torts reviewer

TORTS MIDTERM REVIEWER

I. INTRODUCTION: TORTS AND DAMAGES

1. Classes of Torts

Art. 1156. An obligation is a juridical necessity to give, to do or not to do.

Art. 1157. Obligations arise from:

(1) Law; (2) Contracts; (3) Quasi-contracts; (4) Acts or omissions punished by law; and (5) Quasi-delicts.

Art. 1158. Obligations derived from law are not presumed. Only those expressly determined in thisCode or in special laws are demandable, and shall be regulated by the precepts of the law whichestablishes them; and as to what has not been foreseen, by the provisions of this Book.

Art. 1159. Obligations arising from contracts have the force of law between the contracting partiesand should be complied with in good faith.

Art. 1160. Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1,Title XVII, of this Book.

Art. 1161. Civil obligations arising from criminal offenses shall be governed by the penal laws,subject to the provisions of Article 2177, and of the pertinent provisions of Chapter 2, PreliminaryTitle, on Human Relations, and of Title XVIII of this Book, regulating damages.

Art. 1162. Obligations derived from quasi-delicts shall be governed by the provisions of Chapter 2,Title XVII of this Book, and by special laws.

Tort – A civil wrong, other than breach of contract for which the court will provide a remedy in the form of anaction for damages (Jarencio’s definition)

Atty. Abaño’s definition: A tort is an act which causes damage to another person. [Therefore, under his definition,a tort encompasses a broader concept than a quasi-delict; it also includes breach of contract and crimes]

The tort is the cause, while the effect is manifested in damages.

Classes of Actions

1. Quasi-Delict: based on negligence

2. Breach of Contract: based on the existence of a contract

3. Torts in Human Relations: based on intentional acts of the tort-feasor

4. Crime: based on a violation of a penal statute

2. Twofold Meaning of Damages

1. Damages as the loss, prejudice, or injury resulting from the act of a person; and

2. Damages as compensation for such loss, prejudice, or injury

3. Culpa Aquiliana/Contractual/Criminal

Digests by Sheryl, Cayo, Rosa 1Lecture Notes and Notes from Jona Bautista’s Reviewer

Problem: A bus falls off a cliff due to the driver’s fault. What actions may be filed by the heirs of the passengerswho died in the accident?

Answer: Three actions may be filed based on culpa aquiliana, culpa contractual, and culpa criminal. Thedistinctions among the three are as follows:

CULPA AQUILIANA CULPA CONTRACTUAL CRIMINALPROSECUTION

OBJECT Complaint is againstnegligence

Violation of contract ofcarriage

Criminal negligence

ACTION Damages for quasi-delict

Breach of contract withdamages

Criminal prosecution,which includes civilliability under Art. 100of the RPC

AGAINST Driver,Bus Company, orBoth

Employer bus company Driver

QUANTUM OFEVIDENCE

Preponderance ofEvidence

*once the driver isproven negligent,employer is presumednegligent (rebuttablepresumption)

Preponderance ofEvidence

Proof beyondreasonable doubt

DEFENSES Exercise of ordinarydiligence on the part ofthe driver;

Exercise of diligence inthe selection andsupervision of the driveron the part of theemployer

Exercise ofextraordinary diligence(in contract of carriage,the diligence required ofthe common carrier isextraordinary)

If driver cannot pay thecivil damages, theemployer is subsidiarilyliable. The employerdoes not have anydefense in this case.The negligence of theemployee is conclusiveas to the employer forpurposes of subsidiaryliability

Note: You can file more than one of these cases. You can file any or all, depending on the circumstances. Theonly limitation is against double recovery. (See Imson case).

CASES

Cancio v. Isip

Cancio filed 3 counts of violation of BP22 against Isip, who had issued 3 bad checks. The case was dismissed.Subsequently, 3 cases for estafa were filed. The case was dismissed again. Cancio then filed a civil case forcollection of sum of money to recover the value of the 3 checks from Isip. Isip moved to dismiss on the groundthat the action is barred by res judicata and that Cancio was guilty of forum shopping.

ISSUES:

1. Whether the civil action for collection is barred by res judicata.2. Whether there was forum shopping.

HELD: No to both.

An act or omission causing damage to another may give rise to two separate civil liabilities:

1. ex delicto under Art. 100 of the RPC; and2. independent civil liabilities such as:

a. those not arising from an act or omission complained of as a felony, such as culpa contractual,violations of Articles 31, 32, and 34 of the Civil Code, and culpa aquiliana under Article 2176 of theCivil Code;

b. where the injured party is granted a right to file an action independent and distinct from the criminalaction (ex: Art. 33 of the Civil Code)


Either may be enforced against the offender, but the offended party cannot recover damages twice for the sameact or omission or under both causes. Under the Rules on Criminal Procedure, civil liability ex delicto is deemedinstituted with the criminal action, but the offended party may file the separate civil action before the prosecutionstarts to present evidence. However, the independent civil actions may be filed separately and prosecutedindependently even without any reservation in the criminal action.

In this case, the basis of the complaint is culpa contractual. It is an independent civil action which is based onIsip’s breach of a contractual obligation. This may proceed independently of the criminal proceedings, regardlessof the result of the latter. There is no res judicata because there is no identity of causes of action.

Imson v. CA

This case arose from a vehicular collision involving Imson’s car and a truck registered under the names of FNCBand Holiday Hills. The collision seriously injured Imson and totally wrecked his car. Imson filed a complaint fordamages against:

1. the owners of the truck2. the truck driver3. the beneficial owners of the truck4. the truck insurer

All the defendants, except the insurer, defaulted. Imson and the insurer entered into a compromise, whereby theinsurer paid him 70K in full settlement of his claims against the insurer. The RTC thus dismissed the claim againstthe insurer.

Holiday Hills, as owner of the truck, then moved to dismiss the case against all the other defendants on theground that they were all indispensable parties under a common cause of action. It argued that the dismissal ofthe case against the insurer must result in the dismissal of the case against all of them.

ISSUE: Whether the action should be dismissed as against the other defendants.

HELD: No. The action should not be dismissed against the other defendants because there is no identity in thecauses of action against them.

The rule is where the complaint alleges a common cause of action against defendants who are all indispensableparties to the case, its dismissal against any one of them by virtue of a compromise agreement with the plaintiffresults in a dismissal of the case against the others, including those in default. For this doctrine to apply,however, the requisites are:

1. there must be a common cause of action; and2. all defendants are indispensable parties.

This doctrine is NOT applicable in this case because there is no identity of cause of action. The causes of actionagainst each of the defendants are different. They are as follows:

1. against the driver: quasi-delict under 21762. against the owners of the truck: quasi-delict under 2180 (vicarious liability)3. against the insurance company: contract (third party liability clause of its insurance contract with the

owners of the truck allows the third party to collect directly from the insurer even if there is really notcontractual relationship between them).

Moreover, the defendants are not all indispensable parties. The truck driver is the only one who is indispensable.All the others are merely necessary or proper parties.

BLTB v. CA

Quasi-delict is different from criminal negligence; it is an independent source of obligation.

Aboitiz Shipping v. CA

A common carrier is bound to observe extraordinary diligence. If a passenger dies or is injured in the course ofthe voyage, there is a presumption of fault or negligence. This gives rise to an action for breach of contract ofcarriage.

Dangwa Transport v. CA


In an action based on contact of carriage, the court need not make an express finding or fault or negligence inorder to hold the carrier liable. By the contract of carriage, the carrier assumes the express obligation to transportthe passenger to his destination safely and to observe extraordinary diligence. Any injury that might be sufferedby the passenger is right away attributable to the fault or negligence of the carrier.

II. QUASI-DELICT

1. Elements

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

The elements of a quasi-delict are:

1. Fault or Negligence2. Damage3. Causal connection between the negligence and the damage

Problem: X was driving a car when he ran over a stone. The stone hit a pedestrian on the head. The pedestriandied. Is X liable for quasi-delict?

Answer: No, because there was no negligence on the part of X.

Problem: A supplier’s employees went on strike, as a result of which the supplier failed to deliver his goods to hisclient. Can the client sue the supplier for quasi-delict?

Answer: No. Although there was damage, there was no negligence. [Client should sue based on breach ofcontract instead]

CASES:

Andamo v. IAC

Emmanual and Natividad Andamo owned a parcel of land adjacent to that of the Missionaries of Our Lady of LaSallette. Within the land or Our Lady, waterpaths and an artificial lake were constructed, allegedly inundating anderoding the Andamos’ land. This caused a young man to drown, damaged the Andamos’ crops and fences, andendangered their lives. The Andamos instituted a criminal action against the officers and directors of Our Lady fordestruction by means of inundation under Art. 324 of the RPC. Subsequently, they filed a civil case for damagesagainst the respondents. Upon motion of respondents, the civil case was dismissed for lack of jurisdiction, sincethe criminal case instituted ahead of the civil case was still unresolved. This was based on the provision of theRules of Court which provides that criminal and civil actions arising from the same offense may be institutedseparately, but after the criminal action has been commenced, the civil action cannot be instituted until finaljudgment has been rendered in the criminal action.

ISSUE: Whether the civil action should have been dismissed.

HELD: No. The civil action should not have been dismissed since it was based, not on crime, but on quasi-delict.

All the elements of a quasi-delict are present:

1. damages suffered by the plaintiff;2. fault or negligence of the defendant or some other person for whose acts he must respond; and3. connection of the cause and effect between the fault or negligence of the defendant and the damages

incurred by the plaintiff.

In this case, the waterpaths and contrivances built by respondent are alleged to have inundated the land ofpetitioners. This was caused by the failure of the defendant to install drainage pipes that could have preventedthe inundation. There is therefore a causal connection between the act of building the waterpaths withoutproviding for an adequate drainage system and the damage sustained by the petitioners.

Article 2176 covers not only acts “not punishable by law” but also acts criminal in character, whether intentionaland 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 notallowed to recover damages on both scores and would only be entitled to the bigger award of the two.


FGU Insurance v. CA

A car owned by Soriano and being driven by Jacildone collided with another car owned by Filcar and rented anddriven by Dahl-Jensen, a foreigner. FGU Insurance Corp., Soriano’s insurer, paid Sorian 25K for the damage. Byway of subrogation, FGU sued Dahl-Jensen, Filcar, and Fortune Insurance (insurer of Filcar) for quasi-delict. Thecase was dismissed by the RTC on the ground of failure of FGU to substantiate the claim for subrogation. The CAaffirmed by based on another ground: only the fault or negligence of Dahl-Jensen (who was dropped from thecomplaint because summons could not be served on him) was sufficiently proved but not that of Filcar. There wastherefore no cause of action against Filcar for quasi-delict.

ISSUE: Whether the registered owner of a vehicle is liable for damages suffered by third persons although thevehicle is leased to another.

HELD: No. Filcar is not liable. To sustain a claim based on quasi-delict, the following requisites must concur:

1. damages suffered by the plaintiff;2. fault or negligence of the defendant or some other person for whose acts he must respond; and3. connection of the cause and effect between the fault or negligence of the defendant and the damages

incurred by the plaintiff.

In this case, petitioner failed to prove the fault or negligence of Filcar. The negligence was solely attributable toDahl-Jensen, thus making the damage his personal liability. Filcar had not participation therein. Article 2180 onvicarious liability of owners of motor vehicles is not applicable since there is no employer-employee relationshipbetween Filcar and Dahl-Jensen.

Equitable Lease v. Suyom

A road tractor driven by Raul Tutor slammed into a house/tindahan. Three persons were pinned to death under theengine of the tractor; four were injured. Tutor was charged with and convicted of reckless imprudence resulting inmultiple homicide and multiple physical injuries.

Since the Official Receipt and Certificate of Registration of the vehicle showed the registered owner to be“Equitable Leasing/leased to Edwin Lim,” respondents filed a complaint for damages against Equitable, Tutor, andEcatine [seems to be a corporation of Edwin Lim]. Tutor, Lim, and Ecatine were subsequently dropped from thecomplaint because they could not be found.

Equitable, in its answer, raised the defense that the vehicle had already been sold to Ecatine and that Equitablewas no longer in possession and control thereof at the time of the incident. It also claimed that Tutor was anemployee of Ecatine, not Equitable.

It seems that Equitable and Lim had a finance lease agreement whereby Equitable would remain the registeredowner until the vehicle was fully paid by Lim. In this case, the vehicle was fully paid and a deed of sale hadalready been executed. However, there was failure to register the deed of sale with the LTO.

The RTC and CA found Equitable to be liable.

ISSUE: Whether Equitable is liable.

HELD: Equitable is liable.

It is liable because it was the registered owner at the time of the accident. The registered owner is the lawfuloperator insofar as third persons are concerned and consequently, it is directly and primarily responsible for theconsequences of its operation. In contemplation of law, the owner/operator of record is the employer ofthe driver, the actual operator and employer being considered as merely its agent. The same principleapplies even if the registered owner of any vehicle does not use it for public service.

This is not inconsistent with the earlier FGU case, wherein the owner of the vehicle was absolved from liabilitybecause of the absence of the vinculum juris of an employer-employee relationship between the owner and thedriver.

In the present case, though in fact, there is no employer-employee relationship between Equitable and Tutor, thelaw deems the registered owner to be the employer of the driver, and the actual operator is deemed to be theowner’s agent. Again, under law, Equitable is the owner, Ecatine is Equitable’s agent, Tutor is Equitable’semployee.


The failure of Equitable and/or Ecatine to register the sale with the LTO should not prejudice respondents, whohave the legal right to rely on the legal principle that the registered vehicle owner is liable for the damages causedby the negligence of the driver.

2. No Double Recovery Rule

Art. 2177. Responsibility for fault or negligence under the preceding article is entirely separate anddistinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannotrecover damages twice for the same act or omission of the defendant.

Broader concept of Civil Liability

A single act can give rise to two kinds of liability – civil liability for quasi-delict and liability for crime. Under theliability for crime, the defendant has two kinds of liability – criminal liability and civil liability. This is illustrated bythe following diagram:

Civil liability| |

Quasi-Delict Crime | |Criminal liability Civil liability

Problem: X filed a claim for 100K in damages in an action for quasi-delict. The judge awarded 50K. Can X filed acriminal action to recover the remaining 50K?

Answer: No, this would violate the principle of res judicata. The victim had the opportunity to present evidence inthe criminal case. If he files another case, he will be merely presenting the same evidence.

CASES:

Jarantilla v. CA

Jose Kuan Sing was crossing the street when he was sideswiped by a Volkswagen Beetle driven by EdgarJarantilla.

Sing instituted a criminal action against Jarantilla for serious physical injuries through reckless imprudence.Sing intervened in the prosecution through a private prosecutor and did not reserve his right to institute aseparate civil action. Jarantilla was acquitted because of reasonable doubt.

Sing subsequently instituted a civil action for damages involving the same subject matter and actcomplained of as in the criminal case.

The trial court found in favor of Sing and awarded actual and moral damages, attorney’s fees, and costs.The CA affirmed.

ISSUE: Whether Sing could have filed the separate civil action despite Jarantilla’s acquittal in the criminalaction.

HELD: Yes, the civil action was properly filed.

The same act or omission (in this case, the negligent sideswiping of private respondent) can create twokinds of liability on the part of the offender: civil liability ex delicto and civil liability ex quasi delicto. Sincethe same negligence can give rise either to a delict or crime or to a quasi-delict or tort, either of thesetwo types of civil liability may be enforced against the culprit, subject to the caveat under Article2177 of the Civil Code that the offended party cannot recover damages under both types ofliability.

The only instance where a civil action cannot be instituted after the dismissal of the criminal case is wheresuch dismissal was accompanied by a statement of the court declaring that the act complained of neverhappened.

Atlantic Gulf and Pacific v. CA

This is a resolution of a MR.


The Castillos filed an action for damages against AG&P alleging that the latter’s operations on the former’sproperty caused the soil to become “infertile, salty, unproductive and unsuitable for agriculture.” TheCastillos also averred that AG&P’s heavy equipment was parked on the former’s land without rental havingbeen paid.

The trial court granted damages for both “the damage to the land” and “rentals for the same property.”

ISSUE: Whether the grant of the damages amounts to double recovery.

HELD: It does not amount to double recovery.

It is clearly apparent that AG&P was guilty of two culpable transgressions on the property rights of theCastillos, that is, for the ruination of the agricultural fertility or utility of the soil of their property and,further, for the unauthorized use of said property as a dump site or depot for petitioner's heavy equipmentand trucks. Damages were correctly awarded for the destruction of the land and for the reasonable value forthe use of the premises.

Article 2177 provides that the plaintiff cannot recover damages twice for the same act or omission of thedefendant. In this case, there were two separate acts or omissions.

III. NEGLIGENCE

1. Concept of Negligence

Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which isrequired by the nature of the obligation and corresponds with the circumstances of the persons, ofthe time and of the place. When negligence shows bad faith, the provisions of Articles 1171 and2201, paragraph 2, shall apply.

If the law or contract does not state the diligence which is to be observed in the performance, thatwhich is expected of a good father of a family shall be required.

Negligence – Want of care required by the nature of the obligation and the circumstances of the persons, time,and place.

CASES

Citytrust v. IAC

Emme Herrero issued several postdated checks from her account with Citytrust. She deposited cash in orderto cover the checks. However, in filling up the deposit slip, she omitted a zero and wrote 2900823 instead of29000823. Her checks were dishonored.

Herrero filed a complaint for damages against Citytrust. The trial court dismissed the complaint. The CAreversed and awarded nominal and temperate damages and attorney’s fees.

ISSUE: Whether Citytrust is liable for damages.

HELD: Citytrust is liable.

Banking is a business affected with public interest and because of the nature of its functions, the bank isunder obligation to treat the accounts of its depositors with meticulous care, always having in mind thefiduciary nature of their relationship.

Even if the account number were erroneous, Herrero’s name was clearly written on the deposit slip. Theteller should have noticed that there were only seven numbers instead of eight. Besides, the use of numbersis simply for the convenience of the bank and the depositor’s name should still be controlling.

In fact, there were other instances where Herrero put down the wrong account number but the depositswere still properly made. This indicates that there are ways and means whereby deposits witherroneous account numbers can still be credited to the proper account. It is the bank’s obligation tosee to it that all funds invested with it are properly accounted for and duly posted in its ledgers.


The CA, however, erred in awarding nominal and temperate damages concurrently; the two areincompatible. Nominal damages are merely to recognize the violation of a right and not to indemnify.Temperate damages are designed to indemnify one for pecuniary loss the amount of which cannot beproved with reasonable certainty. Only nominal damages are warranted in this case.

Reyes v. CA, FEBTC

Reyes and Puyat-Reyes, as Philippine Racing Club representatives, were to attend a racing conference in Sydney.In order to pay for the conference fees, they sent the club’s cashier to FEBTC to apply for a foreign exchangedemand draft for AU$1610, payable to the conference organizer.

The application was denied at first because FEBTC did not have an account in any Sydney bank. However, aroundabout way was found whereby the remittance of the money could be achieved. FEBTC would draw a demanddraft against Westpac Bank in Sydney and the latter would reimburse itself from FEBTC’s account in Westpac NY.This arrangement has been resorted to since the 1960s and there has never been a problem.

When the conference organizer presented the demand draft, it was dishonored. However, FEBTC’s account inWestpac NY had been debited. In response to the organizer’s complaint of the dishonor, FEBTC informed WestpacSydney to reimburse itself from FEBTC’s Westpac NY account. FEBTC also instructed Westpac NY to honor theclaim for reimbursement. Despite this, the draft was dishonored a second time.

When the Puyats arrived in Sydney to register [they arrived separately], they were denied because the drafts hadbeen dishonored twice. This allegedly caused them much humiliation, shock, trembling legs, etc. However, afteragreeing to pay in cash, they were admitted to the conference.

Upon getting back to Manila, the Puyats filed a complaint for damages against FEBTC claiming that as a result ofthe dishonor, they were exposed to unnecessary shock, social humiliation, and deep mental anguish in a foreigncountry, and in the presence of an international audience.

ISSUE: Whether FEBTC is liable for damages.

HELD: It is not liable.

The degree of diligence required of FEBTC, in this case, is that degree of diligence expected of an ordinary prudentperson under the circumstances obtaining. The rule that a bank, due to the nature of its relationship with theclient, must exercise extraordinary diligence applies only when the bank is acting in its fiduciary capacity, as wasseen in the Citytrust case. In the present circumstance, the relationship between FEBTC and the Puyats wasmerely that of seller and buyer, with the subject matter being a demand draft.

That ordinary diligence was observed is evident from the numerous follow ups that FEBTC undertook in order toget the demand draft paid. It did all that it could have reasonably done. The reason the demand draft wasdishonored was because Westpac Sydney mistakenly read FEBTC’s cable message to it [a 1 was read as a 7]. As aresult, Westpac Sydney did not recognize the cable message as a request for a demand draft.

Adzuara v. CA

Adzuara, a law student, was driving his Galant along QC Ave.; in the car with him were his two friends. He collidedwith a Corona driven by Martinez. It appears that Martinez was executing a U-turn when Adzuara suddenlyrammed the side of his car. The Corona was flung 20 meters from the point of impact and it landed atop thecenter island of QC Ave. Martinez filed a complaint for reckless imprudence resulting in damage to property withless serious physical injuries [Martinez’s daughter was confined]. The right to institute a separate civil action wasreserved.

The RTC found Adzuara guilty after the following facts were established:

• Adzuara was going much faster than the 40 kph. he claimed. This is evident from the damage to theCorona and from the distance it was flung.

• Adzuara had a red light. Martinez had a green light.• Adzuara did not stop at the last clear chance when he saw that Martinez had almost completely

negotiated the U-turn.

ISSUE: Whether Adzuara is guilty of negligence.

HELD: Guilty.

The facts found by the lower court warrant such a finding.


Negligence is the want of care required by the circumstances. It is a relative or comparative, not anabsolute, term and its application depends upon the situation of the parties and the degree of care andvigilance which the circumstances reasonably require.

What degree of care and vigilance then did the circumstances require? At half past 1:00 o'clock in the morningalong an almost deserted avenue, ordinary care and vigilance would suffice. This may consist of keeping awatchful eye on the road ahead and observing the traffic rules on speed, right of way and traffic light. The claim ofpetitioner that Martinez made a swift U-turn which caused the collision is not credible since a U-turn is done at amuch slower speed to avoid skidding and overturning, compared to running straight ahead. Nonetheless, noevidence was presented showing skid marks caused by the car driven by Martinez if only to demonstrate that hewas driving at a fast clip in negotiating the U-turn. On the other hand, the speed at which petitioner drove his carappears to be the prime cause for his inability to stop his car and avoid the collision. His assertion that he drove atthe speed of 40 kph. is belied by Martinez who testified that when he looked at the opposite lane for any oncomingcars, e saw none; then a few seconds later, he was hit by Adzuara's car. The extent of the damage on the car ofMartinez and the position of the cars after the impact further confirm the finding that petitioner went beyond thespeed limit required by law and by the circumstances.

Picart v. Smith

The test for determining negligence: Would a prudent man in the position of the person to whom the negligence isattributed foresee harm to the person injured as a reasonable consequence of the course about to be pursued? Ifso, the law imposes a duty on the actor to refrain from that course or to take precaution against its mischievousresults, and the failure to do so constitutes negligence. Reasonable foresight of harm, followed by the ignoring ofthe admonition of this provision, is the constitutive fact in negligence.

2. Negligence as Proximate Cause

Proximate Cause – that cause which, in the natural and continuous sequence, unbroken by an efficientsupervening cause, produces the injury and without which the injury would not have occurred.

Subido v. CA

This case involves an accident between a truck [or bus] belonging to Laguna Tayabas Bus Company (LTB) anddriven by Mudales and a truck owned by Sabido and driven by Lagunda.

The two vehicles were going in opposite directions when they met at a curve in the road. Custodio, a passenger ofLTB was hanging [sabit] on the left side of the vehicle. He died after being sideswiped by Sabido’s truck.

The CFI held the vehicle owners and the drivers solidarily liable. LTB and its driver were liable for violating thecontract of carriage; Sabido and his driver were liable for quasi-delict.

ISSUE: Whether Sabido and his driver were guilty of negligence; whether they should be held solidarily liable withLTB.

HELD: They are both guilty of contributory negligence.

Though LTB and its driver were guilty of negligence for allowing Custodio to hang from the left side of the bus,Sabido and his driver were guilty of contributory negligence because the truck was running at a considerablespeed, despite the fact that it was negotiating a sharp curve, and, instead of being close to its right side of theroad, said truck was driven on its middle portion and so near the passenger bus coming from the oppositedirection as to sideswipe a passenger riding on its running board.

Though the negligence of LTB and its driver are independent from the negligence of Sabido and his driver, bothacts of negligence are the proximate cause of the death of Custodio. In fact, the negligence of the first twowould not have produced this result without the negligence of Sabido and his driver. What is more, Sabido’sdriver’s negligence was the last, in point of time, for Custodio was on the running board of the carrier's bussometime before petitioners' truck came from the opposite direction, so that, in this sense, Sabido’s truck hadthe last clear chance.

Even though LTB’s liability arises from breach of contract and Sabido’s arises from quasi-delict, they are solidarilyliable because the rule is that where both negligent acts, in combination, are the direct and proximatecause of a single injury to a third person and it is impossible to determine in what proportion eachcontributed to the injury, either is responsible for the whole injury, even though his act alone mightnot have caused the entire injury, or the same damage might have resulted from the acts of the othertort-feasor.

Ridjo Tape v. CA


Petitioners were being charged by MERALCO P415,317.66 for allegedly unregistered electric consumption(URE) for the period of November 1990 to February 1991. MERALCO justified its demand on the ground thatthe URE was due to defects of the electric meter. When petitioners refused to pay, MERALCO notified themof disconnection which prompted petitioners to file for preliminary injunction and/or TEMPORARYRESTRAINING ORDER which was granted.

ON July 1992, petitioners received another demand letter, this time requiring them to pay P89,710.58 forURE from July 1991 to April 1992, the deficiency again due to the defective meter. Petitioners again filedfor the consolidation of the two cases, and after trial, the injunction was made permanent. CA reversed thedecision of RTC

ISSUE: Whether petitioners should be made to pay the said amounts for their unregistered electricconsumption during the said periods which was due to the defects of the electric meter

HELD: No.

MERALCO’s failure to make the necessary repairs and replacement of the defective electric meter installedwithin the premises of petitioners was obviously the proximate cause of the instant dispute between theparties. Indeed, if an unusual electric consumption was not reflected in the statements of account ofpetitioners, MERALCO, considering its technical knowledge and vast experience in providing electric service,could have easily verified any possible error in the meter reading. In the absence of such a mistake, theelectric meters themselves should be inspected for possible defects or breakdowns and forthwith repairedand, if necessary, replaced. Furthermore, if MERALCO discovered that contraptions or illegal devices wereinstalled which would alter the result of the meter reading, then it should have filed the appropriate criminalcomplaint against petitioners.

Notice of a defect need not be direct and express; it is enough that the same had existed for sucha length of time that it is reasonable to presume that it had been detected, and the presence of aconspicuous defect which has existed for a considerable length of time will create a presumptionof constructive notice thereof. Hence, MERALCO's failure to discover the defect, if any,considering the length of time, amounts to inexcusable negligence.

Furthermore, that as a public utility, MERALCO has the obligation to discharge its functions with utmost careand diligence

The liability of petitioners for consumed but unrecorded electricity must therefore be limited by reason ofMERALCO’s negligence- only the estimated consumption on a three-month average before the controversialperiod (P168,342.75).

Ermitano v. CA, BPI

Luis Ermitano was a credit cardholder together with his wife Manuelita who had an extension, in BPI with acredit limit of 10,000 which they often exceeded and BPI never seemed to have minded for the past 2years.

Manuelita’s bag one day was snatched, and that night she informed by telephone BPI of the loss. This wasfollowed by a letter the next day, surrendering her husband’s card as well, stating that she shall not beresponsible for any and all charges incurred after August 29,1989 (the day of loss), and sought forreplacement cards instead.

However in their monthly billing statement the thief went on some kind of a shopping spree amounting to3,ooo (that’s double a social sin for you!) So she wrote again disclaiming responsibility.

BPI pointed out the stipulation in the contract they had signed stated

"In the event the card is lost or stolen, the cardholder agrees to immediately report its loss or theft inwriting to BECC ... purchases made/incurred arising from the use of the lost/stolen card shall be for theexclusive account of the cardholder and the cardholder continues to be liable for the purchases madethrough the use of the lost/stolen BPI Express Card until after such notice has been given to BECC and thelatter has communicated such loss/theft to its member establishments."

Luis threatened that such was a contract of adhesion and that they’d sue for damages if BPI still insisted onhaving them pay when they already complied with the requirement of notifying them on time and shouldthus be absolved from any liability.


Despite their refusal to pay, their cards were still renewed and some time in 1991, when Luis was paying forgas, lo and behold his card was dishonored! BPI informed them that they had exceeded their credit limit andbecause inclusive in their monthly bill, the unauthorized payments from his lost card were still carried over.

So Luis sued, and won, CA reversed

ISSUE: Whether petitioners should be liable for the unauthorized payments in their credit card until such atime the bank had been able to notify all its member establishments even when they had already exerciseddue diligence in complying promptly with the requirement of notifying BPI of the theft.

HELD: No.

Prompt notice by the cardholder to the credit card company of the loss or theft of his card shouldbe enough to relieve the former of any liability occasioned by the unauthorized use of his lost orstolen card.

The questioned stipulation in this case, which still requires the cardholder to wait until the credit cardcompany has notified all its member-establishments, puts the cardholder at the mercy of the credit cardcompany which may delay indefinitely the notification of its members to minimize if not to eliminate thepossibility of incurring any loss from unauthorized purchases. Or, as in this case, the credit card companymay for some reason fail to promptly notify its members through absolutely no fault of the cardholder. Torequire the cardholder to still pay for unauthorized purchases after he has given prompt notice of the loss ortheft of his card to the credit card company would simply be unfair and unjust.

Benguet Electric v CA

Jose Bernardo managed a stall at the Baguio City meat market. On 14 January 1985 at around 7:50 in themorning, Jose together with other meat vendors went out of their stalls to meet a jeepney loaded withslaughtered pigs in order to select the meat they would sell for the day. Jose was the very first to reach theparked jeepney. Grasping the handlebars at the rear entrance of the vehicle, and as he was about to raisehis right foot to get inside, Jose suddenly stiffened and trembled as though suffering from an epilepticseizure. Romeo Pimienta who saw Jose thought he was merely joking but noticed almost in disbelief that hewas already turning black. In no time the other vendors rushed to Jose and they discovered that theantenna of the jeepney bearing the pigs had gotten entangled with an open electric wire at the top of theroof of a meat stall. Pimienta quickly got hold of a broom and pried the antenna loose from the open wire.But shortly after, Jose released his hold on the handlebars of the jeep only to slump to the ground.

His spouse and children filed a claim against BENECO, who then in turn filed a third party complaint againstthe owner of the jeep, who according to BENECO was the proximate, if not, sole cause of the death

ISSUE: Whether BENECO was negligent.

HELD: Yes.

There is no question that as an electric cooperative holding the exclusive franchise in supplying electricpower to the towns of Benguet province, its primordial concern is not only to distribute electricity to itssubscribers but also to ensure the safety of the public by the proper maintenance and upkeep of its facilities.

It is clear to then that BENECO was grossly negligent in leaving unprotected and uninsulated the splicingpoint between the service drop line and the service entrance conductor, which connection was only eight (8)feet from the ground level, in violation of the Philippine Electrical Code. By leaving an open live wireunattended for years, BENECO demonstrated its utter disregard for the safety of the public. Indeed, JoseBernardo's death was an accident that was bound to happen in view of the gross negligence of BENECO.

BENECO theorizes in its defense that the death of Jose Bernardo could be attributed to the negligence ofCanave, Jr., in parking his jeepney so close to the market stall which was neither a parking area nor aloading area, with his antenna so high as to get entangled with an open wire above the Dimasupil store. Butthis line of defense must be discarded.

Canave's act of parking in an area not customarily used for that purpose was by no means the independentnegligent act adverted to by BENECO in citing Manila Electric Co. v. Ronquillo. Canave was well within hisright to park the vehicle in the said area where there was no showing that any municipal law or ordinancewas violated nor that there was any foreseeable danger posed by his act. One thing however is sure, noaccident would have happened had BENECO installed the connections in accordance with the prescribedvertical clearance of fifteen (15) feet.

St. Mary’s v. Carpitanos


St. Mary’s Academy of Dipolog City conducted an enrollment drive for the school year 1995-1996. A facet of theenrollment campaign was the visitation of schools from where prospective enrollees were studying. As a studentof St. Mary’s Academy, Sherwin Carpitanos was part of the campaigning group. On the fateful day, Sherwin,along with other high school students were riding in a Mitsubishi jeep owned by defendant Vivencio Villanueva ontheir way to Larayan Elementary School. The jeep was driven by James Daniel II then 15 years old and a studentof the same school. Allegedly, the latter drove the jeep in a reckless manner and as a result the jeep turnedturtle.

Sherwin Carpitanos died as a result of the injuries he sustained from the accident.

The parents claimed damages from the school, and won.

ISSUE: Whether St. Mary’s should be liable for the death of a student as a result of a car accident in anauthorized school activity

HELD: No.

The Court of Appeals mistakenly held petitioner St. Mary’s Academy liable for the death of Sherwin Carpitanosunder Articles 218[7] and 219[8] of the Family Code, pointing out that petitioner was negligent in allowing a minorto drive and in not having a teacher accompany the minor students in the jeep.

Under Article 218 of the Family Code, the following shall have special parental authority over a minor child whileunder their supervision, instruction or custody: (1) the school, its administrators and teachers; or (2) theindividual, entity or institution engaged in child care. This special parental authority and responsibility applies toall authorized activities.

Under Article 219 of the Family Code, if the person under custody is a minor, those exercising special parentalauthority are principally and solidarily liable for damages caused by the acts or omissions of the unemancipatedminor while under their supervision, instruction, or custody.

However, for petitioner to be liable, there must be a finding that the act or omission considered asnegligent was the proximate cause of the injury caused because the negligence must have acausal connection to the accident.

In this case, the respondents failed to show that the negligence of petitioner was the proximate cause of the deathof the victim.

In their comment to the petition, respondents Daniel spouses and Villanueva admitted the documentaryexhibits establishing that the cause of the accident was the detachment of the steering wheel guide of thejeep. Hence, the cause of the accident was not the recklessness of James Daniel II but the mechanicaldefect in the jeep of Vivencio Villanueva.

Further, there was no evidence that petitioner school allowed the minor James Daniel II to drive the jeep ofrespondent Vivencio Villanueva. It was Ched Villanueva, the grandson, who had possession and control of thejeep. He was driving the vehicle and he allowed James Daniel II, a minor, to drive the jeep at the time of theaccident.

Hence, liability for the accident, whether caused by the negligence of the minor driver or mechanical detachmentof the steering wheel guide of the jeep, must be pinned on the minor’s parents primarily. The negligence ofpetitioner St. Mary’s Academy was only a remote cause of the accident. Between the remote causeand the injury, there intervened the negligence of the minor’s parents or the detachment of thesteering wheel guide of the jeep.

3. Proof of Negligence

Food Terminal Incorporated vs. CA. and Basic Foods Corp.

Food Terminal Incorporated (FTI) is engaged in the business of warehousing storage of goods or merchandise forcompensation at its refrigerated warehouse in Taguig, Metro Manila. Basic Foods is engaged in the production offood and allied products.

In its manufacture of food, Basic Foods uses Red Star compressed yeast, which requires storage in a refrigeratedspace to avoid spoilage. It deposited 1,770 cartons of yeast with FTI for cold storage. 383 cartons worth P161kwere damaged, allegedly because of FTI’s failure to maintain the proper temperature.


FTI claims that it exercised utmost diligence; that any damage sustained was due to the fault of Basic Foods; thatunder the contract, FTI would not be liable for damage to goods beyond its reasonable control; and that BasicFoods was estopped from filing the action because it acknowledged receipt of the yeast in good order.

The RTC dismissed; the CA held that there was negligence.

ISSUE: Whether FTI was guilty of negligence in the storage of Basic Foods’ yeast.

HELD: FTI was negligent.

In the first place, the issue is factual, thus, the ruling of the Court of Appeals is binding on the parties andmay not be reviewed on appeal via certiorari.

In the second place, petitioner practically admitted that it failed to maintain the agreed temperature of thecold storage area at 2 to 4 degrees centigrade at all times, and this caused the deterioration of the yeaststored therein. Nonetheless, petitioner claimed that temperature was not the sole cause for the deteriorationof respondent's goods. Since negligence has been established, petitioner's liability for damages isinescapable.

Morris v. CA

Morris and Whittier were American citizens employed in the Philippines. They were booked as first-classpassengers on a 3:50 pm Scandinavian Airline System (SAS) flight from Manila to Tokyo. On the day ofdeparture, Morris and Whittier checked in at the airport at 3:10 pm. However, they were told that they could notbe accommodated on the plane because their seats had been given to other passengers. Apparently, theeconomy class of the flight had been overbooked and the seats of the first class passengers who had not checkedin at least 40 minutes before departure time were given to economy class passengers. Morris and Whittier filed aclaim against SAS for moral and exemplary damages.

ISSUE: Whether Morris and Whittier are entitled to moral and exemplary damages.

HELD: No, they are not.

In awarding damages for breach of contract of carriage, the breach must be wanton and deliberately injurious, orthe one responsible acted fraudulently or with malice or bad faith. Where in breaching the contract of carriage,the defendant airline is not shown to have acted fraudulently or in bad faith, liability for damages is limited to thenatural and probable consequences of the breach of obligation which the parties had foreseen or could havereasonably foreseen. Such liability does not include moral and exemplary damages. Moral damages may berecovered only where (a) the mishap results in the death of a passenger; and (b) it is proved that the carrier wasguilty of fraud and bad faith even if death does not result. Bad faith does not simply connote bad judgment ofnegligence. It imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach ofknown duty through some motive or interest or ill will that partakes of the nature of fraud.

In this case, what happened was attributable to the fault of Morris and Whittier, since they failed to check in ontime. SAS could not be faulted for not entertaining their tickets and papers for processing, since the checking inof passengers for the flight was finished. There was no fraud or bad faith as would justify an award of moraldamages.

4. Presumption of Negligence

The plaintiff may invoke the following principles in order to impute presumed negligence on the defendant:

a. res ipsa loquiturb. respondeat superiorc. violation of traffic rulesd. dangerous weapons and substances

In these cases, there is no need for the plaintiff to show that the defendant was negligent. There is a rebuttablepresumption of negligence on the part of the defendant. It is incumbent upon the defendant to prove that heexercised the degree of care required by the circumstances. If he fails to prove this, he shall be liable fordamages.

a. Res ipsa loquitur

Statement of the rule: “Where the thing which caused the injury complained of is shown to be under themanagement of defendant or his servants and the accident is such as in the ordinary course of things


does not happen if those who have its management or control use proper care, it affords reasonableevidence, in absence of explanation by defendant, that the accident arose from want of care.”

Elements:

1. the thing which caused the injury is under the exclusive control of the defendant;2. ordinarily, such event will not happen unless there is negligence;3. defendant fails to give an explanation for the happening of the event.

CASES:

Africa v. Caltex

A fire broke out at a Catex station in Manila. It started while gasoline was being hosed from a tank truck intothe underground storage, right at the opening of the receiving tank where the nozzle of the hose wasinserted. The fire spread to and burned several neighboring houses.

The owners of the burned properties filed a complaint for damages against Caltex, as the owner of thestation, and Boquiren, as the agent in charge of operation.

ISSUE: Whether Caltex was negligent under the doctrine of res ipsa loquitur.

HELD: Caltex was negligent.

First of all, it was necessary to rely on the doctrine of res ipsa loquitur because certain reports made byofficers of the police and fire departments were ruled to be inadmissible in evidence for being hearsay.

Res ipsa loquitur is a rule to the effect that “Where the thing which caused the injury complained of isshown to be under the management of defendant or his servants and the accident is such as in the ordinarycourse of things does not happen if those who have its management or control use proper care, it affordsreasonable evidence, in absence of explanation by defendant, that the accident arose from want of care.”

The rule applies in this case. The gasoline station, with all its appliances, equipment and employees, wasunder the control of appellees. A fire occurred therein and spread to and burned the neighboring houses.The persons who knew or could have known how the fire started were appellees and their employees, butthey gave no explanation thereof whatsoever. It is a fair and reasonable inference that the incidenthappened because of want of care.

The station is in a very busy district and pedestrians often pass through or mill around the premises. Asidefrom this, it is used as a carbarn for around ten taxicabs owned by Boquiren. Also, there is a store locatedaround one meter from the hole of the underground tank. At this store, people hang out and possibly smokecigarettes. It was even alleged that the fire was caused by a match which came into contract with the densefumes.

Furthermore, the concrete walls adjoining the neighborhood are only 2 ½ meters high at most and cannotprevent the flames from leaping over it in case of fire.

Another issue was whether Caltex should be liable as the principal of Boquiren. It was held that Caltex wasliable because there was an agency relationship and Boquiren was not an independent contractor. Caltexowned the station and exercised control over it.

Batiquin v. CA

Dr. Batiquin performed a Caesarean section on Mrs. Villegas. After the delivery of her baby, Mrs. Villegas beganto suffer abdominal pains and fever. When, despite taking medication prescribed by Dr. Batiquin, she still did notget well, Mrs. Villegas consulted another doctor, Doctor Kho. Doctro Kho suggested that they open her up again.During surgery, Doctor Kho found lots of pus and several cysts in Mrs. Villegas’s ovaries. She then discovered apiece of rubber which seemed like a part of a rubber glove or a rubber drain stuck near Mrs. Villegas’s uterus.This rubber glove was the cause of the infection of Mrs. Villegas’s internal organs. After it was taken out, Mrs.Villegas regained her health.

Mrs. Villegas filed an action for damages against Dr. Batiquin.

ISSUE: Whether Mrs. Villegas is entitled to damages.


HELD: Yes. The rule of res ipsa loquitur (the thing speaks for itself) is applicable in this case. Under this doctrine,the happening of an injury permits an inference of negligence where plaintiff produces substantial evidence thatthe injury was caused by an agency or instrumentality under the exclusive control and management of thedefendant, and that the occurrence was such that in the ordinary course of things would not happen if reasonablecare had been used. The doctrine of res ipsa loquitur as a rule of evidence is peculiar to the law of negligencewhich recognizes that prima facie negligence may be established without direct proof and furnishes a substitute forspecific proof of negligence. The doctrine can be invoked only when, under the circumstances, direct evidence isabsent and not readily available.

