case No. 1139, spouses Manuel Millares and Fidencia Arcica sued as heirs of Erlinda Meriales. In Civil Case No. 1140, spouses Mariano Estomo and Dionisia Sarmiento also sued as heirs of Adelaida Estomo.

In all three cases, spouses Mangune and Carreon, Manalo, Rabbit and delos Reyes were all impleaded as defendants. Plaintiffs anchored their suits against spouses Mangune and Carreon and Manalo on their contractual liability. As against Rabbit and delos Reyes, plaintiffs based their suits on their culpability for a quasi-delict. Filriters Guaranty Assurance Corporation, Inc. was also impleaded as additional defendant in Civil Case No. 1136 only.

For the death of Catalina Pascua, plaintiffs in Civil Case No. 1136 sought to collect the aggregate amount of P70,060.00 in damages, itemized as follows: P500.00 for burial expenses; P12,000.00 for loss of wages for 24 years; P10,000.00 for exemplary damages; P10,000.00 for moral damages; and P3,000.00 for attorney's fees. In the same case, plaintiff Caridad Pascua claimed P550.00 for medical expenses; P240.00 for loss of wages for two months; P2,000.00 for disfigurement of her face; P3,000.00 for physical pain and suffering; P2,500.00 as exemplary damages and P2,000.00 for attorney's fees and expenses of litigation.

In Civil Case No. 1139, plaintiffs demanded P500.00 for burial expenses; P6,000.00 for the death of Erlinda, P63,000.00 for loss of income; P10,000.00 for moral damages and P3,000.00 for attorney's fees or total of P80,000.00.

In Civil Case No. 1140, plaintiffs claimed P500.00 for burial expenses; P6,000.00 for the death of Adelaida, P56,160.00 for loss of her income or earning capacity; P10,000.00 for moral damages; and P3,000.00 for attorney's fees.

Rabbit filed a cross-claim in the amount of P15,000.00 for attorney's fees and expenses of litigation. On the other hand, spouses Mangune and Carreon filed a cross-claim in the amount of P6,168.00 for the repair of the jeepney and P3,000.00 for its non-use during the period of repairs.

On December 27, 1978, the trial court rendered its decision finding Mangune negligent, the dispositive portion of which reads (pp. 113-114, Record on Appeal): cdrep

"PREMISES CONSIDERED, this Court is of the opinion and so holds:

"1)That defendants Isidro Mangune, Guillerma Carreon and Tranquilino Manalo thru their negligence, breached contract of carriage with their passengers the plaintiffs' and/or their heirs, and this Court renders judgment ordering said defendants, jointly and severally, to pay the plaintiffs —

'a)In Civil Case No. 1136, for the death of Catalina Pascua, to pay her heirs the amounts of P12,000.00 for indemnity for loss of her life; P41,760.00 for loss of earnings; P324.40 for actual expenses and P2,000.00 for moral damages;

'b)In the same Civil Case No. 1136 for the injuries of Caridad Pascua, to pay her the amounts of P240.00 for loss of wages, P328.20 for actual expenses and P500.00 for moral damages;

'c)In Civil Case No. 1139 for the death of Erlinda Meriales, to pay her heirs (the plaintiffs) the amount of P12,000.00 — for indemnity for loss of her life; P622.00 for actual expenses, P60,480.00 for loss of wages or income and P2,000.00 for moral damages;

'd)In Civil Case No. 1140, for the death of Erlinda (also called Florida or Adelaida Estomo), to pay her heirs (the plaintiffs) the amount of P12,000.00 for indemnity for the loss of her life; P580.00 for actual expenses; P53,160.00 for loss of wages or income and P2,000.00 for moral damages.'

"2)The defendant Filriters Guaranty Insurance Co., having contracted to ensure and answer for the obligations of defendants Mangune and Carreon for damages due their passengers, this Court renders judgment against the said defendants Filriters Guaranty Insurance Co., jointly and severally with said defendants (Mangune and Carreon) to pay the plaintiffs the amount herein above adjudicated in their favor in Civil Case No. 1136 only. All the amounts awarded said plaintiffs as set forth in paragraph one (1) hereinabove;

"3)On the cross claim of Phil. Rabbit Bus Lines, Inc. ordering the defendants Isidro Mangune, Guillerma Carreon and Tranquilino Manalo, to pay jointly and severally, cross-claimant Phil. Rabbit Bus Lines, Inc., the amounts of P216.27 as actual damages to its Bus No. 753 and P2,173.60 for loss of its earning.

"All of the above amounts shall bear legal interest from the filing of the complaints.

"Costs are adjudged against defendants Mangune, Carreon and Manalo and Filriters Guaranty.

"SO ORDERED."

On appeal, the Intermediate Appellate Court reversed the above-quoted decision by finding delos Reyes negligent, the dispositive portion of which reads (pp. 55-57,Rollo):

"WHEREFORE, PREMISES CONSIDERED, the lower court's decision is hereby REVERSED as to item No. 3 of the decision which reads:

'3)On the cross claim of Philippine Rabbit Bus Lines, Inc. ordering the defendants Isidro Mangune, Guillerma Carreon and Tranquilino Manalo, to pay jointly and severally, the amounts of P216.27 as actual damages to its Bus No. 753 and P2,173.60 for loss of its earnings.'

and another judgment is hereby rendered in favor of plaintiffs-appellants Casiana Pascua, Juan Valdez and Caridad Pascua, ordering the Philippine RabbitBus Lines, Inc. and its driver Tomas delos Reyes to pay the former jointly and severally damages in amounts awarded as follows: prLL

"For the death of Catalina Pascua, the parents and/or heirs are awarded:

"Civil Case No. 1136 —

a)Indemnity for the loss of life—P12,000.00b)Loss of Salaries or earning capacity—14,000.00

c)Actual damages (burial expenses)—800.00d)For moral damages—10,000.00e)Exemplary damages—3,000.00f)For attorney's fees—3,000.00————Total—P38,200 (sic)

"For the physical injuries suffered by Caridad Pascua:

"Civil Case No. 1136

a)Actual damages (hospitalization expenses)—P550.00b)Moral damages (disfigurement of the faceand physical suffering—8,000.00c)Exemplary damages—2,000.00————Total—P10,550.00

"For the death of Erlinda Arcega Meriales, the parents and/or heirs:

"Civil Case No. 1139

a)Indemnity for loss of life—P12,000.00b)Loss of Salary or Earning Capacity—20,000.00c)Actual damages (burial expenses)—500.00d)Moral damages—15,000.00e)Exemplary damages—15,000.00f)Attorney's fees—3,000.00————Total—P65,500.00

"For the death of Florida Sarmiento Estomo:

"Civil Case No. 1140.

a)Indemnity for loss of life—P12,000.00b)Loss of Salary or Earning capacity—20,000.00c)Actual damages (burial expenses)—500.00d)Moral damages—3,000.00e)Exemplary damages—3,000.00f)Attorney's fees—3,000.00————Total—P41,500.00

"With costs against the Philippine Rabbit Bus Lines, Inc."SO ORDERED."

The motion for reconsideration was denied. Hence, the present petition.

The issue is who is liable for the death and physical injuries suffered by the passengers of the jeepney?.

