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

Art. 1158. Obligations derived from law are not presumed. Only those expressly determined in this Code or in special laws are demandable, and shall be regulated by the precepts of the law which establishes 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 parties and 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, Preliminary Title, 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 an action 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. 2. 3. 4.

Quasi-Delict: based on negligence Breach of Contract: based on the existence of a contract Torts in Human Relations: based on intentional acts of the tort-feasor Crime: based on a violation of a penal statute

2. Twofold Meaning of Damages

1. 2.

Damages as the loss, prejudice, or injury resulting from the act of a person; and Damages as compensation for such loss, prejudice, or injury

3. Culpa Aquiliana/Contractual/Criminal

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

1

Problem: A bus falls off a cliff due to the driver’s fault. What actions may be filed by the heirs of the passengers who died in the accident? Answer: Three actions may be filed based on culpa aquiliana, culpa contractual, and culpa criminal. The distinctions among the three are as follows: CULPA AQUILIANA OBJECT ACTION Complaint is against negligence Damages for quasidelict Driver, Bus Company, or Both Preponderance of Evidence *once the driver is proven negligent, employer is presumed negligent (rebuttable presumption) Exercise of ordinary diligence on the part of the driver; Exercise of diligence in the selection and supervision of the driver on the part of the employer CULPA CONTRACTUAL Violation of contract of carriage Breach of contract with damages Employer bus company Preponderance of Evidence CRIMINAL PROSECUTION Criminal negligence Criminal prosecution, which includes civil liability under Art. 100 of the RPC Driver Proof beyond reasonable doubt

AGAINST QUANTUM OF EVIDENCE

DEFENSES

Exercise of extraordinary diligence (in contract of carriage, the diligence required of the common carrier is extraordinary)

If driver cannot pay the civil damages, the employer is subsidiarily liable. The employer does not have any defense in this case. The negligence of the employee is conclusive as to the employer for purposes of subsidiary liability

Note: You can file more than one of these cases. You can file any or all, depending on the circumstances. The only 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 for collection of sum of money to recover the value of the 3 checks from Isip. Isip moved to dismiss on the ground that the action is barred by res judicata and that Cancio was guilty of forum shopping. ISSUES: 1. 2. Whether the civil action for collection is barred by res judicata. 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. 2. ex delicto under Art. 100 of the RPC; and independent civil liabilities such as: a. b. 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 the Civil Code; where the injured party is granted a right to file an action independent and distinct from the criminal action (ex: Art. 33 of the Civil Code) 2

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

Either may be enforced against the offender, but the offended party cannot recover damages twice for the same act or omission or under both causes. Under the Rules on Criminal Procedure, civil liability ex delicto is deemed instituted with the criminal action, but the offended party may file the separate civil action before the prosecution starts to present evidence. However, the independent civil actions may be filed separately and prosecuted independently 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 on Isip’s breach of a contractual obligation. This may proceed independently of the criminal proceedings, regardless of 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 FNCB and Holiday Hills. The collision seriously injured Imson and totally wrecked his car. Imson filed a complaint for damages against: 1. 2. 3. 4. the the the the owners of the truck truck driver beneficial owners of the truck truck insurer

All the defendants, except the insurer, defaulted. Imson and the insurer entered into a compromise, whereby the insurer paid him 70K in full settlement of his claims against the insurer. The RTC thus dismissed the claim against the insurer. Holiday Hills, as owner of the truck, then moved to dismiss the case against all the other defendants on the ground that they were all indispensable parties under a common cause of action. It argued that the dismissal of the 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 the causes of action against them. The rule is where the complaint alleges a common cause of action against defendants who are all indispensable parties to the case, its dismissal against any one of them by virtue of a compromise agreement with the plaintiff results in a dismissal of the case against the others, including those in default. For this doctrine to apply, however, the requisites are: 1. 2. there must be a common cause of action; and 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 action against each of the defendants are different. They are as follows: 1. 2. 3. against the driver: quasi-delict under 2176 against the owners of the truck: quasi-delict under 2180 (vicarious liability) 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 not contractual 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 of the voyage, there is a presumption of fault or negligence. This gives rise to an action for breach of contract of carriage. Dangwa Transport v. CA