In this case, all the requisites for recourse to the doctrine are present. First, the entire proceedings of thecaesarean section were under the exclusive control of Dr. Batiquin. Mrs. Villegas did not have any direct evidenceas to the actual culprit or the exact cause of the foreign object finding its way into her body, which could not haveoccurred unless through the intervention of negligence. Second, since aside from the caesarean section, Villegasunderwent no other operation which could have caused the piece of rubber to appear in her uterus, it stands toreason that such could only have been a by-product of the caesarean section performed by Dr. Batiquin. Dr.Batiquin failed to overcome the presumption of negligence arising from resort to the doctrine of res ipsa loquitur.She is therefore liable for negligently leaving behind a piece of rubber in Villegas’s abdomen and for all theadverse effects thereof.

Reyes v. Sisters of Mercy

Jorge Reyes had been suffering from recurring fever with chills for around 5 days. Home medication afforded himno relief so he went to Mercy Community Clinic. Because typhoid was common at the time, the Widal Test wasperformed. Jorge came out positive for typhoid. Dr. Blanes ordered that Jorge be tested for compatibility withchloromycetin, an antibiotic. Nurse Pagente administered the test. As there was no adverse reaction, Dr. Blanesadministered 500 mg of the antibiotic. Another dose was given 3 hours later. Subsequently, Jorge developedhigh fever and experienced vomiting and convulsions. He then turned blue due to deficiency in oxygen – cyanosis– and died. The cause of death was stated to be “ventricular arrhythmia secondary to hyperpyrexia and typhoidfever.”

ISSUE: Whether the Sisters of Mercy Hospital/the doctors were negligent.

HELD: Not negligent.

The doctrine of res ipsa loquitur is not applicable in this case.

Though expert testimony is usually needed to prove malpractice, where common knowledge and experience teachthat the injury would not have occurred if due care had been exercised, the doctrine of res ipsa loquitur can beinvoked to establish negligence. The elements of res ipsa loquitur are:

a. the accident will not normally occur unless someone is negligent;b. the instrumentality which caused the injury was under the control of the person in charge; andc. the injury was not due to the voluntary act of the person injured.

In this case, Jorge’s death was not unusual because he had been suffering from fever and chills 5 days prior toadmission. Furthermore, as to the charge of misdiagnosis, res ipsa loquitur cannot apply to suits involving themerits of a diagnosis.

b. respondeat superior

Art. 1755. A common carrier is bound to carry the passengers safely as far as human care andforesight can provide, using the utmost diligence of very cautious persons, with a due regard for allthe circumstances.

Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have beenat fault or to have acted negligently, unless they prove that they observed extraordinary diligence asprescribed in Articles 1733 and 1755.


Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, arebound to observe extraordinary diligence in the vigilance over the goods and for the safety of thepassengers 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 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengersis further set forth in Articles 1755 and 1756.

Art. 1759. Common carriers are liable for the death of or injuries to passengers through thenegligence or wilful acts of the former's employees, although such employees may have actedbeyond the scope of their authority or in violation of the orders of the common carriers.

This liability of the common carriers does not cease upon proof that they exercised all the diligenceof a good father of a family in the selection and supervision of their employees.

Respondeat superior – means “let the employer/principal” be responsible

Under this principle, if the negligence of the employee has been proved, there is no need to prove the negligenceof the employer. The employer is already presumed negligent in the hiring and/or supervision of the employee.This presumption is, however, rebuttable and not conclusive.

As will be shown in the following cases, the doctrine of respondeat superior is applicable not only to commoncarriers but to other instances where an employee or agent, not necessarily of a common carrier, is negligent.

CASES:

City of Manila v. IAC

Vivencio Sto. Domingo died in 1971 and was buried in a lot in the North Cemetery. The lot was leased to hiswidow Irene Sto. Domingo until 2021. However, apart from the receipt issued by the city for the rental of the lot,there were no other records stating the term of the lease. In 1978, the Mayor of Manila, believed in good faiththat the lease in favor of Irene Sto. Domingo was covered by Administrative Order No. 5, series of 1975 whichprovided for the lease of the burial lots only for a period of 5 years. Thinking that the lease in favor of Sto.Domingo had already terminated by this time, the mayor certified that the lot in which Vivencio was buried wasready for exhumation. In accordance with this certification, the authorities of the North Cemetery exhumed theremains of Vivencio and put them in a bag which was then stored inside a bodega. The lot was then leased toanother party. During All Saints Day, Irene Sto. Domingo and her family were shocked to find that the lot nolonger had the stone marker which they placed on the tomb. When she asked what happened to the remains ofher husband, she was told to look for them in the bodega. Aggrieved, Irene Sto. Domingo filed a claim fordamages against the City of Manila, the city health officer, and the person in charge of the cemetery.

ISSUE: Whether the City of Manila is liable to Sto. Domingo.

HELD: Yes. With respect to proprietary functions, a municipal corporation can be held liable to third persons excontractu or ex delicto. The superior or employer must answer civilly for the negligence or want of skill of itsagent or servant in the course or line of his employment, by which another, who is free from contributory fault isinjured. Maintenance of cemeteries is recognized as a municipal activity of a proprietary character.

Hence, under the doctrine of respondeat superior, petitioner City of Manila is liable for the tortious act committedby its agents who failed to verify and check the duration of the contract of lease. The contention of the petitioner-city that the lease is covered by Administrative Order No. 5, series of 1975 for five (5) years only beginning fromJune 6, 1971 is not meritorious for the said administrative order covers new leases. When subject lot was certifiedon January 25, 1978 as ready for exhumation, the lease contract for fifty (50) years was still in full force andeffect.

The City of Manila is ordered to give Sto. Domingo the right to use a burial lot in the North Cemeterycorresponding to the unexpired term of the fully paid lease sued upon, to search for the remains of the lateVivencio Domingo, and to bury the same in a substitute lot to be chosen by the Sto. Domingos. Moreover, moraland exemplary damages are awarded.

Calalas v. CA and Jujeurche Sunga and Salva


Eliza Jujeurche Salva was a college freshman majoring in Physical Education at the Siliman University inDumaguete City. One morning, Sunga rode a jeep owned and operated by Calalas, but, since it was already full,she was given by the conductor an “extension seat,” a wooden stool at the back of the door at the rear end of thevehicle.

Along the route, the jeepney stopped to let a passenger off. As she was seated at the rear of the vehicle, Sungagave way to the outgoing passenger. Just as she was doing so, an Isuzu truck driven by Verena and owned bySalva bumped the left rear portion of the jeepney. As a result, Sunga was injured. Because of her injury, shedecided not to pursue her Physical Education major as, in her words, her “left leg has a defect already.”

A complaint for damages was filed by Calalas against Salva and Verena on the ground of quasi-delict – this wasdecided in favor of Calalas [this is not the case we’re studying].

Sunga subsequently filed a complaint for damages against Calalas, alleging breach of contract of carriage. Calalasfiled a third-party complaint against against Salva [this is the case we’re studying].

The RTC absolved Calalas in the breach of contract case and held Salva liable as third party defendant. Its rulingwas based on the ruling in the quasi-delict case.

The CA reversed and held that the Sunga’s cause of action was based on breach of contract and not quasi-delict.

ISSUE: Whether Calalas is guilty of violating the contract of carriage.

HELD: Calalas is guilty.

The RTC was wrong in deciding the breach of contract [BOC] case on the basis of the quasi-delict [QD] case.

Firstly, Sunga was not a party to the QD case and cannot be bound by its ruling.

Secondly, the issues or causes of action in both cases are different. The QD case is premised on the negligence ofthe tortfeasor. The BOC case is premised upon the negligence of the carrier in the performance of the contractualobligation.

Sunga’s complaint was based on BOC. It does not matter that a third person’s act was the proximate cause of theinjury. The doctrine of proximate cause is applicable only to QD. In BOC, it is sufficient to show that there is acontractual relation between the parties and the common carrier failed to transmit the passenger safely.

Articles 1733, 1755, and 1756 provide that a common carrier must exercise extraordinary diligence and that incase of death or injury to passengers, the presumption is that the carrier acted negligently.

In this case, it is clear that the presumption of negligence has not been overcome. When the jeep stopped tounload, its rear was protruding around two meters into the highway. Also, it was overloaded, hence theemployment of the extension seat. There is no fortuitous event because the dangers could have been foreseenand avoided.

* moral damages awarded by the CA were deleted because they are generally not available in cases of BOC ofcarriage. The exceptions are death of the passenger and bad faith of fraud of the carrier.

Pestano v. Sumayang

Sumayang and Romagos were riding a motorcycle along a highway in Cebu. As they were about to turn left at ajunction, they were hit by a passenger bus driven by Pestano and owned by Metro Cebu Autobus Corp. The bushad tried to overtake them, but it hit them instead. Both Sumayang and Romagos died in the accident. Criminalcharges were instituted against Pestano. The heirs of Sumayang also filed a civil action for damages againstPestano (as driver of the bus), Metro Cebu (as owner of the bus), and the insurer of Metro Cebu.

The lower court and the CA found Pestano and Metro Cebu guilty of negligence. Pestano was negligent in trying toovertake the victim’s motorcycle at the junction, while Metro Cebu was negligent in allowing the bus to ply itsroute despite its defective speedometer.

ISSUE: Whether Pestano and Metro Cebu are guilty of negligence.

HELD: Yes. The vehicular collision was caused by Pestano’s negligence when he attempted to overtake themotorcycle. As a professional driver operating a public transport bus, he should have anticipated that overtakingat a junction was a perilous maneuver, and he should have thus exercised extreme caution.


Metro Cebu is also guilty of negligence. Under Articles 2180 and 2176 of the Civil Code, owners and managers areresponsible for damages caused by their employees. When an injury is caused by the negligence of a servant oran employee, the master or employer is presumed to be negligent either in the selection or in the supervision ofthat employee. This presumption may be overcome only by satisfactorily showing that the employer exercised thecare and the diligence of a good father of a family in the selection and the supervision of its employee. In thiscase, Metro Cebu showed laxity in the operation of its business and in the supervision of its employees when itallowed Pestano to ply his route with a defective speedometer. It was remiss in the supervision of its employeesand the proper care of its vehicles. It had thus failed to conduct its business with the diligence required by law.

c. Violation of traffic rules

Art. 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, whowas in the vehicle, could have, by the use of the due diligence, prevented the misfortune. It isdisputably presumed that a driver was negligent, if he had been found guilty or reckless driving orviolating traffic regulations at least twice within the next preceding two months.

If the owner was not in the motor vehicle, the provisions of Article 2180 are applicable. (n)

Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehiclehas been negligent if at the time of the mishap, he was violating any traffic regulation.

The driver is disputably presumed negligent if:

1. he had been found guilty of reckless driving at least twice within the next preceding two months;

2. he had been found guilty of violating traffic regulations at least twice within the next preceding twomonths; or

3. at the time of the mishap, he was violating any traffic regulation.

Manuel v. CA

There was a drizzle at around 4 pm when the Scout car, driven by respondent Fernando Abcede, which wasnegotiating the zigzag road in Camarines Norte, was hit on its left side by a bus. The bus was owned by petitionerSuperlines Transportation, Co., Inc. and was driven by petitioner Emiliano Manuel. Due to the impact, the Scoutcar was thrown backwards against a protective railing. Were it not for the railing, the Scout car would have falleninto a deep ravine. All its ten occupants, which included four children, were injured, seven of the victims sustainedserious physical injuries.

Emiliano Manuel, the driver of the bus, was prosecuted for multiple physical injuries through reckless imprudence.As he could later on not be found, an action for quasi-delict was filed against the Bus Co. and its insurer, and wasordered to pay P49, 954 in damages.

On appeal they contended that it was actually Abcede who was at fault, being only 19 yrs old and having nodriver’s license. Proof of this according to them was a woman passenger heard saying ‘. 'Iyan na nga ba angsinasabi ko, napakalakas ang loob,’ when the passengers alighted from the Scout car.

Likewise, petitioners questioned the accuracy of the pictures and sketches submitted by private respondents asevidence that the Superlines bus encroached on the lane of the Scout car. According to them, the sketch made bythe police investigator showing flue skid marks of the bus, is inadmissible as evidence because it was prepared theday after the incident and the alleged "tell-tale" skid marks and other details had already been obliterated by theheavy downpour which lasted for at least an hour after the accident

ISSUE: Whether the Bus Company is liable.

HELD: Yes.

There is strong presumption of regularity of functions of the policemen. Granting however that the placement ofskidmarks were inaccurate, nonetheless, the finding of the Court of Appeals that the collision took place within thelane of the Scout car was supported by other conclusive evidence. "Indeed, a trail of broken glass which wasscattered along the car's side of the road, whereas the bus lane was entirely clear of debris.”


Furthermore, the fact that the Scout car was found after the impact at rest against the guard railing shows that itmust have been hit and thrown backwards by the bus.

Finally, the evidence with respect to the issue that Fernando Abcede, Jr. who was not duly licensed,was the one driving the Scout car at the time of the accident, could not simply exempt petitioners'liability because they were the parties at fault for encroaching on the Scout car's lane.

d. Dangerous Weapons and Substances

Art. 2188. There is prima facie presumption of negligence on the part of the defendant if the death orinjury results from his possession of dangerous weapons or substances, such as firearms and poison,except when the possession or use thereof is indispensable in his occupation or business.

RA6969 Toxic Substances and Hazardous and Nuclear Wastes Control Act of 1990

Defendant is disputably presumed negligent if death or injury results from his possession of dangerous weapons orsubstances.

The defendant may invoke the defense that possession or use of such dangerous weapons or substances isindispensable in his occupation or business.

Smith Bell Shipping v. Borja

Smith Bell requested Customs for inspection on its vessel M/T King Family which was due to arrive containing 750metric tons of alkyl benzene and methyl methacrylate monomer. Catalino Borja, Customs Inspector was then onboard the vessel to perform his duties.

At around noon, while M/T King Family was unloading chemicals unto 2 barges owned by respondent ITTC, asudden explosion occurred setting the vessels afire. Upon hearing the explosion, Borja who was at that time insidethe cabin preparing reports, went outside to check what had happened, and another explosion was heard, seeingthe fire and fearing his life, jumped overboard to save himself. However, the water was likewise on fire duemainly to the spilled chemicals. Despite the tremendous heat, he swam his way for 1 hour until he was rescued bythe people living in the squatters’ area and sent to San Juan De Dios Hospital.

After weeks of intensive care at the hospital, he was diagnosed as permanently disabled due to the incident. Hemade demands against Smith Bell and ITTC for the damages caused by the explosion. However, both deniedliabilities and attributed to each other negligence.

Trial court ruled in favor of Borja and dismissed all counterclaims and such of Smith Bell to ITTC. Contrary to theclaim of petitioner that no physical evidence was shown to prove that the explosion had originated from its vessel,CA held Smith Bell liable following the findings of the investigation conducted by the Special Board of MarineInquiry.

ISSUE: Whether Smith Bell whose cargo on board contained dangerous chemicals is liable.

HELD: Yes.

Smith Bell cannot shift the blame to ITTC, as it stated that all the explosions erupted from outside its vessel andnot aboard. Negligence is conduct that creates undue risk of harm to another. It is the failure to observe thatdegree of care, precaution and vigilance that the circumstances justly demand, whereby that other person suffersinjury.

Petitioner’s vessel was carrying chemical cargo -- alkyl benzene and methyl methacrylate monomer. Whileknowing that their vessel was carrying dangerous inflammable chemicals, its officers and crew failed to take all thenecessary precautions to prevent an accident. Petitioner was, therefore, negligent.

As a result of the fire and the explosion during the unloading of the chemicals from petitioner’s vessel, RespondentBorja suffered burns that will permanently disable him Hence, the owner or the person in possession and controlof a vessel and the vessel are liable for all natural and proximate damage caused to persons and property byreason of negligence in its management or navigation.

Problem: Due to recent bank robberies in the metropolis, a bank issued a circular to all its personnel, includingsecurity guards (contracted out through a security agency), to tighten security. X, a security guard at the frontdoor of the bank, takes this to heart and has his shotgun ready. A, a customer of the bank, arrives at the frontdoor and opens her bag to take out a gun for the purpose of surrendering it to the guard. The guard, upon seeing


the gun, instinctively shoots at A. A dies. Is there a presumption of negligence on the part of (a)the guard? (b)the bank)? (c) the security agency?

Answer: The guard is presumed negligent. But under what doctrine? If you answered under Article 2188(possession of dangerous weapons), you are wrong. The guard cannot be presumed negligent merely because hepossessed a gun because his possession of it was indispensable to his occupation as a security guard. This is oneof the defenses that may be invoked by the defendant against the presumption of negligence under Article 2188.Rather, the guard is presumed negligent under the principle of res ipsa loquitur.

The security agency is presumed negligent under the doctrine of respondeat superior.

The bank is not presumed negligent, since there is no employer-employee relationship between it and the guard.In order to attribute negligence to the bank, such must be established by proof.

5. Defenses

When the defendant is presumed negligent, he may invoke the following defenses:

a. contributory negligenceb. assumption of riskc. last clear chanced. prescriptione. fortuitous eventsf. diligenceg. mistake and waiverh. others

a. Contributory negligence

Art. 2179. When the plaintiff's own negligence was the immediate and proximate cause of his injury,he cannot recover damages. But if his negligence was only contributory, the immediate andproximate cause of the injury being the defendant's lack of due care, the plaintiff may recoverdamages, but the courts shall mitigate the damages to be awarded.

2179 talks of two cases:

a. The defendant can show that the immediate and proximate cause of the injury was the negligence of theplaintiff himself. In this case, the defendant is not liable at all.

b. The defendant can also show that although the proximate cause of the injury was the defendant’s lack ofdue care, the plaintiff also contributed to the injury with his own negligence. In case of contributorynegligence on the part of the plaintiff, the defendant is still liable, but his liability may be mitigated by thecourt.

Atty Abaño: There was a case where the victim was a child below 9 years old. The defendant wanted his liabilitymitigated on the ground that the victim had contributed with his own negligence. The court held that a child below9 years old is incapable of contributory negligence. Therefore, the damages cannot be mitigated.

CASES:

Rakes v. Atlantic Gulf (not included in recitation but discussed in class by Atty. Abaño)

Rakes was a laborer employed by Atlantic. While transporting iron rails from a barge to the company’s yard usinga railroad hand car, Rakes broke his leg when the hand car toppled over and the rails fell on him. It appears thatthe hand car fell due to a sagging portion of the track that gave with the weight of the rails. Atlantic knew of theweak state of the rail but did nothing to repair it.

When Rakes filed an action for damages, Atlantic’s defense was that Rakes’ injuries were caused by his ownnegligence in walking alongside the car, instead of in front or behind it, as the laborers were told to do.

ISSUES:

1. Whether Rakes was negligent. 2. Whether Atlantic is liable to Rakes.

HELD:


1. Rakes was negligent. He disobeyed the orders of his superiors when he walked alongside the car insteadof in front or behind it.

2. Atlantic is liable to Rakes. The negligence of Rakes will not totally bar him from recovering anything fromAtlantic, although the liability of the latter will be mitigated as a result of Rakes’ contributory negligence.This is because although Rakes contributed with his own negligence, the primary cause of the accidentwas still the weak rails which Atlantic refused to repair.

Distinction must be made between the accident and the injury, between the event itself, without whichthere could have been no accident, and those acts of the victim not entering into it, independent of it, butcontributing to his own proper hurt.

Where he contributes to the principal occurrence as one of its determining factors, he cannot recover.Where, in conjunction with the occurrence, he contributes only to his own injury, he may recover theamount that the defendant responsible for the event should pay for such injury, less a sum deemedequivalent for his own imprudence.

Phoenix v. IAC

Dionisio was driving home from a cocktails and dinner meeting with his boss. He was proceeding down a streetwhen his headlights [allegedly] suddenly failed. He switched them to bright but it was too late for him to avoid adump truck looming 2 ½ meters away from his car. He crashed into the dump truck, which was parked on theright side of the street in a manner as to stick out and partly block oncoming traffic. The truck had no lights,reflectors, etc. Dionisio, however, admitted to having had a shot or two of liquor.

The dump truck was owned by Phoenix but it was driven home by an employee, Carbonel, because the latter hadan early morning job.

Dionisio suffered some physical injuries including some permanent facial scars, a “nervous breakdown” and loss oftwo gold bridge dentures, thereby impairing his million-dollar smile.

The trial court found that the sole cause of the accident was Carbonel’s negligence and rendered judgment in favorof Dionisio. The CA affirmed but slightly reduced damages.

ISSUE: Whether the there was contributory negligence on Dionisio’s part.

HELD: There was contributory negligence and the award of damages should be reduced by 20%.

Dionisio’s claim that his headlights suddenly failed was not believed by the SC. The more plausible explanation wasthat he had no curfew pass and so, along that stretch of road, which, incidentally, had a police station on it, heswitched off his lights and sped to avoid detection. This is corroborated by the report of the police officer whofound him and brought him to Makati Medical Center.

The officer reported that Dionisio had no curfew pass on his person and that when he appeared on the scenemoments after the collision [he was manning the nearby police station] people who witnessed the accident toldhim that Dionisio was driving fast and without headlights. This testimony was an exception to the hearsay rule forbeing excited utterances of the bystanders.

However, there is no doubt that the reckless parking of the truck was the indispensable and efficient cause of theaccident.

Dionisio's negligence, although later in point of time than the truck driver's negligence and therefore closer to theaccident, was not an efficient intervening or independent cause – it was merely a foreseeable consequence of therisk created by the negligent manner in which the truck driver had parked the dump truck.

Dionisio's negligence was not of an independent and overpowering nature as to cut, as it were, the chain ofcausation in fact between the improper parking of the dump truck and the accident, nor to sever the jurisvinculum of liability.

* There was no evidence to prove that Dionisio was so heavily under the influence of liquor as to constitute hisdriving a motor vehicle per se an act of reckless imprudence.

LBC Air Cargo v. CA

Rogelio Monterola was riding his motorcycle along a dusty highway. At about the same time, a cargo van ownedby LBC Air Cargo driven by Jaime Tano Jr. was coming from the opposite direction, on the way to the airport. Onboard the van were Fernando Yu, manager of LBC, and his son. When Tano was approaching the vicinity of the


airport road entrance on his left, he saw two vehicles racing against each other from the opposite direction. Tanostopped the van and waited for the two racing vehicles to pass. The racing vehicles produced a cloud of dust thatmade visibility extremely bad. However, instead of waiting for the dust to settle, Tano started to make a sharpturn towards the airport road. Suddenly, the motorcycle driving by Monterola emerged from the cloud of dust andsmashed head-on against the LBC van. Monterola died. The heirs of Monterola filed a case for homicide throughreckless imprudence against Tano and a civil case against against Tano, Yu, and LBC Air Cargo.

ISSUE: Whether LBC, Tano, and Yu are liable to the heirs of Monterola.

HELD: Tano and LBC are liable – Tano for his negligence as driver of the van, and LBC for its presumptivenegligence as employer of Tano. Yu is not liable, there being no employer-employee relationship between him andTano.

The proximate cause of the accident was the negligence of Tano who, despite extremely poor visibility, hastilyexecuted a left turn without first waiting for the dust to settle. It was this negligent act of Tano, which had placedthe LBC van directly on the path of the motorcycle coming from the opposite direction, that almost instantaneouslycaused the collision to occur. Simple prudence required him not to attempt to cross the other lane until after itwould have been safe from and clear of any oncoming vehicle.

Petitioners poorly invoke the doctrine of "last clear chance" (also referred to, at times, as "superveningnegligence" or as "discovered peril"). The doctrine, in essence, is to the effect that where both parties arenegligent, but the negligent act of one is appreciably later in time than that of the other, or when it is impossibleto determine whose fault or negligence should be attributed to the incident, the one who had the last clearopportunity to avoid the impending harm and failed to do so is chargeable with the consequences thereof. In thiscase, the victim was traveling along the lane where he was rightly supposed to be. The incident occurred in aninstant. No appreciable time had elapsed, from the moment Tano swerved to his left to the actual impact, thatcould have afforded the victim a last clear opportunity to avoid the collision. Therefore, the doctrine is notapplicable.

It is true, however, that the deceased was not all that free from negligence in evidently speeding too closelybehind the vehicle he was following. There was contributory negligence on the victim's part that could warrant amitigation of petitioners' liability for damages. Hence, the damages due the heirs of Monterola should be reducedby 20%.

b. Assumption of Risk

Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared bystipulation, or when the nature of the obligation requires the assumption of risk, no person shall beresponsible for those events which could not be foreseen, or which, though foreseen, wereinevitable.

Assumption of risk involves an action to which one consents, and the injury suffered is due to a risk involved inthat action.

Example: Engaging in contact sports – In this case, there is an assumption of risk, but there are still rules whichmust be followed in order to minimize the risk. The defense of assumption of risk by the plaintiff cannot beinvoked if the defendant was guilty of violating these rules.

CASES:

Afiada v. Hisole

Loreto Afialda was employed by the Hisole spouses as caretaker of their carabaos. While tending the carabaos,Loreto was gored by one of them and later died as a consequence of his injuries.

This action for damages was brought by Loreto’s elder sister, Margarita, who depended on him for support. Sheseeks to hold the Hisole spouses liable under Article 1905 [now Art. 2183] of the old Civil Code, which reads:

The possessor of an animal, or the one who uses the same, is liable for any damages it may cause, even if suchanimal should escape from him or stray away.

This liability shall cease only in case the damage should arise from force majeure or from the fault of the personwho may have suffered it.

The lower court ruled that article 1905 [2183] does not apply where damage is caused to the caretaker.


ISSUE: Whether Article 1905 [2183] makes the owner of the animal liable where the injured party is thecaretaker.

HELD: Article 1905 [2183] does not apply.

The statute names the possessor or user of the animal as the person liable for “any damages it may cause,” andthis is for the obvious reason that the possessor or user has the custody and control of the animal and is thereforethe one in a position to prevent it from causing damage.

In the present case, the animal was in the custody and under the control of the caretaker, who was paid for hiswork as such. Obviously, it was the caretaker’s business to try to prevent the animal from causing injury ordamage to anyone, including himself. And being injured by the animal under those circumstances was oneof the risks of the occupation which he had voluntarily assumed and for which he must take theconsequences.

Manresa, citing the Spanish Supreme Court says that such an accident should come under the labor laws.However, Afialda brought the action only under the Civil Code.

*Atty. Abaño – In light of recent labor legislation, such as the Workmen’s Compensation Act, this ruling wouldprobably have been different had it been decided today. Under current laws, the employer has the duty to adaptthe necessary safety measures to protect his employees.

Co v. CA

Co entrusted his Nissan pick-up to the repair shop for repairs and supply of parts. The car was carnapped while itwas being road-tested by an employee of the repair shop. Co filed a suit for damages against the repair shop,based on its negligence. The repair shop denied liability on the ground that the car was lost due to a fortuitousevent – carnapping.

ISSUE: Whether a repair shop can be held liable for the loss of a customer’s vehicle while the same is in itscustody for a repair job.

HELD: Yes, the repair shop is liable.

Pursuant to Articles 1174 and 1262 of the Civil Code, liability attaches even if the loss was due to a fortuitousevent if the nature of the obligation requires the assumption of risk. Carnapping is a normal business risk forthose engaged in the repair of motor vehicles. For just as the owner is exposed to that risk, so is the repair shop,since the car was entrusted to it. That is why repair shops are required to first register with the DTI and to secureand insurance policy for the shop covering the property entrusted by its customer for repair, service, andmaintenance as a pre-requisite for such accreditation/registration. Violation of this statutory duty constitutesnegligence per se.

c. Last Clear Chance

Statement of the Principle: A person who has the last clear chance or opportunity of avoiding an accident,notwithstanding the negligent acts of his opponent or that of a third person imputed to the opponentis considered in law solely responsible for the consequences of the accident. [Therefore, in this case,there is no mitigation of the liability of the defendant even if there was contributory negligence on the part of theplaintiff]

The negligence of the plaintiff does not preclude recovery for the negligence of the defendant where it appearsthat the defendant, by exercising reasonable care and prudence, might have avoided injurious consequences tothe plaintiff, notwithstanding the plaintiff’s negligence.

Even though a person’s own acts may have placed him in a position of peril, and an injury results, the injuredperson is entitled to recovery.

Elements:

1. prior negligence on the part of the plaintiff2. defendant is aware of the plaintiff3. defendant had the last clear chance/opportunity to avoid the peril by taking the necessary precaution, but

failed to do so4. accident occurs because of the negligence of the defendant.

CASES:


Bustamante v. CA

A collision occurred between a cargo truck and a passenger bus. The cargo truck and passenger bus wereapproaching each other, coming from the opposite sides of the highway. The bus driver claimed that from 30meters away, he could see that the front tires of the truck were wriggling, and that the truck was rapidly headedtowards his lane. He thought that the truck driver was a jokester, so despite the circumstances, he downshifted toincrease his speed on the ascending road in order to overtake the vehicle in front of him. At this precise moment,the cargo truck and the passenger bus sideswiped each other. Several passengers of the bus were thrown outand five people died as a result of the injuries they sustained. The heirs of the victims filed an action for damagesagainst the drivers and owners of the truck and bus. The CA held that the truck driver and owner were not liableto the heirs because the driver of the bus had the last clear chance to avoid the accident but failed to do so.Hence, only the bus driver and owner are liable.

ISSUE: Whether the doctrine of last clear chance is applicable.

HELD: No, the doctrine of last clear chance is not applicable. The doctrine of last clear chance is applicable onlyin a suit between the owners and drivers of the colliding vehicles. It does not apply where apassenger demands responsibility from the carrier to enforce its contractual obligations.

In this case, the action is not between the owners and drivers of the colliding vehicles but is one brought by theheirs of the deceased passengers against both owners and drivers of the colliding vehicles. Therefore, thedoctrine is not applicable. The truck driver and owner should be solidarily liable with the bus driver and owner,since the truck driver was found to be negligent as well.

McKee v. IAC

Koh was driving his car when two kids suddenly crossed his path. He swerved to the opposite lane to avoid thetwo kids and collided head-on with a truck. Koh and two of his pasengers died, while three others were seriouslyinjured. One of the survivors, McKee, filed a civil action for quasi-delict against the truck’s owners. Despiteevidence showing that the driver of the truck was driving over the speed limit and failed to step on the brakeseven if he had enough time to do so as he saw Koh swerving in his direction, the IAC held that Koh’s negligencewas the proximate cause of the accident. It dismissed McKee’s complaint for damages.

ISSUE: Whether the driver and owner of the truck are liable to McKee.

HELD: Yes. Under the “emergency rule,” one who suddenly finds himself in a place of danger and is required toact without time to consider the best means that may be adopted to avoid the impending danger is not guilty ofnegligence. In this case, any reasonable and ordinary prudent man would have tried to avoid running over thetwo boys by swerving away. Hence, Koh cannot be deemed negligent.

And assuming that Koh was negligent, the doctrine of last clear chance provides that the contributory negligenceof the party injured will not defeat his claim for damages if it is shown that the defendant might, by the exercise ofreasonable care and prudence, have avoided the negligence of said injured party. In this case, it was proven bythe testimony of an uninterested party that the driver of the truck had the last clear chance to avoid the mishap ifonly he stepped on the truck’s brakes as he had time to do so. Since he failed to do so, he is considered by thelaw as solely responsible for the damage caused.

Canlas v. CA

The Canlas spouses agreed to sell two parcels of land to Mañosca for which the latter issued two postdated checks.The spouses turned over the certificates of title to Mañosca. However, the checks issued by Mañosca turned outto be insufficiently funded. Mañosca managed to mortgage the two parcels to Atty. Magno with the help of twoimpostors who introduced themselves as the spouses Canlas. He again mortgaged the properties to the AsianSavings Bank with the aid of the two impostors. When Mañosca defaulted on his loan, the bank foreclosed themortgage. The real Canlas spouses then informed the bank that the property had been mortgaged without theirconsent and filed an action for the annulment of the mortgage contract. The CA held that the Canlas spouseswere not entitled to relief since they were negligent and must bear the loss. It also held that the bank exerciseddue diligence in approving the loan and mortgage applied for by Mañosca.

ISSUE: Whether the bank was guilty of negligence.

HELD: Yes, the bank was negligent. Therefore, it must bear the loss resulting from the fraudulent acts ofMañosca.


The degree of diligence required of banks is more than that of a good father of a family, in keeping with theirresponsibility to exercise the necessary care and prudence in dealing with registered or titled property. Thebusiness of a bank is affected with public interest, holding in trust the money of the depositors, which bankdeposits the bank should guard against loss due to negligence or bad faith.

In this case, the bank did not observe the requisite diligence in ascertaining or verifying the real identity of thecouple who introduced themselves as the spouses Canlas. Not even a single identification card was exhibited bythe said impostors to show their true identity; and yet, the bank acted on their representations simply on the basisof the residence certificates bearing signatures which tended to match the signatures affixed on a previous deed ofmortgage to a certain Atty. Magno, covering the same parcels of land in question.

Under the doctrine of last clear chance, which is applicable here, the respondent bank must suffer the resultingloss. In essence, the doctrine of last clear chance is to the effect that where both parties are negligentbut the negligent act of one is appreciably later in point of time than that of the other, or where it isimpossible to determine whose fault or negligence brought about the occurrence of the incident, theone who had the last clear opportunity to avoid the impending harm but failed to do so, is chargeablewith the consequences arising therefrom.

Assuming that Canlas was negligent in giving Mañosca the opportunity to perpetrate the fraud, by entrusting tolatter the certificates of title to the parcels of land, it cannot be denied that the bank had the last clear chance toprevent the fraud, by the simple expedient of faithfully complying with the requirements for banks to ascertain theidentity of the persons transacting with them.

For not observing the degree of diligence required of banking institutions, whose business is impressed with publicinterest, Asian Savings Bank has to bear the loss sued upon.

d. Prescription

Art. 1146. The following actions must be instituted within four years:

(1) Upon an injury to the rights of the plaintiff;

(2) Upon a quasi-delict;

However, when the action arises from or out of any act, activity, or conduct of any public officerinvolving the exercise of powers or authority arising from Martial Law including the arrest, detentionand/or trial of the plaintiff, the same must be brought within one (1) year.

The four-year prescriptive period is reckoned from the date when the tortious act was committed.

But, according to the DISCOVERY RULE: if the injury is discovered after the four-year period, the reckoning pointis the date of discovery and not the date of commission of the act.

Problem: X worked in an asbestos factory. Ten years after his repeated exposure to asbestos, he showssymptoms of asbestosis. Can he still file an action for damages against the employer?

Answer: Yes. The prescriptive period begins to run from the discovery of the tortious act and not from itsoccurrence.

Consumer Act of the Philippines

The consumer may sue not only the manufacturer but also the importer and seller for defective product, design,packaging, and lack of information. The prescriptive periods for bringing the action are:

If the defect is apparent: 4 years from purchaseIf the defect is hidden: 2 years from the purchase OR discovery of the hidden defect

Prescription v. Laches

Prescription pertains to the extinction of the right to file an action after the lapse of a definite period. Laches, onthe other hand, is a relative term. It means the inaction of someone who has a right; it is the failure to exercisethis right.

CASES:

United Airlines v. Uy [not assigned but discussed by Atty. Abaño]


On a flight to the UK, Uy was required by UA to check in his briefcase. He refused because the other passengerswere not required to do so. He was treated rudely by the staff and crew of UA. Finally, he checked in thebriefcase. When he reached his destination, the briefcase was lost. At this point, Uy had two causes of action. Hecould have filed an action for damages under the Civil Code (for the rude treatment that he got from the staff) andanother action under the Warsaw Convention which provides for compensation for lost baggage. The prescriptiveperiod of the action under the Warsaw Convention is 2 years.

Instead of filing a court action, however, Uy filed a complaint with the UA office. UA did not act on Uy’s complaintand sat on it for 2 years. Uy eventually filed the two civil actions against UA.

ISSUE: Whether the cause of action under the Warsaw Convention had already prescribed.

HELD: No, the action had not yet prescribed. The cause of action under the Warsaw Convention had not yetprescribed even if it was filed beyond the two-year prescriptive period, since the delay was due to the fault of UA.Courts will set aside technicalities if a strict adherence to them would result in injustice.

Capuno v. Elordi

* A civil action based on a quasi-delict must be instituted within 4 years.

* An action based on a quasi-delict is governed by Art. 1150of the CC as to the question when the prescriptionperiod of 4 years shall begin to run—that is from the day the action may be brought—from the day the quasi-delictoccurred or was committed.

Allied Banking v. CA

Joselito Yujuico was a ranking officer of and a member of the family which controlled General Banking and TrustCorporation (Genbank). In 1976, he obtained a 500k loan from said bank.

In 1977, the Monetary Board of the Central Bank issued a resolution forbidding Genbank from doing business inthe Philippines. Later that same year, a resolution was issued ordering the liquidation of Genbank. Again, in thesame year, the liquidator and Allied Bank entered into an agreement whereby Allied Bank acquired all the assetsand assumed all the liabilities of Genbank, including the receivable due from Yujuico.

Upon Yujuico’s failure to pay the loan at maturity, Allied Bank filed, in 1979, a complaint for collection against him.

In a separate case, in 1986, a ruling of the CA that the liquidation of Genbank was made in bad faith and shouldbe annulled became final and executory.

In 1987, Yujuico filed a third party complaint to implead the Central Bank and the liquidator in the case. Yujuicoalleged that by reason of the tortuous interference by the Central Bank with the affairs of Genbank, he wasprevented from performing his obligation under the loan.

The RTC denied the motion to admit the third-party complaint. The CA annulled the RTC’s order and ordered theadmission of the third-party complaint.

ISSUE: Whether the third-party complaint should be admitted.

HELD: It should not be admitted.

Though the third-party complaint is procedurally allowable, it is barred by prescription.

A third-party complaint is a procedural device whereby a “third-party” who is neither a party nor privy to the actor deed complained of by the plaintiff, may be brought into the case with leave of court, by the defendant, whoacts as third-party plaintiff to enforce against such third-party defendant a right for contribution, indemnity,subrogation or any other relief, in respect of the plaintiffs claim.

In this case, the third-party complaint is “in respect of “Allied Bank’s claim and therefore procedurally sound initself. However, since the claim is based on tortuous interference, which is a quasi-delict, the complaint shouldhave been filed within four years from the time the cause of action accrued [1981, or four years after the 1977order of liquidation]. Contrary to Yujuico’s claim that the pprescriptive period should be counted from the CA’sdecision annulling the liquidation, it is an established rule that it is from the date of the act or omission violative ofthe right of a party when the cause of action arises and it is from this date that the prescriptive period must bereckoned.

Delos Reyes v. CA


Spouses Genaro and Evarista delos Reyes owned a parcel of land measuring 13,405 square meters. Evarista soldto spouses Catalina and Eulalio Pena 10,000 square meters of the property. On June 4, 1943, the Penas wereable to secure a TCT covering not only the 10,000 square meters sold to them but also the remaining 3,405square meters left unsold. The Penas then sold the whole property to the spouses de Guzman. The de Guzmanssold it again. Eventually, the land was acquired by Rodolfo and Zenaida Caina spouses. On July 17, 1963, a TCTover the entire property was issued in favor of the Cainas. On October 3, 1978, the heirs of Evarista delos Reyesfiled an action against the Cainas for reconveyance of the 3,405 square meters, claiming that this portion wasinvalidly included by the Pena Spouses in the titling of the 10,000 sqaure meters that they had purchased fromEvarista. The case was dismissed by the trial court on the ground of laches.

ISSUE: Whether the action is barred by laches.

HELD: Yes, the action is barred.

Petitioners argue that their cause of action still subsists because it accrued either in September 1962 whenEvarista delos Reyes died, or on 17 July 1963 when the TCT was issued to Rodolfo Caiña and his sister ZenaidaCaiña. This is incorrect. A cause of action, being an act or omission of one party in violation of the right of another,arises at the moment such right is violated. In this case, petitioners' cause of action accrued on 4 June 1943 whenthe Pena spouses caused the registration in their name of the entire 13,405 square meters instead of the 10,000square meters that they actually bought from Evarista delos Reyes. For it was on this date that the right ofownership of Evarista over the remaining 3,405 square meters was transgressed, and from that very momentsprung the right of the owner, and hence all her successors in interest, to file a suit for reconveyance of theproperty wrongfully taken from them.

Reivindicatory actions may be brought by the owner within 30 years after he has been deprived of his property.Under Art. 1141 of the Civil Code, real actions over immovables prescribe after 30 years. Thus, even if we applythe 30-year prescriptive period in accordance with the above legal provisions, petitioners' right to recover hasalready been effectively foreclosed by the lapse of time, having been initiated only after 36 years from the accrualof their cause of action.

Be that as it may, even these laws may not apply to this case in the light of the Property Registration Decree.Under this law, the Cainas, as fourth transferees of the property, were not required to go beyond what appearedin the transfer certificate of title in the name of their transferor. They were innocent purchasers for value havingacquired the property in due course and in good faith under a clean title.

The only remedy of an owner who was fraudulently deprived of his land, which was subsequently soldto an innocent purchaser for value, is to file an action for damages against the person who perpetratedthe fraud within four (4) years after the discovery of the deception. Unfortunately in this case we maynever know why Evarista delos Reyes chose not to go after the Pena spouses to recover what could be rightfullyhers, the reason having apparently been long interred with her.

e. Fortuitous Events

According to Atty. Abaño, the requisites of a fortuitous event, as a defense, are:

1. The event must be unforeseen, or if foreseen, inevitable;

2. There must be no concurrent negligence on the part of the offended party.

*If an accident is caused by a tire blowout, there is a presumption that there was negligence.

CASES:

NAPOCOR v. CA

In the early morning hours of October 27, 1978, at the height of typhoon "Kading", a massive flood covered thetowns near Angat Dam, particularly the town of Norzagaray, causing several deaths and the loss and destructionof houses, farms, plants, working animals and other properties of the people residing near the Angat River.

The victims of the flood, private respondents herein, blamed the sudden rush of water to the reckless andimprudent opening of all the three (3) floodgates of the Angat Dam spillway, without prior warning to the peopleliving near or within the vicinity of the dam.

Among the defenses of NAPOCOR were: it observed the necessary diligence, it gave written warnings of theopening of the floodgates, there was no causal relationship between the damage and the acts or omissions, there


was assumption of risk on the part of the victims, and the damages were caused by fortuitous event andhence, damnum absque injuria, and respondents have no cause of action.

The RTC and CA awarded damages in favor of the victims.

ISSUE: Whether NAPOCOR is entitled to the defense of fortuitous event.

HELD: NAPOCOR is liable, the defense of fortuitous event does not apply.

NAPOCOR cannot escape liability by invoking force majeure. Acts of God or force majeure, by definition, areextraordinary events not foreseeable or avoidable, events that could not be foreseen, or which, though foreseen,are inevitable. It is therefore not enough that the event could not have been foreseen or anticipated, as iscommonly believed, but it must be one impossible to foresee or to avoid. As a general rule, no person shall beresponsible for those events which could not be foreseen or which though foreseen, were inevitable.