The trial court, in declaring that Manalo was negligent, considered the following (p. 106, Record on Appeal):

"(1)That the unrebutted testimony of his passenger plaintiff Caridad Pascua that a long ways (sic) before reaching the point of collision, the Mangune jeepney was `running fast' that his passengers cautioned driver Manalo to slow down but did not heed the warning: that the right rear wheel was detached causing the jeepney to run to the eastern shoulder of the road then back to the concrete pavement; that driver Manalo applied the brakes after which the jeepney made a U-turn (half-turn) in such a manner that it inverted its direction making it face South instead of north; that the jeepney stopped on the western lane of the road on the right of way of the oncoming Phil. Rabbit Bus where it was bumped by the latter;

"(2)The likewise unrebutted testimony of Police Investigator Tacpal of the San Manuel (Tarlac) Police who, upon responding to the reported collision, found the real evidence thereat indicating in his sketch (Exh. K, Pascua), the tracks of the jeepney of defendant Mangune and Carreon running on the Eastern shoulder (outside the concrete paved road) until it returned to the concrete road at a sharp angle, crossing the Eastern lane and the (imaginary) center line and encroaching fully into the western lane where the collision took place as evidenced by the point of impact;

"(3)The observation of witness Police Corporal Cacalda also of the San Manuel Police that the path of the jeepney they found on the road and indicated in the sketch (Exh. K-Pascua) was shown by skid marks which he described as `scratches on the road caused by the iron of the jeep, after its wheel was removed;'

"(4)His conviction for the crime of Multiple Homicide and Multiple Serious Physical Injuries with Damage to Property thru Reckless Imprudence by the Court of First Instance of Tarlac (Exh. 24-Rabbit) upon the criminal Information by the Provincial Fiscal of Tarlac (Exh. 23-Rabbit), as a result of the collision, and his commitment to prison and service of his sentence (Exh. 25-Rabbit) upon the finality of the decision and his failure to appeal therefrom; and

"(5)The application of the doctrine of res-ipsa loquitar (sic) attesting to the circumstance that the collision occurred (sic) on the right of way of the Phil.Rabbit Bus."

The respondent court had a contrary opinion. Applying primarily (1) the doctrine of last clear chance, (2) the presumption that drivers who bump the rear of another vehicle guilty and the cause of the accident unless contradicted by other evidence, and (3) the substantial factor test, concluded that delos Reyes was negligent.

The misappreciation of the facts and evidence and the misapplication of the laws by the respondent court warrant a reversal of its questioned decision and resolution.

We reiterate that "[t]he principle about the 'last clear chance' would call for application in a suit between the owners and drivers of the two colliding vehicles. It does not arise where a passenger demands responsibility from the carrier to enforce its contractual obligations. For it would be inequitable to exempt the negligent driver of the jeepney and its owners on the ground that the other driver was likewise guilty of negligence." This was Our ruling in Anuran, et al. v. Buño, et al., G.R. Nos. L-21353 and L-21354, May 20, 1966, 17 SCRA 224. 1 Thus, the respondent court erred in applying said doctrine.

On the presumption that drivers who bump the rear of another vehicle guilty and the cause of the accident, unless contradicted by other evidence, the respondent court said (p. 49, Rollo):

". . ., the jeepney had already executed a complete turnabout and at the time of impact was already facing the western side of the road. Thus the jeepney assumed a new frontal position vis a vis, the bus, and the bus assumed a new role of defensive driving. The spirit behind the presumption of

guilt on one who bumps the rear end of another vehicle is for the driver following a vehicle to be at all times prepared of a pending accident should the driver in front suddenly come to a full stop, or change its course either through change of mind of the front driver, mechanical trouble, or to avoid an accident. The rear vehicle is given the responsibility of avoiding a collision with the front vehicle for it is the rear vehicle who has full control of the situation as it is in a position to observe the vehicle in front of it."

The above discussion would have been correct were it not for the undisputed fact that the U-turn made by the jeepney was abrupt (Exhibit "K," Pascua). The jeepney, which was then travelling on the eastern shoulder, making a straight skid mark of approximately 35 meters, crossed the eastern lane at a sharp angle, making a skid mark of approximately 15 meters from the eastern shoulder to the point of impact (Exhibit "K," Pascua). Hence, delos Reyes could not have anticipated the sudden U-turn executed by Manalo. The respondent court did not realize that the presumption was rebutted by this piece of evidence. cdll

With regard to the substantial factor test, it was the opinion of the respondent court that (p. 52, Rollo):

". . . It is the rule under the substantial factor test that if the actor's conduct is a substantial factor in bringing about harm to another, the fact that the actor neither foresaw nor should have foreseen the extent of the harm or the manner in which it occurred does not prevent him from being liable (Restatement, Torts, 2d). Here, We find defendant bus running at a fast speed when the accident occurred and did not even make the slightest effort to avoid the accident, . . . . The bus driver's conduct is thus a substantial factor in bringing about harm to the passengers of the jeepney, not only because he was driving fast and did not even attempt to avoid the mishap, but also because it was the bus which was the physical force which brought about the injury and death to the passengers of the jeepney."

The speed of the bus was calculated by respondent court as follows (pp. 54-55, Rollo):

"According to the record of the case, the bus departed from Laoag, Ilocos Norte, at 4:00 o'clock A.M. and the accident took place at approximately around 12:30 P.M., after travelling roughly for 8 hours and 30 minutes. Deduct from this the actual stopover time of two Hours (computed from the testimony of the driver that he made three 40-minute stopovers), We will have an actual travelling time of 6 hours and 30 minutes.

"Under the circumstances, We calculate that the Laoag-Tarlac route (365 kms.) driving at an average of 56 km. per hour would take 6 hours and 30 minutes. Therefore, the average speed of the bus, give and take 10 minutes, from the point of impact on the highway with excellent visibility factor would be 80 to 90 kms. per hour, as this is the place where buses would make up for lost time in traversing busy city streets."

Still, We are not convinced. It cannot be said that the bus was travelling at a fast speed when the accident occurred because the speed of 80 to 90 kilometers per hour, assuming such calculation to be correct, is yet within the speed limit allowed in highways. We cannot even fault delos Reyes for not having avoided the collision. As aforestated, the jeepney left a skid mark of about 45 meters, measured from the time its right rear wheel was detached up to the point of collision. Delos Reyes must have noticed the perilous condition of the jeepney from the time its right rear wheel was detached or some 90 meters away, considering that the road was straight and points 200 meters north and south of the point of collision, visible and unobstructed. Delos Reyes admitted that he was running more or less 50 kilometers per hour at the time of the accident. Using this speed, delos Reyes covered the distance of 45 meters in 3.24 seconds. If We adopt the speed of 80 kilometers per hour, delos Reyes would have covered that distance in only 2.025 seconds. Verily, he had little time to react to the situation. To require delos Reyes to avoid the collision is to ask too much from him. Aside from the time element involved, there were no options available to him. As the trial court remarked (pp. 107-108, Record on Appeal):

". . . . They (plaintiffs) tried to impress this Court that defendant de los Reyes, could have taken either of two options: (1) to swerve to its right (western shoulder) or (2) to swerve to its left (eastern lane), and thus steer clear of the Mangune jeepney. This Court does not so believe, considering the existing exigencies of space and time.

As to the first option, Phil. Rabbit's evidence is convincing and unrebutted that the Western shoulder of the road was narrow and had tall grasses which would indicate that it was not passable. Even plaintiffs own evidence, the pictures (Exhs. P and P-2, Pascua) are mute confirmation of such fact. Indeed, it can be noticed in the picture (Exh. P-2, Pascua) after the Rabbit bus came to a full stop, it was tilted to right front side, its front wheels resting most probably on a canal on a much lower elevation that of the shoulder or paved road. It too shows that all of the wheels of the Rabbit bus were clear of the roadway except the outer left rear wheel. These observation appearing in said picture (Exh. P-2, Pascua) clearly shows coupled with the finding the Rabbit bus came to a full stop only five meters from the point of impact (see sketch, Exh. K-Pascua) clearly show that driver de los Reyes veered his Rabbit bus to the right attempting to avoid hitting the Mangune's jeepney. That it was not successful in fully clearing the Mangune jeepney as its (Rabbit's) left front hit said jeepney (see picture Exh. 10-A-Rabbit) must have been due to limitations of space and time.

"Plaintiffs alternatively claim that defendant delos Reyes of the Rabbit bus could also have swerved to its left (eastern lane) to avoid bumping the Mangune jeepney which was then on the western lane. Such a claim is premised on the hypothesis (sic) that the eastern lane was then empty. This claim would appear to be good copy of it were based alone on the sketch made after the collision. Nonetheless, it loses force it one were to consider the time element involved, for moments before that, the Mangune jeepney was crossing that very eastern lane at a sharp angle. Under such a situation then, for driver delos Reyes to swerve to the eastern lane, he would run the greater risk of running smack in the Mangune jeepney either head on or broadside."

After a minute scrutiny of the factual matters and duly proven evidence, We find that the proximate cause of the accident was the negligence of Manalo and spouses Mangune and Carreon. They all failed to exercise the precautions that are needed precisely pro hac vice.