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

3

In an action based on contact of carriage, the court need not make an express finding or fault or negligence in order to hold the carrier liable. By the contract of carriage, the carrier assumes the express obligation to transport the passenger to his destination safely and to observe extraordinary diligence. Any injury that might be suffered by 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, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. The elements of a quasi-delict are: 1. 2. 3. Fault or Negligence Damage 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 pedestrian died. 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 his client. 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 of contract instead] CASES: Andamo v. IAC Emmanual and Natividad Andamo owned a parcel of land adjacent to that of the Missionaries of Our Lady of La Sallette. Within the land or Our Lady, waterpaths and an artificial lake were constructed, allegedly inundating and eroding the Andamos’ land. This caused a young man to drown, damaged the Andamos’ crops and fences, and endangered their lives. The Andamos instituted a criminal action against the officers and directors of Our Lady for destruction by means of inundation under Art. 324 of the RPC. Subsequently, they filed a civil case for damages against the respondents. Upon motion of respondents, the civil case was dismissed for lack of jurisdiction, since the criminal case instituted ahead of the civil case was still unresolved. This was based on the provision of the Rules of Court which provides that criminal and civil actions arising from the same offense may be instituted separately, but after the criminal action has been commenced, the civil action cannot be instituted until 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 on quasi-delict. All the elements of a quasi-delict are present: 1. 2. 3. damages suffered by the plaintiff; fault or negligence of the defendant or some other person for whose acts he must respond; and 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 of petitioners. This was caused by the failure of the defendant to install drainage pipes that could have prevented the inundation. There is therefore a causal connection between the act of building the waterpaths without providing 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 intentional and voluntary or negligent. Consequently, a separate civil action lies against the offender in a criminal act, whether or not he is criminally prosecuted and found guilty or acquitted, provided that the offended party is not allowed to recover damages on both scores and would only be entitled to the bigger award of the two. Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 4

FGU Insurance v. CA A car owned by Soriano and being driven by Jacildone collided with another car owned by Filcar and rented and driven by Dahl-Jensen, a foreigner. FGU Insurance Corp., Soriano’s insurer, paid Sorian 25K for the damage. By way of subrogation, FGU sued Dahl-Jensen, Filcar, and Fortune Insurance (insurer of Filcar) for quasi-delict. The case was dismissed by the RTC on the ground of failure of FGU to substantiate the claim for subrogation. The CA affirmed by based on another ground: only the fault or negligence of Dahl-Jensen (who was dropped from the complaint because summons could not be served on him) was sufficiently proved but not that of Filcar. There was therefore 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 the vehicle is leased to another. HELD: No. Filcar is not liable. To sustain a claim based on quasi-delict, the following requisites must concur: 1. 2. 3. damages suffered by the plaintiff; fault or negligence of the defendant or some other person for whose acts he must respond; and 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 to Dahl-Jensen, thus making the damage his personal liability. Filcar had not participation therein. Article 2180 on vicarious liability of owners of motor vehicles is not applicable since there is no employer-employee relationship between 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 the engine of the tractor; four were injured. Tutor was charged with and convicted of reckless imprudence resulting in multiple 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, and Ecatine [seems to be a corporation of Edwin Lim]. Tutor, Lim, and Ecatine were subsequently dropped from the complaint because they could not be found. Equitable, in its answer, raised the defense that the vehicle had already been sold to Ecatine and that Equitable was no longer in possession and control thereof at the time of the incident. It also claimed that Tutor was an employee of Ecatine, not Equitable. It seems that Equitable and Lim had a finance lease agreement whereby Equitable would remain the registered owner until the vehicle was fully paid by Lim. In this case, the vehicle was fully paid and a deed of sale had already 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 lawful operator insofar as third persons are concerned and consequently, it is directly and primarily responsible for the consequences of its operation. In contemplation of law, the owner/operator of record is the employer of the driver, the actual operator and employer being considered as merely its agent. The same principle applies 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 liability because of the absence of the vinculum juris of an employer-employee relationship between the owner and the driver. In the present case, though in fact, there is no employer-employee relationship between Equitable and Tutor, the law deems the registered owner to be the employer of the driver, and the actual operator is deemed to be the owner’s agent. Again, under law, Equitable is the owner, Ecatine is Equitable’s agent, Tutor is Equitable’s employee. Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 5