However, the principle embodied in the act of God doctrine strictly requires that the act must be occasioned solelyby the violence of nature. Human intervention is to be excluded from creating or entering into the cause of themischief. When the effect is found to be in part the result of the participation of man, whether due to his activeintervention or neglect or failure to act, the whole occurrence is then humanized and removed from the rulesapplicable to the acts of God.

In the case at bar, although the typhoon "Kading" was an act of God, petitioners can not escapeliability because their negligence was the proximate cause of the loss and damage –

(1) They had sufficient warning of the typhoon and they should have taken action by decreasing the water level inanticipation of the coming rain;

(2) The release of the water was not gradual; the lower court found that the opening of the spillways was suddenand abrupt;

(3) The spillways were opened in the wee hours of the morning and without sufficient warning to the townsfolk;(4) Though written warnings were dispatched, they were given to ordinary town employees and policemen, and

not to responsible city officers who could have relayed the warning to everyone concerned.

Clearly, the requirement that the fortuitous event not be humanized is absent in this case.

PAL v. CA

Pantejo, then City Fiscal of Surigao City, disembarked from a PAL flight in Cebu. Due to typhoon Osang, flight wascancelled. PAL gave out P100 & P200 to passengers for their expenses during their stay in Cebu.

Pantejo refused the money. Instead, he asked that he be billeted in a hotel at PAL’s expense. PAL refused.Pantejo stayed with fellow passengers whom he promised to pay when they reach Surigao. Later on, he learnedthat co-passengers were reimbursed by PAL for their expenses. PAL offered him P300 when he threatened to sueon the ground of undue discrimination.

ISSUE: Whether PAL is liable for damages for its failure to provide hotel accommodations for Pantejo and toreimburse him for his expenses incurred by reason of the cancellation of his connecting flight due to forcemajeure.

HELD: Pal is liable.

A contract to transport passengers is quite different in kind and degree from any other contractual relation, andthis is because of the relation which an air carrier sustains with the public. Its business is mainly with the travellingpublic. It invites people to avail of the comforts and advantages it offers. The contract of air carriage, therefore,generates a relation attended with a public duty. Neglect or malfeasance of the carrier's employees naturally couldgive ground for an action for damages.

Assuming arguendo that the airline passengers have no vested right to this amenities in case a flight is cancelleddue to force majeure, what makes petitioner liable for damages in this particular case and under the factsobtaining herein is its blatant refusal to accord the so-called amenities equally to all its stranded passengers whowere bound for Surigao City. No compelling or justifying reason was advanced for such discriminatory andprejudicial conduct.

More importantly, it has been sufficiently established that it is petitioner's standard company policy, whenever aflight has been cancelled, to extend to its hapless passengers cash assistance or to provide them accommodationsin hotels with which it has existing tie-ups.


Petitioner acted in bad faith in disregarding its duties as a common carrier to its passengers and in discriminatingagainst herein respondent Pantejo. It was even oblivious to the fact that this respondent was exposed tohumiliation and embarrassment especially because of his government position and social prominence, whichaltogether necessarily subjected him to ridicule, shame and anguish

Cipriano v. CA

* Violation of a statutory duty is negligence per se.* The existence of a contract between the parties does not bar a finding of negligence under the principles ofquasi-delict.- failure to comply with a statutory duty to secure insurance coverage constitutes negligence.

Yobido v. CA

Spouses Tumboy & their minor children boarded a Yobido Liner bus. While in Agusan del Sur, the left front tire ofthe bus exploded. The bus fell into a ravine around three (3) feet from the road & struck a tree. The incidentresulted in the death of 28-year-old Tito Tumboy, & physical injuries to other passengers.

A complaint for breach of contract of carriage, damages & attorney's fees was filed by Leny & her children againstAlberta Yobido, the owner of the bus, & Cresencio Yobido, its driver.The Yobidos raised the affirmative defense ofcaso fortuito.

The Tumboys asserted that violation of the contract of carriage between them & the Yobidos was brought about bythe driver's failure to exercise the diligence required of the carrier in transporting passengers safely to their placeof destination.

According to Leny Tumboy, the winding road it traversed was not cemented & was wet due to the rain. The buswhich was full of passengers had cargoes on top. Since it was "running fast," she cautioned the driver to slowdown but he merely stared at her through the mirror

The Yobidos contend the accident was due to a fortuitous event. The conductor testified that bus was not full, thatthe bus was running at a speed of "60-50" & was going slow because of the zigzag road. He affirmed that the leftfront tire that exploded was a "brand new tire" w/c he mounted on the bus 5 days before the incident.

ISSUE: Whether the tire blowout was a fortuitous event that would exempt the Yobidos from liability.

HELD: The tire blowout was NOT a fortuitous event. Therefore, the Yobidos are liable.

As a rule, when a passenger boards a common carrier, he takes the risks incidental to the mode of travel he hastaken. After all, a carrier is not an insurer of the safety of its passengers & is not bound absolutely & at all eventsto carry them safely & without injury. However, when a passenger is injured or dies, while traveling, thelaw presumes that the common carrier is negligent.

In culpa contractual, once a passenger dies or is injured, the carrier is presumed to have been at fault or to haveacted negligently. This disputable presumption may only be overcome by evidence that the carrier had observedextraordinary diligence as prescribed by Articles 1733, 10 1755 & 1756 of the Civil Code or that the death orinjury of the passenger was due to a fortuitous event.

Consequently, the court need not make an express finding of fault or negligence on the part of the carrier to holdit responsible for damages sought by the passenger.

Under the circumstances of this case, the explosion of the new tire may not be considered a fortuitous event.There are human factors involved in the situation. The fact that the tire was new did not imply that it was entirelyfree from manufacturing defects or that it was properly mounted on the vehicle. Neither may the fact that the tirebought & used in the vehicle is of a brand name noted for quality, resulting in the conclusion that it could notexplode within five days' use. Be that as it may, it is settled that an accident caused either by defects in theautomobile or through the negligence of its driver is not a caso fortuito that would exempt the carrier from liabilityfor damages.

Moreover, a common carrier may not be absolved from liability in case of force majeure or fortuitous event alone.The common carrier must still prove that it was not negligent in causing the death or injury resulting from anaccident.

JAL v.CA

Respondents in this case are passengers of JAL from Sn Fo and LA bound for Mla. As an incentive for traveling w/JAL, the flights made an overnight stopover in Japan at the airlines’ expense.


The passengers were billeted in Hotel Nikko Narita for the night. The ff day, they learned that Mt. Pinatuboerupted and all flights to Mla were cancelled indefinitely because NAIA was closed. JAL rebooked their flights forthe 16th of June (2 days after scheduled flight). JAL paid for their unexpected overnight stay.

Unfortunately their flight on the 16th was also cancelled. However, JAL informed them that it (JAL) would nolonger shoulder their expenses.

Respondents stayed in Japan until the 22nd and they were forced to pay meals & accommodations from theirpersonal funds. A month later, the respondents filed an action for damages against JAL.

ISSUE: Whether JAL was obligated to shoulder respondent’s expenses during the unexpected stay brought aboutby the eruption of Pinatubo.

HELD: No.

Common carriers are NOT absolutely responsible for all injuries or damages even if the same were caused by afortuitous event. To rule otherwise would render the defense of force majeure as an exception from any liability,illusory and ineffective.

When a party is unable to fulfill his obligation because of force majeure, the general rule is that he cannot be heldliable for damages for non-performance. Airline passengers must take such risks incident to traveling. Adverseweather conditions/ extreme climate changes are some of the perils involved in air travel, the consequences ofwhich the passenger must assume/ expect. After all, common carriers are NOT the insurer of all risks.

If the fortuitous event was accompanied by neglect and malfeasance by the carrier’s employees, an action fordamages against the carrier is permissible. BUT that is not the situation in this case.

f. diligence

Art. 2180 (last par.) The responsibility treated of in this article shall cease when the persons hereinmentioned prove that they observed all the diligence of a good father of a family to prevent damage.

Smith v. Cadwallader

Steamer Helen C belonging to Cadwallader Co. under the command of Capt Lasa, in the course of its maneuvers tomoor at Smith’s wharf, struck the wharf, partially demolishing it and throwing the timber piled thereon into thewater.

Smith filed an action for damages against Cadwallader for the demolition of the wharf and loss of timber.

Cadwallader alleged that the demolition of the wharf was due 1. to the excessive weight of the timber piled upon it by Smith to be loaded on Helen C2. bad condition of piles supporting the wharf

ISSUE: Whether Cadwallader is liable.

HELD: Cadwallader is NOT liable.

The wharf was overloaded. This could have contributed to the wharf’s collapse.

Captain Lasa was a duly licensed captain, authorized to navigate and direct a vessel of any tonnage andCadwallader contracted his services because of his reputation as a captain.

The presumption of liability has been overcome by the exercise of care and diligence of a good father of a familyin selecting Capt. Lasa. Cadwallader is therefore not liable, having exercised due diligence.

Ong v. Metropolitan Water

Dominador Ong went to the recreational swimming pools of Metro H2O District with his 2 brothers. They stayed inthe smaller (&shallower) pool. His 2 bros. decided to go to the bigger pool, and he decided to buy a Coke. Later,someone noticed him swimming under water for a long time. The lifeguards and medical personnel tried to revivehim, but it was too late. The cause of his death was asphyxia by submersion in water.

The parents of Ong filed an action for damages against MWD.


ISSUE: Whether the death of Ong can be attributed to the negligence of MWD and/or its employees so as toentitle the Ongs to recover damages.

HELD: MWD was NOT negligent.

The operator of the swimming pools will not be held liable as it exercised due diligence in the selection of andsupervision over its employees and that it had observed the diligence required by law—in that it has taken allnecessary precautions to avoid danger to the lives of its patrons/ prevent accident w/c may cause their death.

The person claiming damages has the burden of proving that the damage is causedby the fault/ negligence of theperson from whom the damage is claimed, or of one of his employees.

The Ongs are contending that MWD had the last clear chance to save the boy’s life. The Court held that the lastclear chance doctrine can never apply where the party charged is required to act instantaneously, and if the injurycannot be avoided by the application of all means at hand after the peril is/ should have been discovered.

Fabre v. CA

As common carriers, the Fabres were bound to exercise “extraordinary diligence” for the safe transportation of thepassengers to their destination. This duty is of care is NOT excused by proof that they exercised the diligence of agood father of the family in the selection and supervision of their employee.

PBCom v. CAAs elucidated in Simex International (Manila), Inc. In the case of banks, however, the degree of diligence requiredis more than that of a good father of a family. Considering the fiduciary nature of their relationship with theirdepositors, banks are duty bound to treat the accounts of their clients with the highest degree of care.

g. Mistake and Waiver

Art. 1331. In order that mistake may invalidate consent, it should refer to the substance of the thingwhich is the object of the contract, or to those conditions which have principally moved one or bothparties to enter into the contract.

Spouses Theis v. CA

Calson’s Development owned three lots in Tagaytay – Parcels Nos. 1, 2, and 3. Adjacent to parcel no. 3 wasparcel no. 4, which was not owned by Calson’s. Calson’s built a house on Parcel No. 3. In a subsequent survey,parcel no. 3, where the house was built, was erroneously indicated to be covered by the title to parcel no. 1.Parcel nos. 2 and 3 were mistakenly surveyed to be located where parcel no. 4 was located. See diagram below:Actual

According to the Survey/ What Calson’s believed

Unaware of this mistake by which Calson’s appeared to be the owner of parcel no. 4, Calson’s sold what it thoughtwas parcel nos. 2 and 3 (but what was actually parcel no. 4) to the Theis spouses. Upon execution of the deed ofsale, Calson’s delivered the certificates of title to parcel nos. 2 and 3 to the spouses. The spouses then went toGermany. About three years later, they returned to Tagaytay to plan the construction of their house. It was thenthat they discovered that parcel no. 4, which was sold to them, was owned by someone else, and that what wasactually sold to them were parcel nos. 2 and 3. The real parcel no. 3, however, could not have been sold to themsince a house had already been built thereon by Calson’s even before the execution of the contract, and itsconstruction cost far exceeded the price paid by the spouses for the two parcels of land. The spouses insisted thatthey wanted parcel no. 4, but this was impossible, since Calson’s did not own it. Calson’s offered them the realparcel nos. 1 and 2 instead since these were really what it intended to sell to the spouses. The spouses refusedand insisted that they wanted parcel nos. 2 and 3 since the TCTs to these lots were the ones that had been issuedin their name. Calson’s then offered to return double the amount already paid by the spouses. The spouses stillrefused. Calson’s filed an action to annul the contract of sale.

ISSUE: Whether the contract of sale can be annulled.

HELD: Yes, the contract can be annulled on the ground of mistake. Article 1390 of the Civil Code provides thatcontracts where the consent is vitiated by mistake are annullable. In order that mistake may invalidate consent,it should refer to the substance of the thing which is the object of the contract, or to those conditions which haveprincipally moved one or both parties to enter into the contract. The concept of error includes: (1) ignorance,which is the absence of knowledge with respect to a thing; and (2) mistake, which is a wrong conception aboutsaid thing, or a belief in the existence of some fact, circumstance, or event, which in reality does not exist. Inboth cases, there is a lack of full and correct knowledge about the thing.


1 2 3 41 2&3

In this case, Calson’s committed an error of the second type. This mistake invalidated its consent, and as such,annulment of the deed of sale is proper. The error was an honest mistake, and the good faith of Calson’s isevident in the fact that when the mistake was discovered, it immediately offered two other vacant lots to thespouses or to reimburse them with twice the amount paid.

Petitioners’ insistence in claiming parcel no. 3 on which stands a house whose value exceeds the price paid bythem is unreasonable. This would constitute unjust enrichment. Moreover, when the witness for the spousestestified, he stated that what was pointed out to the spouses was a vacant lot. Therefore, they could not haveintended to purchase the lot on which a house was already built.

Gatchalian v. Delim

Reynalda Gatchalian boarded respondent's "Thames" mini-bus. While the bus was running along the highway "asnapping sound" was suddenly heard at one part of the bus. The bus driver dismissed it as a normal occurrence.Shortly thereafter, the vehicle bumped a cement flower pot on the side of the road, went off the road, turnedturtle and fell into a ditch.

Several passengers, including Gatchalian, were injured. They were promptly taken to the hospital for treatment.

While injured passengers were confined, Mrs. Adela Delim, visited them and paid for their hospitalization andmedical expenses. She also gave Gatchalian P12.00 with which to pay her transportation expense in going homefrom the hospital. Mrs. Delim also asked the injured passengers to sign an already prepared Joint Affidavit whichstated “That we are no longer interested to file a complaint, criminal or civil against the said driver and owner ofthe said Thames, because it was an accident and the said driver and owner of the said Thames have gone to theextent of helping us to be treated upon our injuries.”

Notwithstanding the document, Gatchalian filed an action extra contractu to recover compensatory and moraldamages. (inferiority complex, lost beauty and employment opportunities)

Delims averred that the vehicular mishap was due to force majeure, and that Gatchalian had already been paidand had waived any right to institute any action against them.

ISSUE: Whether the Delims are liable to Gatchalian, notwithstanding her waiver.

HELD: Yes. The Delims are liable. The waiver executed by Gatchalian was not a valid waiver.

A waiver, to be valid and effective, must in the first place be couched in clear and unequivocal terms which leaveno doubt as to the intention of a person to give up a right or benefit which legally pertains to him. A waiver maynot casually be attributed to a person when the terms thereof do not explicitly and clearly evidence an intent toabandon a right vested in such person.

Because what is involved here is the liability of a common carrier for injuries sustained by passengers in respect ofwhose safety a common carrier must exercise extraordinary diligence, we must construe any such purportedwaiver most strictly against the common carrier.

For a waiver to be valid and effective, it must not be contrary to law, morals, public policy or good customs. Webelieve this purported waiver is offensive to public policy because it dilutes the degree of care required of commoncarriers.

In case of death or injuries to passengers, a statutory presumption arises that the common carrier was at fault orhad acted negligently unless it proves that it [had] observed extraordinary diligence as prescribed in Articles 1733and 1755.

h. Others

Damnum Absque Injuria (damage without injury): There is damage but no liability because the person whocaused the injury was exercising a legal right.

Simon v. DavidThe dismissal by the office of the fiscal of the complaint for estafa filed by the plaintiffs insufficient to warrant ajudgment for damages in defendant's favor, in the absence of competent evidence that in filing the complaint,plaintiff had acted in bad faith, knowing that the charge was groundless.

Proline Sports v. CA


By virtue of its merger with A.G. Spalding Bros., Inc., QUESTOR became the owner of the trademark "Spalding"appearing in sporting goods, implements and apparatuses. PRO LINE is the exclusive distributor of "Spalding"sports products in the Philippines.

UNIVERSAL, on the other hand, is engaged in the sale and manufacture of sporting goods while co-respondentMonico Sehwani is impleaded in his capacity as president of the corporation.

16 years ago(1981), Edwin Dy Buncio, General Manager of PRO LINE, sent a letter-complaint to the NBI regardingthe alleged manufacture of fake "Spalding" balls by UNIVERSAL.

The NBI conducted a search (by virtue of a warrant) on the premises of Universal. Basketballs and volleyballsmarked "Spalding" were seized and confiscated by the NBI. UNIVERSAL’S factory was sealed and padlocked as thematerials & machineries were too heavy to be removed from the premises and brought under the actual physicalcustody of the court.

Upon motion of UNIVERSAL, Judge ordered the lifting of the seal and padlock on the machineries. The petnersfiled a petn for certiorari in the CA. Also, the petners filed a criminal complaint for unfair competition againstSehwani. The complaint was dropped but an info was later filed by the Ministry of Justice. The case againstSehwani did not propser b/c they were unable to prove that Sehwani sold the fake Spalding products (-- theselling being an essential element of the crime).

UNIVERSAL and Sehwani filed a civil case for damages (malicious prosecution) charging that PRO LINE andQUESTOR maliciously and without legal basis committed acts to their damage and prejudice.

ISSUE: Whether Proline and Questor are liable for damages.

HELD: PROLINE & QUESTOR NOT liable for damages.

There was no malicious prosecution. The elements of malicious prosecution are:(1) absence of probable cause (2) legal malice on the part of the defendant.

The filing of the crim case was based on probable cause: that a corporation other than the certified owner of thetrademark is engaged in the unauthorized manufacture of products bearing the same TM engenders a reasonablebelief that a crim offense for unfair competition is being committed.

A resort to judicial processes is NOT per se evidence of ill will upon which a claim for damages may be based;Malice is an inexcusable intent to injure, oppress, vex, annoy or humiliate. Proline and Questor, in filing theaction, were merely exercising their legal rights. Hence, they are not liable for damages.

Amonoy v. Gutierrez* Well-settled is the maxim that damage resulting from the legitimate exercise of a person’s right is a loss withoutinjury—damnum absque injuria—for which the law gives no remedy.

* Even if the acts of a party may have been legally justified at the outset, their continuation after the issuance ofthe TRO amounted to an insidious abuse of his right—his acts constituted not only an abuse of a right, but aninvalid exercise of a right that had been suspended.

* The exercise of a right ends when the right disappears when it is abused, especially to the prejudice of others.

Mariscal v. CA

Bella Catalan filed an action for annulment of her marriage with Rogelio Mariscal on the ground that it was void abinitio for having been solemnized w/o a valid marriage license and for being bigamous. She also sought to recover$32T and damages.

Rogelio Mariscal also filed for annulment claiming that he was forced to marry her at gunpoint. He also asked fordamages.

Catalan moved for the dismissal of the case filed by Mariscal on the ground of litis pendentia. The case wasdismissed by the CA. Mariscal contends that the case should not have been dismissed because its resolution wouldNOT constitute res judicata.

ISSUE: Whether the dismissal of the case filed by Mariscal was correctly dismissed.

HELD: Yes, the case was correctly dismissed on the ground of litis pendentia.


In litis pendnetia what is essential is the identity and similarity of the issues under consideration. In his effort tohave the case resolved in a different venue, petitioner has resorted to nit-picking and in the process has lost trackof the real issue besetting the 2 axns.

A counterclaim partakes of the nature of a complaint and/or a cause of axn against the plaintiff in a case. Tointerpose a cause of action in a counterclaim and again invoke it in a complaint against the same person or partywould be splitting a cause of action not sanctioned by the Rules. Spouses Lim v. Uni Tan

Uni-Tan filed a complaint in the MTC against the Lims for unlawful detainer. The MTC ruled in favor of Unit-Tanand ordered the Lims to vacate the premises and pay a sum as rental until vacation.

On appeal, the RTC reversed the MTC ruling and dismissed the complaint against the Lims. Since properties of theLims had already been sold on execution during the proceeding before the lower court, the RTC, upon motion,ordered that the items not sold at the execution sale should be returned to them. The Lims apparently wanted anaward of damages because of the sale of their property. The RTC denied the claim on the ground that the Limsfailed to file a supersedeas bond to stay the execution of the judgment.

Lims contend that the RTC erred in not awarding them damages since they were prejudiced by the ejectment suit.

ISSUE: Whether the Lims are entitled to damages.

HELD: No, they are not entitled to damages.

Neither the Uni-Tan nor the sheriff may be faulted for the items sold on execution, because the Lim spouses hadfailed to file a supersedeas bond to stay the execution of the MTC judgment. The immediate execution of ajudgment favorable to the plaintiff is mandated, and the court’s duty to order it is practically ministerial.

There is no basis for petitioners’ claim for damages because respondent was in the lawful exercise of its right atthe time of the execution sale. Spouses Lim should have paid the bond, so that execution will be stayed.

Those who exercise their rights properly do no legal injury. If damages result from their exercise of their legalrights, it is damnum absque injuria—a loss without injury, for which the law gives no remedy.

IV. VICARIOUS/PRIMARY/SOLIDARY LIABILITY

1. Vicarious Liability

Article 2180. The obligation imposed by Article 2176 is demandable not only for one’s ownacts or omissions, but also for those of persons for whom one is responsible.

The father and, in case of his death or incapacity, the mother, are responsible for thedamages caused by the minor children who live in their company.

Guardians are liable for damages caused by the minors or incapacitated persons who areunder their authority and live in their company.

The owners and managers of an establishment or enterprise are likewise responsible fordamages caused by their employees in the service of the branches in which the latter are employedor on the occasion of their functions.

Employers shall be liable for the damages caused by their employees and household helpersacting within the scope of their assigned tasks, even though the former are not engaged in anybusiness or industry.

The State is responsible in like manner when it acts through a special agent; but not when thedamage has been caused by the official to whom the task done properly pertains, in which case whatis provided in Article 2176 shall be applicable.

Lastly, teachers or heads of establishments of arts and trades shall be liable for damagescaused by their pupils and students or apprentices, so long as they remain in their custody.

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


Article 2181. Whoever pays for the damage caused by his dependents or employees mayrecover from the latter what he had paid or delivered in satisfaction of the claim.

Article 2182. If the minor or insane person causing damage has no parents or guardians, theminor or insane person shall be answerable with his own property in an action against him where aguardian ad litem shall be appointed.


PERSON VICARIOUSLY LIABLE NEGLIGENT PERSON REQUISITE CONDITIONFather/Mother Minor child (below 21 years old) Living with parentsGuardian Minor ward or incapacitated

personUnder the custody of the guardian

this means that there must be acourt appointment

Owner and manager ofestablishment

Employee In the service of the branches oron the occasion of their functions(whether or not acting within thescope of their assigned tasks)

It is necessary to prove that thereis an employer-employeerelationship

Employers even though notengaged in business or industry

Employees and household helpers Acting within the scope of assignedtasks

State Special agent Definite order to do some task,foreign to his usual functions

Teachers

Heads of Schools

Student or apprentice Student or apprentice must be intheir custodyTeacher-in-charge is liable if theschool is an academic institution;Head of school is liable if theschool is an institution of arts andtrades

a. parents and guardians

RA 6809

- amended Article 234 of the Family Code. As amended by RA 6809, Article 234 now reads as follows:

Art. 234. Emancipation takes place by the attainment of majority. Unless otherwise provided, majoritycommences at the age of eighteen years.

- Effects of emancipation: Terminates parental authority over the person and property of the child, whoshall then be qualified and responsible for all acts of civil life, EXCEPT:

1. Contracting marriage shall require parental consent until the age of 21.2. Parents and guardians are still responsible for their children and wards below 21 years of

age mentioned in the second and third paragraphs of Article 2180 of the Civil Code.

Cuadra v. Monfort

Maria Teresa Cuadra, 12, and Maria Teresa Monfort, 13, were classmates in Grade 6. They were assigned to weedthe grass in the school premises. Monfort found a plastic headband and jokingly said aloud that she had found anearthworm. To frighten Cuadra, Monfort tossed the headband at her. The headband hit Cuadra in the eye.Cuadra rubbed the injured eye and treated it with some powder. The eye swelled the next day, and Cuadra wastaken to the doctor. She underwent surgical operation, but eventually, she lost sight in her right eye. Cuadra’sparents filed a civil suit against Monfort’s father for damages.

ISSUE: Whether Monfort’s father is liable for damages.

HELD: No.

Article 2176 provides for liability in case of fault or negligence. When the act or omission is that of one person forwhom another is responsible, the latter becomes himself liable under Article 2180. The basis of this vicariousliability is also fault or negligence, which is presumed from that which accompanied the causative act or omission.The presumption is merely prima facie and may therefore be rebutted.

In this case, there is nothing from which it may be inferred that Monfort’s father could have prevented the damageby the observance of due care, or that he was in any way remiss in the exercise of his parental authority in failingto foresee such damage, or the act which caused it. On the contrary, his child was at school, where it was hisduty to send her, and where she was, as he had the right to expect her to be, under the care and supervision ofthe teacher. And as far as the act which caused the injury was concerned, it was an innocent prank not unusualamong children at play and which no parent, however careful, would have any special reason to anticipate, much


less guard against. Nor did it reveal any mischievous propensity, or indeed any trait in the child’s character whichwould reflect unfavorably on her upbringing and for which the blame could be attributed to her parents.

Dissenting opinion, Barredo, J:

Monfort’s father should be liable. There was no evidence that he had properly advised his daughter to behaveproperly and not to play dangerous jokes on classmates and playmates.

Elcano v. Hill

Reginald Hill was a minor, married, and living with and dependent on his father Marvin. He killed Agapito Elcano,for which he was criminally prosecuted. He was acquitted on the ground of lack of intent to kill, coupled withmistake. The parents of Elcano filed an action for damages against Reginald and Marvin Hill. Defendants movedto dismiss on the grounds of res judicata and lack of cause of action against Marvin Hill. They claim that MarvinHill was relieved as guardian of Reginald through emancipation by marriage. Hence, the Elcanos could not claimdamages against Marvin Hill.

ISSUE: Whether Marvin Hill is liable for damages.

HELD: Yes.

While it is true that parental authority is terminated upon emancipation of the child, and under Article 397 of theCivil Code, emancipation takes place by the marriage of a minor child, it also clear that pursuant to Article 399,emancipation by marriage of the minor is not really full or absolute. The minor emancipated by marriage can sueand be sued in court only with the assistance of his father, mother, or guardian. Under Article 2180, the father,and in case of his death or incapacity, the mother, are responsible for the damages caused by the minor childrenwho live in their company. In this case, Reginald, although married, was living with his father and gettingsubsistence from him at the time of the occurrence in question.

The reason behind the joint and solidary liability of parents with their offending child under Article 2180 is that it isthe obligation of the parent to supervise their minor children in order to prevent them from causing damage tothird persons. On the other hand, the clear implication of Article 399, in providing that a minor emancipated bymarriage may not sue or be sued without the assistance of the parents is that such emancipation does not carrywith it freedom to enter into transactions or do any act that can give rise to judicial litigation. Surely, the killing ofa person invites judicial action. Hence, Article 2180 applies to Marvin Hill.

However, since Reginald is now of age, as a matter of equity, Marvin Hill’s liability has become merely subsidiaryto that of his son.

b. Owners and Managers of Enterprises

Heirs of Delos Santos v. CA

The M/V Mindoro owned by Compania Maritima was bound for New Washington, Aklan. In the wee hours of themorning, the vessel met typhoon “Welming” on the Sibuyan Sea, Aklan. The vessel sank, as a result of which,many of the passengers drowned. In a decision of the Board of Marine Inquiry, it was found that the captain andsome members of the crew were negligent in operating the vessel. The Board imposed upon them a penalty ofsuspension and/or revocation of their license. However, the decision could not be executed against the captainwho perished with the vessel.

The heirs of the passengers and some of the survivors filed an action for damages against Compania Maritima.The RTC and CA absolved Compania from liability. The CA found that that although there was concurringnegligence on the part of the captain, Compania cannot be held liable based on the principle of limited liability ofthe shipowner or ship agent under Article 587 of the Code of Commerce.

ISSUE: Whether Compania Maritima is liable for damages.

HELD: Yes.

There is no dispute as to the finding of the captain’s negligence. The controversy centers on the negligence ofCompania Maritimia and the application of Article 587 of the Code of Commerce. Article 587 provides:

Art. 587. The ship agent shall also be civilly liable for indemnities in favor of third persons whichmay arise from the conduct of the captain in the care of goods which he loaded on the vessel,but he may exempt himself therefrom by abandoning the vessel with all herequipments and the freight it may have earned during the voyage.


Under this provision, a shipowner or agent has the right of abandonment, and his liability is confined to that whichhe has a right to abandon – the vessel with all her equipments and the freight it may have earned during thevoyage. However, this article applies only where the fault or negligence is committed solely by the captain. Incases where the shipowner is likewise to be blamed, Article 587 does not apply. The situation will instead becovered by the provisions of the Civil Code on Common Carriers. Common carriers are tasked to observeextraordinary diligence in the vigilance over the goods and for the safety of its passengers. Whenever death orinjury to a passenger occurs, common carriers are presumed to have been at fault or to have acted negligentlyunless they prove that they observed extraordinary diligence.

In this case, Compania Maritima itself was negligent, as shown by the following:

1. The captain knew of the typhoon beforehand, so it can be presumed that Maritima also knew about thetyphoon advisories. In spite of the typhoon advisories, it allowed the ship to depart from Manila. In so doing,Maritima displayed lack of foresight and minimum concern for the safety of its passengers, taking into accountthe surrounding circumstances.

2. The CA held that the captain was negligent in overloading the ship. However, Maritima shared in thisnegligence. A closer supervision by Maritima could have prevented the overloading of the ship. Moreover,Maritima allowed the ship to leave Manila later than its schedule. If it had made the ship leave earlier, theencounter with the typhoon could have been avoided.

3. While the ship was seaworthy and had lifesaving equipment, Maritima failed to show evidence that it hadinstalled a radar which could have allowed the vessel to navigate safely for shelter during a storm.

Since the foregoing shows the lack of extraordinary diligence and the negligence of Maritima, it is liable fordamages.

St. Francis High School v. CA

Ferdinand Castillo was a freshman at St. Francis High School. He asked his parents for permission to go to apicnic at a beach organized by his teachers. His parents allowed him only to bring food to the picnic and to gostraight home after. However, he went and stayed at the picnic. While the students and teachers were in thewater, one of the female teachers appeared to be drowning. Ferdinand came to her rescue, but in the process, hehimself drowned. His parents filed an action for damages against the teachers, the school, and the owners of theschool.

ISSUE: Whether St. Francis High School and the teachers are liable for damages.

HELD: No. They are not liable because they were not guilty of any negligence.

St. Francis is not liable. Under Article 2180, before an employer may be held liable for the negligence of hisemployee, the act or omission which caused damage or prejudice must have occurred while an employee was inthe performance of his assigned tasks. In this case, the teachers were not in the actual performance of theirassigned tasks. The incident happened not within school premises, not on a school day, and while the teachersand students were holding a purely private affair. The picnic had not permit from the school principal; it wasneither a school-sanctioned activity nor an extra-curricular activity. Mere knowledge by the principal of the picnicdoes not show consent to the holding of the same. Therefore, Article 2180 is not applicable. To apply it wouldmake employers liable for acts or omissions of employees even if such were not committed by the employees inthe performance of their duties.

The teachers are not liable either. They did their best and exercised the diligence of a good father of a family toprevent any untoward incident or damages to the students who joined the picnic. In fact, the class adviser invitedtwo male teachers who were PE instructors and scout masters with knowledge of First Aid and swimming. Boththese teachers did all that was humanly possible to save the child by administering first aid upon him.

Dissenting opinion, Padilla, J.:

The school and the teachers are liable.

Though the teachers did exert every effort to resuscitate the child, there was negligence on their part becausethey failed to exercise diligent supervision over the children BEFORE the incident took place. They did not test thewaters to see the possible dangers of swimming in the beach. Moreover, the male teachers who were supposed toact as lifeguards were nowhere within the vicinity of the beach at the time the incident happened. They mighteven have been having a drinking spree as testified by one of the witnesses.

The school is liable for the negligence of the teachers under Article 2180. The excursion had the stamp ofauthority of the school by reason of the participation of several teachers. The principal not only knew of the


excursion but was even invited to attend. Having knowledge of the activity, he should have taken appropriatemeasures to ensure the safety of the students. His silence must be construed as implied consent to the activity.As administrative head of the school, the principal acted as agent of the school. Article 2180 paragraphs 1 and 5are applicable in this situation. No proof was presented by the owners of the school that they exercised the careand diligence of a good father of a family in the selection and/or supervision of the employees causing the injuryor damage. Hence, they should be accountable for the death of the student.

c. Employers

Franco v. IAC

Yulo was driving a Franco Bus when he swerved to the opposite lane to avoid colliding with a parked truck. TheFranco Bus took the lane of an incoming Isuzu Mini Bus driven by Lugue. The two vehicles collided, resulting inthe deaths of both drivers and two passengers of the Mini Bus.

The owner of the Isuzu Mini Bus, the wife of one of the passengers who died, and the wife of the driver of theMini Bus filed an action for damages against Mr. and Mrs. Franco, owners of the Franco Transportation Company.The spouses set up the defense that they exercised the diligence of a good father of a family in selecting andsupervising their employees, including the deceased driver. The RTC held that this defense of due diligence couldnot be invoked by the spouses since the case was one for criminal negligence punishable under Article 102 and103 of the Revised Penal Code and not from Article 2180 of the Civil Code. It held the spouses liable for damagesto the plaintiffs. The CA agreed with the lower court.

ISSUES:

1. Whether the action for damages was predicated upon crime or quasi delict and whether the defense ofdue diligence can be invoked by the spouses.

2. Whether the spouses are liable for damages.

HELD: The action is predicated upon quasi delict, not upon crime. Hence, the defense of due diligence can beinvoked by the defendants. However, in this case, the spouses were not able to prove such due diligence.Therefore, they are liable for damages under Article 2180 of the Civil Code.

1. Distinction should be made between the subsidiary liability of the employer under the RPC and theemployer’s primary liability under the Civil Code, which is quasi-delictual or tortious in character. Thefirst type of liability is governed by Articles 102 and 103 of the RPC, which provide that employers havesubsidiary civil liability in default of their employees who commit felonies in the discharge of their duties.The second kind is governed by Articles 2176, 2177, and 2180 of the Civil Code on the vicarious liabilityof employers for those damages caused by their employees acting within the scope of their assignedtasks. In this second kind, the employer’s liability ceases upon proof that he observed all the diligence ofa good father of a family to prevent damage. Under Article 103 of the RPC, the liability of the employeris subsidiary to the liability of the employee. Before the employer’s subsidiary liability may be proceededagainst, it is imperative that there should be a criminal action where the employee’s criminal negligenceare proved. Without such criminal action being instituted, the employer’s liability cannot be predicatedunder Article 103. In this case, there was no criminal action instituted because the driver who shouldstand as accused died in the accident. Therefore, there is no basis for the employer’s subsidiary liability,without the employee’s primary liability. It follows that the liability being sued upon is based not oncrime, but on culpa aquiliana, where the defense of the exercise of the diligence of a good father of afamily may be raised by the employer.

2. The employers are liable since they failed to prove that they exercised the diligence of a good father of afamily in selecting and/or supervising the driver. They admitted that the only kind of supervision given tothe drivers referred to the running time between the terminal points of the line. They only had twoinspectors whose duties were only ticket inspections. There is no evidence that they were really safetyinspectors.

Go v. IAC

Floverto Jazmin was a US citizen, residing in the Philippines at 34 Maravilla St. Mangatarem, Pangasinan. Heregularly received checks from the US government through the Mangatarem post office, which he encashed at thePrudential Bank branch in Pampanga.

In January 1975, he failed to receive one of the checks on time, prompting him to inquire from the post offices.The result of his inquiries were unsatisfactory, so he wrote the US Civil Service Commission, complaining aboutthe delay in receiving his check. He received a substitute check which he encashed.


Meanwhile, in April 1975, Agustin Go, in his capacity as branch manager of Solidbank (which later becameConsolidated Bank) in Baguio City, allowed a person named Floverto Jazmin to open a savings account bydepositing two US treasury checks for $1810 and $913.40 both payable to the order of Floverto Jasmin ofMaranilla St. Mangatarem, Pangasinan. The depositor indicated in his information sheet that he was FlovertoJazmin with home address at Maravilla St., Mangatarem, Pangasinan.

The checks were sent to the drawee bank for clearance. Solidbank did not receive any word from the draweebank after three weeks, so it allowed the depositor to withdraw the amount indicated in the checks. More than ayear later, the checks were returned to Solidbank with the notation that the amounts were altered. Go reportedthe matter to the Philippine Constabulary in Baguio. The real Jazmin was required to appear before the PCheadquarters in Benguet for investigation regarding the complain filed by Go against him for estafa. Eventuallythe investigators found that the person who made the deposit and withdrawal was an impostor.

Jazmin filed a complaint against Go and Consolidated Bank for moral and exemplary damages, alleging that hesuffered humiliation, embarrassment, and great inconvenience as a result of the negligence of Go.

ISSUE: Whether Go and Consolidated are liable to Jazmin for damages.

HELD: Yes, they are liable for nominal damages.

Go’s negligence was the root of all the inconvenience and embarrassment experienced by Jazmin. Go’s negligencein fact led to the swindling of his employer Consolidated. Had Go exercised the diligence expected of him as abank officer and employee, he would have noticed the glaring disparity between the payee’s name and address onthe treasury checks involved and the name and address of the depositor appearing in the bank records.Therefore, the bank, through its employees, was grossly negligence in handling the business transaction involved.This was the start of the consequent involvement of Jazmin, as his name was illegally used in the illicit transaction.As Go’s negligent was the root cause of the complained inconvenience, humiliation, and embarrassment, Go isliable to Jazmin for damages.

Consolidated is co-equally liable with Go for damages under the fifth paragraph of Article 2180 of the Civil Code,since it not only failed to show that it exercised due diligence to prevent damage but that it was not negligent inthe selection and supervision of its employees.

Castilex Industrial Corp. v. Vasquez Jr.

At around 2 am, Romeo Vasquez was driving a motorcycle around Fuente Osmena Rotunda. Benjamin Abad,manager of Castilex, was driving a pickup owned by Castilex. Instead of going around the Rotunda, he made ashort cut against the flow of traffic. In the process, he collided with the motorcycle driven by Vasquez. He rushedVasquez to the hospital, but the latter died later.

A criminal case was filed against Abad, but it was dismissed for failure to prosecute. The parents of Vasquez filedan action for damages against Abad and Castilex.

ISSUE: Whether Castilex is liable for damages.

HELD: No, Castilex is not liable for damages.

While Castilex presumes the negligence of Abad, it claims that it is not vicariously liable for the injuries andsubsequent death caused by Abad.

Under the fifth paragraph of Article 2180, an employer is liable for the torts committed by employees withinthe scope of his assigned tasks, whether or not the employer is engaged in any business or industry. To makethe employer liable under the fifth paragraph, the plaintiff must:

1. establish an employer-employee relationship; and2. show that the employee was acting within the scope of his assigned task when the tort complained of was

committed.

It is not incumbent upon the employer to prove that the employee was NOT acting within the scope of his duties.It is the obligation of the plaintiff to prove this averment.

Once the plaintiff has shown these, the presumption of negligence of the employer arises, and the employer mayinterpose the defense of the due diligence in the selection and supervision of the employee.

In this case, it is undisputed that Abad was a production manager of Castilex. The testimonies of the witnesses,including Abad, show that he did some overtime work at the office. Thereafter, he went to Goldie’s Restaurant inFuente Osmena, which is known to be a place where prostitutes, pimps, and drug addicts liked to hang out. At the


restaurant, Abad had some snacks and chatted with friends. It was when he left the restaurant that the incidenthappened. Parenthetically, there was a woman with him in the car who shouted “Daddy, Daddy!” but there wasno way that the woman could have been his daughter because he was only 29 years old.

Clearly, Abad was engaged in affairs of his own or was carrying out a personal purpose not in line with his dutiesat the time he figured in the accident. It was around 2 am, way beyond normal working hours. Abad’s workingday had ended, and his overtime work had already been completed. His being at a pimp-prosti-druggie haven hadno relation to the business of Castilex or to his duties as a manager. Rather, Abad was merely using his servicevehicle for personal purposes, which was merely a fringe benefit or perk attached to his position.

Since Abad was not acting within the scope of the functions entrusted to him when the accident happened,Casitlex had not duty to show that it exercised the diligence of a good father of a family in providing Abad with aservice vehicle. It has not vicarious liability for the consequences of the negligence of Abad in driving its vehicle.

Atty. Abaño – If the use of the vehicle inures to the benefit of the company, the employer may be held liablevicariously.

Victory Liner v. Heirs of Malecdan

Andres Malecdan was a 75 year-old farmer. While he was crossing a highway, a Dalin Liner bus stopped to allowhim and his carabao to pass. However, as Andres was crossing, a Victory Liner Bus, driven by Joson, bypassedthe Dalin bus and hit Andres and the carabao he was riding. Andres was thrown off the carabao, while the beasttoppled over. The Victory Liner bus sped past the old man, while the Dalin bus proceeded to its destinationwithout helping him. Andres was brought to the hospital, where he died a few hours later. The carabao also died.

A criminal complaint for reckless imprudence resulting in homicide and damage to property was filed againstJoson. Subsequently, the heirs of Malecdan brought a suit for damages against Joson and Victory Liner. The RTCheld that Joson was negligent in driving the bus, while Victory Liner was guilty of negligence in the selection andsupervision of Joson. Victory Liner appealed.

ISSUE: Whether Victory Liner is liable to the heirs of Malecdan.

HELD: Yes.

Under Article 2180, the responsibility of employers for the negligence of their employees in the performance oftheir duties is primary and, therefore, the injured party may recover from the employers directly, regardless of thesolvency of their employees. Employers may be relieved of responsibility for the negligent acts of their employeesacting within the scope of their assigned task only if they can show that they observed all the diligence of a goodfather of a family to prevent damage. They have the burden of proving that they exercised such diligence in theselection and supervision of the employee. In the selection of prospective employees, employers are required toexamine them as to their qualifications, experience and service records. With respect to the supervision ofemployees, employers must formulate standard operating procedures, monitor their implementation and imposedisciplinary measures for breaches thereof. These facts must be shown by concrete proof, including documentaryevidence.