In culpa contractual, the moment a passenger dies or is injured, the carrier is presumed to have been at fault or to have acted negligently, and this disputable presumption may only be overcome by evidence that he had observed extra-ordinary diligence as prescribed in Articles 1733, 1755 and 1756 of the New Civil Code 2or that the death or injury of the passenger was due to a fortuitous event 3 (Lasam v. Smith, Jr., 45 Phil. 657).

The negligence of Manalo was proven during the trial by the unrebutted testimonies of Caridad Pascua, Police Investigator Tacpal, Police Corporal Cacalda, his (Manalo's) conviction for the crime of Multiple Homicide and Multiple Serious Injuries with Damage to Property thru Reckless Imprudence, and the application of the doctrine of res ipsa loquitur, supra. The negligence of spouses Mangune and Carreon was likewise proven during the trial (p. 110, Record on Appeal):

"To escape liability, defendants Mangune and Carreon offered to show thru their witness Natalio Navarro, an alleged mechanic, that he periodically checks and maintains the jeepney of said defendants, the last on Dec. 23, the day before the collision, which included the tightening of the bolts. This notwithstanding the right rear wheel of the vehicle was detached while in transit. As to the cause thereof no evidence was offered. Said defendant did not even attempt to explain, much less establish, it to be one caused by a caso fortuito. . . ."

In any event, "[i]n an action for damages against the carrier for his failure to safely carry his passenger to his destination, an accident caused either by defects in the automobile or through the negligence of its driver, is not a caso fortuito which

would avoid the carrier's liability for damages (Son v. Cebu Autobus Company, 94 Phil. 892 citing Lasam, et al. v. Smith, Jr., 45 Phil. 657; Necesito, etc. v. Paras, et al., 104 Phil. 75).

The trial court was therefore right in finding that Manalo and spouses Mangune and Carreon were negligent. However, its ruling that spouses Mangune and Carreon are jointly and severally liable with Manalo is erroneous. The driver cannot be held jointly and severally liable with the carrier in case of breach of the contract of carriage. The rationale behind this is readily discernible. Firstly, the contract of carriage is between the carrier and the passenger, and in the event of contractual liability, the carrier is exclusively responsible therefore to the passenger, even if such breach be due to the negligence of his driver (see Viluan v. The Court of Appeals, et al., G.R. Nos. L-21477-81, April 29, 1966, 16 SCRA 742). In other words, the carrier can neither shift his liability on the contract to his driver nor share it with him, for his driver's negligence is his. 4 Secondly, if We make the driver jointly and severally liable with the carrier, that would make the carrier's liability personal instead of merely vicarious and consequently, entitled to recover only the share which corresponds to the driver, 5 contradictory to the explicit provision of Article 2181 of the New Civil Code. 6

We affirm the amount of damages adjudged by the trial court, except with respect to the indemnity for loss of life. Under Article 1764 in relation to Article 2206 of the New Civil Code, the amount of damages for the death of a passenger is at least three thousand pesos (P3,000.00). The prevailing jurisprudence has increased the amount of P3,000.00 to P30,000.00 (see Heirs of Amparo delos Santos, et al. v. Honorable Court of Appeals, et al., G.R. No. 51165, June 21, 1990 citing De Lima v. Laguna Tayabas Co., G.R. Nos. L-35697-99, April 15, 1988, 160 SCRA 70). LLpr

ACCORDINGLY, the petition is hereby GRANTED. The decision of the Intermediate Appellate Court dated July 29, 1983 and its resolution dated November 28, 1983 are SET ASIDE. The decision of the Court of First Instance dated December 27, 1978 is REINSTATED WITH MODIFICATION that only Isidro Mangune, Guillerma Carreon and Filriters Guaranty Assurance Corporation, Inc. are liable to the victims or their heirs and that the amount of indemnity for loss of life is increased to thirty thousand pesos (P30,000.00). SO ORDERED.

SECOND DIVISIONMARCELO MACALINAO, G.R. No. 146635Substituted byESPERANZA MACALINAO and ANTONIO MACALINAO,

Petitioners, Present:

PUNO, J.,

- versus - Chairman, AUSTRIA-MARTINEZ, CALLEJO, SR., TINGA, and CHICO-NAZARIO, JJ.EDDIE MEDECIELO ONGand GENOVEVO SEBASTIAN, Respondents.         Promulgated:

December 14, 2005 x-------------------------------------------------------------------- x

D E C I S I O NTINGA, J.:

Before this Court is a Petition for Review on Certiorari assailing the Decision[1] and Resolution[2] of the Court of Appeals

dated 31 May 2000 and 7 September 2000, respectively, in CA-G.R. CV No. 52963. The Court of Appeals reversed the judgment

of the trial court and dismissed the complaint for damages filed by Marcelo Macalinao (Macalinao) against Eddie Medecielo

Ong (Ong) and Genovevo Sebastian (Sebastian) for insufficiency of evidence.

The antecedent facts follow.

Macalinao and Ong were employed as utility man and driver, respectively, at the Genetron International Marketing

(Genetron), a single proprietorship owned and operated by Sebastian. On 25 April 1992, Sebastian instructed Macalinao, Ong

and two truck helpers to deliver a heavy piece of machinery–a reactor/motor for mixing chemicals, to Sebastian’s

manufacturing plant in Angat, Bulacan. While in the process of complying with the order, the vehicle driven by Ong,

Genetron’s Isuzu Elf truck with plate no. PMP-106 hit and bumped the front portion of a private jeepney with plate no. DAF-

922 along Caypombo, Sta. Maria, Bulacan at around 11:20 in the morning.[3]

Both vehicles incurred severe damages while the passengers sustained physical injuries as a consequence of the

collision.[4]Macalinao incurred the most serious injuriesamong the passengers of the truck. He was initially brought to the Sta.

Maria District Hospital for first aid treatment but in view of the severity of his condition, he was transferred to the Philippine

Orthopedic Center at the instance of Sebastian. He was again moved to the Capitol Medical Center by his parents, petitioners

herein, for medical reasons and later to the Philippine General Hospital for financial considerations.[5]

Macalinao’s body was paralyzed and immobilized from the neck down as a result of the accident and per doctor’s

advice, his foot was amputated. He also suffered from bed sores and infection. His immedicable condition, coupled with the

doctor’s recommendation, led his family to bring him home where he died on 7 November 1992.[6]

Before he died, Macalinao was able to file an action for damages against both Ong and Sebastian before the Regional Trial

Court (RTC) of Quezon City, Branch 81. [7] After his death, Macalinao was substituted by his parents in the action.[8] A criminal

case for reckless imprudence

resulting to serious physical injuries[9] had also been instituted earlier against Ong but for reasons which do not appear in the

records of this case, trial thereon did not ensue.[10]

After trial in the civil action, the RTC held that based on the evidence, Ong drove the Isuzu truck in a reckless and

imprudent manner thereby causing the same to hit the private jeepney. It observed that while respondents claimed that Ong

was driving cautiously and prudently at the time of the mishap, no evidence was presented to substantiate the claim. [11] It

declared Ong negligent and at the same time, it held that Sebastian failed to exercise the diligence of a good father of a family

in the selection and supervision of Ong. Consequently, the trial court pronounced the two of them jointly liable to pay actual,

moral, and exemplary damages as well as civil indemnity for Macalinao’s death. The trial court subsequently increased the

monetary award[12] upon petitioners’ motion for reconsideration thereof.

On appeal, the appellate court reversed the findings of the trial court. It held that the evidence presented by petitioners

was woefully scant to support a verdict of negligence against Ong. And since respondents’ liability hinged squarely on proof of

Ong’s negligence, neither of them could be held liable for damages to petitioners.[13]

Aggrieved at the ruling, petitioners elevated the case to this Court. They herein contend that contrary to the conclusion

reached by the Court of Appeals, the evidence conclusively establish fault or negligence on the part of Ong and justify the

award of damages in their favor.

The petition is meritorious.