The failure of Equitable and/or Ecatine to register the sale with the LTO should not prejudice respondents, who have the legal right to rely on the legal principle that the registered vehicle owner is liable for the damages caused by the negligence of the driver. 2. No Double Recovery Rule Art. 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or omission of the defendant. 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 the liability for crime, the defendant has two kinds of liability – criminal liability and civil liability. This is illustrated by the 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 a criminal action to recover the remaining 50K? Answer: No, this would violate the principle of res judicata. The victim had the opportunity to present evidence in the 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 Edgar Jarantilla. 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 a separate civil action. Jarantilla was acquitted because of reasonable doubt. Sing subsequently instituted a civil action for damages involving the same subject matter and act complained 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 criminal action. HELD: Yes, the civil action was properly filed. The same act or omission (in this case, the negligent sideswiping of private respondent) can create two kinds of liability on the part of the offender: civil liability ex delicto and civil liability ex quasi delicto. Since the same negligence can give rise either to a delict or crime or to a quasi-delict or tort, either of these two types of civil liability may be enforced against the culprit, subject to the caveat under Article 2177 of the Civil Code that the offended party cannot recover damages under both types of liability. The only instance where a civil action cannot be instituted after the dismissal of the criminal case is where such dismissal was accompanied by a statement of the court declaring that the act complained of never happened. Atlantic Gulf and Pacific v. CA This is a resolution of a MR.

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

6

The Castillos filed an action for damages against AG&P alleging that the latter’s operations on the former’s property caused the soil to become “infertile, salty, unproductive and unsuitable for agriculture.” The Castillos also averred that AG&P’s heavy equipment was parked on the former’s land without rental having been 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 the Castillos, 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 equipment and trucks. Damages were correctly awarded for the destruction of the land and for the reasonable value for the use of the premises. Article 2177 provides that the plaintiff cannot recover damages twice for the same act or omission of the defendant. 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 is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shall apply.

If the law or contract does not state the diligence which is to be observed in the performance, that which 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 order to cover the checks. However, in filling up the deposit slip, she omitted a zero and wrote 2900823 instead of 29000823. Her checks were dishonored. Herrero filed a complaint for damages against Citytrust. The trial court dismissed the complaint. The CA reversed 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 is under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship. Even if the account number were erroneous, Herrero’s name was clearly written on the deposit slip. The teller should have noticed that there were only seven numbers instead of eight. Besides, the use of numbers is 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 deposits were still properly made. This indicates that there are ways and means whereby deposits with erroneous account numbers can still be credited to the proper account. It is the bank’s obligation to see to it that all funds invested with it are properly accounted for and duly posted in its ledgers.

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

7

The CA, however, erred in awarding nominal and temperate damages concurrently; the two are incompatible. 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 be proved 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 exchange demand 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, a roundabout way was found whereby the remittance of the money could be achieved. FEBTC would draw a demand draft 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 in Westpac NY had been debited. In response to the organizer’s complaint of the dishonor, FEBTC informed Westpac Sydney to reimburse itself from FEBTC’s Westpac NY account. FEBTC also instructed Westpac NY to honor the claim 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 had been dishonored twice. This allegedly caused them much humiliation, shock, trembling legs, etc. However, after agreeing 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 of the dishonor, they were exposed to unnecessary shock, social humiliation, and deep mental anguish in a foreign country, 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 prudent person under the circumstances obtaining. The rule that a bank, due to the nature of its relationship with the client, must exercise extraordinary diligence applies only when the bank is acting in its fiduciary capacity, as was seen in the Citytrust case. In the present circumstance, the relationship between FEBTC and the Puyats was merely 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 to get the demand draft paid. It did all that it could have reasonably done. The reason the demand draft was dishonored was because Westpac Sydney mistakenly read FEBTC’s cable message to it [a 1 was read as a 7]. As a result, 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 collided with a Corona driven by Martinez. It appears that Martinez was executing a U-turn when Adzuara suddenly rammed the side of his car. The Corona was flung 20 meters from the point of impact and it landed atop the center island of QC Ave. Martinez filed a complaint for reckless imprudence resulting in damage to property with less serious physical injuries [Martinez’s daughter was confined]. The right to institute a separate civil action was reserved. 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 the Corona 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. Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 8