In this case, Victory liner presented the results of Joson’s written examination, actual driving tests, x-rayexamination, psychological examination, NBI clearance, physical examination, hematology examination, urinalysis,student driver training, shop training, birth certificate, high school diploma, and reports from the GeneralMaintenance Manager and the Personnel Manager showing that he had passed all the tests and training sessionsand was ready to work as a professional driver. However, Victory Liner did not present proof that Joson had nineyears of driving experience. There is also no record that Joson ever attended the seminars on driving safety givenby the company to its drivers at least twice a year. Victory Liner also failed to establish the speed of its busesduring its daily trips or to submit in evidence the trip tickets, speed meters, and reports of filed inspectors. Thefinding of the trial court that the Victory Liner bus was running at a very fast speed when it overtook the Dalin busand hit the deceased was not disputed. For these reasons, Victory Liner should be considered as negligent in thesupervision of Joson.

d. State

General Rule: The State cannot be sued without its consent

Exceptions:

1. When the state is performing a proprietary function2. When the state enters into a contract with a private person3. Under Article 2180 – when it acts through a special agent


Fontanilla v. Maliaman

A pick-up owned by the National Irrigation Administration driven officially by Hugo Garcia, an employee of the NIAas its regular driver, bumped a bicycle ridden by Francisco Fontanilla and Restituto Deligo. As a result, Fontanillaand Deligo were injured and brought to the hospital. Fontanilla died.

The parents of Fontanilla filed an action for damages against the NIA in connection with the death of their son.

ISSUE: Whether the NIA is liable for damages.

HELD: Yes, the NIA is liable.

The liability of the State has two aspects, namely:

1. its public or governmental aspects where it is liable for the tortious acts of special agents only; and2. its private or business aspects (as when it engages in private enterprises) where it becomes liable as an

ordinary employer.

Under paragraph 6 of Article 2180, the State assumes liability for acts done through special agents. The state’sagent, if a public official, must not only be specially commissioned to do a particular task, but such task must beforeign to said official’s usual governmental functions. If the state’s agent is not a public official, and iscommissioned to perform non-governmental functions, then the state assumes the role of an ordinary employerand will be held liable as such for its agent’s tort. When the government commissions a private individual for aspecial government task, it is acting through a special agent within the meaning of the provision.

When the state is performing governmental functions, it is immune from tort liability. When the state performs aservice which might as well be provided by a private corporation, and when it collects revenues therefrom, thestate is performing a proprietary function. It is in this instance where there may be liability for the torts of agentswithin the scope of their employment.

The NIA is an agency of the government exercising proprietary functions. Therefore, it may be liable for damagescaused by accidents resulting from the tortious acts of its employees. It assumes responsibility as an ordinaryemployer and as such, it becomes answerable for damages, if it fails to prove that it observed due diligence in theselection and supervision of its employees.

In this case, the victim was thrown 50 meters away from the point of impact. The pick-up suffered substantialdamage, but the people on board did not even bother to stop to find out what they had bumped. There are thusstrong indications that the driver Garcia was driving at a high speed. Evidently, there was negligence in thesupervision of the driver for the reason that they were traveling at a high speed within city limits and yet thesupervisor of the group failed to caution and make the driver observe the proper speed limit. The negligence isfurther aggravated by their desire to reach their destination without even checking whether or not the vehiclesuffered damage from the object it bumped, thus showing imprudence on the part both of the driver and thesupervisor of the group. Even if the employer can prove the diligence in the selection and supervision of theemployee, if he ratifies the wrongful acts or takes no step to avert further damage, the employer is still liable.

e. Teachers/heads of establishments

Amadora v. CA

Alfredo Amadora was a student of the Colegio de San Jose Recoletos. While in the auditorium, he was shot todeath by his classmate Pablito Daffon. Daffon was convicted of homicide through reckless imprudence. Theparents of Amadora filed an action for damages under Article 2180 of the Civil Code against Colegio de SanRecoletos, its rector, the high school principal, the dean of boys, and the physics teacher, together with Daffonand two other students, through their parents. The complaint against the students was later dropped.

Amadora’s parents contend that their son was in school to finish his physics experiment; hence, he was then underthe custody of the school. The school, on the other hand, claims that Amadora had gone to school only for thepurpose of submitting his physics report and that he was no longer in their custody because the semester hadalready ended.

ISSUE: Whether private respondents are liable to Amadora’s parents.

HELD: No.


Article 2180 should apply to all schools, academic as well as non-academic. Where the school is academic ratherthan technical or vocational in nature, responsibility for the tort committed by the student will attach to theteacher in charge of such student, following the first part of the provision. This is the general rule. In the case ofestablishments of arts and trades, it is the head thereof, and only he, who shall be held liable as an exception tothe general rule.

The student is deemed in the custody of the school authorities as long as he is under the control and influence ofthe school and within its premises, whether the semester has not yet begun or has already ended. During all theseoccasions, it is the teacher-in-charge who must answer for his students' torts. He is the one designated by thedean, principal, or other administrative superior to exercise supervision over the pupils in the specific classes orsections to which they are assigned. It should be noted that the liability imposed by this article is supposed to falldirectly on the teacher or the head of the school of arts and trades and not on the school itself. If at all, theschool, whatever its nature, may be held to answer for the acts of its teachers or even of the head thereof underthe general principle of respondeat superior, but then it may exculpate itself from liability by proof that it hadexercised the diligence of a bonus paterfamilias.

Such defense is, of course, also available to the teacher or the head of the school of arts and trades directly heldto answer for the tort committed by the student. As long as the defendant can show that he had taken thenecessary precautions to prevent the injury complained of, he can exonerate himself from the liability imposed byArticle 2180. It should also be noted that the teacher is held answerable by the law for the act of the studentunder him regardless of the student's age.

In this case, the rector, the high school principal and the dean of boys cannot be held liable because none of themwas the teacher-in-charge as previously defined. Each of them was exercising only a general authority over thestudent body and not the direct control and influence exerted by the teacher placed in charge of particular classesor sections and thus immediately involved in its discipline. The evidence of the parties does not disclose who theteacher-in-charge of the offending student was. The mere fact that Alfredo Amadora had gone to school that dayin connection with his physics report did not necessarily make the physics teacher, respondent Celestino Dicon,the teacher-in charge of Alfredo's killer.

At any rate, assuming that he was the teacher-in-charge, there is no showing that Dicon was negligent inenforcing discipline upon Daffon or that he had waived observance of the rules and regulations of the school orcondoned their nonobservance. His absence when the tragedy happened cannot be considered against himbecause he was not supposed or required to report to school on that day. And while it is true that the offendingstudent was still in the custody of the teacher-in-charge even if the latter was physically absent when the tort wascommitted, it has not been established that it was caused by his laxness in enforcing discipline upon the student.On the contrary, the private respondents have proved that they had exercised due diligence, through theenforcement of the school regulations, in maintaining that discipline. The Colegio de San JoseRecoletos cannot beheld directly liable under the article because only the teacher or the head of the school of arts and trades is maderesponsible for the damage caused by the student or apprentice. Salvosa v. IAC

The Baguio Colleges Foundation was an academic institution and also an institution of arts and trade. It had anROTC Unit. Jimmy Abon, the appointed armorer of the ROTC unit was a commerce student of the BCF. Abon shotNapoleon Castro, a student of the University of Baguio in the parking lot of BCF with an unlicensed firearm takenfrom the armory of the ROTC Unity of the BCF. Castro died, and Abon was prosecuted for and convicted ofhomicide. The heirs of Castro sued for damages, impleading Abon, the ROTC Commandant, the officers of BCF,the Dean of BCF and BCF itself. The RTC found them all solidarily liable for damages. Salvosa, President of BCF,and BCF appealed.

ISSUE: Whether Salvosa and BCF are liable for damages.

HELD: No. Considering that the shooting happened after classes, at around 8 pm, Abon cannot be considered tohave been "at attendance in the school," or in the custody of BCF, when he shot Napoleon Castro. Therefore,Salvosa and BCF cannot be held solidarily liable with Abon for damages under Article 2180. Besides, the recordshows that before the shooting incident, Roberto B. Ungos ROTC Unit Commandant, AFP, had instructed Abon "notto leave the office and [to keep the armory] well guarded." Apart from negating a finding that Jimmy B. Abon wasunder the custody of the school when he committed the act for which the petitioners are sought to be held liable,this circumstance shows that Abon was supposed to be working in the armory with definite instructions from hissuperior, the ROTC Commandant, when he shot Napoleon Castro.

PSBA v. CA

Carlitos Bautista was a third year commerce student at PSBA. He was stabbed to death inside the schoolpremised by elements from outside the school. Bautista’s parents filed an action for damages against PSBA and


its corporate officers on the ground that they were guilty of negligence, recklessness, and lack of securityprecautions, means and methods before, during and after the attack on the victim.

Defendants sought to have the suit dismissed, alleging that since they are presumable sued under Article 2180 ofthe Civil Code, the complaint states no cause of action against them, as jurisprudence on the subject is to theaffect that academic institutions such as PSBA are beyond the ambit of that rule.

ISSUE: Whether the parents of Bautista have a cause of action against PSBA under Article 2180 of the Civil Code.

HELD: No, but they may have a cause of action based on breach of contract.

Article 2180, in conjunction with Article 2176, establishes the rule of in loco parentis. It provides that damageshould have been caused or inflicted by pupils or students of the educational institution sought to be held liable forthe acts of its pupils or students while in its custody. However, this situation does not exist in this case, since theassailants of Bautista were not students of the PSBA for whose acts the school could be made liable.

This does not necessarily mean the PSBA is exempt from liability. When an academic institution accepts studentsfor enrollment, there is established a contract between them, resulting in bilateral obligations which both partiesare bound to comply with. One of these obligations is that the school must ensure that adequate steps are takento maintain peace and order within the campus premises and to prevent the breakdown thereof. To avoid liability,the school must prove that the breach of this contractual obligation to the students was not due to its negligence.

Since there has been no trial on the merits, the RTC is ordered to continue proceedings to determine whetherPSBA was guilty of the contractual breach.

2.Primary Liability

a. Possessors/Users of Animals

Art. 2183. The possessor of an animal or whoever may make use of the same is responsible for thedamage which it may cause, although it may escape or be lost. This responsibility shall cease only incase the damage should come from force majeure or from the fault of the person who has suffereddamage.

Damage caused by: an animal

Person primarily liable:a. the possessor of an animal; orb. whoever may make use of the same

Defenses:a. that the damage was caused by force majeureb. that the damage was caused through the fault of the person who suffered damage

Vestil v. IAC

Three year-old Theness Tan Uy was bitten by a dog named “Andoy” while she was playing with a child of theVestils in the house of the late Vicente Miranda, father of Purita Vestil. Theness was rushed to the hospital whereshe was treated for multiple lacerated wounds on the forehead and was given an anti-rabies shot. She wasdischarged after nine days but was re-admitted a week later. She died the following day, due to broncho-pneumonia. Seven months later, the Uys sued the Vestils for damages, alleging that the Vestils were liable tothem as the possessors of Andoy. The Vestils denied liability, claiming that the dog belonged to the deceasedVicente Miranda. Purita Vestil insisted that she was not liable since she was not the owner of the house or of thedog, as his estate had not yet been partitioned.

ISSUE: Whether the Vestils are liable for damages.

HELD: Yes, the Vestils are liable for damages.

Ownership of the house or of the dog is immaterial in this case. What must be determined is the possession of thedog, since Article 2183 holds liable the possessor of the animal that causes damage. In this case, Purita Vestil andher husband were the possessors of the house at the time when the incident happened. Meanwhile, the dogstayed in the house and even remained there after the death of Vicente Miranda, up to the time when it bitTheness. Hence, the Vestils are deemed in possession of the dog and are liable for the damages that it caused.

The Vestils raised the defense that, assuming that they were in possession of the dog, they were still not liablebecause there was no causal connection between the broncho-pneumonia that caused the death of Theness and


the dog bite. Moreover, they argued that the dog was tame and was provoked by Theness into biting. The courtrejected these defenses. It held that the broncho-pneumonia suffered by Theness was a complication of rabies.The Vestil’s contention that they could not be expected to exercise remote control of the dog was also foundunacceptable. Article 2183 holds the possessor liable even if the animal should escape or be lost and so beremoved from his control. It does not matter either that the dog was tame and was merely provoked by the childinto biting her. The law does not speak only of vicious animals but covers even tame ones as long as they causeinjury. As for the alleged provocation, Theness was only three years old at that time and cannot be faulted forwhatever she might have done to the animal.

b. Owners of Motor Vehicles

Art. 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, whowas in the vehicle, could have, by the use of the due diligence, prevented the misfortune. It isdisputably presumed that a driver was negligent, if he had been found guilty of reckless driving orviolating traffic regulations at least twice within the next preceding two months.

If the owner was not in the motor vehicle, the provisions of Article 2180 are applicable.

Damage caused by: driver of a motor vehicle

Person solidarily liable: owner of the motor vehicle

Requisites of solidary liability of the owner:

1. owner is in the vehicle at the time of the mishap2. the owner could have prevented the misfortune by the use of due diligence

Disputable presumption of negligence of driver: If driver had been found guilty of reckless driving orviolating traffic regulations at least twice within the next preceding two months.

Manlangit v. Urgel

Reynato Manlangit owned a passenger jeepney. While he was on board the jeepney with some other passengers,the driver of the jeepney, Edgardo Castillo, occupied the wrong line while passing a blind curve. At the curve,they suddenly saw a parked truck. By then, it was too late to avoid collision with the truck. The jeepney swervedto the right. Manlangit and Castillo managed to jump off the jeepney before it plunged into a river. Thepassengers were not as lucky. They sustained injuries and were brought to the nearest hospital for treatment.

A criminal complaint for serious physical injuries through reckless imprudence was filed with the sala of JudgeUrgel against both the driver Castillo and the owner Manlangit. The judge issued a warrant for the arrest of both.Manlangit filed a motion to drop him from the criminal complaint and to quash the warrant. The judge ruledfavorably and dropped him from the complaint. Manlangit then filed this administrative complaint against JudgeUrgel for gross ignorance of the law in issuing a warrant for his arrest.

ISSUE: Whether Judge Urgel is guilty of gross ignorance of the law in issuing a warrant for the arrest of the ownerof the jeepney.

HELD: Yes. It is a basic postulate in criminal law that the criminal act of one person cannot be charged to anotherwithout a showing that the other participated directly or constructively in the act or that the act was done infurtherance of a common design or purpose for which the parties were united in intention. In cases of employer-employee relations, an employer is not criminally liable for the criminal acts of his employee or agent unless he, insome way, participates in, counsels or abets his employee’s acts or omissions. In such case, the employer himselfbecomes a participant to the criminal act of his employee. His liability under the circumstances is direct andcriminal. However, under Article 102, in relation to Article 103 of the RPC, the employer liability for the criminalnegligence of his employee is subsidiary in nature and is limited only to civil indemnity. Thus, an employer isparty to a criminal case for the criminal negligence of his employee only by reason of his subsidiary civil liabilityunder the law.

In this case, nowhere is it shown that Manlangit abetted or even approved the negligent and reckless manner inwhich the driver maneuvered the vehicle on that blind curve. Moreover, it does not appear that the drivercontinuously pursued a reckless and thoughtless control of the wheel throughout the journey, without anyadmonition or reproof on the part of Manlangit. It is evident that the driver’s decision to go on the wrong lanewhile approaching a blind curve was a split second judgment which left neither Manlangit nor the other passengerstime to react to the perilous maneuver.


c. Manufacturers and Processors

Art. 2187. Manufacturers and processors of foodstuffs, drinks, toilet articles and similar goods shallbe liable for death or injuries caused by any noxious or harmful substances used, although nocontractual relation exists between them and the consumers.

RA 7394: The Consumer Act of the Philippines

The manufacturer, importer, and seller can be held liable for actual injury or damage incurred

Prescriptive period is 2 years.

Problem: A father buys ice cream for his children from a supermarket. The kids eat ice cream. The ice cream hasshards of glass. One of the children swallows the glass and wounds his throat. How can the father prove liability?

Answer: Present the following evidence:

a. Testimonial – the father, the kids, the doctor

b. Documentary – doctor’s bills, x-ray, receipt from the store (the receipt is the best evidence ofthe sale; need to prove the purchase and connect the seller to the injury)

c. Real – the shard of glass taken from the throat of the child, the container of the ice cream

d. Municipal Corporations

Art. 2189. Provinces, cities and municipalities shall be liable for damages for the death of, or injuriessuffered by, any person by reason of the defective condition of roads, streets, bridges, publicbuildings, and other public works under their control or supervision.

Damage caused by: defective condition of roads, streets, bridges, public buildings, and other public works

Primarily liable: Provinces, cities, municipalities

Condition: the road, street, bridge, public building, or other public work must be under the control or supervisionof the province, city, or municipality in question

Defense: Due diligence

Note: Municipal corporations are liable only for damages for the death of or injuries suffered by persons and notfor damage to property.

Guilatco v. City of Dagupan

Florentina Guilatco was about to board a tricycle at a sidewalk located at Perez Blvd. (a national road) when sheaccidentally fell into an open manhole. Her right leg was fractured, resulting in her hospitalization and continuingdifficulty in locomotion. Because of her accident, Guilatco was unable to go to work, thereby losing her income.She also lost weight, and she is now no longer her former jovial self since she is unable to perform her religious,social, and other activities. She filed an action for damages against the City of Dagupan.

The City of Dagupan denied liability on the ground that the manhole was located on a national road, which was notunder the control or supervision of the City of Dagupan.

ISSUE: Whether the City of Dagupan is liable to Guilatco.

HELD: Yes, the City of Dagupan is liable. For Article 2189 to apply, it is not necessary for the defective road orstreet to belong to the province, city or municipality. The article only requires that either control or supervision isexercised over the defective road or street.

In this case, this control or supervision is provided for in the charter of Dagupan and is exercised through the CityEngineer, whose duties include the care and custody of the public system of waterworks and sewers. The charterof Dagupan provides that the laying out, construction, and improvement of streets, avenues, and alleys andsidewalks and the regulation of the use thereof may be legislated by the Municipal Board. Thus, the charterclearly indicates that the city indeed has supervision and control over the sidewalk where the open drainage holeis located.


The express provision in the charter holding the city not liable for damages or injuries sustained by persons orproperty due to the failure of any city officer to enforce the provisions of the charter cannot be used to exempt thecity. The charter only lays down the general rules regulating the liability of the city. On the other hand, Article2189 applies in particular to the liability arising from defective streets, public buildings, and other public works.

e. Building Proprietors

Art. 2190. The proprietor of a building or structure is responsible for the damages resulting from itstotal or partial collapse, if it should be due to the lack of necessary repairs.

Art. 2191. Proprietors shall also be responsible for damages caused: (ESTE)

(1) By the explosion of machinery which has not been taken care of with due diligence, and theinflammation of explosive substances which have not been kept in a safe and adequate place;

(2) By excessive smoke, which may be harmful to persons or property;

(3) By the falling of trees situated at or near highways or lanes, if not caused by force majeure;

(4) By emanations from tubes, canals, sewers or deposits of infectious matter, constructed withoutprecautions suitable to the place.

Art. 2193. The head of a family that lives in a building or a part thereof, is responsible for damagescaused by things thrown or falling from the same.

Gotesco v. Chatto

Gloria Chatto and her 15 year-old daughter Lina went to see the movie “Mother Dear” at Superama I theaterowned by the Gotesco Investment Corporation. Hardly ten minutes after the two entered the theater, the ceilingof its balcony collapsed. The theater was plunged into darkness and pandemonium ensued. Gloria and Lina wereable to crawl under the fallen ceiling and out of the theater. They were later confined and treated for the injuriesthat they suffered. Due to continuing pain in the neck, headache, and dizziness, Gloria Chatto went to Illinois,USA for further treatment. She stayed in the US for about 3 months during which she had to go to the hospital 5or 6 times.

Gloria and Lina Chatto filed an action for damages against Gotesco. Gotesco denied liability on the ground thatthe collapse of the ceiling of its theater was due to force majeure.

ISSUE: Whether Gotesco is liable for damages.

HELD: Yes. Having interposed force majeure as a defense, Gotesco had the burden to prove that the collapse wasindeed caused by force majeure. However, Gotesco’s claim that the collapse of the ceiling was due to forcemajeure is not founded on facts. Its witness, Jesus Lim Ong, who was supposedly the architect of the building,admitted that he could not give any reason why the ceiling collapsed. That Mr. Ong could not offer anyexplanation does not imply force majeure. Force majeure is an inevitable accident produced by any physical causewhich is irresistible, such as lightning, tempest, perils of the sea, inundation, or earthquake. Gotesco could haveeasily discovered the cause of the collapse if indeed it were due to force majeure. It appears that the real reasonwhy Mr. Ong could not explain the reason for the collapse is that either he did not actually conduct theinvestigation or that he is incompetent. On the other hand, the trial court found that the collapse was due toconstruction defects. There was no evidence offered to overturn this finding. The building was constructed barely4 years prior to the accident. It was not shown that any of the causes denominated as force majeure obtainedimmediately before or at the time of the collapse of the ceiling. Such defects could have been easily discoveredhad Gotesco exercised due diligence and care in keeping and maintaining the premises.

It is settled that the owner or proprietor of a place of public amusement impliedly warrants that the premises,appliances, and amusement devices are safe for the purpose for which they are designed. Where a patron of atheater or other place of public amusement is injured, and the thing that caused the injury is wholly andexclusively under the control and management of the defendant, and the accident is such as in the ordinary courseof events would not have happened if proper care had been exercised, its occurrence raises a presumption or


permits of an inference of negligence on the part of the defendant. That presumption or inference was notovercome by Gotesco.

And even assuming that the collapse was due to force majeure, Gotesco still cannot escape liability since the trialcourt found that it was grossly negligent.

f. Engineers/Architects/Contractors

Art. 2192. If damage referred to in the two preceding articles should be the result of any defect inthe construction mentioned in Article 1723, the third person suffering damages may proceed onlyagainst the engineer or architect or contractor in accordance with said article, within the periodtherein fixed.

Art. 1723. The engineer or architect who drew up the plans and specifications for a building is liablefor damages if within fifteen years from the completion of the structure, the same should collapse byreason of a defect in those plans and specifications, or due to the defects in the ground. Thecontractor is likewise responsible for the damages if the edifice falls, within the same period, onaccount of defects in the construction or the use of materials of inferior quality furnished by him, ordue to any violation of the terms of the contract. If the engineer or architect supervises theconstruction, he shall be solidarily liable with the contractor.

Acceptance of the building, after completion, does not imply waiver of any of the cause of action byreason of any defect mentioned in the preceding paragraph.

The action must be brought within ten years following the collapse of the building.

OWNER/PROPRIETOR ARCHITECT/ENGINEER

CONTRACTOR

TIME OF COLLAPSE Anytime Within 15 years aftercompletion

Within 15 years aftercompletion

CAUSE OF COLLAPSE Lack of necessary repairs Defects in theplans/specifications

Defects in the ground

Inferior materialsfurnished by him

Violation of the contractPRESCRIPTIVE

PERIOD4 years 10 years 10 years

Nakpil & Sons v. CA

The Philippine Bar Association (PBA) decided to construct an office building in Intramuros. For the plans,specifications and design, PBA contracted the services of the Juan Nakpil & Sons and Juan F. Nakpil (NAKPILS).For the construction of the building, PBA contracted the services of United Construction Company on anadministration basis. The building was completed in 1966.

In 1968, an unusually strong earthquake hit Manila, and the building sustained major damage. The front columnsof the building buckled, causing the building to tilt forward dangerously. As a temporary measure, the buildingwas shored up by United.

The PBA filed an action against United and its President and General Manager Juan Carlos, claiming that thecollapse of the building was caused by defects in construction. United, in turn, filed a third-party complaintagainst the Nakpils, alleging that the collapse of the building was due to the defects in the architects’ plans,specifications, and design.

ISSUE: Whether United or the Nakpils or both are liable for damages to the PBA.

HELD: Both the Nakpils and United are liable for the damage. While the damage sustained by the PBA buildingwas caused directly by the earthquake, they were also caused by the defects in the plans and specificationsprepared by the Nakpils and United’s deviation from said plans and specifications and its failure to observe therequisite workmanship in the construction of the building. Such wanton negligence of both United and the Nakpilsin effecting the plans, designs, specifications, and construction of the PBA building is equivalent to bad faith in theperformance of their respective tasks.


United argues that it is the legal duty of the PBA to provide full-time and active supervision in the construction ofthe building. This claim has no legal or contractual basis. The ordinary practice is for the owner of a building toavail himself of the services of architects and engineers whose training and expertise make them more qualified toprovide effective supervision of the construction.

EPG Construction v. CA

EPG Construction and the University of the Philippines entered into a contract for the construction of the UP LawLibrary Building. The agreement contained a guarantee whereby EPG undertook to repair any defective work at isown cost and expenses for a period of 1 year from the date of substantial completion and acceptance of the workby UP. On Jan. 13, 1983, the building was formally turned over by EPG to UP, which issued a certification ofacceptance indicating that the building was completed without any defects whatsoever. In July 1983, UPcomplained to EPG that 6 air-conditioning units were not working properly. EPG agreed to shoulder the expensesfor the repair in the amount of 38K. However, the repair was never undertaken. After demands made by UP forEPG to repair the units were unanswered, UP contracted with another company, which repaired the defects for190K. UP then demanded reimbursement of the 190K plus damages from EPG. EPG denied liability and arguedthat UP was estopped from invoking the guarantee provision because it issued the certificate of acceptance.

ISSUE: Whether EPG is liable to UP.

HELD: Yes, EPG is liable to UP.

There is no merit in the argument that UP waived its right to invoke the guarantee by issuing the certification ofacceptance. All UP certified to was that the building was in good condition at the time it was turned over. It didnot thereby relieve the petitioner of liability for any defect that might arise of be discovered later during the one-year period of the guarantee. Moreover, acceptance of the work by the employer generally relieves the contractorof liability except if the defect is hidden or if the employer expressly reserves his rights against the contractor byreason of the defect. In this case, the defects complained against were hidden and there was an expressreservation by UP of its right to hold the contractor liable for the defects during a period of one year. Therefore,mere acceptance of the work by UP did not relieve EPG of liability.

EPG’s contention that the defects were caused by force majeure as a result of the frequent brownouts in MetroManila is not meritorious. The recurrent power cut-offs cannot be classified as a fortuitous event. The real causeof the problem was poor workmanship.

Therefore, EPG is liable to UP. However, the lower court erred in holding Emmanuel de Guzman, its President,solidarily liable with EPG. De Guzman cannot be held solidarily liable since he acted on behalf of EPG within thescope of his authority and without any malice or bad faith.

g. Solidary Liability

Art. 2194. The responsibility of two or more persons who are liable for quasi-delict is solidary.

Vicarious v. Solidary Liability

The party vicariously liable can get reimbursement for 100% of what he paid from the party who caused damage.

The party solidarily liable can be reimbursed only for that portion pertaining to the other party liable.

Cruz v. NLRC [not assigned but discussed]

In labor recruitment cases, if the OCW suffers damage, both the foreign employer and the local recruiter aresolidarily liable.

Singapore Airlines v. CA

Sancho Rayos was an OCW who had a contract with Arabian American Oil Company (ARAMCO). As part ofARAMCO’s policy, its employees returning to Saudi from Manila were allowed to claim reimbursement for amountspaid for excess baggage up to 50Kg as long as supported by receipt. Rayos took a Singapore Airlines (SLA) flightto Saudi with a 50Kg excess baggage for which he paid about 4K. ARAMCO reimbursed the amount uponpresentation of the excess baggage ticket.

Later, Rayos learned that he was being investigated by ARAMCO for fraudulent claims. He asked his wife in Manilato obtain a written confirmation from SLA the he paid an excess baggage of 50Kg. SLA’s manager notified thewife of its inability to issue the certification because the records showed that only 3Kg were entered and charged


as excess baggage. SLA issued the certification four months later, after the wife threatened it with a lawsuit.When the year ended, Rayos’ contract with ARAMCO was not renewed.

Convinced that SLA was responsible for the non-renewal of the contract, the spouses Rayos filed an action fordamages against SLA. SLA filed a third-party complaint against its handling agent PAL, claiming that thetampering was committed not by SLA but by PAL. PAL denied any participation in the tampering and attributed itto the SLA personnel. The lower court held SLA liable to the spouses for damages and ordered PAL as third partydefendant to pay SLA whatever it will pay the Rayos spouses.

ISSUE: Whether SLA is entitled to reimbursement from PAL.

HELD: SLA is entitled to reimbursement from PAL, but only to the extent of one-half (½) of the amount that itpaid to the Rayos spouses.

PAL cannot be held solely liable for the satisfaction of the entire judgment. While the proximate cause of the non-renewal of Rayos’ employment contract was the tampering of his excess baggage ticket by PAL’s personnel, theimmediate cause of such non-renewal was SLA’s delayed transmittal of the certification needed by Rayos to provehis innocence to his employer. Thus, the non-renewal of Rayos’ employment contract was the natural andprobable consequence of the separate tortious acts of SLA and PAL. Under Article 2176, Rayos is entitled tocompensation for such damages. Inasmuch as the responsibility of two or more persons, or tort-feasors, liable fora quasi-delict is joint and several and the sharing as between such solidary debtors is pro-rata, it is but logical,fair, and equitable to require PAL to contribute to the amount awarded to the Rayos spouses already paid by SIA,instead of totally indemnifying the latter.

De Guzman v. NLRC

De Guzman was the general manager of the Manila Office of Affiliated Machineries Agency Ltd. (AMAL) and amongthe respondents in a complaint for illegal dismissal and non-payment of statutory benefits filed by formeremployees of AMAL. The employees filed the complaint following AMAL’s refusal to pay their monetary claimsafter AMAL decided to cease its operations in 1986. De Guzman was impleaded for allegedly selling part of AMAL’sassets and applying the proceeds to satisfy his own claims against the company. He also formed a new companynamed Susarco and engaged in the same line of business with the former clients of AMAL.

ISSUE: Whether De Guzman is liable for damages to the employees.

HELD: Yes, De Guzman is liable for damages to the employees arising from his bad faith. However, he is notsolidarily liable for the claims for the claims of the employees against AMAL.

De Guzman is not solidarily liable with AMAL for the employees’ claims. As mere managerial employee, DeGuzman had no participation in the decision to cease operations and to terminate the services of the employees,which was the exclusive responsibility of AMAL alone. Nevertheless, for having acted in bad faith by appropriatingthe assets of AMAL to satisfy his own claims to the prejudice of the employees’ pending claims, De Guzman isdirectly liable for moral and exemplary damages based on Articles 19, 21, 2219 (10) and 2229 of the Civil Code.

GSIS v. CA

The National Food Authority (NFA) was the owner of a Chevrolet truck which was insured against liabilities fordeath or and injuries to third parties with the GSIS.

The truck which was driven by Corbeta collided with a Toyota Tamaraw owned by Uy, killing 5 and injuring 10persons, who were all passengers of the Tamaraw.

Uy filed a case for quasi-delict, damages, and attorney’s fees against NFA and Corbeta.

An injured passenger filed an action for damages against Uy and his insurer Mabuhay Insurance and Guaranty Co(MIGC). Uy filed a cross-claim against MIGC and a third-party complaint against Corbeta and NFA.

The other injured passengers filed an action against the following: NFA and Corbeta for damages due to quasi-delict; GSIS as insurer of the truck; Uy for breach of contract of carriage; and MIGC as insurer of the ToyotaTamaraw.

At the trial, it was found that the proximate cause of the collision was the negligence of Corbeta. The findings ofthe trial court stated that the truck was speeding and was in the wrong lane at the time of the collision. The trialcourt dismissed the complaint against Uy. It ordered MIGC, Corbeta, NFA, and GSIS to jointly and severally paydamages to the victims of the collision.

ISSUE: Whether GSIS is solidarily liable with NFA.


HELD: GSIS is directly liable to the victims but only up to the extent of what is provided in the contract ofinsurance with NFA. It is NOT solidarily liable with NFA.

It is now established that the injured or the heirs of a deceased victim of a vehicular accident may sue directly theinsurer of the vehicle. However, the third party liability of the insurer is only up to the extent of the insurancepolicy and those required by law. While it is true that where the insurance contract provides for indemnity againstliability to third persons, and such third persons can directly sue the insurer, the direct liability of the insurer underindemnity contracts against third party liability does not mean that the insurer can be held liable in solidum withthe insured and/or the other parties found at fault. This because the liability of the insurer is based on contract;that of the insured carrier or vehicle owner is based on tort. The liability of GSIS based on the insurance contractis direct, but not solidary with that of the NFA. The latter’s liability is based separately on Article 2180 of the CivilCode.

In this case, the Compulsory Motor Vehicle Liability Insurance coverage provided that the maximum indemnity fordeath was 12K per victim. Hence, the heirs of the victims who dies in the incident could proceed against GSIS forthe indemnity of 12K for each dead victim, and against NFA and Corbeta for any other damages or expensesclaimed; or against NFA and Corbeta to pay them all their claims in full. The other injured victims may also claimtheir medical expenses from any of the following: GSIS, NFA, or Corbeta. As to damages exceeding that allowedunder the insurance, they may proceed only against NFA or Corbeta.


V. Special Torts (Human Relations)

1. Abuse of Right

Art. 19. Every person must, in the exercise of his rights and in the performance of hisduties, act with justice, give everyone his due, and observe honesty and good faith.

Velayo v. Shell Co.

Shell was one of the creditors of CALI. CALI became insolvent and called all of its creditors, includingShell, to a meeting. CALI told the creditors that it was broke but that it had an airplane in the US,which it was planning to sell to PAL so that it could raise more money to pay its debts. On the sameday, acting upon the knowledge of (1) the insolvency of CALI, and (2) the existence of the plane, Shellassigned its credit to Shell USA. Shell USA then sued CALI in a California court and attached the planeas security. Thus, the plane was placed beyond the reach of CALI and the other creditors. Theassignee in insolvency of CALI filed an action against Shell for damages for taking advantage of theinformation that it acquired to the prejudice of CALI and the other creditors. ISSUE: Whether Shell is liable for damages.

HELD: Shell is liable for damages.

Shell took advantage of its knowledge that insolvency proceedings were to be instituted by CALI if thecreditors did not come to an understanding as to the distribution of the insolvent’s assets amongthem. Believing that it was improbable for the creditors to arrive at such an understanding, itschemed and effected the transfer of credit to its sister corporation in the US, thereby disposing ofCALI’s plane and depriving CALI of the opportunity to recover it. It is liable for damages under Article19 of the Civil Code, which provides that any person must, in the exercise of his rights and in theperformances of his duties, act with justice, give everyone his due and observe honesty and goodfaith. This is implemented by Article 21 which prescribes that any person who wilfully causes loss orinjury to another in a manner that is contrary to morals, good customs or public policy shallcompensate the latter for the damage.

De Guzman v. NLRC

The employees of AMAL filed a case against AMAL for illegal dismissal and non-payment of benefits.AMAL refused to pay and later on ceased operations. The employees impleaded De Guzman, thegeneral manager of AMAL, in the case because he sold part of AMAL’s assets and applied the proceedsof the sale to satisfy his own claims against the company.

ISSUE: Whether De Guzman is liable for damages to the employees.

HELD: Yes, De Guzman is liable for damages to the employees arising from his bad faith. However,he is not solidarily liable for the claims of the employees against AMAL. (His liability to the employeesis personal and not as agent of AMAL).

De Guzman is not solidarily liable with AMAL for the employees’ claims. As mere managerialemployee, De Guzman had no participation in the decision to cease operations and to terminate theservices of the employees, which was the exclusive responsibility of AMAL alone. Nevertheless, forhaving acted in bad faith by appropriating the assets of AMAL to satisfy his own claims to theprejudice of the employees’ pending claims, De Guzman is directly liable for moral and exemplarydamages based on Articles 19, 21, 2219 (10) and 2229 of the Civil Code.

UE v. Jader

Jader was a student at the UE College of Law. In the first sem of his last year, he failed to take theregular final exam in Practice Court for which he was given an incomplete grade. He enrolled for thesecond sem. Before graduation, he took an exam to make up the incomplete grade. He was then


included in the list of candidates for graduation and actually participated in the graduationceremonies, receiving a pretend-diploma, taking pictures, and even throwing a graduation bash. Aftergraduation, he started preparing for the bar. However, in May, his professor in Practice Courtsubmitted his failing grade of 5. Thus, he dropped his review classes and did not take the bar exam.He then sued UE for damages alleging that he suffered moral shock, mental anguish, serious anxiety,besmirched reputation, wounded feelings and sleepless nights when he was not able to take the barexaminations arising from the latter's negligence. ISSUE: Whether UE is liable for damages.

HELD: Yes, UE is liable for damages.

UE, in belatedly informing Jader of the result of the removal examination, particularly at a time whenhe had already commenced preparing for the bar exams, cannot be said to have acted in good faith.UE ought to have known that time was of the essence in the performance of its obligation to informJader of his grade. It cannot feign ignorance that Jader will not prepare himself for the bar examssince that is precisely the immediate concern after a law student graduates. UE cannot just give outits student's grades at any time because a student has to comply with certain deadlines set by theSupreme Court on the submission of requirements for taking the bar. UE's liability arose from itsfailure to promptly inform Jader of the result of an examination and in misleading the latter intobelieving that he had satisfied all requirements for the course.

However, while UE was guilty of negligence and thus liable to Jader for the latter's actual damages,Jader should not be awarded moral damages. If he was indeed humiliated by his failure to take thebar, he brought this upon himself by not verifying if he had satisfied all the requirements including hisschool records, before preparing himself for the bar examination. Hence, UE is liable for actualdamages and attorney’s fees but not moral damages.

Class Notes:

Filinvest v. CA

Plaintiff purchased a truck on installment. He failed to pay amortization. The financing companywanted to take the truck and had one of its personnel impersonate the sheriff in order to seize thetruck. Plaintiff filed a re-delivery bond to get back the truck, but by then, it had already beencannibalized.

HELD: Financing company is liable for damages under Article 19. It had the right to seize the car byvirtue of a writ of replevin, but it acted in bad faith when it had its representative impersonate thesheriff and when it cannibalized the truck.

Sea Commercial v. CA

Company appointed an exclusive dealer of its product in the province. One of the obligations of thedealer was to promote the product, for which it spent money. When the product was already popular,the Company discontinued the dealership and sold the product on its own.

HELD: Company is liable for damages to dealer under Article 19. While it had the right to discontinuethe dealership under the terms of the contract, it did not act in good faith when it allowed the dealerto invest in promotion expenses only to terminate the dealership later on so that it could then benefitfrom the dealer’s investment.

Sir’s example: Two society matrons – one owned a bank and the other mortgaged her property tothe bank. The matrons had a cat fight. The debtor-matron then failed to pay her debt to the bank.The bank-owner matron told the bank to publish a ½ page notice of foreclosure in the society pages ofa newspaper of general circulation. Liable for damages?


A: Bank-owner matron is liable for damages to debtor-matron under Article 19. Though the bank hadthe right to foreclose the mortgage and the obligation to publish a notice of foreclosure, it should nothave been done in this manner (not in the society pages). This constitutes abuse of right.

2. Contrary to Law and Morals

Art. 20. Every person who, contrary to law, wilfully or negligently causes damage toanother, shall indemnify the latter for the same.

Art. 21. Any person who wilfully causes loss or injury to another in a manner that iscontrary to morals, good customs or public policy shall compensate the latter for thedamage.

Article 20 – “contrary to law”

Even if the particular provision of law does not expressly provide for indemnification in case ofviolation, so long as there is a violation of law and damage resulting therefrom, there is liability fordamages under Article 20.

Hermosisima v. CA

Soledad Cagigas, was going out with Francisco Hermosisima, who was almost ten (10) years youngerthan she. They were regarded as engaged, although he had made no promise of marriage to her.Soledad got pregnant. When she told Francisco that she was in the family way, he promised to marryher. Their child, Chris Hermosisima, was born later. However, just a month after the birth of Chris,Francisco married another woman. Hence, Soledad commenced an action for recognition of Chris asnatural child of Francisco, support, and moral damages for his breach of promise to marry her.

ISSUE: Whether moral damages are recoverable for breach of promise to marry.

HELD: No. Moral damages are not recoverable for breach of promise to marry.

Breach of promise to marry is not actionable. No other action lends itself more readily to abuse bydesigning women and unscrupulous men.

The CA awarded moral damages to Soledad on the ground that she was seduced by Francisco. The SCheld that Francisco was not morally guilty of seduction. He was approximately 10 years younger thanSoledad, who was a highly enlightened former high school teacher and a life insurance agent.Moreover, the CFI found that, Soledad "surrendered herself" to Francisco because, "overwhelmed byher love" for him, she "wanted to bind" him "by having a fruit of their engagement even before theyhad the benefit of clergy.” In other words, pinikot siya, therefore, an award of moral damages is not inorder.

Wassmer v. Velez

A couple was engaged to be married. The bride-to-be undertook all the preparations for the wedding.Just a few days before the wedding, the groom-to-be sent her a telegram that he was backing out.Bride-to-be (that never was) filed an action for damages against the flaker.

HELD: Breach of promise to marry, in itself, is not actionable. But if the bridegroom allows the brideto go through the preparations only to walk out at the last minute, such as in this case, it isactionable.

Sir’s example: This is even worse than Wassmer v. Velez. On the day of the wedding, the groom waslate. Feeling impatient as well as excited to live her dream of walking down the aisle, the bride


proceeded to walk down the aisle even if the groom was not yet there. She waited for him at the altarand waited, and waited, and waited, but the groom never showed up. Liable for damages?

A: Yes. Though breach of promise to marry is generally not actionable in itself, it is the act of lettingthe bride-that-never-was go through all that humiliation that can give rise to liability for damages.

Shookat v. CA

Employer who dismisses an employee without just cause is liable for damages. Under the Labor Code,the prescriptive period is 3 years. So after 3 years, the case can still be filed against the employerunder the Civil Code, since the prescriptive period is 4 years.

Medel v. CA

Servando Franco and Leticia Medel obtained several loans from Veronica Gonzales, worth a total of500K and executed a promissory note payable in one month with interest at 5.5% per month plus 2%service charge per annum from the date of the document. The note also contained an accelerationand penalty clause, which provided that should they fail to pay any amortization when due, all otherinstallments together with all interest accrued shall immediately be due and payable, with penaltyinterest of 1% per month, and the further sum of 25% as attorney’s fees. On maturity of the loan,they failed to pay. Veronica Gonzales filed a complaint for collection of the full amount of the loanincluding interests and other charges. The debtors question the validity of the interest rate (5.5% permonth) stipulated.