The issue of negligence is factual and, in quasi-delicts, crucial in the award of damages. [14] In the case at bar, the crux

of the controversy is the sufficiency of the evidence presented to support a finding of negligence against Ong. Given the

contradictory conclusions of the trial court and the appellate court on this issue, this Court is impelled to ascertain for itself

which court made the correct determination.

While as a rule factual findings of the Court of Appeals are deemed conclusive in cases brought to us on appeal, we

have also consistently pronounced that we may review its findings of fact in the following instances, among others:

(i) when the judgment of the Court of Appeals was based on a misapprehension of facts; (ii) when the factual findings are conflicting; (iii) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion; and (iv) where the findings of fact of the Court of Appeals are contrary to those of the trial court, or are mere conclusions without citation of specific evidence, or where the facts set forth by the petitioner are not disputed by the respondent, or where the findings of fact of the

Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record.[15]

Said exceptions obtain in this case thus, a departure from the application of the general rule is warranted.

In reversing the trial court and absolving respondents from liability, the appellate court made the following

pronouncement:

The evidence presented is woefully scant. The pictures of the collision afford no basis for concluding that it was the fault of the defendant driver, or that he was driving recklessly. The police report contains no findings as to the road conditions, estimates of the relative speed of the vehicles, or their exact position at the time of the accident. And even so, entries in the police blotter should not be given significance or probative value as they do not constitute conclusive proof of the truth thereof. Nor were eyewitnesses presented, not even affidavits or statements to give any indication as to what actually happened. The police investigator’s findings are sketchy at best, with only the phrase “Isuzu lost control” as his opinion, with no explanation how he reached it. Civil cases require evidence of a lesser degree than criminal cases, but one sentence by one who did not even witness an event, is not conclusive proof.

. . . There was only the fact of the collision before the trial court. The attendant circumstances

were not established, and no fault could be determined using the evidence, both testimonial and documentary presented.[16]

Contrary to the above conclusion of the appellate court, the evidence on record coupled with the doctrine of res 

ipsa loquitursufficiently establishes Ong’s negligence.

We focus first on the evidence presented before the trial court.

The photographs of the accident which the appellate court cavalierly brushed aside as insignificant deserve

substantial cogitation. In Jose v. Court of Appeals,[17] we upheld the trial court’s reliance on photographs of the accident as

opposed to a party’s obviously biased testimony. In so doing, we stated:

In criminal cases such as murder or rape where the accused stands to lose his liberty if found guilty, this Court has, in many occasions, relied principally upon physical evidence in ascertaining the truth. In People v. Vasquez,[18] where the physical evidence on record ran counter to the testimonial evidence of the prosecution witnesses, we ruled that the physical evidence should prevail.[19]

Physical evidence is a mute but an eloquent manifestation of truth which ranks high in our hierarchy of trustworthy

evidence.[20]

In this case, while there is a dearth of testimonial evidence to enlighten us about what actually happened,

photographs[21]depicting the relative positions of the vehicles immediately after the accident took place do exist. It is well

established that photographs, when duly verified and shown by extrinsic evidence to be faithful representations of the subject

as of the time in question, are, in the discretion of the trial court, admissible in evidence as aids in arriving at an understanding

of the evidence, the situation or condition of objects or premises or the circumstances of an accident.[22]

According to American courts, photographs are admissible in evidence in motor vehicle accident cases when they appear

to have been accurately taken and are proved to be a faithful and clear representation of the subject, which cannot itself be

produced, and are of such nature as to throw light upon a disputed point. [23] Before a photograph may be admitted in evidence,

however, its accuracy or correctness must be proved, and it must be authenticated or verified [24] first. In the case at bar, the

photographer testified in open court and properly identified the pictures as the ones he took at the scene of the accident.[25]

An examination of said photographs clearly shows that the road where the mishap occurred is marked by a line at

the center separating the right from the left lane. Based on the motorist’s right of way rule, the Isuzu truck which was headed

towards Norzagaray, Bulacan[26] should have been occupying the left lane while the private jeepney which was traversing the

road to the town proper of Sta. Maria, Bulacan [27] should have been in the right lane. Exhibits “L” and “L-4” among the

photographs, however, reveal that in the aftermath of the collision, the Isuzu truck usurped the opposite lane to such an

extent that only its right rear wheel remained in the left lane, a few inches from the demarcation line. Its two front wheels and

left rear wheel were planted squarely on the private jeepney’s lane and the Isuzu truck had rotated such that its front no

longer pointed towards Norzagaray but partially faced the town proper of Sta. Maria instead.

While ending up at the opposite lane is not conclusive proof of fault in automobile collisions, the position of the two

vehicles gives rise to the conclusion that it was the Isuzu truck which hit the private jeepney rather than the other way around.

The smashed front of the Isuzu truck is pressed against the private jeepney’s left front portion near the driver’s side. The

private jeepney is positioned diagonally in the right lane; its front at the rightmost corner of the road while its rear remained a

few feet from the demarcation line. Based on the angle at which it stopped, the private jeepney obviously swerved to the right

in an unsuccessful effort to avoid the Isuzu truck. This would support the statement of the police investigator that the Isuzu

truck lost control[28] and hit the left front portion of the private jeepney. [29] It would also explain why the driver of the private

jeepney died immediately after being brought to the hospital, [30] since in such a scenario, the brunt of the collision logically

bore down on him.

Moreover, the unequal size and weight of the two vehicles would make it improbable for the relatively lighter

private jeepney to have stricken the heavier truck with such force as to push the latter to the former’s side of the road. Had

that been the case, the two vehicles would have ended up crushed together at the center of the road or at the Isuzu truck’s

lane instead of rolling to a stop at the private jeepney’s lane.

Another piece of evidence which supports a finding of negligence against Ong is the police report of the incident denoted

as Entry No. 04-229 of the Sta. Maria Police Station. The report states that the Isuzu truck was the one which hit the left front

portion of the private jeepney.[31] This piece of evidence was disregarded by the Court of Appeals on the ground that entries in

police blotters should not be given significance or probative value as they do not constitute conclusive proof of the truth

thereof.

While true in most instances, it must still be remembered that although police blotters are of little probative value,

they are nevertheless admitted and considered in the absence of competent evidence to refute the facts stated therein.

[32] Entries in police records made by a police officer in the performance of the duty especially enjoined by law are prima 

facie evidence of the fact therein stated,[33] and their probative value may be either substantiated or nullified by other

competent evidence.[34]

In this case, the police blotter was identified and formally offered as evidence and the person who made the entries

thereon was likewise presented in court. On the other hand, aside from a blanket allegation that the driver of the other vehicle

was the one at fault, respondents did not present any evidence to back up their charge and show that the conclusion of the

police investigator was false. Given the paucity of details in the report, the investigator’s observation could have been easily

refuted and overturned by respondents through the simple expedient of supplying the missing facts and showing to the

satisfaction of the

court that the Isuzu truck was blameless in the incident. Ong was driving the truck while the two other truck helpers also

survived the accident. Any or all of them could have given their testimony to shed light on what actually transpired, yet not one

of them was presented to substantiate the claim that Ong was not negligent.

Since respondents failed to refute the contents of the police blotter, the statement therein that the Isuzu truck hit the

private jeepney and not the other way around is deemed established. The prima facie nature of the police report ensures that

if it remains unexplained or uncontradicted, it will be sufficient to establish the facts posited therein.[35]

While not constituting direct proof of Ong’s negligence, the foregoing pieces of evidence justify the application of res ipsa 

loquitur, a Latin phrase which literally means “the thing or the transaction speaks for itself.”[36]

Res  ipsa  loquitur recognizes that parties may establish prima facie negligence without direct proof, thus, it allows the

principle to substitute for specific proof of negligence.[37] 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.[38]

The doctrine can be invoked only when under the circumstances, direct evidence is absent and not readily available.