Negligence is the want of care required by the circumstances. It is a relative or comparative, not an absolute, term and its application depends upon the situation of the parties and the degree of care and vigilance 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 morning along an almost deserted avenue, ordinary care and vigilance would suffice. This may consist of keeping a watchful eye on the road ahead and observing the traffic rules on speed, right of way and traffic light. The claim of petitioner that Martinez made a swift U-turn which caused the collision is not credible since a U-turn is done at a much slower speed to avoid skidding and overturning, compared to running straight ahead. Nonetheless, no evidence was presented showing skid marks caused by the car driven by Martinez if only to demonstrate that he was driving at a fast clip in negotiating the U-turn. On the other hand, the speed at which petitioner drove his car appears to be the prime cause for his inability to stop his car and avoid the collision. His assertion that he drove at the speed of 40 kph. is belied by Martinez who testified that when he looked at the opposite lane for any oncoming cars, e saw none; then a few seconds later, he was hit by Adzuara's car. The extent of the damage on the car of Martinez and the position of the cars after the impact further confirm the finding that petitioner went beyond the speed 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 is attributed foresee harm to the person injured as a reasonable consequence of the course about to be pursued? If so, the law imposes a duty on the actor to refrain from that course or to take precaution against its mischievous results, and the failure to do so constitutes negligence. Reasonable foresight of harm, followed by the ignoring of the admonition 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 efficient supervening 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) and driven 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 of LTB 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 the contract 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 with LTB. 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 considerable speed, despite the fact that it was negotiating a sharp curve, and, instead of being close to its right side of the road, said truck was driven on its middle portion and so near the passenger bus coming from the opposite direction 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, both acts of negligence are the proximate cause of the death of Custodio. In fact, the negligence of the first two would not have produced this result without the negligence of Sabido and his driver. What is more, Sabido’s driver’s negligence was the last, in point of time, for Custodio was on the running board of the carrier's bus sometime before petitioners' truck came from the opposite direction, so that, in this sense, Sabido’s truck had the last clear chance. Even though LTB’s liability arises from breach of contract and Sabido’s arises from quasi-delict, they are solidarily liable because the rule is that where both negligent acts, in combination, are the direct and proximate cause of a single injury to a third person and it is impossible to determine in what proportion each contributed to the injury, either is responsible for the whole injury, even though his act alone might not have caused the entire injury, or the same damage might have resulted from the acts of the other tort-feasor. Ridjo Tape v. CA Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 9

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 that the URE was due to defects of the electric meter. When petitioners refused to pay, MERALCO notified them of disconnection which prompted petitioners to file for preliminary injunction and/or TEMPORARY RESTRAINING ORDER which was granted. ON July 1992, petitioners received another demand letter, this time requiring them to pay P89,710.58 for URE from July 1991 to April 1992, the deficiency again due to the defective meter. Petitioners again filed for the consolidation of the two cases, and after trial, the injunction was made permanent. CA reversed the decision of RTC ISSUE: Whether petitioners should be made to pay the said amounts for their unregistered electric consumption 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 installed within the premises of petitioners was obviously the proximate cause of the instant dispute between the parties. Indeed, if an unusual electric consumption was not reflected in the statements of account of petitioners, 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, the electric meters themselves should be inspected for possible defects or breakdowns and forthwith repaired and, if necessary, replaced. Furthermore, if MERALCO discovered that contraptions or illegal devices were installed which would alter the result of the meter reading, then it should have filed the appropriate criminal complaint against petitioners. Notice of a defect need not be direct and express; it is enough that the same had existed for such a length of time that it is reasonable to presume that it had been detected, and the presence of a conspicuous defect which has existed for a considerable length of time will create a presumption of 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 care and diligence The liability of petitioners for consumed but unrecorded electricity must therefore be limited by reason of MERALCO’s negligence- only the estimated consumption on a three-month average before the controversial period (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 a credit limit of 10,000 which they often exceeded and BPI never seemed to have minded for the past 2 years. Manuelita’s bag one day was snatched, and that night she informed by telephone BPI of the loss. This was followed by a letter the next day, surrendering her husband’s card as well, stating that she shall not be responsible for any and all charges incurred after August 29,1989 (the day of loss), and sought for replacement cards instead. However in their monthly billing statement the thief went on some kind of a shopping spree amounting to 3,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 in writing to BECC ... purchases made/incurred arising from the use of the lost/stolen card shall be for the exclusive account of the cardholder and the cardholder continues to be liable for the purchases made through the use of the lost/stolen BPI Express Card until after such notice has been given to BECC and the latter 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 on having them pay when they already complied with the requirement of notifying them on time and should thus be absolved from any liability.