ISSUE: Whether the interest rate stipulated is valid.

HELD: The stipulated interest is void.

The stipulated interest cannot be considered usurious because CB Circular 905 has expressly removedinterest ceilings, making the “Usury Law” non-existent. [Sir says that technically, the Usury Law isnot non-existent since there has been no repeal by the legislature. It is merely inoperative, since theCB has suspended interest ceilings.] However, the rate of interest at 5.5% per month or 66% perannum is excessive, iniquitous, unconscionable, and exorbitant. It is contrary to morals, if not againstthe law, and as such, is void. The courts shall reduce equitably liquidated damages, whether intendedas an indemnity or a penalty if they are iniquitous or unconscionable. Consequently, under thecircumstances, interest at 12% per annum, and an additional 1% a month penalty charge asliquidated damages may be more reasonable.

Silvestre v. Ramos

Silvestre Pascual borrowed 150K from Rodrigo Ramos at the interest rate of 7% (P10,500) per month.As security, he executed a deed of sale with right to repurchase over his house and lot. Ramos gavePascual a year to repurchase the property by settling the loan with interest.

When, after one year, Pascual failed to pay the principal, Ramos filed an action to consolidateownership over the property. The trial court found that the Pascuals had made payments in the totalsum of 344K, and that with interest at 7% per annum, the Pascuals had overpaid the loan byP141,500. The trial court dismissed the petition to consolidate ownership and awarded the PascualsP141,500 as overpayment on the loan and interests. Ramos moved for reconsideration, alleging thatthe trial court erred in using the rate of 7% per annum instead of 7% per month as stipulated in theagreement of the parties. Thus, the Pascuals had not overpaid interest, but even had a balance ofP643K in interest. The trial court acknowledged that it had inadvertently declared the interest rate tobe 7% per annum instead of 7% per month. However, since the rate was too burdensome andonerous, it reduced it to 5% per month and ordered the Pascuals to pay the principal plus interest at5% per month. The Pascuals now question the legality of the interest rate of 5% per month on theground that it is exorbitant, unconscionable, unreasonable, usurious, and inequitable, citing Medel v.CA.

ISSUE: Whether the interest rate is valid.


HELD: Yes, the interest rate is valid.

The ruling in Medel v. CA is not applicable to this case. In Medel v. CA, in addition to the interest, thedebtors were also required to pay service charge of 2% per annum, a penalty charge of 1% permonth, and attorney’s fee of 25%. Thus, taken in conjunction with the stipulated service charge andpenalty, the interest rate of 5.5% in the Medel case was found to be excessive, iniquitous,unconscionable, exorbitant and hence, contrary to morals, thereby making such stipulation null andvoid. In this case, however, there is no other stipulation for the payment of an extra amount exceptinterest on the principal of the loan. Considering this variance in the factual circumstances of theMedel case and this one, the court is not prepared to apply the former, lest it be construed thatinterest rates agreed upon by the parties in a loan transaction can be struck down anytime by thecourt.

The interest rate of 7% per month was voluntarily agreed upon by Ramos and the Pascuals. There isno showing that the Pascuals were victims of fraud when they entered into the agreement withRamos. Neither is there a showing that in their contractual relations with Ramos, the Pascuals were ata disadvantage on account of their moral dependence, ignorance, mental weakness, tender age orother handicap, which would entitle them to the vigilant protection of the courts as mandated byArticle 24 of the Civil Code.

Sir’s example: A five-year loan agreement had the following terms:

Year Interest rate

1 3%/month

2 4%/month

3 5%/month

4 6%/month

5 7%/month

By the end of the five years, the balance of the P8M loan had ballooned to P17M with all theaccumulated interest. Creditor filed an action to foreclose the mortgage. If you were the lawyer forthe debtor, how would you approach the case?

A: File an action for injunction of the foreclosure proceedings. Then, file for annulment of the loanagreement based on the nullity of the interest on the ground that the rates are iniquitous andunconscionable.

Which interest rate is unconscionable – the 7% only? 6% and 7%?

A: You can argue that all of the interest rates (3,4,5,6,7%) when taken as a whole areunconscionable. (Comment from the SecTrans nerd: I don’t think this is a valid argument. When theinterest rate is void for being iniquitous and unconscionable or for any other reason, the loanagreement itself is not void and should not be annulled. Only the interest is annulled, and it is just asif there were no interest charged, or it can be reduced according to terms that are just, in thediscretion of the court. But this is not SecTrans, so of course, we follow what Sir said.)


3. Unjust Enrichment

Art. 22. Every person who through an act or performance by another, or any other means,acquires or comes into possession of something at the expense of the latter without justor legal ground, shall return the same to him.

Art. 23. Even when an act or event causing damage to another's property was not due tothe fault or negligence of the defendant, the latter shall be liable for indemnity if throughthe act or event he was benefited.

Elements of Unjust Enrichment:

1. There must be enrichment on the part of the defendant.

2. There is a concomitant injury to the plaintiff.

3. There is no just cause or legal ground for the enrichment.

Pecson v. CA

Pecson owned a commercial lot on which he built a four-door two-storey apartment building. Forfailure to pay realty taxes amounting to 12K, the lot was sold at public auction by the City Treasurerto Nepomuceno. Nepomuceno in turn sold the property to the spouses Nuguid. Pecson filed a casequestioning the validity of the auction sale. The trial court dismissed the complaint but held that thesale did not include the apartment building. The Nuguid spouses filed a motion for delivery ofpossession of the lot and the apartment building, citing Article 546 of the Civil Code (rules on builderin good faith). The spouses offered to pay the cost of construction spent by Pecson in 1965 asindemnity under Art. 448 and 546 of the Civil Code.

ISSUE: How much indemnity should be paid by the Nuguid spouses to Pecson?

HELD: The Nuguid spouses should pay the current market value of the apartment bulding on thelot. For this purpose, the parties should be allowed to present evidence on the current market value.

The objective of Article 546 of the Civil Code is to administer justice between the parties involved. Itwas formulated in trying to adjust the rights of the owner and possessor in good faith of a piece ofland, to administer complete justice to both of them in such a way as neither one nor the other mayenrich himself of that which does not belong to him. Guided by this precept, it is therefore the currentmarket value of the improvements which should be made the basis of reimbursement. A contraryruling would unjustly enrich the Nuguid spouses who would otherwise be allowed to acquire a highlyvalued income-yielding four-unit apartment building for a measly amount.

Security Bank v. CA

Ysmael Ferrer was contracted by SBTC and Rosito Manhit to construct the building of SBTC in Davao


for 1.76M. The contract provided that Ferrer would finish construction in 200 working days. Ferrerwas able to complete the construction within that period, but he was compelled by a drastic increasein the cost of construction materials to incur expenses of about 300K on top of the original cost. SBTCrefused to pay and denied ever authorizing payment of any amount beyond the original contract price.It also invoked Article IX of the building contract, which states that in case of supervening increase inprices of construction materials and/or labor, the owner (SBTC) shall equitably make the appropriateadjustment on mutual agreement of both parties. Since there was no such mutual agreement, therewas no obligation on its part to pay above the original contract price. Ferrer then filed a complaint forbreach of contract with damages against SBTC.

ISSUE: Whether SBTC is liable for the additional amount.

HELD: Yes, SBTC is liable.

Article 22 of the Civil Code embodies the maxim, Nemo ex alterius incommodo debet lecupletari (noman ought to be made rich out of another’s injury). In this case, Ferrer incurred additional expensesin constructing SBTC’s building. SBTC derived benefits when Ferrer completed the construction evenat an increased cost. Hence, to allow SBTC to acquire the constructed building at a price far below itsactual construction cost would undoubtedly constitute unjust enrichment for the bank, to the prejudiceof Ferrer. Such unjust enrichment is not allowed by law.

Valarao v. CA

Spouses Valarao entered into an agreement with Arellano for the sale to the latter of a parcel of landfor 3.225M pesos. The agreement, entitled a “Deed of Conditional Sale” provided that should Arellanofail to pay three (3) successive monthly installments or any one year-end lump sum payment withinthe period stipulated, the sale shall be considered automatically rescinded without the necessity ofjudicial action and all payments made by the vendee shall be forfeited in favor of the vendors by wayof rental for the use and occupancy of the property and as liquidated damages. After Arellano hadalready paid around P2M, she failed to pay the installments for the months of October and November.In December, however, she attempted to pay the installments due from October to December but theValaraos’ maid – to whom the installments had been habitually paid – refused to accept the tender,allegedly on her employers’ instructions. Because of the refusal to accept payment, Arellano consignedthe money in court. On the same date, the Valaraos sent Arellano a letter notifying her that they wereenforcing the automatic rescission stipulation in the contract and that they were forfeiting the P2M ininstallments already made.

ISSUE: Whether the contract can be rescinded and the payments already made forfeited.

HELD: The contract cannot be rescinded and even if it could, the payments cannot be forfeitedbecause the refusal of payment was unjustified.

Under the Maceda Law, Arellano had a grace period of three months from December within whichto pay the unpaid installments. Thus, the spouses Valarao did not have the right to rescind thecontract yet. And even if the contract could be rescinded, the automatic forfeiture clause couldnot be enforced because it would be inequitable to allow the forfeiture of the amount of more thanP2M already paid by Arellano, a sum which constitutes two-thirds of the total consideration.Because she made a tender of payment which was unjustifiably refused, the Valaraos cannotenforce the automatic forfeiture clause of the contract. To rule in favor of the Valaraos wouldresult in patent injustice and unjust enrichment. The SC is not merely a court of law, but also acourt of justice.

EPG Construction v. Vigilar


The ministry of Public Works and Highways forged individual contracts with petitioners EPGConstruction et al (CONTRACTORS) for the construction of 145 housing units. Under the contracts,the scope of construction and funding therefor covered only around 2/3 of each housing unit. Afterthe contractors performed their work on 2/3 of the units, DPWH Undersecretary Canlas requested thatthey perform additional constructions to complete the units and gave his verbal assurance thatadditional funds would be available and forthcoming. The contractors performed the additionalconstructions and completed the units. They were paid the contract price, representing 2/3 of thework actually done, leaving an unpaid balance of about 6M for the additional constructions for thecompletion of the existing housing units. DPWH Secretary Vigilar denied the money claims for theadditional amount.

ISSUE: Whether the contractors have a right to be compensated for the additional constructionsdone.

HELD: Yes, they should be compensated.

The Administrative Code provides that the existence of appropriations and availability of funds ascertified to and verified by the proper accounting officials are conditions sine qua non for the executionof government contracts. In this case, the additional work was pursued through a verbal request ofDPWH Undersecretary Canlas despite the absence of the corresponding supplemental contracts andappropriate funding. Because of this, DPWH Secretary Vigilar claims that the implied contracts arenull and void, and are not binding on the government.

While it is true that the implied contracts covering the additional constructions are void, the Court, inthe interest of substantial justice, upholds the right of the contractors to be compensated for theadditional construction, applying the principle of quantum meruit. The peculiar circumstances in thiscase necessitate the allowance of the contractors’ money claims. They believed in good faith and inthe interest of the government and the public in general that appropriations to cover the additionalconstructions and completion of the project would be available and forthcoming. The construction ofthe housing units had already been completed by the contractors and the subject housing units hadbeen, since their completion, under the control and disposition of the government pursuant to itspublic works housing project.

It would thus be the apex of injustice and highly inequitable to defeat the contractors’ right to be dulycompensated for actual work performed and services rendered, where both the government and thepublic have, for years, received and accepted benefits from said housing project and reaped the fruitsof the contractors’ honest toil and labor.

Sir’s examples:

A has crops planted on top of a slope. Below the slope, B’s cattle grazed. During a flood, the portionwhere B’s cattle grazed was submerged in water. The cattle went up the slope in order to avoidgetting drowned. Unfortunately, the cattle trampled and destroyed A’s crops. Does B have tocompensate A for the damage?

A: Yes. B was enriched – his cattle were saved. On the other hand, A suffered a loss – his crops gottrampled. It would thus constitute unjust enrichment if B did not pay A.

You sell a house for P2M, payable in ten equal monthly installments. Four months later, inflation has


turned the house into a P10M property. Can you refuse to convey the house to the buyer on theground of unjust enrichment?

A: No. Sir did not explain exactly why not, but I think it’s because there was no real loss on your partif a supervening increase in the value of the property happens due to inflation, so the second elementis not present.

You owe someone P100K. Ten years lapse without payment. Therefore, the loan has prescribed. Notknowing this, you pay. When you find out that you no longer had a legal obligation to pay, you ask forthe P100K back on the ground of unjust enrichment. Can you have your cake and eat it too?

A: No. There’s still a natural/moral obligation to pay. You cannot invoke unjust enrichment.

Pinatubo eruption. There was an immediate need to dredge a flooded area. The government wasable to contract a company to perform the service on short notice. The COA then disallowed paymentbecause there was no public bidding, and the other formalities for government projects were notfollowed. Can the government refuse to pay?

A: No. The government must pay the contractor. It would constitute unjust enrichment if it is notpaid just because the requirements of public bidding, etc. were not followed, given the emergencysituation at the time.

4. Judicial Vigilance

Art. 24. In all contractual, property or other relations, when one of the parties is at adisadvantage on account of his moral dependence, ignorance, indigence, mentalweakness, tender age or other handicap, the courts must be vigilant for his protection.

Examples when the courts exercised judicial vigilance:

PLDT v. PLDT Union

PLDT hired a blind man to show the world its political correctness. After two years, PLDT terminatedhim on the ground that he was blind.

HELD: He was illegally dismissed. The court exercised judicial vigilance here in protecting the rightsof the handicapped, under Article 24.

Deaf-mute was accused of murder. The court appointed counsel de oficio who happened to be a veryold guy who did not object even once and did not cross-examine the witnesses for the prosecution.Naturally, the deaf-mute was convicted.


HELD: The case was remanded to the trial court for new trial. The court ordered the trial court toappoint better counsel de oficio.

5. Thoughtless Extravagance

Art. 25. Thoughtless extravagance in expenses for pleasure or display during a period ofacute public want or emergency may be stopped by order of the courts at the instance ofany government or private charitable institution.

6. Disrespect for Person

Art. 26. Every person shall respect the dignity, personality, privacy and peace of mind ofhis neighbors and other persons. The following and similar acts, though they may notconstitute a criminal offense, shall produce a cause of action for damages, prevention andother relief:

(1) Prying into the privacy of another's residence:

(2) Meddling with or disturbing the private life or family relations of another;

(3) Intriguing to cause another to be alienated from his friends;

(4) Vexing or humiliating another on account of his religious beliefs, lowly station in life,place of birth, physical defect, or other personal condition.

This includes sexual harassment.

Concepcion v. CA

The Nicolas spouses were lessees in an apartment owned by Florence Concepcion. Florence alsocontributed capital to the business that the Nicolas spouses were engaged in. One day, Florence’sbrother-in-law, Rodrigo, accused Mr. Nicolas in front of his children and friends of having an affair withFlorence. As a result of the incident, Mr. Nicolas felt extreme embarrassment and shame to the extentthat he could no longer face his neighbors. Florence also ceased to do business with him by notcontributing capital anymore so much so that the business venture of the Nicolas spouses declined asthey could no longer cope with their commitments to their clients and customers. To make mattersworse, Mrs. Nicolas started to doubt Mr. Nicolas’s fidelity, resulting in frequent bickerings and quarrelsduring which Mrs. Nicolas even expressed her desire to leave her husband. Consequently, Mr. Nicolaswas forced to write Rodrigo demanding public apology and payment of damages. Rodrigo pointedlyignored the demand, for which reason the Nicolas spouses filed a civil suit against him for damages.

ISSUE: Whether Rodrigo Concepcion is liable for damages.

HELD: Yes. Under Article 26, the rights of persons are amply protected, and damages are provided forviolations of a person's dignity, personality, privacy and peace of mind. The violations mentioned inArticle 26 are not exclusive but are merely examples and do not preclude other similar or analogous


acts. Damages therefore are allowable for actions against a person's dignity, such as profane,insulting, humiliating, scandalous or abusive language.

Marquez v. Desierto

Lourdes Marquez was the branch manager of PCIB Julia Vargas. She received an order fromOmbudsman Aniano Desierto to produce several bank documents for purposes of inspection in camerarelative to various accounts maintained at the bank. Marquez asked Desierto for an extension toproduce the checks in question, since they were payable to cash or bearer and could not be easilyidentified. Desierto issued an order requiring the production of the documents and threatened to citeMarquez in indirect contempt and for obstruction of justice. Marquez filed an action for declaratoryrelief to clarify how she could comply with the order without violating the Secrecy of Bank DepositsAct. While this action was pending, Marquez was charged with indirect contempt.

ISSUE: Whether Marquez may be cited for indirect contempt for her failure to produce the documentsrequested by the Ombudsman. Whether the order of the Ombudsman to have an in camerainspection of the questioned account is allowed as an exception to the law on secrecy of bankdeposits.

HELD: Marquez may not be cited for indirect contempt for her failure to produce the documents. Theorder of the Ombudsman to inspect the questioned account is not allowed as an exception to the lawon secrecy of bank deposits.

The exceptions to the law on secrecy of bank deposits are:

1. Where the depositor consents in writing; 2. Impeachment cases; 3. By court order in bribery or dereliction of duty cases against public officials; 4. Deposit is subject of litigation; 5. Sec. 8, R.A. No.3019, in cases of unexplained wealth.

Thus, before an in camera inspection may be allowed, there must be a pending case before a court ofcompetent jurisdiction. Further, the account must be clearly identified, the inspection limited to thesubject matter of the pending case before the court of competent jurisdiction. The bank personnel andthe account holder must be notified to be present during the inspection, and such inspection maycover only the account identified in the pending case.

In this case, there is yet no pending litigation before any court of competent authority. What isexisting is an investigation by the Office of the Ombudsman. In short, what the office of theombudsman would wish to do is to fish for additional evidence. There was no pending case in courtwhich would warrant the opening of the bank account for inspection.

Zone of privacy is recognized and protected in our laws. The Civil Code provides that “every personshall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons”and punishes as actionable torts several acts for meddling and prying into the privacy of another. Italso holds a public officer or employee or any private individual liable for damages for any violation ofthe rights and liberties of another person, and recognizes the privacy of letters and other privatecommunications. The Revised Penal Code makes a crime the violation of secrets by an officer,


revelation of trade and industrial secrets, and trespass to dwelling. Invasion of privacy is an offense inspecial laws like the Anti-Wiretapping Law, the Secrecy of Bank Deposits Act, and the IntellectualProperty Code.

7. Dereliction of Duty

Art. 27. Any person suffering material or moral loss because a public servant or employeerefuses or neglects, without just cause, to perform his official duty may file an action fordamages and other relief against he latter, without prejudice to any disciplinaryadministrative action that may be taken.

Javellana v. Tayo

Mayor Tayo, the Vice Mayor two councilors, and the secretary of Buenavista, Iloilo werealways absent from the sessions of the council. Thus, the remaining council memberselected among themselves a temporary presiding officer and a secretary to take notes.They then proceeded with the matters to be taken up by the council. When the minutes ofall their proceedings were presented to Mayor Tayo for action, the mayor refused to actupon them, or particularly to approve or disapprove the resolution they had been workingon and which they, as a council, had approved. According to the mayor, the sessions werenull and void. Mayor Tayo even refused to affix his signature to their payrolls covering theper diems owing to them alleging that the proceedings were illegal due to his absence.

Trial Court: Sessions perfectly valid and legal. Moral damages awarded pursuant to art. 27 of the NCCto Exequiel Golez who had testified and proved that he had suffered as a consequence of the refusal ofMayor Tayo to perform his official duty. Of course, the hard-headed mayor still refuses to back down.Hence, this appeal.

ISSUE: Whether Exequiel Golez is entitled to moral damages.

HELD: Yes. The award of moral damages is proper under Art. 27 of the NCC considering thataccording to the trial court, Golez was able to prove that he suffered as a consequence ofthe mayor’s refusal to perform his official duty, notwithstanding the action taken by theprovincial fiscal and the provincial board upholding the validity of the sessions in question.

8. Unfair Competition

Art. 28. Unfair competition in agricultural, commercial or industrial enterprises or in labor throughthe use of force, intimidation, deceit, machination or any other unjust, oppressive or highhandedmethod shall give rise to a right of action by the person who thereby suffers damage.

Note that this is different from unfair competition under the Revised Penal Code, which is a criminaloffense.

Habana v. Robles

Habana was the author and copyright owner of a college textbook entitled “College English for Today.”He discovered that another textbook written by Robles was strikingly similar to his own with regard tothe content, scheme of presentation, illustrations, and examples. Several pages of Robles’ bookdirectly plagiarized his own book. Habana sued Robles for copyright infringement, unfair competition,and damages.

ISSUE: Whether Robles is liable for damages.


HELD: Yes. Robles is guilty of copyright infringement. Infringement of copyright consists in doing byany person, without the consent of the owner of the copying, of anything, the sole right to do which isconferred by statute on said owner. Said infringement is in fact a trespass on a private domain ownedby the owner of the copyright. With regard to books and other literary works, the purpose ofcopywriting is to give protection to the intellectual product of an author. In such a case, copyingalone is not what is prohibited – the copying must produce an injurious effect.

In this case, even if Habana’s book, or even a large portion of it, was not copied by Robles, if so muchis taken that the value of the original work is substantially diminished, then Robles is indeed guilty ofinfringement. With regard to the injurious effect, the least Robles could have done was toacknowledge Habana’s book as the source of the contested portions of her own book. To allowanother to copy the book without appropriate acknowledgment is injury enough, hence the requisite ofinjurious effect is complied with.

Sir’s examples:

A owns a hospital named St. Peter’s located in a small town. B owns another hospital in the sametown. B puts up a funeral parlor across the street from St. Peter’s Hospital and names it St. Peter’sFuneral Parlor. Is this unfair competition under Article 28?

A: Yes. This is an unjust, oppressive, and highhanded method of competing with A.

The ad for a product claims that “Our product is number one.” Does this constitute unfair competition?

A: No.

The ad for a product claims that “Our product is the only good product.” Does this constitute unfaircompetition?

A: Yes.

9. Violation of Civil/Political Rights

Art. 32. Any public officer or employee, or any private individual, who directly or indirectlyobstructs, defeats, violates or in any manner impedes or impairs any of the followingrights and liberties of another person shall be liable to the latter for damages:

(1) Freedom of religion;

(2) Freedom of speech;

(3) Freedom to write for the press or to maintain a periodical publication;


(4) Freedom from arbitrary or illegal detention;

(5) Freedom of suffrage;

(6) The right against deprivation of property without due process of law;

(7) The right to a just compensation when private property is taken for public use;

(8) The right to the equal protection of the laws;

(9) The right to be secure in one's person, house, papers, and effects againstunreasonable searches and seizures;

(10) The liberty of abode and of changing the same;

(11) The privacy of communication and correspondence;

(12) The right to become a member of associations or societies for purposes not contraryto law;

(13) The right to take part in a peaceable assembly to petition the government forredress of grievances;

(14) The right to be free from involuntary servitude in any form;

(15) The right of the accused against excessive bail;

(16) The right of the accused to be heard by himself and counsel, to be informed of thenature and cause of the accusation against him, to have a speedy and public trial, to meetthe witnesses face to face, and to have compulsory process to secure the attendance ofwitness in his behalf;

(17) Freedom from being compelled to be a witness against one's self, or from beingforced to confess guilt, or from being induced by a promise of immunity or reward to makesuch confession, except when the person confessing becomes a State witness;


(18) Freedom from excessive fines, or cruel and unusual punishment, unless the same isimposed or inflicted in accordance with a statute which has not been judicially declaredunconstitutional; and

(19) Freedom of access to the courts.

In any of the cases referred to in this article, whether or not the defendant's act oromission constitutes a criminal offense, the aggrieved party has a right to commence anentirely separate and distinct civil action for damages, and for other relief. Such civilaction shall proceed independently of any criminal prosecution (if the latter be instituted),and mat be proved by a preponderance of evidence.

The indemnity shall include moral damages. Exemplary damages may also be adjudicated.

The responsibility herein set forth is not demandable from a judge unless his act oromission constitutes a violation of the Penal Code or other penal statute.

If you will notice, the rights enumerated in Article 32 are the same as the rights protected underArticle III of the Constitution in the Bill of Rights. Is Article 32 a surplussage then?

A: No. The Constitution protects citizens from violations of their civil rights by the State. Article 32covers violations committed even by private individuals. Moreover, Article 32 covers not only directviolations of civil rights, but also INDIRECT violations. For example, under Article 32, even a witnessfor the application of a search warrant who lies in his testimony may be liable for damages to theaggrieved party.

MHP Garments v. CA

MHP had the exclusive franchise to sell and distribute official Boy Scout uniforms and supplies. Actingupon information that private respondents were selling Boy Scout items without authority, MHP sentone of its employees, together with three members of the Philippine Constabulary, to the store ofprivate respondents. The employee and the members of the PC seized the merchandise in the storewithout any warrant. The items were then turned over to MHP. When private respondents demandedthe return of the goods, not all items were returned, while the others were of inferior quality. Privaterespondents filed an action for damages against MHP. MHP denies liability on the ground that it wasthe PC that conducted the raid, and its participation was only to report the alleged illegal activity ofprivate respondents.

ISSUE: Whether MHP is liable for damages.

HELD: Yes. It is not the actor alone (i.e. the one directly responsible) who must answer for damagesunder Article 32. The person indirectly responsible must also answer for the damages or injury causedto the aggrieved party. Article 32 of the Civil Code makes the persons who are directly, as well asindirectly, responsible for the transgression as joint tortfeasors.

In this case, MHP was indirectly involved in transgressing the right of private respondents againstunreasonable search and seizure. It instigated the raid, which was even conducted with the activeparticipation of one of the employees of MHP. It received for safekeeping the goods unreasonablyseized and refused to surrender them upon demand. It failed to report the unlawful peddling of thegoods to the Boy Scouts of the Philippines so that the latter could have properly applied for a warrant.


Obra v. CA

Obra, the Regional Director of the Bureau of Mines and Geo-Sciences (BMGS), received from JeanetteGrybos a letter on behalf of the Gillies heirs complaining that the spouses Brett had been conductingillegal mining activities in a mining area belonging to the Gillies family. Obra requested the assistanceof Brig. Gen. Dumpit in apprehending a truck allegedly used by the spouses Brett in illegal mining.Obra also issued to Dumpit a BMGS certification stating that the spouses Brett had no mining permit.Four days later, the elements of the military seized a truck belonging to the Spouses Brett as it wasentering the contested mining area. The truck was impounded. The spouses filed a complaint fordamages against Obra and Dumpit.

ISSUE: Whether Obra and Dumpit are liable for damages.

HELD: Yes. The constitutional rights of the spouses to due process and to security againstunreasonable searches and seizure were violated. Article 32 of the Civil Code makes liable any publicofficer who is directly or indirectly responsible for violation of the constitutional right. The language ofArticle 32 makes both the actor (the one directly responsible) and the person indirectly responsibleliable for damages. Thus, Dumpit could not claim that he had no knowledge of the acts of hissubordinates who seized the truck. Neither can he evade responsibility for his acts by claiming that hemerely performed a ministerial duty in ordering the implementation of Obra’s request. Otherwise,liability under Article 32 could easily be avoided by the mere plea that the officer concerned was onlycarrying out a ministerial duty.

VI. Interference in Contractual Relation

Art. 1314. Any third person who induces another to violate his contract shall be liable fordamages to the other contracting party.

Elements of Interference in Contractual Relation:

1. Valid contract;2. Outsider knows of the existence of the contract;3. The third party induces one party to breach his obligation under the contract;4. Damage.

Is malice an element of interference in contractual relation?

A: There are variances in opinion. Some cases say that it is not, while other cases say that it is (SoPing Bun v. CA). So if you’re the lawyer for the plaintiff, you should try to prove it anyway just to besure.

What are the defenses available to the defendant?

(1) business competition & the purpose is (i) furtherance of the business; & (ii) lawful means areused. Note that there is no intent to cause damage. (So Ping Bun v. CA)

(2) honest advice made (i) in good faith and (ii) in performance of his duty as adviser (3) innocence of breaching party (Sir doesn’t agree); element of inducement lacking – Cite

Daywalt – that the third party cannot be more liable than the party on whose behalf heintermeddles.

Gilchrist v. Cuddy


Cuddy was the owner of the rights to the film “Zigomar.” He entered into an agreement with C.S.Gilchrist whereby Gilchrist would rent the film from Cuddy and screen it for a week for P125. Gilchristpaid the money in advance. However, a few days before the screening date agreed upon, Cuddy sentthe money back, saying that he had made other arrangements with his film. It turns out that Cuddyentered into another agreement with Espejo and Zaldarriaga (the partners) for the rental of the filmfor the same week agreed upon with Gilchrist, for the price of P350.

ISSUE: Whether the partners are liable to Gilchrist for damages for interfering with the contractbetween Gilchrist and Cuddy.

HELD: Yes. The only motive for the interference by the partners in the Gilchrist-Cuddy contract was adesire to make profit by exhibiting the film in their theater; there was no malice involved. However,this fact does not relieve them of the legal liability for interfering with that contract and causing itsbreach. In the US case Angle v. Railway Co., the US Supreme Court held the third party liable fordamages even if his only motive for interference was to make a profit.

Neither is it necessary for the tortfeasor to know the identity of the person to whom he causesdamages. Article 1902 [of the old Civil Code] provides that a person who, by act or omission, causesdamage to another when there is fault or negligence, shall be obliged to repair the damage so done.It is clear that this article does not require prior knowledge of the identity of the person to whom thetortfeasor causes damage in order for him to be liable for damages.

Daywalt v. La Corporacion de los Padres Agustinos Recoletos

In 1902, Teodorica Endencia executed a contract whereby she obligated herself to convey to Geo W.Daywalt a 452-hectare parcel of land for P4,000. They agreed that a deed should be executed assoon as Endencia’s title to the land was perfected in the Court of Land Registration and a Torrens titleissued in her name. When the Torrens title was issued, Endencia found out that the propertymeasured 1,248 hectares instead of 452 hectares, as she initially believed. Because of this, shebecame reluctant to transfer the whole tract to Daywalt, claiming that she never intended to sell solarge an amount and that she had been misinformed as to its area. Daywalt filed an action for specificperformance. The SC ordered Endencia to convey the entire tract to Daywalt.

Meanwhile, the La Corporacion de los Padres Agustinos Recoletos (Recoletos), was a religiouscorporation, which owned an estate immediately adjacent to the property sold by Endencia toDaywalt. It also happened that Fr. Sanz, the representative of the Recoletos, exerted some influenceand ascendancy over Endencia, who was a woman of little force and easily subject to the influence ofother people. Father Sanz knew of the existence of the contracts with Daywalt and discouraged herfrom conveying the entire tract.

Daywalt filed an action for damages against the Recoletos on the ground that it unlawfully inducedEndencia to refrain from the performance of her contract for the sale of the land in question and towithhold delivery of the Torrens title. Daywalt’s claim for damages against Recoletos was for the hugesum of P500,000 [in the year 1919], since he claims that because of the interference of the Recoletos,he failed to consummate a contract with another person for the sale of the property and its conversioninto a sugar mill.

ISSUE: Whether Recoletos is liable to Daywalt.

HELD: No, it is not liable.

The stranger who interferes in a contract between other parties cannot become moreextensively liable in damages for the nonperformance of the contract than the party inwhose behalf he intermeddles. Hence, in order to determine the liability of the Recoletos, there isfirst a need to consider the liability of Endencia to Daywalt. The damages claimed by Daywalt fromEndencia cannot be recovered from her, first, because these are special damages which were notwithin the contemplation of the parties when the contract was made, and secondly, these damages


are too remote to be the subject of recovery. Since Endencia is not liable for damages to Daywalt,neither can the Recoletos be held liable. As already suggested, by advising Endencia not to performthe contract, the Recoletos could in no event render itself more extensively liable than the principal inthe contract.

Roble v. Arbasa (July 31, 2001)

New doctrine when it comes to the sale of land: Whether the consideration for the sale of realproperty was in price per unit or a lump-sum sale, if the actual size exceeds the size contracted upon,the buyer must pay the value of the excess.

Rubio v. CA

The Rubio spouses owned shares of stock in Hacienda Benito Inc. (HBI), which they sold to Robert O.Phillips and Sons Inc. (ROPSI) for P5.5M. An initial payment of P1.2M was paid by ROPSI to theRubios, leaving an unpaid balance of about P4.25M. The contract provided that the spouses had aright to rescind the sale in case ROPSI failed to pay the balance. Robert O. Phillips (the person) andhis wife signed as guarantors for the amount of the balance.

In the meantime, Robert O. Phillips, in behalf of his wife and of ROPSI, entered into negotiations forthe sale of these same shares of stock to Alfonso Yuchengco. When he found out about thenegotiations, Miguel Rubio wrote a letter reminding ROPSI and Yuchengco that the shares weresubject to the payment of the unpaid balance, and that he still had the right to rescind the sale in caseof non-payment. Rubio expressed no objections to the sale, provided that the obligations in theirfavor were satisfied. ROPSI wrote back, telling Rubio that the only obstacle to the consummation ofthe sale of the HBI shares to Yuchengco was the letter that Rubio sent. ROPSI warned that unless theletter was withdrawn, they would seek redress elsewhere. Rubio was also informed that Yuchengcohad given the ultimatum that if the letter was not withdrawn, the transaction with ROPSI would becancelled. [Yuchengco wanted the letter withdrawn because he did not want to purchase the shares ofstock if they would later be involved in a collection suit]. Rubio refused to withdraw the letter andinstead threatened to file an action for collection in case the balance of the purchase price was notpaid when due. ROPSI, however, beat them to court and filed a case against the Rubios for unlawfulinterference in the transaction between ROPSI and Yuchengco.

ISSUE: Whether the Rubios are liable for interfering in the transaction between ROPSI andYuchengco.

HELD: No, the Rubios are not liable for interfering in the transaction between ROPSI and Yuchengco.

There is no reason why Rubio should be accused of unlawful interference in maintaining his stand thathe still had the option to rescind the contract between him and ROPSI and in stating the existence ofhis vendor’s lien over the shares of stock.

Rubio never pretended that he still had full control of the shares of stock sold to ROPSI. In fact, headmitted that the shares were already transferred to ROPSI and that he did not have a recorded lientherein. He merely made of record his right to rescind under the original contract of sale. The detailspertaining to the earlier transaction governing the sale of the shares of stock between Rubio andROPSI were in fact known to Yuchengco. Moreover, Rubio was only interested in recovering theP4.25M balance owing to him. He expressed his intention to withdraw the letter, provided hisinterests would be protected. Obviously, he felt that the payment of his P4.25M was not securedunder the terms of payment proposed by Yuchengco. Thus, he had the right to refuse to withdraw theletter. There was nothing illegal or inofficious about the letter or the refusal to withdraw it.

So Ping Bun v. CA

Tek Hua Trading entered into agreements with DCCSI for the lease of several properties which TekHua used to store its textiles. The successor of Tek Hua Trading, Tek Hua Enterprises, allowed SoPing Bun, the grandson of the managing partner of Tek Hua Trading, to use the premises to store his


own textiles. Later, Manual Tiong, one of the members of Tek Hua Enterprising Corp., asked So PingBun to vacate the warehouse within 14 days since Tiong needed it for his textile business. So PingBun refused to vacate. Instead, So Ping Bun entered into lease contracts with DCCSI over the samepremises. Tek Hua Enterprises and Manuel Tiong filed an action to nullify the contracts of leasebetween So Ping Bun and DCCSI and also claimed damages against So Ping Bun for unlawfulinterference in the lease contracts between DCCSI and Tek Hua Enterprises.

ISSUE: Whether So Ping Bun is liable for damages.

HELD: No, So Ping Bun is not liable.

The elements of tort interference are:

(1) existence of a valid contract;(2) knowledge on the part of the third person of the existence of the contract; and(3) interference of the third person is without legal justification or excuse.

In this case, Trendsetter Marketing asked DCCSI to execute lease contracts in its favor, and as aresult, it was able to deprive Tek Hua Enterprises of its property right. Clearly, the three elements oftort interference are present since So Ping Bun prevailed upon DCCSI to lease the warehouse to hisenterprise at the expense of Tek Hua Enterprises.

However, So Ping Bun still cannot be held liable for damages. Though he took interest in the propertyof Tek Hua and benefited from it, nothing on record imputes deliberate wrongful motives or malice onhim. The business desire is there to make some gain to the detriment of the contracting parties. Lackof malice, however, precludes damages.

Sir’s examples:

A was a real estate agent. She offered to sell a condo unit to X and X agreed to purchase.Subsequently, B, another real estate agent, also offered a condo unit to X. Because of B’s offer, X didnot proceed with the purchase of the first unit offered by A and bought the one offered by B instead.Is B liable for interference in the contract to sell between A and X?

A: No. There is no indication that X was only planning to buy one unit, such that if he bought from B,he would automatically not buy from A anymore. Also, it was in furtherance of business and themeans used were lawful.

Same situation as above, but B criticized the condo unit that A was selling, is B liable?

A: Yes. Under contractual interference and also unfair competition. This time, the means used wereunjust and unfair.

A entered into a contract with B. A did not graduate high school. C, a lawyer, advised A not tocomply with the contract. B filed an action for damages against A. What defense can A invoke?

A: A can claim the defense that he was just following his lawyer’s advice, so he is not liable.

Does this mean that C is also not liable for interference in contractual relations under the principlethat the interferor cannot be more liable than the party in whose behalf he interferes?

A: Probably not, since the lawyer is supposed to know the law. However, he can set up the defensethat he gave the advice in good faith.

VII. CIVIL LIABILITY ARISING FROM CRIME


1. Remedies

a. Civil Action with Criminal Action

RULES OF COURT RULE 111 - PROSECUTION OF CIVIL ACTION

Section 1. Institution of criminal and civil actions. – (a) When a criminal action isinstituted, the civil action for the recovery of civil liability arising from the offense chargedshall be deemed instituted with the criminal action unless the offended party waives thecivil action, reserves the right to institute it separately or institutes the civil action prior tothe criminal action.

The reservation of the right to institute separately the civil action shall be made beforethe prosecution starts presenting its evidence and under circumstances affording theoffended party a reasonable opportunity to make such reservation.

When the offended party seeks to enforce civil liability against the accused by way ofmoral, nominal, temperate, or exemplary damages without specifying the amount thereofin the complaint or information, the filing fees therefore shall constitute a first lien on thejudgment awarding such damages.

Where the amount of damages, other than actual, is specified in the complaint orinformation, the corresponding filing fees shall be paid by the offended party upon thefiling thereof in court.

Except as otherwise provided in these Rules, no filing fees shall be required for actualdamages.

No counterclaim, cross-claim or third-party complaint may be filed by the accused in thecriminal case, but any cause of action which could have been the subject thereof may belitigated in a separate civil action.

(b) The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to includethe corresponding civil action. No reservation to file such civil action separately shall beallowed.

Upon filing of the aforesaid joint criminal and civil actions, the offended party shall pay infull the filing fees based on the amount of the check involved, which shall be consideredas the actual damages claimed. Where the complaint or information also seeks to recoverliquidated, moral, nominal, temperate or exemplary damages, the offended party shall payadditional filing fees based on the amounts alleged therein. If the amounts are not soalleged but any of these damages are subsequently awarded by the court, the filing feesbased on the amount awarded shall constitute a first lien on the judgment.


Where the civil action has been filed separately and trial thereof has not yet commenced,it may be consolidated with the criminal action upon application with the court trying thelatter case. If the application is granted, the trial of both actions shall proceed inaccordance with section 2 of this Rule governing consolidation of the civil and criminalactions.

Clarification of this rule:

This rule on civil actions instituted with the criminal action has been amended several times, hencethe conflicting jurisprudence.

Under the 2000 Revised Rules of Criminal Procedure, the civil liability arising from crime is deemedinstituted and not merely “impliedly” instituted with the institution of the criminal action, unless:

1. the offended party waives the civil action,

2. reserves the right to institute it separately, or

3. institutes the civil action prior to the criminal action.

But take note that the civil action that is deemed instituted with the criminal action is only the one forthe recovery of the civil liability arising from the offense charged, and no other civil action. Alldecisions to the contrary are no longer controlling.

What are the independent civil actions?

A: The independent civil actions are those under Articles 32, 33, 34, and 2176. These are NOTdeemed instituted with the criminal action or considered as waived even if there is no reservation.The need for reservation applies only to the civil liability arising from the offense charged.

Can an employer be held civilly liable for quasi delict in a criminal action for reckless imprudence filedagainst his employee?

A: No. Quasi delict under Article 2176 is not deemed instituted with the criminal action. If at all, theonly civil liability of the employer in the criminal action would be his subsidiary liability under theRevised Penal Code.

What is the difference between “separate civil action” under Section 2 of Rule 111 of the Rules ofCourt and an “independent civil action”?

A: The independent civil actions are those under Articles 32, 33, 34, and 2176 of the Civil Code.These are not deemed instituted with the criminal action even if there is no reservation made by theplaintiff. The separate civil action under Section 2 of Rule 111 refers to an action to recover civilliability arising from the crime. This is deemed instituted with the criminal action, unless the offendedparty waives it, makes a reservation, or institutes it prior to the institution of the criminal action.Note that this should refer to the civil liability arising from the offense, and not to any other civilaction which may be connected to the offense but does not necessarily arise from the crime (ex: civilcase for legal separation in connection with a case for bigamy).

Manuel v. Alfeche

A criminal information for libel was filed against Felipe Celino, Danny Fajardo, Lemuel Fernandez, andJohn Paul Tia, who were all members of the staff of a regional newspaper known as “Panay News,” formaliciously publishing a story that a certain Delia Manuel was the “Shabu Queen” in Western Visayas.The information also stated that, as a direct consequence of the said article, Delia Manuel sufferedactual, moral, and exemplary damages in the amount of P10M. The trial court convicted the firstthree accused and acquitted the fourth. However, it dismissed the claim for civil indemnity by way ofmoral damages for lack of jurisdiction on the ground that Manuel did not pay the filing fees therefor.


Manuel filed this action for certiorari in the Supreme Court, questioning the validity of the dismissal ofher claim for damages. Meanwhile, the three defendants appealed their conviction to the CA.

ISSUE: Whether Manuel is entitled to the civil indemnity by way of moral damages.

HELD: No.

Since the case is already pending appeal with the CA, Manuel should have filed her petition also in theCA. This is because the award of moral and exemplary damages by the trial court is inextricablylinked to and necessarily dependent upon the factual finding and basis therefor – the existence of thecrime of libel. There would thus be a possibility that the CA would reverse the trial court and acquitthe accused. In such event, the appellate court’s action could collide with an SC ruling awardingdamages in favor of Manuel. Such a situation would lead to absurdity and confusion and must beavoided.