[39] This is based in part upon the theory that the defendant in charge of the instrumentality which causes the injury either

knows the cause of the accident or has the best opportunity of ascertaining it while the plaintiff has no such knowledge, and is

therefore compelled to allege negligence in general terms and rely upon the proof of the happening of the accident in order to

establish negligence.[40] The inference which the doctrine permits is grounded upon the fact that the chief evidence of the true

cause, whether culpable or innocent, is practically accessible to the defendant but inaccessible to the injured person.[41]

In this case, Macalinao could no longer testify as to the cause of the accident since he is dead. Petitioners, while

substituting their son as plaintiff, have no actual knowledge

about the event since they were not present at the crucial moment. The driver of the private jeepney who could have shed

light on the circumstances is likewise dead. The only ones left with knowledge about the cause of the mishap are the two truck

helpers who survived, both employees of Sebastian, and Ong, who is not only Sebastian’s previous employee but his co-

respondent in this case as well. In the circumstances, evidence as to the true cause of the accident is, for all intents and

purposes, accessible to respondents but not to petitioners. The witnesses left are unlikely to divulge to petitioners what they

knew about the cause of the accident if the same militates against the interest of their employer. This justifies the invocation of

the doctrine.

Under local jurisprudence, the following are the requisites for the application of res ipsa loquitur:

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

(2) It is caused by an instrumentality within the exclusive control of the defendant or

defendants; and (3) The possibility of contributing conduct which would make the plaintiff responsible is

eliminated.[42]

We are convinced that all the above requisites are present in the case at bar.

No two motor vehicles traversing opposite lanes will collide as a matter of course unless someone is negligent, thus,

the first requisite for the application of the doctrine is present. Ong was driving the Isuzu truck which, from the evidence

adduced, appears to have precipitated the collision with the private jeepney. Driving the Isuzu truck gave Ong exclusive

management and control over it, a fact which shows that the second requisite is also present. No contributory negligence

could be attributed to Macalinao relative to the happening of the accident since he was merely a passenger in the Isuzu truck.

Respondents’ allegation that Macalinao was guilty of contributory negligence for failing to take the necessary precautions to

ensure his safety while onboard the truck[43] is too specious for belief particularly as respondents did not even present any

evidence to prove such allegation. The last requisite is, therefore, likewise present.

There exists a fourth requisite under American jurisprudence, that is, that the defendant fails to offer any

explanation tending to show that the injury was caused by his or her want of due care.[44] In this case, while respondents

claimed that Ong drove cautiously and prudently during the time in question, no evidence was proffered to substantiate the

same. In fact, Ong did not bother to testify to explain his actuations and to show that he exercised due care when the accident

happened, so even this requisite is fulfilled.

All the requisites for the application of the rule of res   ipsa   loquitur are present, thus a reasonable presumption or

inference of Ong’s negligence arises. In consonance with the effect of the doctrine, the burden of proving due care at the time

in question shifts to respondents. Unfortunately, as previously discussed, aside from blanket allegations that Ong exercised

prudence and due care while driving on the day of the accident, respondents proffered no other proof. As a consequence,

the prima facie finding of negligence against Ong, remaining unexplained and/or uncontradicted, is deemed established. This in

turn warrants a finding that Ong is liable for damages to petitioners.

Such liability of Ong is solidary with Sebastian pursuant to Art. 2176 in relation to Art. 2180 of the Civil Code which

provide:

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

Art. 2180. The obligation imposed by Art. 2176 is demandable not only for one’s own acts or

omissions but also for those of persons for whom one is responsible. . . .

Employers shall be liable for the damage 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 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.

Whenever an employee’s negligence causes damage or injury to another, there instantly arises a presumption juris 

tantum that the employer failed to exercise diligentissimi patris families in the selection (culpa in eligiendo) or supervision

(culpa in vigilando) of its employees.[45] 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.[46]

In an attempt to exculpate himself from liability, Sebastian claimed that he exercised due care in selecting Ong as a

driver. Before he hired Ong, he allegedly required him to produce police and NBI clearances and he took into account the

recommendations of Ong’s previous employer and friends.[47] Sebastian also stressed that he instructed Ong to drive slowly and

carefully and to take necessary precautions.[48] He likewise admonished Ong to be careful after the latter had some minor

accidents in the parking area.[49]

However, Sebastian’s statements are not sufficient to prove that he exercised the diligence of a good father of a

family in the selection of Ong. His testimony is self-serving and devoid of corroboration as he did not bother to support the

same with document evidence. Moreover, Sebastian could not even remember whether the recommendation from Ong’s

previous employer was made verbally or in writing.[50]

On the other hand, due diligence in supervision requires the formulation of rules and regulations for the guidance

of employees and the issuance of proper instructions as well as actual implementation and monitoring of consistent

compliance with the rules.[51]Admonitions to drive carefully without the corresponding guidelines and monitoring of the

employee do not satisfy the due diligence required by law either.

In short, Sebastian’s claims fall short of what is required by law to overcome the presumption of negligence in the

selection and supervision of his employee. The trial court therefore correctly held him solidarily liable with Ong to petitioners.

In an obvious ploy to relieve himself from liability should the appellate court’s decision be reversed, Sebastian

averred that Macalinao is not entitled to damages. He anchored his claim on the novel argument that the provisions of Art.

2180 apply only when the injured party is a third person but it has no application to an employee like Macalinao. [52] He likewise

postulated that recovery from the Social Security System, State Insurance Fund, Employee’s Compensation Commission, and

the Philippine Medical Care Act, the government agencies with which petitioners filed a claim in view of Macalinao’s injury and

subsequent death, preclude pursuing alternate recourse or recovering from other sources until the former claims have been

rejected.[53]

Sebastian is grasping at straws. Art. 2180 makes no distinction whatsoever whether the claimant is an employee or

a third person relative to the employer. Ubi   lex   non   distinguit   nec   nos   distinguere   debemos. Where the law does not

distinguish, neither should we.[54]

 

Moreover, petitioner’s claim against Sebastian is not based upon the fact of Macalinao’s previous employment with

him but on the solidary liability of the latter for the negligent act of one of his employees. Such is not precluded by prior claims

with the government agencies enumerated. One is based on compulsory coverage of government benefits while the other is

based on a cause of action provided by law.

Additionally, respondents postulated that since it was Macalinao who sustained physical injuries and died, he was

the one who suffered pain, not petitioners so moral damages are not recoverable in this case.[55]

The relatives of the victim who incurred physical injuries in a quasi-delict are not proscribed from recovering moral

damages in meritorious cases. To hold otherwise would give rise to the ridiculous scenario where a defendant may be

compelled to pay moral damages in a quasi-delict causing physical injuries but will be relieved from doing so should those same

injuries cause the victim’s death.

In the case of Lambert v. Heirs of Ray Castillon,[56] we held that in quasi-delicts: . . . . the award of moral damages is aimed at a restoration, within the limits possible, of the spiritual status  quo  ante; and therefore, it must be proportionate to the suffering inflicted. 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.[57] (Emphasis Supplied.)

The trial court awarded moral damages in the amount of P30,000.00 but since prevailing jurisprudence has fixed the same

atP50,000.00,[58] there is a need to increase the award to reflect the recent rulings.

Lastly, respondents claim that exemplary damages is not warranted in this case. Under the law, exemplary damages may be

granted in quasi-delicts if the defendant acted with gross negligence. [59] Gross negligence has been defined as negligence

characterized by the want of even slight care, acting or omitting to act in a situation where there is duty to act, not inadvertently

but willfully and intentionally, with a conscious indifference to consequences insofar as other persons may be affected.[60]

Ong’s gross negligence in driving the Isuzu truck precipitated the accident. This is lucidly portrayed in the photographs on

record and it justifies the award of exemplary damages in petitioners’ favor. However, the trial court’s award of P10,000.00 is

insufficient, thus the Court deems it proper to increase the award to P25,000.00 under the circumstances.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated 31 May 2000, as well as

its Resolutiondated 7 September 2000, are hereby SET ASIDE. The Decision of the Regional Trial Court of Quezon City, Branch 81

dated 12 April 1996 as amended by the Order dated 23 May 1996 is hereby REINSTATED with the modifications that the award

for moral damages is increased to P50,000.00 to conform with prevailing jurisprudence and

the award for exemplary damages is increased to P25,000.00. Costs against respondents.

SO ORDERED.