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

10

Despite their refusal to pay, their cards were still renewed and some time in 1991, when Luis was paying for gas, lo and behold his card was dishonored! BPI informed them that they had exceeded their credit limit and because 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 a time the bank had been able to notify all its member establishments even when they had already exercised due 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 should be enough to relieve the former of any liability occasioned by the unauthorized use of his lost or stolen card. The questioned stipulation in this case, which still requires the cardholder to wait until the credit card company has notified all its member-establishments, puts the cardholder at the mercy of the credit card company which may delay indefinitely the notification of its members to minimize if not to eliminate the possibility of incurring any loss from unauthorized purchases. Or, as in this case, the credit card company may for some reason fail to promptly notify its members through absolutely no fault of the cardholder. To require the cardholder to still pay for unauthorized purchases after he has given prompt notice of the loss or theft 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 the morning, Jose together with other meat vendors went out of their stalls to meet a jeepney loaded with slaughtered pigs in order to select the meat they would sell for the day. Jose was the very first to reach the parked jeepney. Grasping the handlebars at the rear entrance of the vehicle, and as he was about to raise his right foot to get inside, Jose suddenly stiffened and trembled as though suffering from an epileptic seizure. Romeo Pimienta who saw Jose thought he was merely joking but noticed almost in disbelief that he was already turning black. In no time the other vendors rushed to Jose and they discovered that the antenna of the jeepney bearing the pigs had gotten entangled with an open electric wire at the top of the roof 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 against the 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 electric power to the towns of Benguet province, its primordial concern is not only to distribute electricity to its subscribers but also to ensure the safety of the public by the proper maintenance and upkeep of its facilities. It is clear to then that BENECO was grossly negligent in leaving unprotected and uninsulated the splicing point between the service drop line and the service entrance conductor, which connection was only eight (8) feet from the ground level, in violation of the Philippine Electrical Code. By leaving an open live wire unattended for years, BENECO demonstrated its utter disregard for the safety of the public. Indeed, Jose Bernardo's death was an accident that was bound to happen in view of the gross negligence of BENECO. BENECO theorizes in its defense that the death of Jose Bernardo could be attributed to the negligence of Canave, Jr., in parking his jeepney so close to the market stall which was neither a parking area nor a loading area, with his antenna so high as to get entangled with an open wire above the Dimasupil store. But this 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 independent negligent act adverted to by BENECO in citing Manila Electric Co. v. Ronquillo. Canave was well within his right to park the vehicle in the said area where there was no showing that any municipal law or ordinance was violated nor that there was any foreseeable danger posed by his act. One thing however is sure, no accident would have happened had BENECO installed the connections in accordance with the prescribed vertical clearance of fifteen (15) feet. St. Mary’s v. Carpitanos Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 11

St. Mary’s Academy of Dipolog City conducted an enrollment drive for the school year 1995-1996. A facet of the enrollment campaign was the visitation of schools from where prospective enrollees were studying. As a student of 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 on their way to Larayan Elementary School. The jeep was driven by James Daniel II then 15 years old and a student of the same school. Allegedly, the latter drove the jeep in a reckless manner and as a result the jeep turned turtle. 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 an authorized school activity HELD: No. The Court of Appeals mistakenly held petitioner St. Mary’s Academy liable for the death of Sherwin Carpitanos under Articles 218[7] and 219[8] of the Family Code, pointing out that petitioner was negligent in allowing a minor to 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 while under their supervision, instruction or custody: (1) the school, its administrators and teachers; or (2) the individual, entity or institution engaged in child care. This special parental authority and responsibility applies to all authorized activities. Under Article 219 of the Family Code, if the person under custody is a minor, those exercising special parental authority are principally and solidarily liable for damages caused by the acts or omissions of the unemancipated minor while under their supervision, instruction, or custody. However, for petitioner to be liable, there must be a finding that the act or omission considered as negligent was the proximate cause of the injury caused because the negligence must have a causal connection to the accident. In this case, the respondents failed to show that the negligence of petitioner was the proximate cause of the death of the victim. In their comment to the petition, respondents Daniel spouses and Villanueva admitted the documentary exhibits establishing that the cause of the accident was the detachment of the steering wheel guide of the jeep. Hence, the cause of the accident was not the recklessness of James Daniel II but the mechanical defect in the jeep of Vivencio Villanueva. Further, there was no evidence that petitioner school allowed the minor James Daniel II to drive the jeep of respondent Vivencio Villanueva. It was Ched Villanueva, the grandson, who had possession and control of the jeep. He was driving the vehicle and he allowed James Daniel II, a minor, to drive the jeep at the time of the accident. Hence, liability for the accident, whether caused by the negligence of the minor driver or mechanical detachment of the steering wheel guide of the jeep, must be pinned on the minor’s parents primarily. The negligence of petitioner St. Mary’s Academy was only a remote cause of the accident. Between the remote cause and the injury, there intervened the negligence of the minor’s parents or the detachment of the steering 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 for compensation at its refrigerated warehouse in Taguig, Metro Manila. Basic Foods is engaged in the production of food and allied products. In its manufacture of food, Basic Foods uses Red Star compressed yeast, which requires storage in a refrigerated space to avoid spoilage. It deposited 1,770 cartons of yeast with FTI for cold storage. 383 cartons worth P161k were damaged, allegedly because of FTI’s failure to maintain the proper temperature.