Manuel claims that Article 33 of the Civil Code allows an independent civil action for damages in casesof defamation, fraud, and physical injuries to be instituted separately and independently from thecriminal. She then concludes that the civil aspect of the case is not dependent on the criminal, butrather, may proceed independently thereof, and that therefore, the review of the civil aspect by theSC may take place simultaneously with and separately from the review of the criminal aspect by theCA.

This reasoning is misplaced. Sec. 1 of Rule 111 of the Rules of Court provides that the civil action forrecovery of civil liability is impliedly instituted with the criminal action unless the offended partywaives the civil action, reserves his right to institute it separately, or institutes the civil action prior tothe criminal action. In the present case, the civil action had been actually (not just impliedly)instituted with the criminal prosecution, as shown by the fact that Manuel took an active part in theprosecution of the criminal case. Thus, there can no longer be any independent civil action to speakof, as the civil aspect had previously been included in the criminal. Manuel, by attempting to haverecourse to the SC while the criminal aspect is still pending with the CA, was effectively trying to splita single cause of action, which cannot be allowed.

[This seems to be an application of the old rule.]

Bañez v. Valdevilla

Bañez was the sales operations manager of Oro Marketing in its branch in Iligan City. In 1993, thecompany “indefinitely suspended” Bañez. Bañez filed a complaint for illegal dismissal with the NLRC.The labor arbiter found that he was illegally dismissed and ordered the payment of separation pay inlieu of reinstatement, backwages, and attorney’s fees. The decision was appealed to the NLRC butwas dismissed for being filed out of time. The company elevated the petition to the SC on certiorari.It was dismissed on technical grounds, and the SC pointed out that even if all the proceduralrequirements were met, it would still have been dismissed for failure to show grave abuse ofdiscretion on the part of the NLRC.

Subsequently, Oro Marketing filed a complaint for damages against Bañez in the RTC of MisamisOriental. Oro Marketing claimed damages for lost profits and earnings due to the abandonment orneglect by Bañez of his duties as sales manager because he was preoccupied with his unauthorizedinstallment sale scheme. It also claimed damages for the value of its property and supplies whichBañez used in conducting his own business. Bañez moved to dismiss on the ground that the action fordamages, having arisen from an employer-employee relationship, was under the exclusive originaljurisdiction of the NLRC and is barred by reason of the final judgment in the labor case.

ISSUE: Whether the RTC has jurisdiction over the complaint filed by Oro Marketing.

HELD: No, the RTC has no jurisdiction.

Article 217 of the Labor Code provides that Labor Arbiters shall have original and exclusive jurisdictionto hear and decide all claims for damages arising from employer-employee relations. This article


applies not only to claims for damages filed by employees but also to those filed by an employer foractual damages against its dismissed employee, where the basis for the claim arises from or isnecessarily connected with the fact of termination, and should be entered as a counterclaim in theillegal dismissal case.

In this case, the claim of Oro Marketing against Bañez for actual damages arose from a prioremployer-employee relationship. Oro Marketing would not have taken issue with Bañez’s doingbusiness of his own had the latter not been concurrently its employee. Second, to allow the RTC toproceed with the action for damages would be to open anew the factual issue of whether Bañez’sinstallment sale scheme resulted in business losses and the dissipation of Oro’s property. This issuehad been duly raised and ruled upon in the illegal dismissal case. The Labor Arbiter found that nobusiness losses may be attributed to Bañez, and it was in fact his installment plan which had broughtmore sales to the company.

This should be differentiated from those labor cases where the employer-employee relationship ismerely incidental and the cause of action proceeds from a different source of obligation. Thus, thejurisdiction of regular courts was upheld where the damages claimed were based on tort, maliciousprosecution, or breach of contract.

The remedy of Oro is not the filing of a separate action for damages but properly perfecting an appealfrom the Labor Arbiter’s decision. Having lost the right to appeal on the ground of untimeliness, thedecision in the labor case stands as a final judgment on the merits, and the instant action for damagescannot take the place of such lost appeal.

DMPI Employees Credit Cooperative (DMP-ECCI) v. Velez

An information for estafa was filed against Carmen Mandawe for alleged failure to account to EribertaVillegas the amount of about P600K. Villegas entrusted this amount to Mandawe, an employee ofDMPI-ECCI, for deposit with the teller of DMPI-ECCI. Subsequently, Villegas filed with the RTC acomplaint against Mandawe and DMPI-ECCI for a sum of money and damages with preliminaryattachment arising out of the same transaction. DMP-ECCI filed a motion to dismiss on the groundsthat there was already a pending criminal case arising from the same facts, and that the complaintfailed to contain a certification against forum shopping. The trial court dismissed the case, but later,upon motion for reconsideration of Villegas, it reversed itself and recalled the dismissal of the case.

ISSUE: Whether the civil case can proceed independently of the criminal case for estafa.

HELD: Yes, the civil case can proceed independently of the criminal case for estafa.

Under Rule 111, Section 1 of the Revised Rules of Criminal Procedure, which became effective onDecember 1, 2000, the civil action for the recovery of civil liability arising from the offense chargedshall be deemed instituted with the criminal action unless the offended party waives the civil action,reserves the right to institute it separately, or institutes the civil action prior to the criminal action.Section 2 of the same rule provides that after the criminal action has been commenced, the separatecivil action arising therefrom cannot be instituted until final judgment has been entered in the criminalaction.

However, only the civil liability arising from the offense charged is deemed instituted with the criminalaction unless the offended party waives the civil action, reserves his right to institute it separately, orinstitutes the civil action prior to the criminal action. There is nor more need for a reservation of theright to file the independent civil actions under Articles 32, 33, 34, and 2176 of the Civil Code. Thereservation refers only to the civil action for the recovery of the civil liability arising from the offensecharged [under Article 100 of the RPC]. This does not include recovery of civil liability under Articles32, 33, 34, and 2176 of the Civil Code arising from the same act or omission which may beprosecuted separately even without a reservation. Thus, the civil case instituted by Villegas, anindependent civil action for damages on account of the fraud committed against him under Article 33of the Civil Code, may proceed independently even if there was no reservation as to its filing.

[This is the application of the present rule.]


b. Separate Civil Action

Sec. 2. When separate civil action is suspended. – After the criminal action has beencommenced, the separate civil action arising therefrom cannot be instituted until finaljudgment has been entered in the criminal action.

If the criminal action is filed after the said civil action has already been instituted, thelatter shall be suspended in whatever state it may be found before judgment on themerits. The suspension shall last until final judgment is rendered in the criminal action.Nevertheless, before judgment on the merits rendered in the civil action, the same may,upon motion of the offended party, be consolidated with the criminal action in the courttrying the criminal action. In case of consolidation, the evidence already adduced in thecivil action shall be deemed automatically reproduced in the criminal action withoutprejudice to the right of the prosecution to cross-examine the witness presented by theoffended party in the criminal case and of the parties to present additional evidence. Theconsolidated criminal and civil actions shall be tried and decided jointly.

During the pendency of the criminal action, the running period of prescription of the civilaction which cannot be instituted separately or whose proceeding has been suspendedshall be tolled.

The extinction of the penal action does not carry with it extinction of the civil action.However, the civil action based on delict shall be deemed extinguished if there is a findingin a final judgment in the criminal action that the act or omission from which the civilliability may arise did not exist.

CIVIL CODE

Art. 33. In cases of defamation, fraud, and physical injuries a civil action for damages,entirely separate and distinct from the criminal action, may be brought by the injuredparty. Such civil action shall proceed independently of the criminal prosecution, and shallrequire only a preponderance of evidence.

Summary of this Rule:

1. This rule contemplates a situation where the offended party files a separate civil action torecover civil liability arising from the offense. This is a departure from the general rule inSection 1 that the civil action is deemed instituted with the criminal action.

2. If the criminal action has bee commenced, and the offended party makes a reservation toseparately file the civil action arising therefrom, he cannot institute the civil action until finaljudgment has been rendered in the criminal action.

3. If the separate civil action has already been instituted prior to the filing of the criminal action,upon filing of the criminal action, the civil action shall be suspended in whatever stage it maybe found until final judgment is rendered in the criminal action.


4. In case the criminal action is instituted after the civil action, the two actions may, upon motionof the offended party, be consolidated before judgment on the merits is rendered in the civilaction. It will be tried and decided jointly by the court trying the criminal action.

5. The only civil action that is deemed suspended is the civil action arising from the offensecharged and not other civil actions that may be related to but do not arise from the offense. Acivil action may not be suspended under Rule 111 where the action is not to enforce civilliability from the crime charged.

6. As a general rule, there can only be consolidation of the criminal and civil actions if the civilaction is for recovery of the civil liability arising from the offense. However, under certainexceptional circumstances, there can still be consolidation of the criminal and civil actionseven if the civil action is not for the recovery of civil liability arising from the offense (ex: civilaction based on contract). The requisites for consolidation in these cases are:

a. the actions arise from the same act, event, or transaction;b. they involve the same or like issues;c. they depend largely or substantially on the same evidenced. the court must have jurisdiction over the cases to be consolidated; ande. a joint trial will not give one party an undue advantage or prejudice the substantial

rights of any of the parties.

7. The period of prescription of the civil action arising from a crime that has not been reserved orthat was filed ahead of the criminal action and was subsequently suspended shall not run whilethe criminal action is pending.

Cojuangco v. CA

A blind item was published in a magazine implying that Gretchen Oppen-Cojuangco was prostitutingherself to speed up the approval of a loan from the government. The spouses Cojuangco filed a civilaction for Damages based on Libel against the owner, publisher, general manager and editor of themagazine and writer of the article.

Subsequently, the Fiscal filed with the same court a criminal case for libel against the defendants. Thespouses filed motions to consolidate the civil and criminal cases, alleging that the evidence to bepresented in both would be the same and that Article 360 of the RPC provides that in libel, the civilaction shall be filed in the same court where the criminal action is filed and vice-versa, providedhowever, that the court where the criminal action or civil action for damages is filed shall acquirejurisdiction to the exclusion of other courts.

Respondents opposed the motions to consolidate. They claimed that the spouses, having filed aseparate civil action, have no legal standing to intervene in the criminal case.

ISSUE: Whether the civil and criminal actions may be consolidated for joint trial.

HELD: Yes, they may be consolidated.

An independent civil action for the recovery of civil liability, authorized under Articles 32, 33, 34, and2176 of the Civil Code may be consolidated with the criminal case, subject to the condition that nofinal judgment has been rendered in the criminal case. Section 1, Rule 31 of the Rules of Courtauthorizes consolidation of actions involving common questions of law or fact pending before thecourt. The purpose or object of consolidation is to avoid multiplicity of suits, guard against oppressionor abuse, prevent delay, clear congested dockets, simplify the work of the trial court, and saveunnecessary costs.

In this case, the civil and criminal cases involve common or identical questions of fact and law, andthey would even have the same witnesses. Moreover, Article 360 of the RPC provides that the


criminal case for libel and the civil action for damages arising therefrom must be filed in the samecourt. Therefore, it is only proper that the two cases be consolidated.

Sarmiento Jr. v. CA

Limpin and Apostol executed a trust receipt over their merchandise in favor of a bank to secure thepayment of a letter of credit worth 495K obtained by the two from the bank. Under the trust receipt,Limpin and Apostol undertook to hold the goods in trust for the bank, with authority to sell the same,the proceeds to be turned over to the bank and applied to their obligation. The due date of the trustreceipt came, but Limpin and Apostol failed to pay. A complaint was filed by the bank against themfor Violation of the Trust Receipt Law. Limpin was convicted. The bank then filed a civil action tocollect the 495K from Limpin and Sarmiento. Limpin now claims that the civil action is barred becauseit was not expressly reserved in the criminal action earlier filed against him.

ISSUE: Whether the civil action is barred.

HELD: No, the civil action is not barred.

The provisions of the Rules of Criminal Procedure show that the offended party is required to make areservation of his right to institute a separate civil action. Jurisprudence instructs that suchreservation need not be express but may be implied. It may be inferred not only from the acts of theoffended party but also from acts other than those of the latter. For example, the SC has held in theBernales case that the failure of the court to make any pronouncement in its decision concerning thecivil liability of the accused must be due to the fact that the criminal action did not involve at all anyclaim for civil indemnity. This indicates an implied reservation of the right to institute a separate civilaction. In the present case, nothing in the records show that the bank ever attempted to enforce itsright to recover civil liability during the prosecution of the criminal action. Hence, it is deemed tohave made the implied reservation.

Moreover, the complaint of the bank against Limpin and Sarmiento was based on the failure of thelatter to comply with their obligation as spelled out in the Trust Receipt executed by them. Thisbreach of obligation is separate and distinct from any criminal liability for “misuse and/ormisappropriation of goods or proceeds realized from the sale of goods, documents or instrumentsreleased under trust receipts,” punishable under Section 13 of the Trust Receipts Law in relation toArticle 315(1)(b) of the RPC. Being based on an obligation ex contractu and not ex delicto, the civil action may proceed independently of the criminal proceedings instituted againstpetitioners regardless of the result of the latter.

c. Independent Civil Action

Art. 30. When a separate civil action is brought to demand civil liability arising from acriminal offense, and no criminal proceedings are instituted during the pendency of thecivil case, a preponderance of evidence shall likewise be sufficient to prove the actcomplained of.

Art. 31. When the civil action is based on an obligation not arising from the act oromission complained of as a felony, such civil action may proceed independently of thecriminal proceedings and regardless of the result of the latter.

Rules of Court

Section 3. When civil action may proceeded independently. — In the cases provided for inArticles 32, 33, 34 and 2176 of the Civil Code of the Philippines, the independent civilaction may be brought by the offended party. It shall proceed independently of thecriminal action and shall require only a preponderance of evidence. In no case, however,may the offended party recover damages twice for the same act or omission charged inthe criminal action.

Andamo v. IAC


Emmanuel and Natividad Andamo owned a parcel of land adjacent to that of the Missionaries of OurLady of La Sallette. Within the land of Our Lady, waterpaths and an artificial lake were constructed,allegedly inundating and eroding the Andamos’ land. This caused a young man to drown, damagedthe Andamos’ crops and fences, and endangered their lives. The Andamos instituted a criminal actionagainst the officers and directors of Our Lady for destruction by means of inundation under Art. 324 ofthe RPC. Subsequently, they filed a civil case for damages against the respondents. Upon motion ofrespondents, the civil case was dismissed for lack of jurisdiction, since the criminal case institutedahead of the civil case was still unresolved. This was based on the provision of the Rules of Courtwhich provides that criminal and civil actions arising from the same offense may be institutedseparately, but after the criminal action has been commenced, the civil action cannot be instituteduntil final judgment has been rendered in the criminal action.

ISSUE: Whether the civil action should have been dismissed.

HELD: No. The civil action should not have been dismissed since it was based, not on crime, but onquasi-delict under Article 2176 of the Civil Code.

In quasi-delicts, the civil action is entirely independent of the criminal case according toArticles 33 and 2177 of the Civil Code. To subordinate the civil action contemplated in the saidarticles to the result of the criminal prosecution – whether it be conviction or acquittal – would rendermeaningless the independent character of the civil action and clear injunction in Article 31, that thisaction may proceed independently of the criminal proceedings and regardless of the resultof the latter, subject only to the rule against double recovery.

Cancio v. Isip

Cancio filed 3 counts of violation of BP22 against Isip, who had issued 3 bad checks. The case wasdismissed. Subsequently, 3 cases for estafa were filed. The case was dismissed again. Cancio thenfiled a civil case for collection of sum of money to recover the value of the 3 checks from Isip. Isipmoved to dismiss on the ground that the action is barred by res judicata and that Cancio was guilty offorum shopping.

ISSUES:

3. Whether the civil action for collection is barred by res judicata.4. Whether there was forum shopping.

HELD: No to both.

An act or omission causing damage to another may give rise to two separate civil liabilities:

3. ex delicto under Art. 100 of the RPC; and4. independent civil liabilities such as:

c. those not arising from an act or omission complained of as a felony, such as culpacontractual, violations of Articles 31, 32, and 34 of the Civil Code, and culpa aquilianaunder Article 2176 of the Civil Code;

d. where the injured party is granted a right to file an action independent and distinct fromthe criminal action (ex: Art. 33 of the Civil Code)

Either may be enforced against the offender, but the offended party cannot recover damages twice forthe same act or omission or under both causes. Under the Rules on Criminal Procedure, civil liabilityex delicto is deemed instituted with the criminal action, but the offended party may file the separatecivil action before the prosecution starts to present evidence. However, the independent civilactions may be filed separately and prosecuted independently even without any reservationin the criminal action.


In this case, the basis of the complaint is culpa contractual. It is an independent civil actionwhich is based on Isip’s breach of a contractual obligation. This may proceed independentlyof the criminal proceedings, regardless of the result of the latter. There is no res judicatabecause there is no identity of causes of action.

2. Effects

a. acquittal/dismissal

Civil Code, Art. 29. When the accused in a criminal prosecution is acquitted on the groundthat his guilt has not been proved beyond reasonable doubt, a civil action for damages forthe same act or omission may be instituted. Such action requires only a preponderance ofevidence. Upon motion of the defendant, the court may require the plaintiff to file a bondto answer for damages in case the complaint should be found to be malicious.

If in a criminal case the judgment of acquittal is based upon reasonable doubt, the courtshall so declare. In the absence of any declaration to that effect, it may be inferred fromthe text of the decision whether or not the acquittal is due to that ground.

Rules of Court

Rule 111 [2-b]. The extinction of the penal action does not carry with it extinction of thecivil action. However, the civil action based on delict shall be deemed extinguished if thereis a finding in a final judgment in the criminal action that the act or omission from whichthe civil liability may arise did not exist.

Rule 120 [2]. Contents of the judgment. – If the judgment is of conviction, it shall state(1) the legal qualification of the offense constituted by the acts committed by the accusedand the aggravating or mitigating circumstances which attended its commission; (2) theparticipation of the accused in the offense, whether as principal, accomplice, or accessoryafter the fact; (3) the penalty imposed upon the accused; and (4) the civil liability ordamages caused by his wrongful act or omission to be recovered from the accused by theoffended party, if there is any, unless the enforcement of the civil liability by a separatecivil action has been reserved or waived.

In case the judgment is of acquittal, it shall state whether the evidence of theprosecution absolutely failed to prove the guilt of the accused or merely failed to prove hisguilt beyond reasonable doubt. In either case, the judgment shall determine if the act oromission from which the civil liability might arise did not exist.

Padilla v. Court of Appeals

Padilla et al were charged with grave coercion in the CFI after forcibly opening and demolishing themarket stalls and carting away the merchandise of complainants. The CFI convicted them. Thejudgment was appealed to the CA on the ground that it was not supported by the evidence. The CAmodified the CFI’s judgment and acquitted Padilla et al on the ground of reasonable doubt. They were,however, ordered to solidarily pay the complainants P9,600 as actual damages. An MR was filed,contending that their acquittal as to criminal liability results in the extinction of their civil liability.


ISSUE: Whether the CA erred in requiring Padilla et al to pay civil indemnity after acquitting themfrom the criminal charge.

HELD: The CA was correct.

Padilla et al were acquitted because of reasonable doubt and not because they did not commit theacts stated in the charge against them. There is no dispute over the forcible opening of the marketstall, its demolition with axes and other instruments, and the carting away of the merchandise. Thepetitioners were acquitted because these acts were denominated coercion when they properlyconstituted some other offense such as threat or malicious mischief. They could not, however, beconvicted under the latter offenses because the information did not charge them with the same.

In this case, where the criminal liability was extinguished, the civil liability arising from the crime wasalso extinguished. However, the same act or omission gave rise to two kinds of civil liabilities: onearising from crime and the other arising from quasi-delict, subject to the rule on double recovery. It ison the latter that the award of damages was based. The only time that acquittal will result inextinction of both kinds of civil liability is where the ruling was that the act complained of did not exist.

Despite Article 29 of the Civil Code, which provides for the institution of a civil action in case ofacquittal, there is no more need to institute a civil action in this case because all of the facts necessaryto award damages were before the court. To require an action to be filed anew would be to clog thedockets unnecessarily.

Heirs of Guaring v. CA

A Philippine Rabbit bus collided with a car, killing the driver of the car. An action for damages basedon quasi-delict was filed by the heirs of Guaring against Philippine Rabbit. The RTC found the driver ofthe bus at fault and awarded damages. On appeal, the CA set aside the RTC decision on the strengthof a decision rendered by another RTC in a criminal case for reckless imprudence resulting in homicideacquitting the bus driver, based on reasonable doubt. The appellate court held that since the basis ofpetitioners’ action was the alleged negligence of the bus driver, the latter’s acquittal in the criminalcase rendered the civil case based on quasi-delict untenable.

ISSUE: Whether the acquittal of the driver in the criminal case bars a civil action based on quasi-delict.

HELD: No. Acquittal of the accused, even if based on a finding that he is not guilty, does not carrywith it the extinction of the civil liability based on quasi-delict. Even if damages are sought on thebasis of crime and not quasi-delict, the acquittal was based not on a finding that he was not guilty butonly on reasonable doubt. The judgment of acquittal extinguishes the liability of the accused fordamages only when it includes a declaration that the facts from which the civil liability might arise didnot exist.

Sapiera v. CA

Sapiera bought merchandise from Sua and paid for them using two checks issued by Arturo deGuzman and signed at the back by Sapiera. The checks were dishonored. Sapiera was charged withfour counts of estafa and De Guzman was charged with two violations of BP22. The RTC acquittedSapiera of all the charges of estafa but did not rule on whether she could be held civilly liable for thechecks she indorsed to Ramon Sua. De Guzman was convicted. Sua appealed on the civil aspect andprayed that the court order Sapiera to pay the aggregate value of the checks indorsed by her plusinterest, etc. The CA denied the appeal but, on MR, held that Sapiera was liable for P335K minusP125k that De Guzman had already paid.

ISSUE: Whether Sapiera’s acquittal extinguished her liability for damages.

HELD: No, Sapiera could still be and was properly held liable for damages.


The judgment of acquittal extinguishes the liability of the accused for damages only when it includes adeclaration that the fact from which the civil liability might arise did not exist. Thus, the civil liability isnot extinguished by acquittal where: (a) the acquittal is based on reasonable doubt; (b) where thecourt expressly declares that the liability of the accused is not criminal but only civil in nature; and,(c) where the civil liability is not derived from or based on the criminal act of which the accused isacquitted.

In this case, Sapiera’s acquittal was due to the fact that conspiracy was not proved before the trialcourt. However, despite the absence of conspiracy, she did sign the backs of the checks and becamean indorser thereon and obliged herself to pay the amount of the checks to the holder.

b. extinction of civil liability

Rule 111 [2-b]. The extinction of the penal action does not carry with it extinction of thecivil action. However, the civil action based on delict shall be deemed extinguished if thereis a finding in a final judgment in the criminal action that the act or omission from whichthe civil liability may arise did not exist.

Bunag v. CA

Conrado Bunag and Zenaida Cirilo were former sweethearts. Allegedly, Bunag forcibly abducted Cirilo,brought her to a motel and deflowered her against her will. He then brought her to his grandmother’shouse where they lived together for 21 days. Bunag promised to marry her, but suddenlydisappeared. A criminal action for forcible abduction was filed against Bunag, but this was dismissedby the fiscal at the preliminary investigation stage. Cirilo then filed a civil action for damages againstBunag on account of the forcible abduction. The trial court awarded Cirilo damages. Bunag claimsthat the dismissal of the criminal action for abduction should have extinguished his civil liability.

ISSUE: Whether the dismissal of the criminal case result in the extinction of the civil liability.

HELD: No. Extinction of the penal action does not carry with it the extinction of civil liability unlessthe extinction proceeds from a declaration in a final judgment that the fact from which the civil mightarise did not exist. In this case, the dismissal of the complaint for forcible abduction with rape was bymere resolution of the fiscal at the preliminary investigation stage. There was no declaration in a finaljudgment that the fact from which the civil case might arise did not exist. Consequently, the dismissaldid not in any way affect the right Cirilo to institute a civil action arising from the offense because suchpreliminary dismissal of the penal action did not carry with it the extinction of the civil action.

3. Prejudicial Question

Art. 36. Pre-judicial questions which must be decided before any criminal prosecution maybe instituted or may proceed, shall be governed by rules of court which the Supreme Courtshall promulgate and which shall not be in conflict with the provisions of this Code.

Rules of Court – Rule 111 Sec. 6. Suspension by reason of prejudicial question. – Apetition for suspension of the criminal action based upon the pendency of a prejudicialquestion in a civil action may be filed in the office of the prosecutor or the courtconducting the preliminary investigation. When the criminal action has been filed in courtfor trial, the petition to suspend shall be filed in the same criminal action at any timebefore the prosecution rests. Sec. 7. Elements of prejudicial question. – The elements of a prejudicial questions are:(a) the previously instituted civil action involves an issue similar or intimately related tothe issue raised in the subsequent criminal action, and (b) the resolution of such issuedetermines whether or not the criminal action may proceed

What is a prejudicial question?


A prejudicial question is one based on a fact separate and distinct from the crime but is so intimatelyconnected with it that it determines the guilt or innocence of the accused.

Elements:

1. the previously instituted civil action involves an issue similar or intimately related to the issueraised in the subsequent criminal action, and

2. the resolution of such issue determines whether or not the criminal action may proceed.

Take note that the new rule is that the civil action must have been previously instituted in order toconstitute a prejudicial question (Torres v. Garchitorena).

Apa v. Judge Fernandez

An information for violation of the Anti-Squatting Law was filed against Apa, et al. It alleged that theaccused built residential houses on Rosita Tigol’s land and against her will. Apa, et al moved for thesuspension of the arraignment on the ground that there was a prejudicial question pending resolutionin another case being tried in another branch the same court, where Apa, et al seek a declaration ofthe nullity of Rosita’s title to the lot in question and the partition of the lot in question among themand Rosita Tigol as heirs of Filomeno and Rita Taghoy. The case had been filed three years before thesquatting complaint was filed.

ISSUE: Whether the question of ownership over the lot, which was pending in a civil case, is aprejudicial question justifying suspension of the proceedings in the criminal case.

HELD: Yes, it is a prejudicial question.

A prejudicial question is a question which is based on a fact distinct and separate from the crime butso intimately connected with it that its resolution is determinative of the guilt or innocence of theaccused. To justify suspension of the criminal action, it must appear not only that the civil caseinvolves facts intimately related to those upon which the criminal prosecution is based but also thatthe decision of the issue or issues raised in the civil case would be decisive of the guilt or innocence ofthe accused.

The elements of a prejudicial question are: (a) the civil action involves an issue similar or intimatelyrelated to the issue raised in the criminal action; and (b) the resolution of such issue determineswhether or not the criminal action may proceed.

Since the information states that Apa, et al occupied the lot without the consent of the owner, it mustfirst be determined who the owner is.

In fact, subsequent to the filing of the information, the TCT of the lot in question was cancelled andthe parties were held to be co-owners of the lot, which they inherited from their parents. Surely, ifApa, et al are co-owners of the lot in question, they cannot be found guilty of squatting because theyare as much entitled to the use and occupation of the land as are Rosita Tigol and her family.

Beltran v. People

Husband filed a petition for nullity of marriage on the ground of psychological incapacity against wife.In her answer, Wife alleged that it was Husband who abandoned the conjugal home and lived withanother woman. Wife subsequently filed a criminal complaint for concubinage against Husband andhis paramour. The information was filed against them. Husband, in order to forestall the issuance ofa warrant for his arrest, filed a motion to defer proceedings on the ground that there was a pendingcivil case for the declaration of nullity of his marriage, and this constituted a prejudicial question tothe determination of the criminal case.

ISSUE: Whether the pendency of the petition for declaration of nullity or marriage based onpsychological incapacity is a prejudicial question to the criminal case for concubinage.


HELD: No. For a civil case to be considered prejudicial to a criminal action, it must appear not onlythat the said civil case involves the same facts upon which the criminal prosecution would be based,but also that in the resolution of the issue or issues raised in the aforesaid civil action, the guilt orinnocence of the accused would necessarily be determined. According to the Family Code and thecase of Domingo v. CA, it is only for purposes of remarriage that a final judgment declaring a priormarriage void is the only acceptable proof of the nullity of such first marriage. In other cases, otherevidence of the nullity of the marriage may be presented. Thus, in a case for concubinage, theaccused need not present a final judgment declaring his marriage void, for he can adduce otherevidence. Thus, he need not wait for final judgment in the case for declaration of nullity.

With regard to petitioner’s argument that he could be acquitted of the charge of concubinage shouldhis remarriage be declared void, suffice it to state that even a subsequent pronouncement that hismarriage is void from the beginning is not a defense. Parties to the marriage should not be permittedto judge for themselves the nullity of their marriage. A marriage is presumed valid until declared voidby the courts, and he who cohabits with a woman not his wife before judicial declaration of nullity ofthe marriage assumes the risk of being prosecuted for concubinage.

Marbella-Bobis v. Bobis

There are three marriages involved here: (1) Isagani Bobis & Maria Dulce Javier(2) Isagani Bobis and Imelda Marbella(3) Isagani Bobis and Julia Sally Hernandez

Upon Imelda Marbella-Bobis’s complaint, an information for bigamy was filed against Isagani.Sometime thereafter, Isagani initiated a civil action for the judicial declaration of absolute nullity of hisfirst marriage on the ground that it was celebrated without a marriage license. Isagani then filed amotion to suspend the proceedings in the criminal case for bigamy invoking the pending civil case fornullity of the first marriage as a prejudicial question to the criminal case.

ISSUE: Whether the subsequent filing of a civil action for declaration of nullity of a previous marriageconstitutes a prejudicial question to a criminal case for bigamy.

HELD: No. In the case at bar, Isagani's clear intent is to obtain a judicial declaration of nullity of hisfirst marriage and thereafter to invoke that very same judgment to prevent his prosecution forbigamy. He cannot have his cake and eat it too. Otherwise, all that an adventurous bigamist has to dois to disregard Article 40 of the Family Code, contract a subsequent marriage and escape a bigamycharge by simply claiming that the first marriage is void and that the subsequent marriage is equallyvoid for lack of a prior judicial declaration of nullity of the first.

Here, Isagani was for all legal intents and purposes regarded as a married man at the time hecontracted his second marriage with petitioner. Against this legal backdrop, any decision in the civilaction for nullity would not erase the fact that Isagani entered into a second marriage during thesubsistence of a first marriage. Thus, a decision in the civil case is not essential to the determinationof the criminal charge. It is, therefore, not a prejudicial question. Isagani cannot be permitted to usehis own malfeasance to defeat the criminal action against him.

[Also, take note that in this case, the criminal case was instituted prior to the civil case. Hence, noprejudicial question under the new rules which require that the civil action be previously instituted.]

When is an action for declaration of nullity of marriage prejudicial to a criminal case for bigamy?

The only instance I can think of is: Husband marries Wife1. Then, Wife2 forces him at gunpoint tomarry her. Husband files an action to annul the marriage to Wife2 on the ground of vitiated consent.Then Wife1 institutes a criminal action for bigamy against Husband. In this case, the criminal actionshould be suspended pending the determination of the validity of the marriage to Wife2. This isbecause if the trial court finds that the consent of the Husband was indeed vitiated, then that means


that he also did not willfully commit bigamy. Thus, the civil action is determinative of the guilt orinnocence of the husband.

Torres v. Garchitorena

Susana Realty, Inc. owned parcels of land located at Cavite. These were adjacent to the sea and overtime portions thereof were submerged by sea water. Mayor Torres caused the leveling andreclamation of the submerged portion of SRI’s property for the relocation of squatters. SRI filed withthe Ombudsman a criminal complaint against Torres for violation of the Anti-Graft & Corrupt PracticesAct. Ombudsman charged Torres & Alvarez. Subsequently, the Republic of the Philippines filed withthe RTC a complaint against SRI for reversion of the property back to the State. The Republic allegedthat said property had been ascertained by the DENR to be part of Manila Bay. Torres and Alvarezfiled a motion with the Sandiganbayan for the suspension of the proceedings in the criminal case onthe ground of the existence of a prejudicial question in the civil case filed by the Republic.

ISSUE: Whether there was a prejudicial question.

HELD: No. In order to constitute a prejudicial question, the civil action must be instituted prior tothe institution of the criminal action. In this case, the information was filed with the Sandiganbayanahead of the civil case. Thus, no prejudicial question exists.

4. Subsidiary Liability

Art. 102. Subsidiary civil liability of innkeepers, tavernkeepers and proprietors ofestablishments. — In default of the persons criminally liable, innkeepers, tavernkeepers,and any other persons or corporations shall be civilly liable for crimes committed in theirestablishments, in all cases where a violation of municipal ordinances or some general orspecial police regulation shall have been committed by them or their employees.

Innkeepers are also subsidiarily liable for the restitution of goods taken by robbery ortheft within their houses from guests lodging therein, or for the payment of the valuethereof, provided that such guests shall have notified in advance the innkeeper himself, orthe person representing him, of the deposit of such goods within the inn; and shallfurthermore have followed the directions which such innkeeper or his representative mayhave given them with respect to the care and vigilance over such goods. No liability shallattach in case of robbery with violence against or intimidation of persons unlesscommitted by the innkeeper's employees.

Art. 103. Subsidiary civil liability of other persons. — The subsidiary liability established inthe next preceding article shall also apply to employers, teachers, persons, andcorporations engaged in any kind of industry for felonies committed by their servants,pupils, workmen, apprentices, or employees in the discharge of their duties.

Requisites of subsidiary civil liability of the employer, teacher, corporation, etc:

(a) the existence of an employer-employee relationship; (b) that the employer is engaged in some kind of industry; (c) that the employee is adjudged guilty of the wrongful act and found to have committed the offense

in the discharge of his duties (not necessarily any offense he commits "while" in the discharge ofsuch duties); and

(d) that said employee is insolvent.

a. Concept and Requisites


Yonaha v. CA and the Heirs of Ouano

Ouana, allegedly a driver of Evelyn Yonaha, was charged with and convicted of Reckless ImprudenceResulting In Homicide – he ran over and killed Hector Cañete. Ouano pleaded guilty and the trial courtsentenced him to imprisonment and to pay the heirs of Cañete a total of P90k in damages. A writ ofexecution was issued for the satisfaction of the monetary award but the writ was returned unsatisfiedafter Ouano manifested his inability to pay the monetary obligation. The heirs of Ouano filed a motionfor subsidiary execution and the trial court, without notice or hearing to Yonaha, ordered the issuanceof a writ of subsidiary execution. The sheriff went to Yonaha's residence to enforce the writ, and it wasthen, allegedly for the first time, that Yonaha was informed of Ouano's conviction. Yonaha filed amotion to stay and to recall the subsidiary writ on the ground of denial of due process and on the factthat the employer’s liability had yet to be established.

ISSUE: Whether the finding of the subsidiary liability of an employer requires notice and hearing.

HELD: Yes, notice and hearing are required. The judgment of conviction of the employee, of course,is conclusive upon the employer and the subsidiary liability may be enforced in the same criminalcase, but to afford the employer due process, the court should hear and decide that liability on thebasis of the conditions required therefor by law. There is a need for notice and hearing to determinewhether the requisites for the subsidiary liability of an employer under Art. 103 of the RPC arepresent.

Catacutan v. Heirs of Kadusale

Driver hit a tricycle, killing its driver and passenger. He was convicted of reckless imprudenceresulting in double homicide with physical injuries and damages to property and was sentenced toimprisonment & to pay damages. The writ of execution was returned unsatisfied as the driver hadnothing to pay off the damages in the decision. A subsidiary writ of execution was served on hisemployer. Employer opposed claiming that she was never a party to the criminal case, and toproceed against her would violate due process.

ISSUE: Whether the employer is subsidiarily liable.

HELD: Yes. Even if she was not able to participate in the criminal action, it cannot be said that theemployer was not given due process. She was furnished a copy of the motion for subsidiary writ ofexecution to which she filed her opposition. Thus, she is deemed to have been given notice andhearing.

b. diligence not a defense

Connel Brothers Company v. Aduna

Aduna, employed as a driver by Ex-Meralco Employees Transportation Company (EMETCO), whiledriving the latter’s bus in a negligent manner, bumped an Oldsmobile car owned by Connel BrothersCompany. The car fell into a canal and sustained damage. Two passengers sustained physical injuries.

Aduna was convicted of damage to property and serious physical injuries thru reckless imprudenceand had served his prison sentence. At the trial of said criminal case, the injured parties reserved theirright to file the corresponding civil suit for damages. The civil case was filed and Aduna and EMETCOwere adjudged to be liable for damages, despite EMETCO’s allegation of diligence in selection andsupervision.

ISSUE: Whether EMETCO is solidarily liable.

HELD: No, EMETCO is not solidarily liable. Its liability is merely subsidiary.

Where the act or omission constitutes an offense, an injured party generally has two options by whichto recover damages: via the offender’s civil liability arising from conviction of a crime or via theoffender’s civil liability arising from quasi-delict.


If he chooses the criminal avenue, and an employer’s subsidiary liability is sought to beenforced, the conviction of the employee is conclusive on the employer and the latter maybe made to pay in the event that the former is insolvent. Here, the guilt of the accusedmust be proved beyond reasonable doubt and the conviction is conclusive on the employer– there is no defense of diligence in selection and supervision of the employee.

If he chooses the civil action, upon a finding of the employee’s negligence, the employer’ssolidary liability attaches unless he proves diligence in the selection and supervision of theemployee concerned. Here, negligence may be proved by a preponderance of evidence.

In this case, it is clear that the injured parties based their action on the result of the criminal caseagainst Aduna or upon his civil liability arising from crime. There was no evidence presented in thecivil case to show Aduna’s negligence; only his conviction was alleged.

Because the action was based on the result of the criminal case, EMETCO is only subsidiarily liable.Aduna’s insolvency and the other requisites for a finding of subsidiary liability must be satisfied.

PART TWO

VII. DAMAGES

1. CONCEPT/KINDS OF DAMAGES

Art. 2197. Damages may be:

1. Actual or compensatory;2. Moral;3. Nominal;4. Temperate or moderate;5. Liquidated; or6. Exemplary or corrective

What are the kinds of damages and give a brief explanation.

Damages may be:

1. Actual – This is compensation for the pecuniary loss actually suffered and proved by theplaintiff.

Examples:

A robber steals a ring. Actual damages = value of the ringSomeone beats you up. Actual damages = expenses for going to the hospital, doctor,medicineContract with supplier of raw materials. Supplier fails to comply and because of that, thebuyer fails to manufacture his products. Actual damages = unrealized profit.

2. Moral – Moral damages include:a. physical sufferingb. mental anguish


c. frightd. serious anxietye. besmirched reputationf. wounded feelingsg. moral shockh. social humiliationi. similar injury

Examples:

Someone beats you up. Moral damages = pain, physical sufferingSomeone kills your wife. Moral damages = moral suffering, which is presumed by law once afamily member dies.

3. Nominal – Adjudicated in order that a right of the plaintiff, which has been violated orinvaded by the defendant, may be vindicated or recognized, and not for the purpose ofindemnifying the plaintiff for any loss suffered by him.

Example: Police officers barge into your home without a warrant.

4. Temperate – More than nominal but less than actual/compensatory. May be recovered whenthe court finds that some pecuniary loss has been suffered but its amount cannot, from thenature of the case, be proved with certainty.

Example: Evidence presented at the trial to show the value of the damage was wrong, but thedamage itself was proven.

5. Liquidated - agreed upon by the parties to a contract, to be paid in case of breach thereof.

Example: Contract for construction which states that in case of delay in completion, thecontractor must pay 1/10 of 1% of the project cost for every day of delay.

6. Exemplary or corrective - imposed, by way of example or correction for the public good, inaddition to the moral, temperate, liquidated or compensatory damages.

Example: When offender acted with evident bad faith and malice, such as in crimes attendedby aggravating circumstances.

General Principles of Damages:

1. The amount should be fair and just and commensurate to the damage.2. Damage and the amount must be proven by competent evidence. “Competent” means that it

is admissible.

How to prove:

Example: You lost jewelry to robbers. To prove the amount of damages, you must presentdocumentary evidence, such as receipts. But you probably don’t keep the receipts of yourjewelry around, so you can also present testimonial evidence of an expert witness, such as ajewelry appraiser.

3. Only proximate damages, not remote or speculative, can be recovered.

Examples:

If you run over a chicken, you only pay the value of the chicken, not the eggs that it wouldhave produced.


Client appealed a case that he lost. His lawyer failed to file appellant’s brief, so his appeal wasdismissed. Client filed for damages against the lawyer, claiming that he would have beenawarded P1M by the appellate court had the brief been filed. SC held that this was toospeculative. Client was proceeding from the assumption that he would win the case onappeal, when the probability of this happening was not very high since he already lost in thelower court. But the SC ordered the lawyer to pay damages for his gross negligence in failingto file the brief.

So Ping Bun v. CA

ISSUE: Whether Tek Hua is entitled to the attorney’s fees of P200,000.

HELD: Tek Hua is entitled to an award of attorney’s fees BUT only in the amount of P100,000.

The trial court and the Court of Appeals were both correct in not awarding actual, moral, andexemplary damages. This is because So Ping Bun was not motivated by any malicious intent inprevailing upon DCCSI to lease the warehouse to his enterprise at the expense of Tek Hua. Hence, hecannot be deemed a malicious interferor.

However, this does not mean that So Ping Bun is totally exempt from liability. He is still liable forattorney’s fees. The recovery of attorney’s fees in the concept of actual or compensatory damages, isallowed under the circumstances provided for in Art. 2208 of the Civil Code. One such occasion iswhen the defendant’s act or omission has compelled the plaintiff to litigate with third persons or toincur expenses to protect his interest. But it has been consistently held that the award of considerabledamages should have clear factual and legal bases. In connection with attorney’s fees, the awardshould be commensurate to the benefits that would have been derived from a favorable judgment.Settled is the rule that fairness of the award of damages by the trial court calls for appellate reviewsuch that the award, if far too excessive, can be reduced. This ruling applies with equal force on theaward of attorney’s fees. In a long line of cases, it has been said that it is not sound policy to place apenalty on the right to litigate.

In this case, considering that the lease contract of Tek Hua ran only on a month-to-month basis, theSC finds the award of P200,000 still exorbitant in the light of prevailing jurisprudence. Consequently,the award is reduced to P100,000.

2. General Principle of Recovery

PAL v. Miano

Miano took a PAL flight to Germany. When he arrived in Austria, his checked-in luggage was missing.He reported the matter to Lufthansa authorities. It was only 11 days later that his baggage wasdelivered to him. He claimed that due to the delay, he was forced to borrow money for clothes, pay$200 for the transportation of his baggage from Austria to Czechoslovakia, and he lost a camera.Miano later instituted an action for damages before the RTC of Makati. PAL disclaimed any liability onthe ground that there was no report of mishandled baggage on flight PR 722, and no tracer telex fromits Viena Station. It also claimed that if it is at all liable, its obligation was limited by the WarsawConvention rate.