DANTE O. TINGA

Associate Justice 

WE CONCUR:

REYNATO S. PUNOAssociate Justice

Chairman

MA. ALICIA AUSTRIA-MARTINEZ ROMEO J. CALLEJO, SR. Associate Justice                            Associate Justice     

MINITA V. CHICO-NAZARIOAssociate Justice

ATTESTATION

 I attest that the conclusions in the above Decision had been in consultation before the case was assigned to the writer of

the opinion of the Court’s Division. REYNATO S. PUNO Associate Justice Chairman, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairman’s Attestation, it is hereby certified that

the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the

opinion of the Court’s Division. HILARIO G. DAVIDE, JR. Chief Justice

THIRD DIVISION

[G.R. No. 157611. August 9, 2005.]

ALABANG COUNTRY CLUB INC., ROBERTO ANONAS, CATALINO SANTOS, ERNESTO CAYETANO and ROGELIO MANALO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, ALABANG COUNTRY CLUB INDEPENDENT EMPLOYEES UNION, MARILOU ABADIANO, ERNESTO BANAL, BENEDICTO CATALAN, ABNER CAVESTANY, ROMULO DALAYGON, ELENA DELA CRUZ, RONALDO IBARRA, MA. ISABELITA PIZARRO, FELIX ARISME, EDILBERTO BANTILLES, BERNARDO DE CHAVEZ, MEDARDO ENRIQUEZ, ERNESTO DEREZA, DOMINGO IBALLAR, GINA DUMALAON, JOSE MASAGCA, MARIO FRANCHE, SHARON DANTES-PLATERO, ANNALISSA GARCIA, JULIET TENORIO, ROLANDO GANNABAN, EMERSON ARGOSO, ANICETO GLEAN, FELIPE CADENA, PERLITA HENARES, JOSEPH TAYONG, JAIME HIDALGO, ROSANNA ROSARIAL, LEODEGARIO HUMIRANG, EFREN ABIADA, FILIPINO DIZON, ELPIDIO IBUOS, JR., ROBERTO LANON, ARNOLD LAYUG, JOEL LINAOGO, EDUARDO LLENAS, JOSELITO LORINO, FERDINAND MABITASAN, GEORGE MARASIGAN, PERLA MARGES, CYNTHIA MATHAY, WERLITO NAVARRO, CRISTINA OLEGARIO, CRISTINA OMAYAO, NENEN ORTIGOZA,

ELEONOR PALIMA, MARIA PANTALITA, EDUARDO PERALTA, RICHARD PEREZ, JOVITO PIDLAOAN, PACITA PILONGO, BENJAMIN PINTOR, NARCISO QUIZANA, AGRIFINO REYES, DENNIS REYES, EDUARDO RUBINA, ARISTEO SANTOS, ROBERTO SOLANTE, ARMANDO SUAREZ, DOLORES VALIENTE, REMEDIOS UMALI, INGERSOL POMIDA, and FLORO MACABIT, respondents.

Salvador C. Medialdea for petitioners.

Fernandez & Kasilag-Villanueva for private respondents.

SYLLABUS

1.LABOR AND SOCIAL LEGISLATION; LABOR RELATIONS; TERMINATION OF EMPLOYMENT; RETRENCHMENT ON THE GROUND OF SERIOUS BUSINESS LOSSES; CONDITIONS. — In Lopez Sugar Corporation v. Federation of Free Workers cited by respondents, this Court held that retrenchment on the ground of serious business losses is allowed subject to the conditions that (1) the losses expected should be substantial and not merely de minimis in extent; (2) the substantial losses apprehended must be reasonably imminent as such imminence can be perceived objectively in good faith by the employer; (3) retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and (4) the alleged losses, if already realized and the expected imminent losses sought to be forestalled, must be proven by sufficient and convincing evidence.

2.ID.; ID.; ID.; RETRENCHMENT AND CLOSURE OF BUSINESS; DISTINGUISHED. — While retrenchment and closure of a business establishment or undertaking are often used interchangeably and are interrelated, they are actually two separate and independent authorized causes for termination of employment. Retrenchment is the reduction of personnel for the purpose of cutting down on costs of operations in terms of salaries and wages resorted to by an employer because of losses in operation of a business occasioned by lack of work and considerable reduction in the volume of business. Closure of a business or undertaking due to business losses is the reversal of fortune of the employer whereby there is a complete cessation of business operations to prevent further financial drain upon an employer who cannot pay anymore his employees since business has already stopped. One of the prerogatives of management is the decision to close the entire establishment or to close or abolish a department or section thereof for economic reasons, such as to minimize expenses and reduce capitalization. While the Labor Code provides for the payment of separation package in case of retrenchment to prevent losses, it does not obligate the employer for the payment thereof if there is closure of business due to serious losses.

3.ID.; ID.; ID.; ID.; ALLEGATION OF SUBSTANTIAL LOSSES REQUIRES SUFFICIENT EVIDENCE. — As in the case of retrenchment for the closure of a business or a department due to serious business losses to be regarded as an authorized cause for terminating employees, it must be proven that the losses incurred are substantial and actual or reasonably imminent; that the same increased through a period of time; and that the condition of the company is not likely to improve in the near future. As did the appellate court, this Court finds that the study report submitted by the internal auditor of petitioner, the only evidence submitted to prove its alleged losses, is self-serving and falls short of the stringent requirement of the law that the employer prove sufficiently and convincingly its allegation of substantial losses.

4.ID.; ID.; ID.; CLOSURE OF ESTABLISHMENT AND REDUCTION OF PERSONNEL; VALIDITY THEREOF. — Petitioner's failure to prove that the closure of its F & B Department was due to substantial losses notwithstanding, this Court finds that individual respondents were dismissed on the ground of closure or cessation of an undertaking not due to serious business or financial reverses, which is allowed under Article 283 of the Labor Code. The closure of operation of an establishment or undertaking not due to serious business losses or financial reverses includes both the complete cessation of operations and the cessation of only part of a company's activities. For any bona fide reason, an employer can lawfully close shop anytime. Just as no law forces anyone to go into business, no law can compel anybody to continue the same. It would be stretching the intent and spirit of the law if a court interferes with management's prerogative to close or cease its business operations just because the business is not suffering from any loss or because of the desire to provide the workers continued employment. Management's exercise of its prerogative to close a section, branch, department, plant or shop will be upheld as long as it is done in good faith

to advance the employer's interest and not for the purpose of defeating or circumventing the rights of employees under the law or a valid agreement.

5.ID.; ID.; ID.; ID.; ID.; EMPLOYER MANDATED TO PAY SEPARATION PAY. — While the closure of F & B Department is found to be justified, petitioner is, under the above-quoted provision of Art. 283 of the Labor Code, mandated to pay separation pay computed from the time individual respondents commenced their employment until the time the department ceased operations in an amount equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. Respondents not having been illegally dismissed, they are not entitled to backwages.

6.ID.; ID.; ID.; QUITCLAIMS. — A waiver or quitclaim is a valid and binding agreement between the parties, provided that it constitutes a credible and reasonable settlement and the one accomplishing it has done so voluntarily and with a full understanding of its import. As the waivers and quitclaims executed by individual respondents who had been given their separation pay were duly notarized, the certificate of acknowledgment in each of them serves as prima facie evidence of their due execution.

D E C I S I O N

CARPIO MORALES, J p:

Petitioner Alabang Country Club Inc. (ACCI), a stock, non-profit corporation that operates and maintains a country club and various sports and recreational facilities for the exclusive use of its members, seeks to set aside the appellate court's Decision 1 of August 14, 2002 as well as its Resolution 2 of March 6, 2003 denying petitioner's motion for reconsideration. The appellate court reversed and set aside the National Labor Relation Commission's (NLRC) Decision 3 of March 15, 2002, and ordered the reinstatement of herein sixty-three (63) respondents-members of a duly registered labor organization — Alabang Country Club Independent Employees Union (the Union), without loss of seniority rights and other privileges, and the payment of their full backwages including attorney's fees.