ISSUE: Whether Miano is entitled to damages and attorney’s fees.

HELD: No. But he is entitled to actual damages of $200 for expense incurred for the transportation ofhis baggage.

In breach of contract of carriage by air, moral damages are awarded only if the defendant actedfraudulently or in bad faith. There was no bad faith on the part of PAL. In fact, upon complaint, itimmediately coordinated with its central baggage services to trace the bag and found it. Exemplarydamages cannot be awarded either. In case of contracts and quasi contracts, the defendant must


have acted in a fraudulent, oppressive, reckless, or malevolent manner for exemplary damages to begiven. These do not characterize PAL’s actions.

When moral and exemplary damages are eliminated, attorney’s fees must be deleted as well.

People v. Paraiso

Paraiso and an unknown companion, John Doe, willfully and unlawfully entered into the house of aneighbor, Lolita Tigley, and robbed certain articles such as jewelry, a rolex watch, P200 cash, and atelescope, all valued at P180 K. They then hogtied Paraiso’s 4 children, afterwhich they took Tigley toanother room and stabbed her to death.

The lower court then held that Paraiso was guilty beyond reasonable doubt of the special complexcrime of robbery with homicide attended by 3 aggravating circumstances: disregard of the respect duethe victim on account of her sex, that the act was committed in the victim’s dwelling withoutprovocation on the victim’s part, and that the accused took advantage of their superior strength.Paraiso was then sentenced to death and ordered to pay actual damages (P180K) as well as moraldamages (P200K) and exemplary damages ( P100K).

ISSUE: Did the court a quo err in finding Paraiso guilty beyond reasonable doubt?

HELD: No. But the award of damages is modified.

Judgment with regard to damages was modified by the SC in the following manner:

1. As regards the civil liability, following current jurisprudence, the amount of P50K isawarded for the death of the victim Tagley. No other proof is necessary other than the factof the death of the victim and the accused’s responsibility therefor.

2. As regards moral damages, such is in order because of the obvious pain, anguish, andgrief suffered by the victim’s children. However, since the purpose of such an award is notto enrich the victim’s children but to compensate them for the injuries to their feelings,the amount of P200K is reduced to P100 K.

3. As regards exemplary damages, the presence of one or more aggravating circumstancesjustifies such after proof that the offended party is entitled to moral, temperate, orcompensatory damages. However, in this case the amount of P100 K is reduced to P50 Kas such is already reasonable.

4. As regards actual damages, such can only be premised upon competent proof and on thebest evidence obtainable. In this case, except for the amount of P200 cash, the value ofthe rest of the stolen articles (jewelry, rolex, etc) are not matters of public knowledge andin the absence of receipts or any other competent evidence besides the self-servingvaluation of the prosecution, the award of actual damages should be reduced from P200Kto P200 as this was the only amount which was sufficiently proven by the prosecutionwitnesses.

Victory Liner v. Malecdan

Andres Malecdan was a 75 year-old farmer. While crossing the street, he was hit by a Victory Linerbus, along with the carabao he was riding. Both Andres and the carabao died. A criminal complaintfor reckless imprudence resulting in homicide and damage to property was filed against Joson.Subsequently, the heirs of Malecdan brought a suit for damages against Joson and Victory Liner. TheRTC held that Joson was negligent in driving the bus, while Victory Liner was guilty of negligence inthe selection and supervision of Joson. The RTC also awarded the following damages:

a. P50,000.00 as death indemnity;b. P88,339.00 for actual damages;


c. P200,000.00 for moral damages;d. P50,000.00 as exemplary damages;e. Thirty percent (30%) as attorney’s fees of whatever amount that can be collected by the

plaintiff; andf. The costs of the suit.

On appeal, the CA affirmed the RTC and fixed the award of attorney’s fees at P50,000.

ISSUE: Whether the award of damages by the RTC and its affirmation by the CA was proper.

HELD: Yes, but the amounts are modified/reduced.

Actual Damages: To justify an award of actual damages, there should be proof of the actual amountof loss incurred in connection with the death, wake or burial of the victim. Receipts showing expensesincurred some time after the burial of the victim, such as expenses relating to the 9th day, 40th dayand 1st year death anniversaries, should not be taken into account. In this case, the trial courtawarded P88,339.00 as actual damages. While these were duly supported by receipts, these includedthe amount of P5,900.00, the cost of one pig which had been butchered for the 9th day deathanniversary of the deceased. This item cannot be allowed. Therefore, the amount of actual damagesis reduced to P82,439.00.00.

Moral Damages: The award of P200,000.00 for moral damages should likewise be reduced. The trialcourt found that the wife and children of the deceased underwent “intense moral suffering” as a resultof the latter’s death. Under Art. 2206 of the Civil Code, the spouse, legitimate children and illegitimatedescendants and ascendants of the deceased may demand moral damages for mental anguish byreason of the death of the deceased. Under the circumstances of this case, an award of P100,000.00would be in keeping with the purpose of the law in allowing moral damages.

Idemnity: The award of P50,000.00 for indemnity is in accordance with current rulings of the Court.

Exemplary Damages: Art. 2231 provides that exemplary damages may be recovered in casesinvolving quasi-delicts if the defendant acted with gross negligence. Exemplary damages are imposednot to enrich one party or impoverish another but to serve as a deterrent against or as a negativeincentive to curb socially deleterious actions. In this case, petitioner’s driver Joson, Jr. was grosslynegligent in driving at such a high speed along the national highway and overtaking another vehiclewhich had stopped to allow a pedestrian to cross. Worse, after the accident, Joson, Jr. did not stopthe bus to help the victim. Under the circumstances, the trial court’s award of P50,000.00 asexemplary damages is proper.

Attorney’s Fees: Private respondents are entitled to attorney’s fees. Under Art. 2008 of the CivilCode, attorney’s fees may be recovered when, as in the instant case, exemplary damages areawarded. In the recent case of Metro Manila Transit Corporation v. Court of Appeals, an award ofP50,000.00 as attorney’s fees was held to be reasonable. Hence, private respondents are entitled toattorney’s fees in that amount.

3. Actual Damages

Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequatecompensation only for such pecuniary loss suffered by him as he has duly proved. Suchcompensation is referred to as actual or compensatory damages.

Art. 2200. Indemnification for damages shall comprehend not only the value of the losssuffered, but also that of the profits which the obligee failed to obtain.


Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who actedin good faith is liable shall be those that are the natural and probable consequences of thebreach of the obligation, and which the parties have foreseen or could have reasonablyforeseen at the time the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible forall damages which may be reasonably attributed to the non-performance of the obligation.

Art. 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages whichare the natural and probable consequences of the act or omission complained of. It is notnecessary that such damages have been foreseen or could have reasonably been foreseenby the defendant.

Art. 2203. The party suffering loss or injury must exercise the diligence of a good father ofa family to minimize the damages resulting from the act or omission in question.

Art. 2205. Damages may be recovered:

(1) For loss or impairment of earning capacity in cases of temporary or permanentpersonal injury;

(2) For injury to the plaintiff's business standing or commercial credit.

Art. 2207. If the plaintiff's property has been insured, and he has received indemnity fromthe insurance company for the injury or loss arising out of the wrong or breach of contractcomplained of, the insurance company shall be subrogated to the rights of the insuredagainst the wrongdoer or the person who has violated the contract. If the amount paid bythe insurance company does not fully cover the injury or loss, the aggrieved party shall beentitled to recover the deficiency from the person causing the loss or injury.

Art. 2209. If the obligation consists in the payment of a sum of money, and the debtorincurs in delay, the indemnity for damages, there being no stipulation to the contrary,shall be the payment of the interest agreed upon, and in the absence of stipulation, thelegal interest, which is six per cent per annum.

Article 2199 provides the general rule that one is entitled to an adequate compensation only for suchpecuniary loss suffered by him as he has duly proved. The exceptions are:

1. provided by law: example is the fixed indemnity. If someone is killed, automatically, anindemnity of 50K is awarded. There is only a need to prove the fact of death.

2. stipulation: if the parties stipulate the amount of damages in case of breach of contract, itbecomes liquidated damages.

Actual damages may be:

1. Under Article 2200a. value of the loss sufferedb. profits which the obligee failed to obtain (unrealized profit)

how to prove this: documentary evidence

Example: X and Y killed A and threw his body into a river, not knowing that he had P100K inhis pocket. X and Y are liable for 100K in actual damages because they are liable for all the


damages attributed to their criminal act, even if they did not know of or contemplate the lossof the 100K.

2. Under Article 2205a. loss or impairment of earning capacity due to temporary or permanent injury

“permanent injury” does not mean that you’re a vegetable but that you cannot dothe same job as before because of the injury

how to prove this: present documentary evidence, such as the ITR, payrollb. injury to the plaintiff’s business standing or commercial credit

how to prove this: present documentary evidence, such as contracts for futurebusiness or comparison or earnings before and after the injury.

3. Fixed indemnity – The law provides a fixed indemnity in certain cases, such as death, rape,seduction, etc. For death: 50K.

4. Loss of earning capacity – This presupposes that the person concerned is dead. How tocompute:

First step: Determine the life expectancy using the following formula:

Life expectancy = 2/3 x (80 - age of the deceased at the time of death)

Second step: Compute for earning capacity using the following formula:

Earning capacity = net earnings per year x life expectancy2

How do you prove the net earnings per year:

a. documentary evidence: ITR, payrollb. Oral testimony on minimum wage (but this is not always admitted)

The net earnings of the deceased is divided by two since the law presumes that half of it goesto his living expenses. But if other evidence is presented to establish the actual personalexpenses of the deceased, then this figure may be used instead.

5. Interest

Rules:

a. If there is a stipulation as to the rate of interest, apply the rate unless it is contrary tolaw, morals, and good customs, in which case apply the legal rate.

b. If interest is imposed, but no rate is stipulated, or there is delay, apply the legal rate(either 6% or 12%)

(1) when the obligation involves the payment of indemnities in the concept ofdamage, the legal rate or interest is 6% computed as follows:

(a) from date of demand if the amount of indemnities can be establishedwith reasonable certainty;

(b) if not, from the date of the judgment of the trial court.

(2) When the obligation consists of a loan or forbearance of money, goods orcredits as well as judgment involving such loan or forbearance, the legal rateof interest shall be 12% per annum computed from default, that is, fromjudicial or extrajudicial demand.


(3) In both cases, the legal rate of interest shall be 12% from the finality ofjudgment until the judgment is paid.

Sample Problem:

Andrew was a 40 year-old company executive earning P400,000 a year. His wife Rose was engaged inthe realty business and was earning P20,000 a month on the average. One day, they were on the wayto a meeting where Rose would buy a land which she intended to resell at a profit of P200,000 when aspeeding truck hit their P500,000 car. The injured Andrew was brought to the hospital but late died,and Rose was incapacitated for 3 months. Hospital and funeral expenses cost P100,000 and P80,000.Their car was totally wrecked and the P50,000 money Rose was carrying as downpayment for the landwas lost or stolen. Compute for the actual damages.

2. Under Article 2200a. value of the loss suffered:

Hospital expenses P100KFuneral expenses P80KCar P500KMoney lost P50K

b. profits which the obligee failed to obtain (unrealized profit)

Expected profit from the sale of land P200K

3. Under Article 2205

c. loss or impairment of earning capacity due to temporary or permanent injury

Earnings of Rose for 3 months P20K x 3 months = P60K

d. injury to the plaintiff’s business standing or commercial credit: not applicable

4. Fixed indemnity: 50K for death of Andrew

5. Loss of earning capacity of Andrew:

First Step: Life expectancy = 2/3 x (80-40) = 26.67 years

Second Step: Earning capacity = (400,000/2) x 26.67 years= P5,333,333

6. Interest: 6%

PNOC Shipping v. CA

The plaintiff tried to prove actual damages by presenting his general manager who testified as to thevalue of the property damaged and also by presenting documentary evidence in the form of brochuresquoting the prices of similar equipment.

ISSUE: Whether the actual damages were adequately established by the evidence presented.

HELD: No. To enable an injured party to recover actual or compensatory damages, he is required toprove the actual amount of loss with reasonable degree of certainty premised upon competent proofon the best evidence available.

In this case, actual damages were proven through the sole testimony of Maria Efigenia’s generalmanager and certain pieces of documentary evidence. The testimony of the general manager as to thevaluation of the ship is not reliable because he is an interested party and because it was not within his


competence to determine the value of the property. On the other hand, the documentary evidence inthe form of brochures are not admissible for being hearsay evidence. They do not constitute anexception to the hearsay rule since they are not commercial lists. Since the persons who preparedthem were not presented in court, they cannot be admitted in evidence.

Nominal damages were awarded instead. [Though, in reality, they should have been called temperatedamages – the damage was proved, but the amount was not.]

Bank of America v. American Realty Corp

Bank of America NT & SA (BANTSA) is an international banking and financing institution licensed to dobusiness in the Philippines, organized under the laws of California. American Realty Corp. (ARC) is adomestic corporation. Bank of America Limited (BAIL) is a limited liability company organized underthe laws of England.

BANTSA and BAIL extended multi-million dollar loans to three corporate borrowers, all of which wereexisting under the laws of Panama and were foreign affiliates of ARC. The borrowers defaulted inpayment, so they entered into a restructuring agreement with BANTSA. As additional security for therestructured loans, ARC, as third party mortgagor, executed two REMs over its parcels of land inBulacan. The corporate borrowers defaulted, prompting BANTSA to file civil actions for collectionbefore foreign courts (England and Hong Kong). ARC was not impleaded in this civil actions filedbefore foreign courts.

Subsequently, BANTSA filed before the Office of the Provincial Sheriff of Bulacan an application forextrajudicial foreclosure of real estate mortgage. The properties were sold at public auction to ICCS.

ARS filed an action for damages against BANTSA for the latter’s act of foreclosing the mortgagesdespite the pendency of the civil suits before foreign courts for the collection of the principal loan.

ISSUE: Whether ARS is entitled to damages.

HELD: ARS is entitled to actual or compensatory damages inasmuch as the act of BANTSA inextrajudicially foreclosing the REM constituted a clear violation of the rights of ARC as third partymortgagor. This is because BANTSA, in filing a collection case, had effectively abandoned or waivedits right to foreclose the mortgage constituted by ARC.

Actual or compensatory damages are those recoverable because of pecuniary loss in business, trade,property, profession, job or occupation, and the same must be proved, otherwise if the proof is flimsyand non-substantial, no damages will be given. In this case, the valuation of the real properties whichARS lost as a result of the foreclosure was made by the Philippine Appraisal Company in a 23-pagereport. This was corroborated by the testimony of another witness presented by ARS. The judge alsoconducted an ocular inspection of the property. Based on these considerations, the SC affirms theruling of the trial court as regards the valuation of the property at P99M.

Petitioner questions the validity of an award of damages higher than that prayed for in the complaint.Actual damages higher than that prayed for in the complaint may be awarded by the court if it isproved by evidence, and the adverse party was given the opportunity to refute and object to theevidence. In this case, this requirement was satisfied. Hence, the award is justified.

a. damnum emergens/lucrum cessans

Art. 2200. Indemnification for damages shall comprehend not only the value of the losssuffered, but also that of the profits which the obligee failed to obtain.

Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who actedin good faith is liable shall be those that are the natural and probable consequences of the


breach of the obligation, and which the parties have foreseen or could have reasonablyforeseen at the time the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible forall damages which may be reasonably attributed to the non-performance of the obligation.

People v. Degoma

The Tagbilaran Friendly Bazaar was a victim of robbery on the evening of April 12, 1988, in the sumsof US$300 and P200. During such robbery, the security guard of the store, Alexander Parilla, wasallegedly shot and killed with the use of a firearm by Efren Degoma, who was one of the robbers. Thelower court found the accused guilty and also ordered them to jointly and severally indemnify theowners of the Tagbilaran Bazaar the sum of P200.00 and the equivalent exchange rate prevailing forUS$300, indemnify the heirs of Alexander Parilla in the sum of P36,000 for his death, P200,000 formoral damages, P87,947.94 for actual expenses, and P5,000 for attorney’s fees for counsel of Parilla.

ISSUE: Whether the award for damages was correct.

HELD: The award for actual damages should be reduced.

In delict, the defendant is liable for all damages which are the natural and probable consequences ofthe act or omission complained of. To seek recovery for actual damages, it is necessary to prove witha reasonable degree of certainty, premised upon competent proof and on the best evidence obtainableby the injured party the actual amount of loss. Courts cannot simply assume that damages weresustained by the injured party, nor can it rely on speculation or guesswork in determining the fact andamount of damages.

In this case, the award of actual damages in the amount of P87,947.94 is not sustained by a review ofthe evidence of record. Of the expenses allegedly incurred, the Court can only give credence tothose supported by a receipt and which appear to have been genuinely incurred inconnection with the death, wake, or burial of the victim.

The court cannot take account of receipts showing the following expenses:

1. those incurred before the date of the slaying of the victim; 2. those incurred after a considerable lapse of time from the burial of the victim which do not

have any relation to his death, wake, or burial; 3. those incurred for purely aesthetic or social purposes, such as the lining with marble of the

tomb of the victim; 4. those which appear to have been modified to show an increase in the amount of expenditure,

such as by adding a number to increase the purchase value from tens to hundreds; 5. those expenditures which could not be reasonably itemized or determined to have been

incurred in connection with the death, wake, or burial of the victim; 6. those which would nonetheless have been incurred, the death, wake or burial of the victim

being merely incidental; 7. and those which were not in fact shouldered by the immediate heirs of the victim, such as

plane trips by relatives or in-laws.

Having these guidelines, the Court puts the gross expenses proved by the immediate heirs of thevictim at P10,175.85. The Court off-sets the amount of P6,400, representing the alms received by theheirs of the victim against the amount of P10,175.85, leaving the amount of P3,775.85 as the actualamount of loss sustained by the immediate heirs of the victim.

The Court increases the amount of indemnity for the death of Parilla to P50,000 in line with presentjurisprudence.

Asuncion v. Evangelista


Evangelista in the 70s was the sole proprietor of a piggery. After a decade, he had it incorporated asEmbassy Farms Inc. He was the majority stockholder of the corporation, with 90% of the shares inhis name. He obtained loans from numerous banks and owed the millions. He was only able to payaround P200,000 of these debts. He probably then had no choice but to cede his treasured piggery toa rich fellow named Asuncion under a Memorandum of Agreement whereby Asuncion would pay theloans of Evangelista and Evangelista would in turn transfer to Asuncion his interest in Embassy Farmsas well as title to several properties that he had mortgaged, free from the encumbrance. Asuncionregularly paid Evangelista the amounts that he was required to pay under the MOA. When Asunciondemanded that Evangelista transfer title to the shares and to the mortgaged properties, Evangelistarefused. Asuncion later found out that some of the mortgaged properties had already beenforeclosed. He thereafter filed for rescission of the MOA. The RTC found that it was Asuncion whobreached the MOA; hence, it was Evangelista who was entitled to rescission and damages. The trialcourt declared the MOA rescinded and ordered Asuncion to pay Evangelista P32M as actual orcompensatory damages arising from the rescission of the MOA. Asuncion was further ordered to payaround P27M representing earnings of Embassy Farms as additional compensatory damages.

ISSUE: Whether Asuncion is entitled to rescission and is liable for damages.

HELD: Asuncion is entitled to rescission and is not liable for damages. However, he is not entitled todamages or to recovery of what he had paid either. Mutual restitution is impossible.

The MOA entered into by Evangelista and Asuncion should be rescinded. The refusal of Asuncion topay Evangelista’s overdue loans was justified, considering that Evangelista was the first to refuse todeliver to Asuncion the properties and certificates of stock that were the consideration for the almost6 million pesos in debt that Asuncion was to assume and pay.

The award of P32M in damages to Evangelista is totally baseless and must be struck down. Actual orcompensatory damages cannot be presumed but must be duly proved with reasonable degree ofcertainty.

Neither may the Court allow the grant of damages corresponding to the value of the land foreclosedby the creditors of Evangelista upon the latter’s failure to make his loan payments. Evangelista, in hisamended counterclaim, prayed for the rescission of the MOA. In case of rescission, while damagesmay be assessed in favor of the prejudiced party, only those kinds of damages consistent with theremedy of rescission may be granted, keeping in mind that had the parties opted for specificperformance, other kinds of damages would have been called for which are absolutely distinct fromthose kinds of damages accruing in the case of rescission. In this case, compensatory damagesconsisting of the value of Evangelista’s landholdings would have been proper in case he resorted tothe remedy of specific performance, not rescission. Since his counterclaim prayed for the rescission ofthe MOA, it was grave error for the lower court to have enforced said agreement by ordering Asuncionto pay him the value of the landholdings.

However, Asuncion is not entitled to recover the amount of P3M that he spent in compliance with hisundertaking under the MOA. Mutual restitution is required in rescission, but this presupposes thatboth parties may be restored in their original situation. In this case, an essential part of theconsideration of the amount of P3M paid by Asuncion was taking over the effective management ofEmbassy Farms. Mutual restitution would require Asuncion to restore Evangelista on the effectivemanagement of said corporation and that Evangelista return the amount to Asuncion. This has beenrendered impossible by the foreclosure of the landholdings of Evangelista and the shutdown of thepiggery’s operations.

b. disability/commercial credit

Art. 2205. Damages may be recovered:

(1) For loss or impairment of earning capacity in cases of temporary or permanentpersonal injury;

(2) For injury to the plaintiff’s business standing or commercial credit.


PNB v. CA

Lily Pujol opened with PNB an account denominated as “Combo Account”, a combination of SavingsAccount and Current Account in her business name “Pujol Trading” under which checks drawn againsther checking account could be charged against her savings account should the funds in her currentaccount be insufficient to cover the value of her checks.

She issued two checks, one to her daughter-in-law, and another to her daughter, both weredishonored allegedly for insufficiency of funds. When issued and presented for payment, however,there were sufficient funds in her savings account. Realizing its mistake as to the 2nd check, PNBsubsequently accepted and honored it.

Lily, however, filed with the RTC a complaint for moral and exemplary damages against PNB fordishonoring her checks despite sufficiency of her funds. The trial court rendered a decision orderingPNB to pay Lily moral damages of P100,000 and atty’s fees of P20,000. it found that Lily had sufferedmental anguish and besmirched reputation as a result of the dishonor of her checks, and that being aformer member of the judiciary who was expected to be the embodiment of integrity and goodbehavior, she was subjected to embarrassment due to the erroneous dishonor of her checks by PNB.(Daughter-in-law confronted her and son-in-law would no longer hold her in high esteem.)

ISSUE: Whether PNB is liable to Lily for moral damages due to the mental anguish, embarrassment,besmirched reputation, schwar, schwar, she suffered.

HELD: Yes. The award of moral damages and atty’s fees affirmed.

A bank is under obligation to treat the accounts of its depositors with meticulous care. Responsibilityarising from negligence in the performance of every kind of obligation is demandable. While PNB’snegligence in this case may not have been attended with malice and bad faith, nevertheless, it causedserious anxiety, embarrassment and humiliation to Lily for which she is entitled to recover reasonablemoral damages. In the case of Leopold Araneta v. Bank of America it was held that it can hardly bepossible that a customer’s check can be wrongfully refused payment without some impeachment of hiscredit which must in fact be an actual injury, although he cannot, from the nature of the case, furnishindependent and distinct proof thereof.

Damages are not intended to enrich the complainant at the expense of the defendant, and there is nohard and fast rule in the determination of what would be a fair amount of moral damages since eachcase must be governed by its own peculiar facts. The yardstick should be that it is not palpably andscandalously excessive. In this case, considering the reputation and social standing of Lily, the awardof damages is reasonable.

c. Fixed Indemnity

Art. 1764. Damages in cases comprised in this Section (Common Carriers) shall beawarded in accordance with Title XVIII of this Book, concerning Damages. Art. 2206 shallalso apply to the death of a passenger caused by the breach of contract by a commoncarrier.

Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be atleast Three thousand pesos, even though there may have been mitigating circumstances.In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased, andthe indemnity shall be paid to the heirs of the latter; such indemnity shall in every case beassessed and awarded by the court, unless the deceased on account of permanentphysical disability not caused by the defendant, had no earning capacity at the time of hisdeath;

(2) If the deceased was obliged to give support according to the provisions of Art. 291,the recipient who is not an heir called to the decedent’s inheritance by the law of testate


or intestate succession, may demand support from the person causing the death, for aperiod not exceeding five years, the exact duration to be fixed by the court;

(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceasedmay demand moral damages for mental anguish by reason of the death of the deceased.

Fortune Express v. CA

Fortune is a bus company operating in Northern Mindanao. One of the Fortune buses figured in anaccident with a jeepney where two Maranaos were killed. The Philippine Constabulary heard reportsthat other Maranaos were planning to take revenge on Fortune by burning some of its buses. Theoperations manager of Fortune assured the constabulary that the necessary precautions would betaken to insure the safety of the lives and property of the passengers.

In November 1989, three armed Maranaos, who pretended to be passengers, seized a Fortune bus.They shot the driver in the arm, started pouring gasoline in the bus, then ordered other passengers toget off. One Atty. Caorong returned to the but to get something from the overhead rack. When hesaw that the Maranaos were pouring gasolinve over the head of the driver, he pleaded with them tospare his life. While this occurred, the driver surreptitiously escaped through a window.

Shots were heard from inside the bus. The other passengers rushed to help the shot Atty. Caorongfrom the burning bus, but he died later while under surgery.

The heirs of Atty. Caorong filed an action for damages against Fortune. The lower court found that theambush was an event that could not be foreseen and not liability should attach to Fortune. It furtherclaimed that the obligation to provide security guards was not required of common carriers.

The CA reversed and held Fortune liable. It found that no preventive measures were taken, that theevent was not unforeseen, as Fortune had been previously warned that there was a possibility thatone of its buses would be ambushed, and that frisking should at least have been resorted to as asafety measure.

ISSUE: Whether Fortune is liable to the heirs of Atty. Caorong.

HELD: Yes.

Due to the negligence of Fortune, the seizure of its bus was made possible. It is thus liable for injuriessuffered by its passengers and for the death of Atty. Caorong. This is not a case of force majeurebecause Fortune had sufficient warning. Also, Atty. Caorong was not guilty of contributory negligencewhen he went back to the bus. The target of the assailants was the bus and not the passengers. Hisprotracted stay inside was due to his desire to save the life of the driver. Thus, his act could not beconsidered an act of negligence, let alone recklessness.

INDEMNITY FOR DEATH: Art. 1754 of the Civil Code, relative to Art. 2206 thereof, provides for thepayment of indemnity for the death of passengers caused by the breach of contract of carriage by acommon carrier. Initially fixed at P3,000 by Art. 2206, the amount has been increased gradually inview of the declining value of the peso. It is presently fixed at P50,000. The heirs of Atty. Caorongare entitled to this amount. They are also entitled to actual, moral and exemplary damages andattorney’s fees. They are also entitled to compensation for the loss of earning capacity in addition toindemnity for death.

People v. Balgos

Criselle Fuentes, a 6 year old, went to Balgos’ house to play with her 2 friends, the latter’s nieces.While they were playing, Baldos asked his nieces to go out and buy some snacks. While they weregone, Baldos tried to rape Criselle but could not penetrate the latter’s vagina as it was too damnsmall.


Criselle eventually told her parents about the incident who reported the same to the police. At trial,the court a quo found Baldos guilty beyond reasonable doubt of the crime of statutory rape and wassentenced to death. He was also ordered to pay P50K as civil damages.

Upon automatic review by the SC, Baldos argued that he was not able to penetrate Criselle’s vagina,hence he should only be held liable for acts of lascivousness and not rape.

ISSUE: Whether Baldos is guilty of rape.

HELD: Yes.

As we all know, the crime of rape is consummated by the mere “touching” of the penis and the labia,hence actual penetration is not necessary.

More importantly, as to damages, if the commission of rape is qualified by any of the circumstancesunder Art. 335 RPC for which the penalty of death is imposed, the civil liability for the victim shall befixed at not less than P75K . In this case, since the rape is qualified by the fact that the victim wasless than 7 years old at the time of the crime, the penalty of death is thus imposed and the civilliability therefore should be increased from P50 K to P75K.

Moreover, Art 2219 CC provides that moral damages may be awarded in cases of rape, seduction,abduction, or other lascivious acts. Also, said article provides that the parents of victims of suchcrimes may also avail of moral damages. Therefore, in line with current jurisprudence, Criselle is thusalso entitled to moral damages in the amount of P50 K.

d. Loss of Earning Capacity

Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be atleast Three thousand pesos, even though there may have been mitigating circumstances.In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased, andthe indemnity shall be paid to the heirs of the latter; such indemnity shall in every case beassessed and awarded by the court, unless the deceased on account of permanentphysical disability not caused by the defendant, had no earning capacity at the time of hisdeath;

(2) If the deceased was obliged to give support according to the provisions of Art. 291,the recipient who is not an heir called to the decedent’s inheritance by the law of testateor intestate succession, may demand support from the person causing the death, for aperiod not exceeding five years, the exact duration to be fixed by the court;

(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceasedmay demand moral damages for mental anguish by reason of the death of the deceased.

Davila v. PAL

A PAL plane crashed resulting in the death of passengers and crew. Appellants here are parents ofDavila, who died in the crash. They are appealing the award of damages by the lower court:

(1) For the death of Pedro T. Davila Jr. the amount of P6,000;(2) For the loss of the earning capacity of the deceased at the rate of P12,000 per annum for five

years in the amount of P60,000.

ISSUE: Whether the computation of loss of earning capacity is wrong, thus entitling the parents ofDavila to a larger amount.

HELD: Yes, more than double pa nga dapat eh. Wanna know why? Read on then…


The deceased was employed as a manager of a radio station, from which he was earning P8,400 ayear, consisting of a monthly salary of P600 and allowance of P100. As a lawyer and junior partner ofhis father in the law office, he had an annual income of P3,600. From farming, he was getting anaverage of P3,000. All in all, therefore, the deceased had gross earning of P15,000 a year.

According to Article 2206 (1) of the Civil Code, “The defendant shall be liable for the loss of theearning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter.” Thisarticle, while referring to “damages for death caused by crime or quasi-delict,” is expressly madeapplicable by Article 1764 “to the death of a passenger caused by the breach of contract by a commoncarrier.”

The deceased, Pedro Davila Jr. was single and 30 years of age when he died. At that age, one’snormal life expectancy is 33-1/3 years, according to the formula (2/3 x [80 – 30]) adopted by thisCourt in the case of Villa Rey Transit Inc. v. CA on the basis of the American Expectancy Table ofMortality or the Actuarial of Combined Experience Table of Mortality. However, although the deceasedwas in relatively good health, his medical history shows that he had complained of and had beentreated for such ailments as backaches, chest pains, and occasional feelings of tiredness. It isreasonable to make an allowance for these circumstances and consider, for purposes of this case, areduction of his life expectancy to 25 years.

In the same case of Villa Rey Transit, this court stated: “…earning capacity, as an element of damagesto one’s estate for his death by wrongful act is necessarily his net earning capacity or his capacity toacquire money, less the necessary expense for his own living.” Stated otherwise, the amountrecoverable is not loss of the entire earnings, but rather the loss of that portion of the earnings whichthe beneficiary would have received. In other words, only net earnings, not gross earnings, are to beconsidered, that is the total of the earnings less expenses necessary in the creation of such earningsor income and less living and other incidental expenses.

Considering the fact that the deceased was getting his income from three (3) different sources,namely, from managing a radio station, from law practice, and from farming, the expenses incidentalto the generation of such income were necessarily more than if he had only one source. Together withhis living expenses, a deduction of P600 a month, or P7,200 a year seems reasonable, leaving a netyearly income of P7,800. This amount, multiplied by 25 years, or P195,000, is the amount whichshould be awarded to the plaintiffs.

People v. Jerez

Jerez went around town looking for a carabao buyer. Reynaldo Ochoa andJoselito Balbastro expressed interest. Jerez told them that the carabaoswere in Barangay Teddy, so the three took a tricycle to Barangay Tedd tocheck the condition of the carabaos. It was the last time, however, that thetwo were seen alive. When the latter failed to return the following day, asearch was conducted. The bodies of Reynaldo and Joselito were later foundlifeless, having sustained several mortally-inflicted stab wounds in differentparts of their bodies. The victims were divested of their watches, raybanglasses, and a sum of money amounting to P37,000.00. Jerez was convictedof robbery with double homicide. The RTC ordered him to pay damages tothe heirs of Reynaldo and Joselito, including P100,000 for loss of earningcapacity. The RTC computed loss of earning capacity using the followingformula: estimated income x life span.


ISSUE: Whether the RTC used the correct formula in computing loss ofearning capacity.

HELD: No, the computation of the damages is erroneous.

The formula consistently used by the Supreme Court in determining life expectancy is (2/3 x [80 - ageof the victim at the time of death]). Thus, the award for loss of earning capacity for each victim shallbe as follows:

Joselito Balbastro

P36,000.00 — gross annual income (P3,000.00 x 12 mos.)Multiply: 30 — life expectancy (2/3 x 45 [80 - 35 {age at time of death}])P1,080,000.00 — total loss of earning capacity

Reynaldo Ochoa

P36,000.00 — gross annual income (P3,000.00 x 12 mos.)Multiply: 21 — life expectancy (2/3 x 31 [80 - 49 {age at time of death}])P756,000.00 — total loss of earning capacity

Rosales v. CA

Liza Rosalie was a high school student in UP-IS when she was ran over by an MMTA bus while crossingKatipunan Road. The driver was found guilty of reckless imprudence and the employers were foundsolidarily liable. The parents raised this appeal for an increase of amount of damages awarded tothem.

ISSUE: Whether petitioners are entitled to be compensated for loss of earning capacity of their minorchild, a mere high school student.

HELD: Yes.

Art. 2206 of the Civil Code provides that in addition to the indemnity for death caused by a crime orquasi-delict, the “defendant shall be liable for loss of earning capacity of the deceased, and theindemnity shall be paid to the heirs of the latter…” Compensation of this nature is awarded not forloss of earnings but for loss of capacity to earn money. Evidence must be presented that the victim, ifnot yet employed at the time of death, was reasonably certain to complete training for a specificprofession.

In this case, the spouses Rosales presented evidence to show that Liza Rosalie was a good student,promising artist, and obedient child. She consistently performed well in her studies. A guidancecounselor testified and a faculty member of UP Fine Arts who had been conducting workshops with herevery summer testified that she had artist potential. 51 samples of Liza Rosalie’s watercolor,charcoal, and pencil drawings were submitted as exhibits. Considering her good academic record,extra-curricular activities, and varied interests, it is reasonable to assume that Liza Rosalie would haveenjoyed a successful professional career had it not been for her untimely death. Hence, it is properthat compensation for loss of earning capacity should be awarded to her heirs in accordance with theformula established for computing net earning capacity in decided cases:Digests by Sheryl, Cayo, Rosa 101Lecture Notes and Notes from Jona Bautista’s Reviewer

Net Earning Capacity = Life Expectancy x Gross Annual Income – Necessary Living Expenses

Life expectancy is equivalent to 2/3 multiplied by the difference between 80 and the age of thedeceased. Since Liza Rosalie was 16 at the time of her death, her life expectancy was 44 more years.Her projected gross annual income, computed based on the minimum wasge for workers in the non-agricultural sector in effect at the time of her death, then fixed at P37.00 is P14,630.46. Allowing fornecessary living expenses of 50% of her projected gross annual income, her total net earning capacityamounts to P321,870.00.

e. Interest

Art. 2209. If the obligation consists in the payment of a sum ofmoney, and the debtor incurs in delay, the indemnity for damages,there being no stipulation to the contrary, shall be the payment ofthe interest agreed upon, and in the absence of stipulation, thelegal interest, which is six per cent per annum.

Art. 2210. Interest may, in the discretion of the court, be allowedupon damages awarded for breach of contract.

Art. 2211. In crimes and quasi-delicts, interest as a part of thedamages may, in a proper case, be adjudicated in the discretion ofthe court.

Art. 2212. Interest due shall earn legal interest from the time it isjudicially demanded, although the obligation may be silent uponthis point.

Art. 2213. Interest cannot be recovered upon unliquidated claimsor damages, except when the demand can be established withreasonably certainty.

Eastern Shipping v. CA

Two drums of riboflavin were shipped from Japan for delivery on board the vessel “SS EASTERNCOMET” owned by Eastern Shipping Lines. The shipment was insured by Mercantile InsuranceCompany. When the shipment arrived in Manila, one drum was found to be in bad order. As a resultof the alleged fault and negligence of both Eastern Shipping Lines, the Metro Port Service, and theAllied Brokerage Corporation, the insurance company had to pay the consignee of the shipmentaround 19K for the damaged carge. The insurance company then filed an action against the three,claiming that under the marine insurance policy, it became subrogated to all the rights of action of theconsignee against the defendants.


The CA ordered the defendants to jointly and severally pay the insurer 19K with legal interest at 12%per annum from the date of the filing of the complaint, until fully paid.

ISSUES:

1. Whether the interest should commence from the date of the filing of the complaint or from thedate of the decision of the trial court.

2. Whether the proper rate of interest is 12% per annum or 6% per annum.

HELD: Interest to be paid is 6% on the amount due, computed from the date of the decision of thecourt a quo. A 12% interest, in lieu of 6%, shall be imposed on such amount upon finality of thisdecision until the payment thereof.

When an obligation, regardless of its source (law, contracts, quasi-contracts, delicts, quasi-delicts) isbreached, the contravenor can be held liable for damages. With regard to an award or interest in theconcept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, isimposed as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money (i.e., aloan or forbearance of money), the interest due should be that which may have beenstipulated in writing. Furthermore, the interest due shall itself earn legal interest from thetime it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12%per annum to be computed from default i.e., from judicial or extrajudicial demand under andsubject to the provision of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an intereston the amount of damages awarded may be imposed at the discretion of the court at the rateof 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damagesexcept when or until the demand can be established with reasonable certainty. Accordingly,where the demand is established with reasonable certainty, the interest shall begin to runfrom the time the claim is made judicially or extrajudicially but when such certainty cannot beso reasonably established at the time the demand is made, the interest shall begin to run onlyfrom the date the judgment of the court is made (at which time the quantification of damagesmay be deemed to have been reasonably ascertained). The actual base of the computation oflegal interest shall, in any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, therate of legal interest, whether the case falls under paragraph 1 or paragraph 2 above shall be12% per annum from such finality until its satisfaction, this interim period being deemed to beby then an equivalent to a forbearance of credit.

Medel v. CA

Servando Franco and Leticia Medel obtained several loans from Veronica Gonzales at 6% interest permonth. Due to their failure to pay the loans upon maturity, Franco and Medel consolidated all saidloans bringing their indebtedness to a total of P500K, and executed a promissory note to cover saidamount with an interest of 5.5% per month plus 2% service charge per annum.

Due to Franco and Medel’s failure to pay upon maturity, a complaint for collection of money was filedagainst them by Gonzales. The lower court held that although the usury law was repealed, the interestcharged by Gonzales was unconscionable and was therefore invalid. The CA however upheld thevalidity of the aforementioned stipulated interest and held that since the usury law was repealed, thelender and borrower could agree on any interest that may be charged on the loan.

Medel then filed certiorari with the SC, arguing that the interest charged by Gonzales was iniquitous,unconscionable, and exorbitant.

ISSUE:Was the interest stipulation in this case valid?


HELD: No.

Although Circular No. 905 of the Central Bank expressly repealed the usury law, the interest in thiscase of 5.5% per month or 66% per annum is iniquitous or unconscionable, and hence contrary tolaw and morals. Such a stipulation of interest is void and the courts in such a case shall equitablyreduce liquidated damages, whether intended as an indemnity or a penalty, if they are iniquitous andunconscionable.

In this case, due to the iniquitousness of the stipulated interest, the SC imposed the “legal rate ofinterest for loan or forbearance of money, goods, or credit” which was 12% per annum, plus anadditional 1% monthly penalty charge.

David v. CA

In a civil case between Jesus David (as plaintiff) and Peña and Afable (as defendants), Judge Diazordered Afable to pay David P66,500 plus interest from January 4, 1966, until fully paid.

To execute judgment, a public auction of properties belonging to Peña and Afable were sold at publicauction. The Sheriff informed David that the total amount of the judgment was around P270K, whichincluded a computation of simple interest. David claimed that the judgment award should be aroundP3M because the amount due ought to be based on compounded interest.

At the public auction, David was the highest bidder, having bid around P3M for the auctionedproperties. However, the Sheriff did not issue the Certificate of Sale because David did not pay thebid price. The Sheriff contended that the sale was not consummated since David had failed to payaround P2.94M of the bid price. The P2.94M was computed by deducting from the bid price of P3Mthe judgment award to which David was entitled in the amount of P270K. According to David, on theother hand, he did not have to pay the P2.94M, since the judgment award should have been P3M(enough to cover the entire bid price) if interest were compounded instead of just simple.

ISSUE: Whether interest should be simple or compounded.

HELD: Simple interest only.

Compounded interest may be charged only when there is stipulated or conventional interest which hasaccrued when demand was judicially made. In case where no interest had been stipulated by theparties, no accrued conventional interest could further earn interest upon judicial demand. In thiscase, no interest was stipulated by the parties. Therefore, David is not entitled to compoundinginterest.

Example in class: First Metro Investment Corp case

Loan agreement with fixed interest at 18%, plus officers of the bank were to be employed asconsultants of the debtor for a fee. Held: Consultation fee is actually disguised interest. It isunconscionable and should be struck down.

4. Moral Damages

Art. 2217. Moral damages include physical suffering, mental anguish, fright, seriousanxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, andsimilar injury. Though incapable of pecuniary computation, moral damages may berecovered if they are the proximate result of the defendant's wrongful act for omission.

Art. 2218. In the adjudication of moral damages, the sentimental value of property, real orpersonal, may be considered.


Art. 2219. Moral damages may be recovered in the following and analogous cases:

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

(3) Seduction, abduction, rape, or other lascivious acts;

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

(7) Libel, slander or any other form of defamation;

(8) Malicious prosecution;

(9) Acts mentioned in Article 309;

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of thisarticle, may also recover moral damages.

The spouse, descendants, ascendants, and brothers and sisters may bring the actionmentioned in No. 9 of this article, in the order named.

Art. 2220. Willful injury to property may be a legal ground for awarding moral damages ifthe court should find that, under the circumstances, such damages are justly due. Thesame rule applies to breaches of contract where the defendant acted fraudulently or inbad faith.

Art. 309. Any person who shows disrespect to the dead, or wrongfully interferes with afuneral shall be liable to the family of the deceased for damages, material and moral.