Sometime in 1993, Francisco Ferrer, then President of ACCI, requested its Internal Auditor, Irene Campos-Ugalde, to conduct a study on the profitability of ACCI's Food and Beverage Department (F & B Department). 4 Ugalde made use of the audited figures in the financial statements 5 prepared by Sycip Gorres Velayo & Co. (SGV&Co.) for the years 1989-1993 in reflecting the total revenue and costs and expenses of the F & B Department. However, while SGV&Co. deducted the entire "undistributed operating costs and expenses" consisting of "general and maintenance costs" from the total income of ACCI, 6 Ugalde allocated a percentage of these expenses and charged the same against the total revenue of the F & B Department. 7 Consequently, her report showed that from 1989 to 1993, F & B Department had been incurring substantial losses in the aggregate amount of Eight Million Seven Hundred Twenty-Seven Thousand One Hundred Thirty-Five Pesos (P8,727,135.00). 8 Her report further showed that:

1.It was only in 1993 when the losses dropped as compared to the 1992 figures. This was the result of an effective joint management employee undertaking in 1993 towards cost-cutting and efficient resource administration; and

2.The endeavor succeeded only in reducing losses but not totally raising the figures upward to at least a break-even level;

3.ACCI can generate income from F & B Department if its operation will be transferred to a concessionaire;

4.Actual breakages alone w[ere] approximately P298,000 [from] January 1, 1994 to May 15, 1994 or an average of P60,000 a month. 9

Realizing that it was no longer profitable for ACCI to maintain its own F & B Department, the management decided to cease from operating the department and to open the same to a contractor, such as a concessionaire, which would be willing to operate its own food and beverage business within the club. 10

ACCI's Labor Committee Chairman Catalino Santos thus met on November 11, 1994 with the Union officers and members and discussed the financial standing of the F & B Department. 11

ACCI subsequently entered on December 1, 1994 into an agreement with La Tasca Restaurant Inc. (La Tasca), for it to operate the F & B Department. 12 Under the agreement, La Tasca would pay ACCI fifteen (15%) percent of its gross sales net of sales tax plus the expenses for light and water in the amount of five (5%) percent of monthly gross sales net of sales tax. 13

Also on December 1, 1994, ACCI sent its F & B Department employees individual letters informing them that their services were being terminated effective January 1, 1995; 14 and that they would be paid separation pay equivalent to one hundred twenty five (125%) percent of their monthly salary for every year of service. 15 ACCI also informed them that La Tasca agreed to absorb all affected employees immediately with the status of regular employees without need of undergoing a probationary period, and that all affected employees would receive the same salary they were receiving from ACCI at the time of their termination. 16

On December 11, 1994, the Union, with the authority of individual respondents, filed before the NLRC a complaint for illegal dismissal, unfair labor practice, regularization and damages with prayer for the issuance of a writ of preliminary injunction against ACCI. 17

The Union then filed a notice of strike. 18 ACCI, finding that the requirements under the Labor Code had not been complied with, suspended on December 28, 1994 those who participated in the strike. 19

The Union averred, however, that no strike was actually held and that it was caught by surprise when, upon reporting for work on December 28, 1994, employees of La Tasca "brought their equipment and took over the posts held by most of [the individual respondents]." 20

As scheduled, ACCI ceased operating its F & B Department by January 1, 1995 as La Tasca began operating its own F & B business at the Alabang Country Club. ESTCDA

Meanwhile, in the proceedings before the Labor Arbiter, respondent union and individual respondents informed that the F & B Division had been reporting gaining profits as shown by the Statement of Income and Deficit prepared by SGV&Co. 21 They thus argued that compliance with the standards for losses in Lopez Sugar Corporation v. Federation of Free Workers 22 to justify their retrenchment were not met by ACCI.

ACCI averred, however, that it may exercise management prerogatives to adopt a cost-saving and cost-consciousness program to improve efficiency in its operations,23 prevent losses, and concentrate on core businesses, 24 and to lay-off workers and contract out their jobs. 25

During the pendency of the complaint for illegal dismissal before the Labor Arbiter, forty-seven (47) of the individual respondents accepted separation benefits from ACCI at 125% of their monthly salary for every year of service, on account of which they executed Waivers and Quitclaims in favor of ACCI: Marilou Abadiano, Ernesto Banal, Benedicto Catalan, Abner Cavestany, Romulo Dalaygon, Elena dela Cruz, Ernesto Dereza, Gina Dumalaon, Mario Franche, Annalissa Garcia, Rolando Gannaban, Aniceto Glean, Perlita Henares, Jaime Hidalgo, Leodegario Humirang, Elpidio Ibuos, Jr., Roberto Lanon, Arnold Layug, Joel Linaogo, Eduardo Llenas, Joselito Lorino, Ferdinand Mabitasan, George Marasigan, Perla Marges, Cynthia Mathay,

Werlito Navarro, Cristina Olegario, Cristina Omayao, Nenen Ortigoza, Eleonor Palima, Maria Pantalita, Eduardo Peralta, Richard Perez, Jovito Pidlaoan, Pacita Pilongo, Benjamin Pintor, Narciso Quizana, Agrifino Reyes, Dennis Reyes, Eduardo Rubina, Aristeo Santos, Roberto Solante, Armando Suarez, Dolores Valiente, Remedios Umali, Ingersol Pomida and Floro Macabit. 26

By decision of April 30, 1999, the Labor Arbiter dismissed the complaint for illegal dismissal on the ground that a business entity has the right to reduce its work force if necessitated by compelling economic factors which endanger its existence or stability. 27 The Labor Arbiter in fact found that the study made by Ugalde which was a more detailed version of the financial statements prepared by SGV&Co. clearly established that the F & B Department was incurring losses, thus justifying ACCI to exercise its inherent prerogative to retrench its workers to prevent further losses. 28

On appeal, the NLRC acknowledged the right of ACCI to regulate, according to its own discretion and judgment, all aspects of employment including the lay-off of workers because of losses in the operation of its business, lack of work and considerable reduction in the volume of business. 29 It thus dismissed the appeal.

Private respondents' motion for reconsideration of the NLRC's dismissal of the appeal was denied by Resolution 30 of April 28, 2000.

Private respondents thereupon brought their case, via petition for certiorari, 31 before the Court of Appeals, alleging that the Labor Arbiter and the NLRC committed grave abuse of discretion and utter ignorance of the law in completely disregarding the audited financial statements prepared by SGV&Co. showing that ACCI's F & B Department had been consistently earning profits. 32

During the pendency of the petition before the appellate court, fifteen (15) of the individual respondents received their separation package equivalent to 125% of their monthly salary for every year of service, on account of which they executed Waivers and Quitclaims in favor of ACCI: Ronaldo Ibarra, Ma. Isabelita Pizarro, Felix Arisme, Edilberto Bantilles, Bernardo de Chavez, Medardo Enriquez, Domingo Iballar, Jose Masagca, Sharon Dantes-Platero, Juliet Tenorio, Emerson Argoso, Felipe Cadena, Joseph Tayong, Rosanna Rosarial, and Efren Abadia. 33

By decision of August 14, 2002, the Court of Appeals reversed those of the NLRC and the Labor Arbiter. It held that due to ACCI's failure to prove by sufficient and competent evidence that its alleged losses were substantial, continuing and without any immediate prospect of abating them, the bona fide nature of theretrenchment appeared doubtful. 34 Passing on ACCI's financial status, the appellate court, citing Bogo-Medellin Sugarcane Planters Association, Inc. v. NLRC 35 andDela Salle University v. Dela Salle University Employees Association, 36 held that financial statements audited by independent external auditors, and not a mere study report of an internal auditor of a company, constitute the normal method of proof of the profit and loss of the company. 37

ACCI's motion for reconsideration 38 having been denied by the appellate court by Resolution 39 of March 6, 2003, it comes before this Court via petition for review oncertiorari, advancing the following arguments:

A.

CONTRARY TO LAW AND ESTABLISHED JURISPRUDENCE, THE COURT OF APPEALS GRAVELY DISREGARDED THE CLUB'S RIGHT TO TERMINATE ITS EMPLOYEES FOR AN AUTHORIZED CAUSE, PARTICULARLY TO SECURE ITS CONTINUED VIABILITY AND EXISTENCE.

B.

CONSISTENT WITH ESTABLISHED LAW AND JURISPRUDENCE, INASMUCH AS BOTH FINDINGS OF PUBLIC RESPONDENT NLRC AND THE LABOR ARBITERA QUO THAT THE CLUB'S F & B EMPLOYEES WERE VALIDLY TERMINATED, ARE SUPPORTED BY AUDITED FINANCIAL STATEMENTS AND OTHER SUBSTANTIAL EVIDENCE, THE PETITION BELOW SHOULD HAVE BEEN DISMISSED.

C.

THE ORDER FOR REINSTATEMENT, PAYMENT OF BACKWAGES, AND THE AWARD OF ATTORNEY'S FEES ARE NOT PROPER SINCE RESPONDENTS WERE TERMINATED FOR AN AUTHORIZED CAUSE AND AFTER COMPLIANCE WITH DUE PROCESS.

D.

THE COURT OF APPEALS SHOULD HAVE RECOGNIZED THAT SIXTY-TWO OUT OF THE SIXTY THREE PETITIONERS INDICATED IN THE PETITION BELOW HAVE ALREADY ACKNOWLEDGED RECEIPT OF THE MONETARY AWARD AFFIRMED IN THE COMMISSION'S DECISION DATED 15 MARCH 2000 IN FULL SATISFACTION THEREOF. 40

The petition is impressed with merit.

ACCI, hereinafter referred to as petitioner, justifies the closure of its F & B Department based on business losses incurred for the past years as reflected in its letter to its employees dated December 1, 1994, to wit:

As you probably have known, our Food and Beverage Division has been losing for the past several years. Your management tried to remedy the situation through changes and innovations but to no avail. This being so and to prevent further losses, management has deemed it necessary to concessionize (sic) our Food and Beverage operations. Since La Tasca won in the bidding and pursuant to our agreement with the same, La Tasca shall, effective January 1, 1995, be operating all our Food and Beverage outlets. As a consequence thereof, please be informed that effective January 1, 1995, your services shall be terminated as effective said date ACCI shall cease to operate all Food and Beverage outlets. . . . 41 (Underscoring supplied).

In Lopez Sugar Corporation v. Federation of Free Workers 42 cited by respondents, this Court held that retrenchment on the ground of serious business losses is allowed subject to the conditions that (1) the losses expected should be substantial and not merely de minimis in extent; (2) the substantial losses apprehended must be reasonably imminent as such imminence can be perceived objectively in good faith by the employer; (3) retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and (4) the alleged losses, if already realized and the expected imminent losses sought to be forestalled, must be proven by sufficient and convincing evidence. 43

This Court, however, views the case as one involving closure of a business undertaking, not retrenchment. While retrenchment and closure of a business establishment or undertaking are often used interchangeably and are interrelated, they are actually two separate and independent authorized causes for termination of employment. 44

Retrenchment is the reduction of personnel for the purpose of cutting down on costs of operations in terms of salaries and wages 45 resorted to by an employer because of losses in operation of a business occasioned by lack of work and considerable reduction in the volume of business. 46

Closure of a business or undertaking due to business losses is the reversal of fortune of the employer whereby there is a complete cessation of business operations to prevent further financial drain upon an employer who cannot pay anymore his employees since business has already stopped. 47

One of the prerogatives of management is the decision to close the entire establishment or to close or abolish a department or section thereof for economic reasons, such as to minimize expenses and reduce capitalization. 48

While the Labor Code provides for the payment of separation package in case of retrenchment to prevent losses, it does not obligate the employer for the payment thereof if there is closure of business due to serious losses. 49

In the present case, when petitioner decided to cease operating its F & B Department and open the same to a concessionaire, it did not reduce the number of personnel assigned thereat. It terminated the employment of all personnel assigned at the department. cETCID

As in the case of retrenchment, however, for the closure of a business or a department due to serious business losses to be regarded as an authorized cause for terminating employees, it must be proven that the losses incurred are substantial and actual or reasonably imminent; that the same increased through a period of time; and that the condition of the company is not likely to improve in the near future. 50

As did the appellate court, this Court finds that the study report submitted by the internal auditor of petitioner, the only evidence submitted to prove its alleged losses, is self-serving 51 and falls short of the stringent requirement of the law that the employer prove sufficiently and convincingly its allegation of substantial losses.

In contrast, part of the evidence presented by respondents are audited financial statements prepared by SGV&Co. for 1989 to 1993 which show a positive net income for the F & B Department ranging from P959,533 - P2,911,810 and, except for the year 1992, marked increases in annual net income per year. 52 Moreover, for the year 1994, its last year of operation, the F & B Department posted an annual net income of P1,562,385. 53

In claiming that the F & B Department had been losing, petitioner's internal auditor deducted from the department's annual income the undistributed operating costs and expenses. However, the study report failed to provide the necessary details on how the undistributed operating costs and expenses charged to the F & B Department was arrived at, including the basis, for example, of allocating association dues and real estate tax directly to the F & B Department as expenses.

Petitioner's failure to prove that the closure of its F & B Department was due to substantial losses notwithstanding, this Court finds that individual respondents were dismissed on the ground of closure or cessation of an undertaking not due to serious business losses or financial reverses, which is allowed under Article 283 of the Labor Code:

Art. 283.Closure of establishment and reduction of personnel. — The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the worker and the Ministry of Labor and Employment at least one (1) month before its intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of the establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year. (Emphasis in the original)

The closure of operation of an establishment or undertaking not due to serious business losses or financial reverses includes both the complete cessation of operations and the cessation of only part of a company's activities. 54

For any bona fide reason, an employer can lawfully close shop anytime. Just as no law forces anyone to go into business, no law can compel anybody to continue the same. 55 It would be stretching the intent and spirit of the law if a court interferes

with management's prerogative to close or cease its business operations just because the business is not suffering from any loss or because of the desire to provide the workers continued employment. 56

While petitioner did not sufficiently establish substantial losses to justify closure of its F & B Department on this ground, there is basis for its claim that the continued maintenance of said department had become more expensive through the years. An evaluation of the financial figures appearing in the audited financial statements prepared by the SGV&Co. shows that ninety one to ninety six (91% - 96%) percent of the actual revenues earned by the F & B Department comprised the costs and expenses in maintaining the department. 57 Petitioner's decision to place its F & B operations under a concessionaire must then be respected, absent a showing of bad faith on its part.

In fine, management's exercise of its prerogative to close a section, branch, department, plant or shop 58 will be upheld as long as it is done in good faith to advance the employer's interest and not for the purpose of defeating or circumventing the rights of employees under the law or a valid agreement. 59

While the closure of F & B Department is found to be justified, petitioner is, under the above-quoted provision of Art. 283 of the Labor Code, mandated to pay separation pay computed from the time individual respondents commenced their employment until the time the department ceased operations, in an amount equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. In petitioner's case, it in fact voluntarily doled out to some of individual respondents separation pay equivalent to one month and a quarter (1 1/4) for every year of service, a fraction of a year being considered as one year. 60

Respondents not having been illegally dismissed, they are not entitled to backwages.

By petitioner's information, it had paid, during the pendency of the case, the separation package of sixty-two (62) of the sixty-three (63) individual respondents on account of which they executed Releases, Waivers and Quitclaims in its favor. 61

A waiver or quitclaim is a valid and binding agreement between the parties, provided that it constitutes a credible and reasonable settlement and the one accomplishing it has done so voluntarily and with a full understanding of its import. 62 As the waivers and quitclaims executed by individual respondents who had been given their separation pay were duly notarized, the certificate of acknowledgement in each of them serves as prima facie evidence of their due execution. 63 Not one of individual respondents who executed the waivers or quitclaims has come forward to challenge the reasonableness of the settlement and/or voluntariness of the execution of the documents.

WHEREFORE, the petition is hereby GRANTED. The assailed Decision of August 14, 2002 and the Resolution of March 6, 2003 of the Court of Appeals are hereby REVERSED and SET ASIDE.

Petitioner, Alabang Country Club, Inc., is hereby ORDERED to pay the remaining individual respondent, Filipino Dizon, who does not appear to have received separation package equivalent to one month and a quarter (1 1/4) for every year of service, as agreed upon by petitioner. ADHcTE

SO ORDERED.