Francisco v. Ferrer


The wedding cake was not delivered on the wedding day. They had to eat sans rival instead. Moraldamages were awarded in favor of the plaintiffs.

Another case: The bride and groom hired someone to cover their wedding on video. But nothing wasrecorded on video kasi wala yatang lamang tape. Moral damages were not awarded because therewas no bad faith. Just nominal damages.

Requisites of award of moral damages:

1. One of the grounds under article 2177 (physical suffering, mental anguish, etc.) must bepresent.

2. Such must be the proximate effect of the tortious act (fraud/bad faith).3. Testimony of the offended party or other evidence to prove the suffering.

Ex: Because of shock, plaintiff suffered a heart attack. Prove this by presenting medicalrecords.

The wording of Article 2219 says that moral damages “may” be awarded, not “shall.” This is becausein addition to the moral suffering, etc, there must be fraud or bad faith on the part of the defendant.

Under 2219 (3), moral damages are awarded to the rape victim and her parents. The law alsoprovides a fixed indemnity, which is 50K. For qualified rape, it is 75K. This fixed indemnity isdifferent and apart from the moral damages under 2219 (3). Fixed indemnity is given for every countof rape. So if there are many rapists, the fixed indemnity is multiplied by the number of counts.

A person who commits a crime is deemed in bad faith.

2219 (9) – Acts mentioned under Article 309 – this includes scoffing at the corpse, like burning thebody or chopping it up.

Cases when moral suffering is presumed:

1. rape2. murder3. homicide

a. Amount of Award

Moral damages must be proven, but the amount is determined by the judge. Plaintiff must prove thelegal basis for the award; actual amount is up to the judge.

Factors in determining the amount of moral damages:

1. political, social, financial standing of offended party and offender

2. mental anguish

Example: Compare the mental anguish of two mothers whose sons died in two differentincidents. One son was shot to death, and he died instantly. The other son was partying atOzone when it burned down. He suffered for several weeks with painful burns before he finallydied. The mental suffering of the Ozone victim’s mother is greater than that of the mother ofthe son who was shot to death, since the former had to watch as her son had to withstand theagony of the burns.

3. Sentimental value

Example: Two rings – one with a huge stone that you won at a raffle and another with a tinystone that was given to you by your one true love. Of course, the sentimental value of thesecond ring is greater.


Lopez v. PANAM

Senator Lopez and his family were inadvertently bumped off first class and had to take coach. Theysued for damages.

ISSUE: Whether plaintiffs are entitled to all damages sought for.

HELD: YES. The relevant portion with regard to moral damages is that the Senator and familysuffered social humiliation, mental anguish, serious anxiety. A lot of schwar schwar on him being asenate president pro tempore, prestigious sya eklat. According to SC-- It may not be humiliating totravel as tourist passengers; it is humiliating to be compelled to travel as such, contrary to what isrightfully to be expected from the contractual undertaking.

In conclusion, SC wanted to stress that amount of damages awarded in this appeal has beendetermined by adequately considering the official, political, social, and financial standing ofthe offended parties on the one hand, and the business and financial position of theoffender on the other, And further considering the present rate of exchange and the termsat which the amount of damages awarded would approximately be in US dollars.

b. bad faith/fraud/malice

Example in class: Couple was booked for economy tickets. The airline had overbooked the economyclass, so they were asked to sit in the business class section. This was allegedly against their will.They felt bad because their repapips were in economy. They filed for damages against the airline.Held: No damages. There was no bad faith here.

Zalamea v. CA

Passengers filed for damages since they were bumped off their flight because the airline hadoverbooked.

ISSUE: Whether there was bad faith in overbooking and thereby entitling petitioners to damages.

HELD: YES.

REspondent avers that there is no bad faith where overbooking is a common accepted practicein the COde of Federal Regulations in the Civil Aeronautic Board. HOwever, there was no documentpresented as evidence to that effect. ONly the sole statement of TWA's customer service agent wasrelied upon. Moreover, in this jurisdiction, jurisprudence states that overbooking amounts to bad faith,entitling passengers to an award of moral damages.

Assuming arguendo overbooking is allowed, TWA is still guilty of bad faith in not informingits passengers beforehand that it could breach the contract of carriage even if they hadconfirmed tickets, in the event of overbooking. TWA should have incorporated stipulationsin overbooking on the tickets or properly inform its passengers about such policies so thatthe passengers may be prepared for such an eventuality, or would have the choice of ridingon another airline. Moral damages awarded.

Prudential Bank v. CA

A check issued by Valenzuela bounced even if she had enough money in her account. Later, it wasfound that the check bounced because the bank had made a mistake in crediting her deposits toanother account.

ISSUE: Whether Valenzuela is entitled to moral damages.

HELD: Yes, Valenzuela is entitled to moral damages.


Prudential claims that Valenzuela is not entitled to moral damages because it acted in good faith andcommitted an honest mistake. This is untentable. As a business affected with public interest andbecause of the nature of its functions, the bank is under obligation to treat the accounts of itsdepositors with meticulous care, always having in mind the fiduciary nature of their relationship. Evenif malice or bad faith was not sufficiently proved in this case, the fact remains that the bankcommitted a serious mistake. The bank’s negligence was the result of lack of due care and cautionrequired of managers and employees of a firm engaged in so sensitive and demanding a business asbanking. Accordingly, the award of moral damages was proper.

* This is the exception to the general rule that in breach of contract, moral damages are proper onlywhen there was fraud, malice, or bad faith. When the party breaching the contract is a bank, in theexercise of its fiduciary capacity, there is no need for bad faith in order for the moral damages to beawarded.

c. malicious prosecution

Elements of Malicious Prosecution:

1. There must be a baseless prosecution2. The one who filed the criminal action must be aware that there was no probable cause3. There must be a dismissal of the criminal case at the time of the preliminary investigation

(indicating that there was no probable cause)4. Malice

Lao v. CA

Lao was presented as a witness in a case filed by his employer against Espiritu. The case was filed bythe prosecutor but was later dismissed. Espiritu filed a case for malicious prosecution against Lao.

ISSUE: Whether Lao may be held liable for malicious prosecution.

HELD: NO.

Lao had a valid defense to the action for malicious prosecution (Civil Case No. 84-M) because it washis employer that was the complainant in the estafa case against Espiritu. Lao was only a witness, notthe prosecutor in the estafa case.

Moreover, there was probable cause for the charge of estafa against Espiritu, as found and certified bythe investigating fiscal himself.

Lao was not motivated by malice in making the affidavit upon which the fiscal based the filing of theinformation against Espiritu. He executed it as an employee, a salesman of the St. Joseph Lumberfrom whom Espiritu made his purchases of construction materials and who, therefore, had personalknowledge of the transaction. Although the prosecution of Espiritu for estafa did not prosper, theunsuccessful prosecution may not be labelled as malicious.

[Note in this case that the decision of the CA finding Lao guilty of malicious prosecution had alreadybecome final and executory. But since Lao was deprived of due process due to the negligence of thelawyer, which was why he lost the case, and he had a valid defense against malicious prosecution, theSC allowed the action for annulment of judgment.]

Lao v. CAG.R. 109205, 18 April 1997

Deuna pointed out to the police a jeepney used in running over Eduardo. The owner could not befound, so the police left word at the residence of the alleged driver that the jeepney was taken to thepolice station for safekeeping and to be used in connection with the investigation of the incident.Subsequently, the owner of the jeepney filed a complaint for carnapping against Deuna. The


complaint was dismissed by the prosecutor/DOJ for lack of probable cause. Deuna filed an action formalicious prosecution against the owner.

ISSUE: Whether the defendants are liable for malicious prosecution.

HELD: Yes.

In this case, there was malicious intent in the filing of the complaint for carnapping. The elements ofmalice and absence of probable cause are present. The owner had already been told that Deuna,along with some policemen, had taken the vehicle to the police station after the incident. She cannotvalidly claim that prior to the filing of the complaint for carnapping, she did not know the whereaboutsof the vehicle. That there was no probable cause for the filing of the carnapping charge against andFrank led to the dismissal of the case. The vehicle was taken by policemen and brought to the stationin connection with the frustrated homicide case against George. There was clearly no intent to gain,which is an essential element of the crime of carnapping.

d. labor cases

Most of the time, moral damages are awarded in labor cases as long as bad faith, oppression againstlabor are proven, or if the employer acted contrary to law, morals, good customs, etc.

Audion Electric v. NLRC

Nicolas Madolid had been employed by Audion Electric Company for 13 years when the companyterminated his services. Madolid filed a complaint with the Labor Arbiter, claiming that he wasillegally dismissed. He asked for reinstatement, with full backwages, as well as moral and exemplarydamages. The Labor Arbiter granted his claims.

ISSUE: Whether Madolid is entitled to moral and exemplary damages.

HELD: No.

The Labor Arbiter was correct in ordering the reinstatement with full backwages of Madolid. However,his award of moral and exemplary damages must be deleted for being devoid of legal basis. Moraland exemplary damages are recoverable only where the dismissal of an employee was attended bybad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary tomorals, good customs or public policy. The person claiming moral damages must prove the existenceof bad faith by clear and convincing evidence, for the law always presumed good faith. It is notenough that one merely suffered sleepless nights, mental anguish, serious anxiety as the result of theactuations of the other party. Invariably, such action must be shown to have been willfully done inbad faith or with ill motive, and bad faith or ill motive under the law cannot be presumed but must beestablished with clear and convincing evidence. In this case, Madolid predicated his claim for suchdamages on his own allegations of sleepless nights and mental anguish without establishing bad faith,fraud, or ill motive as legal basis therefor.

Paguio v. PLDT

Paguio was appointed head of PLDT’s garnet exchange. For several years, he criticized the method bywhich the management of PLDT made the performance evaluation of its employees. He repeatedlycomplained about the rating system being unfair. After three years, Santos, his superior, transferredhim to another office of the PLDT. His new position was actually a functionless position, with no officeand staff, and without any opportunity to get any promotion or wage increase. Paguio complained toFerido, a VP of PLDT, but the latter affirmed the authority of Santos to reassign employees accordingto the needs of the company. Ferido also stated in his decision that the transfer was based on Santos’well-founded conclusion that Paguio was not a team player and could not accept decisions ofmanagement already arrived at, short of insubordination. Enrique Perez, COO of PLDT, affirmed theaction taken by Ferido and explained to Paguio that his transfer was not in the nature of a disciplinaryaction that required compliance with the process of “investigation, confrontation, and evaluation”


before it can be implemented and that the same was not done in bad faith.

As a result, Paguio filed a complaint for illegal demotion and damages against PLDT.

ISSUE: Whether Paguio is entitled to moral and exemplary damages.

HELD: Yes.

Under Article 21 of the Civil Code, any person who wilfully causes loss or injury to another in a mannerthat is contrary to morals, good customs or public policy shall compensate the latter for the damage.The illegal transfer of Paguio to a functionless office was clearly an abuse by PLDT of its right tocontrol the structure of its organization. The right to transfer or reassign an employee is decidedly anemployer’s exclusive right and prerogative. However, such managerial prerogative must be exercisedwithout grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Havingthe right should not be confused with the manner by which such right is to be exercised. In this case,there is no clear justification for the transfer of Paguio except that it was done as a result of hisdisagreement with his superiors with regard to company policies.

Paguio is entitled to an award of moral and exemplary damages. In determining entitlement to moraldamages, it suffices to prove that the claimant has suffered anxiety, sleepless nights, besmirchedreputation and social humiliation by reason of the act complained of. Exemplary damages, on theother hand, are granted in addition to moral damages by way of example or correction for the publicgood. Furthermore, as Paguio was compelled to litigate and incur expenses to enforce and protect hisrights, he is entitled to an award of attorney’s fees. The amount of damages recoverable is, in turn,determined by the business, social and financial position of the offended parties and the business andfinancial position of the offender.

In this case, an award of P50,000.00 as moral damages, P20,000.00 as exemplary damages andattorney’s fees equivalent to 10% of the amount to which petitioner is entitled is reasonable.

e. Corporation

We learned in Corp law that a corporation is generally not entitled to damages because it is anartificial person and is not capable of feeling pain, moral suffering, etc. However, the court mayaward damages if, as a result of the act of the defendant, the corporation suffers damage to itsgoodwill and reputation.

Atty. Abaño does not seem to agree with this exception. He says it was in just one old, old case andwas never repeated by the SC.

Example: A committed a tortious act against Corp X, causing besmirched reputation of theCorporation. As a result, the Corp suffered losses. Is A liable for moral damages to the stockholdersof Corp X? No. The corp is separate and distinct from its stockholders.

5. Nominal Damages

Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, whichhas been violated or invaded by the defendant, may be vindicated or recognized, and notfor the purpose of indemnifying the plaintiff for any loss suffered by him.

Art. 2222. The court may award nominal damages in every obligation arising from anysource enumerated in 1157, or in every case where any property right has been invaded.

Art. 2223. The adjudication of nominal damages shall preclude further contest upon theright involved and all accessory questions, as between the parties to the suit, or theirrespective heirs and assigns.


PAL v. CA

Relevant to the topic of Nominal Damages: As a general rule, an appellee who has not appealed(such as Mrs. Padilla in this case) is not entitled to affirmative relief other than the ones granted in thedecision of the court below. However, in this case, there was a 16-year delay in the disposition of thiscase due to the multiple appeals filed by PAL. Mrs. Padilla herself has already joined her son in theGreat Beyond without being able to receive the indemnity she well deserved. Considering howinflation has depleted the value of the judgment in her favor, in the interest of justice, PAL is orderedto pay legal rate of interest on the indemnity due her. JAL v. CA

On June 13, 1991, Jose Miranda boarded a JAL flight from San Francisco to Manila. Enrique Agana,Maria Angela Agana, and Adelia Francisco were also passengers of a JAL flight from LA to Manila. Asan incentive for traveling with JAL, the flights made an overnight stopover in Japan at the airline’sexpense.

Upon arrival in Japan on June 14, the passengers were billeted in Hotel Nikko Narita for the night.The following day, they learned that Mt. Pinatubo erupted, and all flights to Manila were cancelledindefinitely because NAIA was closed. JAL rebooked them on flights due to depart on June 16. JALpaid for their unexpected overnight stay.

Unfortunately, the June 16 flight was also cancelled. JAL informed the stranded passengers that itwould no longer shoulder their expenses. The passengers stayed in Japan until the 22nd and wereforced to pay meals and accommodations from their personal funds.

The passengers filed an action for damages against JAL, claiming that JAL failed to live up to its dutyto provide care and comfort to its stranded passengers when it refused to pay for their hotel andaccommodation expenses from June 16 to 21.

ISSUE: Whether JAL is liable for the expenses incurred by its stranded passengers brought about bythe unexpected eruption of Mt. Pinatubo.

HELD: No. However, JAL is liable for nominal damages.

JAL is not liable for the expenses incurred by the passengers, since the reason why JAL was preventedfrom resuming its flight to Manila was due to the effects of the Mt. Pinatubo eruption, which was afortuitous event.

However, JAL is not completely absolved from liability. It must be noted that the passengers boughttickets from the US with Manila as their final destination. While JAL was no longer required to defraythe passengers’ living expenses during their stay in Japan on account of the fortuitous event, JAL hadthe duty to make the necessary arrangements to transport the passenger on the first availableconnecting flight to Manila. JAL reneged on its obligation to look after the comfort and convenience ofits passengers when it declassified them from “transit passengers” to “new passengers,” as a result ofwhich they were obliged to make the necessary arrangements themselves for the next flight to Manila.They were placed on the waiting list from June 20 to June 24. To assure themselves of a seat on anavailable flight, they were compelled to stay in the airport the whole day of June 22, and it was only at8 pm of that day that they were advised that they could be accommodated in said flight, which flew atabout 9 am the next day.

Because of JAL’s failure to make the necessary arrangements to transport the passengers on its firstavailable flight to Manila, an award of P100,000 as nominal damages, in favor of each passenger, is inorder.

BPI Investment v. CA


Frank Roa obtained a loan at an interest rate of 16.25% per annum from Ayala Investment andDevelopment Corp (AIDC), the predecessor of BPI Investment, for the construction of a house on hislot in Alabang. The house and lot was mortgaged to AIDC to secure the loan. Roa then sold thehouse and lot to ALS Management and Development Corp and Antonio Litonjua (private respondents)for P850K. Private respondents paid 350K in cash and assumed the 500K balance of Roa’sindebtedness with AIDC. AIDC, however, was not willing to extend the old intrest rate to privaterespondents, so it granted them a new loan for 500K to be applied to Roa’s debt and secured by thesame property, at an interest rate of 20% per annum. The mortgage deed stipulated that thepayment of the amortizations of the new loan would begin the following month, on May 1, 1981.

On August 13, 1982, private respondents updated Roa’s arrearages by paying BPI the sum ofP190,601.35. This reduced Roa’s principal balance to P457,204.90, which in turn, was paid off whenBPIC applied thereto the proceeds of private respondents’ loan of 500K. Thereafter, on September13, 1982, BPI released to private respondents P7,146.87, purporting to be what was left of their loanafter full payment of Roa’s loan.

Two years later, BPI instituted foreclosure proceedings against private respondents on the ground thatthey failed to pay their mortgage indebtedness. Private respondents filed a case against BPI, allegingthat they were not in arrears in their payment. The trial court ruled that private respondents were notin arrears. It also found that they suffered damages when BPI caused their publication in a newspaperof general circulation as defaulting debtors. It thus awarded moral and exemplary damages. Onappeal, the CA found that BPI had no basis in extrajudicially foreclosing the mortgage and publishingin newspapers that private respondents were delinquent debtors. It affirmed the grant of moral andexemplary damages.

ISSUE: Whether BPI is liable for moral and exemplary damages.

HELD: No, but it is liable for nominal damages.

First, private respondents were not in arrears. The loan was perfected only on September 13, 1982since that was the only time when its proceeds were released by BPI to private respondents. Beforethat time, they had no obligation to pay the monthly amortizations. Their obligation to pay arose onlya month after September 13, and not on May 1, 1982, as stipulated in the mortgage contract.Moreover, the total amount released to ALS and Litonjua was less than 500K (457K applied to Roa’sloan + 7K released on September 13 = about 464K). Thus, the balance of about 36K which was notreleased to them should have been applied as part of their monthly amortizations.

BPI claims that it should not be held liable for moral and exemplary damages because it did not actmaliciously when it initiated the foreclosure proceedings. It merely exercised its right under themortgage contract because ALS and Litonjua were irregular in their monthly amortization. On theother hand, ALS and Litonjua claim the BPI was guilty of bad faith and should be liable for saiddamages because it insisted on the payment of amortization on the loan before it was released.Further, it did not make the corresponding deduction in the monthly amortization to conform to theactual amount of the loan released, and it immediately initiated foreclosure proceedings when ALS andLitonjua failed to make timely payment.

The SC held that BPI cannot be liable for moral and exemplary damages. ALS and Litonjua admittedthemselves that they were irregular in their payment of monthly amortizations. Hence, it cannot besaid that BPI acted in bad faith when it instituted foreclosure proceedings.

However, BPI was negligent in relying merely on the entries found in the deed of mortgage, withoutchecking and correspondingly adjusting its records on the amount actually released to ALS andLitonjua and the date when it was released. Such negligence resulted in damage to ALS and Litonjua,for which an award of nominal damages should be given in recognition of their rights which wereviolated by BPI. For this purpose, the amount of 25K is sufficient.

6. Temperate Damages


Art. 2224. Temperate or moderate damages, which are more than nominal but less thancompensatory damages, may be recovered when the court finds that some pecuniary losshas been suffered but its amount can not, from the nature of the case, be proved withcertainty.

Art. 2225. Temperate damages must be reasonable under the circumstances.

Necessito v. Paras

Severina Garces and her one-year old son, Precillano Necessito, boarded a Philippine Rabbit Bus atAgno, Pangasinan. When the bus entered a wooden bridge, its front wheels swerved to the right. Thedriver lost control, and the bus fell into a creek where water was breast deep. Severina drowned,while her son Precillano suffered abrasions and a fractured femur.

Two actions for damages and attorney’s fees were filed against the carrier. The CFI found that theaccident was caused by the defective steering knuckle of the bus, which could not have been knownby the carrier. The CFI exonerated the carrier on the ground of fortuitous event.

ISSUE: Whether the carrier is liable for damages.

HELD: Yes, the carrier is liable for damages.

The accident was not due to a fortuitous event. The evidence presented shows that the carrier merelyconducted visual inspections of the steering knuckle every thirty days to see if any cracks developed.Neither the manufacturer of the bus nor the carrier tested the steering knuckle to ascertain whetherits strength was up to standard, or that it had not hidden flaws that would impair its strength. Thisperiodic visual inspection of the steering knuckle did not measure up to the required legal standard of“utmost diligence of very cautions persons” required of common carriers. Therefore, the knuckle’sfailure can not be considered a fortuitous event that exempts the carrier from responsibility.

As to the damages: No allowance may be made for moral damages, since the carrier did not actfraudulently or in bad faith. Neither can exemplary damages be awarded, since the carrier has notacted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. Hence, the court believesthat for Precillano Necessito, and indemnity of P5,000 would be adequate for the abrasions andfracture of the femur, including medical and hospitalization expenses, there being no evidence thatthere would be any permanent impairment of his faculties or bodily functions, beyond the lack ofanatomical symmetry.

As for the death of Severina Garces, who was 33 years old, with seven minor children when she died,her heirs are entitled to indemnity not only for the incidental losses of property (cash, wrist watch,and merchandise) worth P394 that she carried at the time of the accident and for the burial expensesof P490, but also for the loss of her earnings (average of P120 a month) and for the deprivation of herprotection, guidance, and company. In the judgment of the court, an award of P15,000 would beadequate.

The low income of the plaintiffs-appellants makes an award for attorney’s fees just and equitable. Afee of P3,500 would be reasonable.

Consolidated Plywood Industries Inc. v. CA

Consolidated Plywood Industries was in the business of logging and manufacturing timber products inDavao. Willie and Alfred Kho operated a fleet of hauling trucks. Consolidated entered into a verbalagreement with the Khos whereby the Khos undertook to haul the logs of Consolidated. The partiesalso agreed that as a pre-condition before the Khos sent their truck haulers to the jobsite,Consolidated would provide financial assistance to the Khos in the amount of 180K cash, to defray thecost of repairs and reconditioning of the trucks and other expenses necessary for the haulingoperations. The 180K was in the nature of a cash advance obtained by the Khos from Equitable bankin the aggregate amount of 180K, on the guaranty of Henry Wee, President of Consolidated, payable


by the Khos. The agreement also provided that the hauling services shall continue unless and untilthe loan from Equitable remained unpaid.

After the Khos obtained the 180K, they commenced the hauling service for Consolidated. However,after hauling logs for about a year, the Khos, without giving notice to Consolidated, suddenly andsurreptitiously at nighttime, withdrew all its truck haulers from the jobsite. This was in violation of theagreement, since they had not yet paid the 180K loan with Equitable.

Because of the sudden and surreptitious abandonment by the Khos of its obligation to haul logs,Consolidated filed an action for damages. It allegedly suffered the following damages:

1. Aquarius Trading, a Taiwan log importer, charged Consolidated P56K representing thecancellation fee that it had to pay for a chartered vessel, LC extension fee and other chargesdue to the failure of Consolidated to deliver logs which resulted from the failure of hauling bythe Khos on the due date. Consolidated also failed to realize a profit of 150K because this salewas cancelled.

2. After the sudden abandonment by the Khos, Consolidated did not have immediatereplacement haulers for a month. During this period, it could have produced 5,000 cu. m. oflogs, representing a loss of P350K.

3. Because the Khos did not pay the 180K loan with Equitable, Henry Wee was exposed toliability to Equitable as guarantor of the loans. Demands for payment resulted in undulyannoying and vexing Wee, entitling him to moral damages in the amount of P200K.

The trial court awarded these claims, along with attorney’s fees, awards for unpaid overdraft cashvales, and the 56K reimbursement charges that Consolidated had to pay Aquarius. On appeal, the CAmodified the judgment and awarded only the 150K unrealized profit in the transaction with Aquarius,the 56K reimbursement charges paid to Aquarius, and the amount of the unpaid overdraft.

ISSUE: Whether Consolidated is entitled to the awards for unfulfilled import of logs, moral damages,and attorney’s fees.

HELD:

There was no evidence to support the claim for 350K for the unfulfilled import of logs. This claimapparently refers to an alleged commitment to a certain Ching Kee Trading of Taiwan, as distinguishedfrom the claim for actual damages incurred in connection with its transaction with Aquarius. While thecommitment to Aquarius Trading was sufficiently substantiated by documentary evidence, the allegedcommitment of Consolidated to Ching Kee was not supported by evidence other than the self-servingstatement of Wee. Nor did they present any other evidence which would show that they had otherunfulfilled shipments for which they incurred damages because of the pull-out of the Khos’ trucks. Buteven assuming that there was a commitment to Ching Kee, the shipment was scheduled some 2months after the Khos pulled out their trucks. That would have given them to find other trucks to dothe job.

Consolidated insists that if the CA did not consider the 350K damages for unfulfilled shipments, itshould have been awarded this amount as a form of temperate or moderate damages. This isincorrect. Temperate or moderate damages may be recovered when the Court finds that somepecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved withcertainty. In this case, the nature of the contract between the parties is such that damages which theinnocent party may have incurred can be substantiated by evidence. Hence, it is not entitled to 350Kas temperate or moderate damages.

The court also awarded 50K as moral damages because the Khos acted in bad faith when theysurreptitiously pulled out their trucks before the termination of the contract.

From Ms. Ng’s Reviewer:

8) Exemplary Damages


Art. 2229. EXEMPLARY OR CORRECTIVE DAMAGES are imposed, by way of example orcorrection for the public good, in addition to the moral, temperate, liquidated orcompensatory damages.

Art. 2230. In (1) criminal offenses, exemplary damages as a part of the civil liability maybe imposed when the crime was committed with one or more aggravating circumstances.Such damages are separate and distinct from fines and shall be paid to the offended party.

Art. 2231. In (2) quasi-delicts, exemplary damages may be granted if the defendant actedwith gross negligence.

Art. 2232. In (3) contracts and quasi-contracts, the court may award exemplary damagesif the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolentmanner.

Art. 2233. Exemplary damages cannot be recovered as a matter of right; the court willdecide whether or not they should be adjudicated. DISCRETIONARY

Art. 2234. While the amount of the exemplary damages need not be proved, the plaintiffmust show that he is entitled to moral, temperate or compensatory damages before thecourt may consider the question of whether or not exemplary damages should beawarded. In case liquidated damages have been agreed upon, although no proof of loss isnecessary in order that such liquidated damages may be recovered, nevertheless, beforethe court may consider the question of granting exemplary in addition to the liquidateddamages, the plaintiff must show that he would be entitled to moral, temperate orcompensatory damages were it not for the stipulation for liquidated damages.

Art. 2235. A stipulation whereby exemplary damages are renounced in advance shall benull and void.

Octot v. YbañezDiosdado Octot, a security guard in the Regional Health Office of Cebu, was summarily dismissed.Octot was convicted for libel but same was pending appeal. When his acquittal was obtained, hesought reinstatement. His request was given due course but despite notices to him to fill upthe necessary papers to support his new appointment, he failed to appear but instead filed theinstant action for mandamus praying for reinstatement, payment of back salaries, cost of livingallowance, compensatory, exemplary and moral damages. Is Octot entitled to backwages anddamages?

HELD: No, sorry Octot! (what a name… :P)In the absence of proof that the Regional Director acted in bad faith & with grave abuse ofdiscretion, Octot is not entitled to backwages & consequently cannot claim for damages.The officials were not motivated by ill will or personal malice in dismissing Octot but only their desireto comply with mandates of PD 6.

If there was any delay in his reinstatement, it was attributed to his own fault & negligence.After his reinstatement was authorized by the Office of the President, Officials promptly communicatedwith him, directing him to report to the Regional Office & accomplish the necessary papers for hisreinstatement, but he delayed doing so. Where it is clear that his separation from thegovernment service had not been shown to be in bad faith, an award for moral damageunder the circumstance would not be just and proper. Neither is it among the cases mentionedin Articles 2219 and 2220 of the Civil Code wherein moral damages may be recovered.

An employee who was dismissed but whose reinstatement was later ordered is not entitled to moraldamages where he refused to report for work despite several calls for said purpose.

Exemplary damages are NOT generally recoverable in a special civil action for mandamusUNLESS the defendant patently acted with vindictiveness or wantonness & not in theDigests by Sheryl, Cayo, Rosa 115Lecture Notes and Notes from Jona Bautista’s Reviewer

exercise of honest judgment. The claim for exemplary damages must presuppose the existence ofthe circumstances under Art 2231 & 2232.

Exemplary or corrective damages are imposed by way of example or correction for the public good, inaddition to the moral, temperate, liquidated or compensatory damages. Such damages are requiredby public policy, for wanton acts must be suppressed. They are an antidote so that the poison ofwickedness may not run through the body politic.

CONDITIONS FOR AWARD OF EXEMPLARY DAMAGES(1) imposed by way of example or correction only in ADDITION to compensatory, liquidated,

moral, & temperate damages (2) CANNOT be recovered as a matter of right, their determination depending upon the amt of

damages that may be awarded to the claimant(3) Claimant must first establish his right to moral, temperate, liquidated, or compensatory

damages(4) Wrongful act must be accompanied by bad faith & the award would be allowed only if the

guilty party acted in wanton, fraudulent, reckless, oppressive or malevolent manner

PAL v. CAPantejo, City Fiscal of Surigao City, boarded a PAL plane in Manila & disembarked in Cebu where hewas supposed to take his connecting flight to Surigao. However, due to typhoon “Osang”, the flightwas cancelled. PAL gave out cash assistance to its stranded passengers. Pantejo requested that he bebilleted in a hotel at PAL’s expense because he didn’t have cash with him at that time but PAL refused.Kaya nangutang muna si Fiscal sa isang co-passenger. Later on, he learned that PAL reimbursedother passengers. PAL offered to reimburse him but Fiscal Pantejo sued PAL for discriminatingagainst him. Is PAL in bad faith and therefore liable for damages?

HELD: Yes, Fiscal wins. Whooopeee!Assuming arguendo that the airline passengers have no vested right to these amenities in case a flightis cancelled due to force majeure, what makes PAL liable for damages is its blatant refusal toaccord the so-called amenities equally to all its stranded passengers who were bound forSurigao City. No compelling or justifying reason was advanced for such discriminatory andprejudicial conduct.

The refund of hotel expenses was surreptitiously and discriminatorily made by PAL sincethe same was not made known to everyone except thru word of mouth to a handful ofpassengers. PAL acted in bad faith in disregarding its duties as a common carrier to its passengers &discriminating against Pantejo. Fiscal dude was exposed to humiliation and embarrassment especiallybecause of his governmental position & social prominence. Moral, exemplary, and actual damagesPLUS interest awarded!

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People v. Las PiñasIñego Las Piñas was charged with the rape of 12 yr old Sarah Joy Arpon. CA convicted him of rape &was sentenced to suffer the penalty of reclusion perpetua & to pay the victim P50T as moral damages& costs. Is Las Piñas guilty of rape?

HELD: YES!Basta guilty sha sa rape.

People v. Catubig: Aggravating circumstances committed before the effectivity of the Dec 1, 2000Revised ROC on Crimpro may serve as basis for awarding exemplary damages even if not alleged inthe info, so long as said circumstances are proven at the trial.

The prosecution was able to prove that Las Piñas is the hubby of the younger sister of the victim’sfather & therefore a relative of the family by affinity within the third civil degree. This circumstancejustifies the imposition of exemplary damages in the amt of P25T.


Las Piñas should further pay the victim P50T as civil indemnity, in addition to moral damages of P50Tawarded by the CA.

9) Attorney’s Fee

(1) as FEES: lawyer-client relationship; belongs to lawyer

(2) as DAMAGES: belongs to client

General Rule: Atty’s fees cannot be recovered.Exception: Granted in instances under 2208. There must be a legal basis for the award of atty’sfees.

Court must state basis fro award. Otherwise, its null & void.

Case of A v. B who are fighting over ownership of land. A’s counsel agrees to represent A for 25% ofthe value of the land. If A wins, can A’s counsel file for an attorney’s lien on the property? No. Atty’slien on real property subject of litigation is not allowed. But if the action was principally for damagesand A wins, the atty’s fees can constitute a lien on the money awarded. The lien is allowed only if thesubject matter is money, not real property.

What if your agreement with your client is that you’ll be paid 100K but client is awarded only 50K.Are you entitled to just 50K? No. The contract between you and the client is a separate agreement.

Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, otherthan judicial costs, cannot be recovered, except: (1) When exemplary damages are awarded; (2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; (3) In criminal cases of malicious prosecution against the plaintiff; (4) In case of a clearly unfounded civil action or proceeding against the plaintiff; (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy theplaintiff's plainly valid, just and demandable claim; (6) In actions for legal support; (7) In actions for the recovery of wages of household helpers, laborers and skilledworkers; (8) In actions for indemnity under workmen's compensation and employer's liability laws;(9) In a separate civil action to recover civil liability arising from a crime; (10) When at least double judicial costs are awarded; (e.g. docket fees, TSN expenses; can be sizeable)(11) In any other case where the court deems it just and equitable that attorney's feesand expenses of litigation should be recovered. (e.g. case lasted for several years & handled by same lawyer)In all cases, the attorney's fees and expenses of litigation must be reasonable.

Algoon v. CA: There can be no atty’s lien on real property subject oflitigation. However, if case was for damages, atty can claim a lien over theaward.

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Compania Maritima v. CA: Quantum Meruit; reasonable value of services based on the ff:

(1)time & extent of services(2)novelty & difficulty of questions involved(3)importance of subject matter


(4)skill demanded of case(5)probability of losing other clients coz of acceptance(6)amount involved & benefits by client(7)certainty of compensation (contingency)(8)professional standing of lawyer

PNB v. Utility Assurance Surety (UTASSCO)Kangkyo Bank issued a Letter of Credit in favor of Pedro Bartolome Ent tocover an export of shipment of logs to Japan. LOC assigned to LanuzaLumber. Later, Lanuza Lumber, obtained a P25T loan from PNB. UtilityAssurance furnished the surety bond. Lanuza Lumber & UTASSCO defaulted.Thus, PNB filed an action to recover the amt of the PN with interest PLUSatty’s fees. UTASSCO claims that its obligation under the surety bond was tosecure the performance of the T&C of the Letter of Credit & had notguaranteed performance of Lanuza’s obligation under its P25T loan fromPNB. Is UTASSCO liable to pay the obligation & atty’s fees?

HELD: YES.The surety bond was intended to secure the payment of Lanuza Lumber’sloan with PNB. (1) The surety bond explicitly stated the P25T loan was beingsecured by the bond. (2) While the bond & endorsement referred to the LOC,Lanuza Lumber had NO obligation under the LOC as it was the beneficiary-assignee of the LOC.

Clause limiting the liability of UTASSCO does not prevent grant ofinterest & atty’s fees. Tagawa vs. Aldanese: creditors suing on asuretyship bond may recover from the surety as part of their damages,interest at the legal rate even if the surety would thereby become liable topay more than the total amount stipulated in the bond. 'The theory is thatinterest is allowed only by way of damages for delay upon the part of thesureties in making payment after they should have done. " The surety ismade to pay interest, not by reason of the contract, but by reason ofits failure to pay when demanded and for having compelled theplaintiff to resort to the courts to obtain payment.

The NCC permits recovery of attorney's fees in eleven cases enumerated inArt 2208, among them 'where the court deem it just and equitable thatattorney's fees and expenses of litigation should be recovered' or 'when thedefendant acted in gross and evident bad faith in refusing to satisfy theplaintiffs plainly valid, just and demandable claim.' This gives the courtsdiscretion in apportioning attorney's fees.

Ibaan Rural Bank v. CA


Spouses Reyes mortgaged 3 parcels lf land with Ibaan Rural Bank. TheReyeses sold the same to the Tarnate spouses under a DOAS withAssumption of Mortgage. The Tarnates failed to pay the loan & the bankextra-judicially foreclosed the properties. No notice of the extra-judicialforeclosure was given to the Tarnates. Tarnates tried to redeem theproperties but the bank & Sheriff refused. The Tarnates then filed acomplaint to compel the bank to allow their redemption of the foreclosedlots. LC ordered redemption of the properties plus payment of atty’s fees asdamages. Was the award of atty’s fees on the basis of the bank’s refusal toallow redemption proper?

HELD: NO.The award of atty’s fees must be disallowed for lack of legal basis.The fact that the Tarnates were compelled to litigate & incur expenses toprotect & enforce their claim does not justify the award of atty’s fees.

The general rule is that atty’s fees cannot be recovered as part of damagesbecause of the public policy that no premium should be placed on the rightto litigate. The award of atty’s fees must be deleted where the award ofmoral & exemplary damages are eliminated.

10) Mitigation of Damages

Art. 1192. In case BOTH PARTIES HAVE COMMITTED A BREACH of the obligation, theliability of the first infractor shall be equitably tempered by the courts. If it cannot bedetermined which of the parties first violated the contract, the same shall be deemedextinguished, and each shall bear his own damages.

Art. 2203. The party suffering loss or injury must exercise theDILIGENCE OF A GOOD FATHER OF A FAMILY to minimize thedamages resulting from the act or omission in question.

Art. 2204. In crimes, the damages to be adjudicated may berespectively increased or lessened according to the AGGRAVATINGOR MITIGATING CIRCUMSTANCES.

Art. 2214. In quasi-delicts, the CONTRIBUTORY NEGLIGENCE of the plaintiff shall reducethe damages that he may recover.

Art. 2215. In contracts, quasi-contracts, and quasi-delicts, the court may EQUITABLYMITIGATE the damages under circumstances other than the case referred to in thepreceding article, as in the following instances: (1) That the plaintiff himself has contravened the terms of the contract; (2) That the plaintiff has derived some benefit as a result of the contract; (3) In cases where exemplary damages are to be awarded, that the defendant acted uponthe advice of counsel; (4) That the loss would have resulted in any event;


(5) That since the filing of the action, the defendant has done his best to lessen theplaintiff's loss or injury.

EXTINGUISHES LIABILITY and EACH BEARS OWN LOSS: can’t determine who was the firstinfractor

MITIGATES LIABILITY(1) diligence of a good father of a family(2) mitigating circumstances(3) contributory negligence on the part of the adverse party (Ex: case in crim1 where the victim in

a hacking incident went and submerged his hands in canal water. Of course, he died ofinfection or tetanus later on. He was guilty of contributory negligence)

(4) plaintiff himself has contravened the terms of the contract(5) plaintiff has derived some benefit as a result of the contract(6) In cases where exemplary damages are to be awarded, that the defendant acted upon the

advice of counsel; (7) loss would have resulted in any event;

(8) since the filing of the action, the defendant has done his best to lessen the plaintiff's loss orinjury. (Example: if you run over someone, you should bring him to the hospital. Your liabilitywill be mitigated.)

Malaysian Airlines v. CAMalaysina Airline System Bernad recruited Renato Arellano from PAL for his training & experience andcontracted his services as pilot for two years. When the plane he was driving landed at Bintuloairport, all the tires burst, causing alarm among the passengers but causing no injuries. Arellano wasfound negligent by the investigating board in Malaysia & was dismissed by Malaysian Airlines. RTC-Pnas held that Arellano’s dismissal from service was improper as he was not negligent & orderedpayment of P3M moral damages, P1M exemplary damages, among others. Was the amount ofdamages awarded excessive?

HELD: YES.The inordinate amount granted to Arellano calls for the moderating of the Court, that justicemay be tempered with reason instead of being tainted with what appears here to be aruthless vindictiveness.

The complaint prayed for payment of unpaid salaries from July 1981 to July 1982 which correspondsto the periods of the renewed contract. On the basis of his monthly salary of Malaysian $4,025, orP33,568.50, his total unearned salaries will be P402,822. To this should be added the amount ofP123,098.40 as allowance for the same period of one year at the rate of $1,230/mnth plus P80T,representing his expenses in transferring his family to the Philippines, amounting to an aggregate sumof P605,920.40 in actual damages.

Moral damages is reduced to P500T and atty’s fees to P25T. All other awards are disauthorized.

Bricktown v. Amor-TierraBricktown Development Corporation executed two Contracts to Sell in favor of Amor-TierraDevelopment Corp covering 96 residential lots at Multinational Village. Of the total purchase price ofP21M, Amor-Tierra only paid P1.3M. Bricktown sent a notice of cancellation to Amor-Tierra. Amor-Tierra demanded a refund OR assign to it an equivalent number of lots. Bricktown refused. Amorfiled for rescission of the contract. Was the rescission and forfeiture of payment valid?

HELD: YES and NO.While Bricktown still acted within its legal right to declare the contracts to sell rescinded orcancelled, considering the negotiations which made Amor-Tierra believe that they would beentering into a new contract, it would be unconscionable to likewise sanction the forfeitureof payments. The relationship between parties in any contract must always be characterizedand punctuated by good faith and fair dealing. Bricktown did fall well behind that standard. WeDigests by Sheryl, Cayo, Rosa 120Lecture Notes and Notes from Jona Bautista’s Reviewer

do not find it equitable, however, to adjudge any interest payment by Bricktown on the amount to bethus refunded, computed from judicial demand, for, indeed, Amor-Tierra should not be allowed tototally free itself from its own breach. 12% interest/annum to commence only from the finalityof this decision until such refund is effected.

International School v. CASpouses Torralba filed a complaint for damages against IS for the death of their only son Eric, while inthe custody of IS & its officers. RTC awarded damages. IS appealed. The Torralba’s moved forexecution of judgment pending appeal on grounds that the appeal is merely dilatory & filing of a bondis another good reason for execution. RTC granted same. CA affirmed. Was the execution ofjudgment pending appeal improper?

HELD: YES.Reason that an appeal is dilatory does NOT justify execution pending appeal, neither does the filing ofa bond, without anything more, justify the same. IS could not be faulted for its withdrawal of itssupersedeas bond inasmuch as the LC granted the execution pending appeal & rejected its offer ofsupersedeas bond.

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The awards for moral & exemplary damages CANNOT be the subject of execution pendingappeal. RATIONALE: The execution of any award for moral & exemplary damages is dependent on theoutcome of the main case. Unlike actual damages for which petitioners may clearly be held liable ifthey breach a specific contract & the amts of which are fixed & certain, liabilities with respect to moral& exemplary damages as well as the exact amounts remain uncertain & indefinite pending resolutionby the IAC & SC. The existence of the factual bases of these types of damages and their causalrelation to the petitioner’s act will have to be determined in the light of errors on appeal. It ispossible that the petitioners, after all, while liable for actual damages may not be liable formoral & exemplary damages. Or in some cases elevated to the SC, the awards may bereduced.

IX. PROCEDURAL RULES ON DAMAGES - Just look at Sir’s handout. Ok yon.

Good Luck!


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