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

12

FTI claims that it exercised utmost diligence; that any damage sustained was due to the fault of Basic Foods; that under the contract, FTI would not be liable for damage to goods beyond its reasonable control; and that Basic Foods 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 and may not be reviewed on appeal via certiorari. In the second place, petitioner practically admitted that it failed to maintain the agreed temperature of the cold storage area at 2 to 4 degrees centigrade at all times, and this caused the deterioration of the yeast stored therein. Nonetheless, petitioner claimed that temperature was not the sole cause for the deterioration of respondent's goods. Since negligence has been established, petitioner's liability for damages is inescapable. Morris v. CA Morris and Whittier were American citizens employed in the Philippines. They were booked as first-class passengers on a 3:50 pm Scandinavian Airline System (SAS) flight from Manila to Tokyo. On the day of departure, Morris and Whittier checked in at the airport at 3:10 pm. However, they were told that they could not be accommodated on the plane because their seats had been given to other passengers. Apparently, the economy class of the flight had been overbooked and the seats of the first class passengers who had not checked in at least 40 minutes before departure time were given to economy class passengers. Morris and Whittier filed a claim 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, or the 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 the natural and probable consequences of the breach of obligation which the parties had foreseen or could have reasonably foreseen. Such liability does not include moral and exemplary damages. Moral damages may be recovered only where (a) the mishap results in the death of a passenger; and (b) it is proved that the carrier was guilty of fraud and bad faith even if death does not result. Bad faith does not simply connote bad judgment of negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known 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 on time. SAS could not be faulted for not entertaining their tickets and papers for processing, since the checking in of passengers for the flight was finished. There was no fraud or bad faith as would justify an award of moral damages. 4. Presumption of Negligence The plaintiff may invoke the following principles in order to impute presumed negligence on the defendant: a. b. c. d. res ipsa loquitur respondeat superior violation of traffic rules dangerous weapons and substances

In these cases, there is no need for the plaintiff to show that the defendant was negligent. There is a rebuttable presumption of negligence on the part of the defendant. It is incumbent upon the defendant to prove that he exercised the degree of care required by the circumstances. If he fails to prove this, he shall be liable for damages. a. Res ipsa loquitur Statement of the rule: “Where the thing which caused the injury complained of is shown to be under the management of defendant or his servants and the accident is such as in the ordinary course of things Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 13

does not happen if those who have its management or control use proper care, it affords reasonable evidence, in absence of explanation by defendant, that the accident arose from want of care.” Elements: 1. 2. 3. 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 into the underground storage, right at the opening of the receiving tank where the nozzle of the hose was inserted. 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 the station, 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 by officers 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 is shown to be under the management 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 reasonable 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, was under 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, but they gave no explanation thereof whatsoever. It is a fair and reasonable inference that the incident happened because of want of care. The station is in a very busy district and pedestrians often pass through or mill around the premises. Aside from this, it is used as a carbarn for around ten taxicabs owned by Boquiren. Also, there is a store located around one meter from the hole of the underground tank. At this store, people hang out and possibly smoke cigarettes. It was even alleged that the fire was caused by a match which came into contract with the dense fumes. Furthermore, the concrete walls adjoining the neighborhood are only 2 ½ meters high at most and cannot prevent 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 was liable because there was an agency relationship and Boquiren was not an independent contractor. Caltex owned the station and exercised control over it. the thing which caused the injury is under the exclusive control of the defendant; ordinarily, such event will not happen unless there is negligence; defendant fails to give an explanation for the happening of the event.

Batiquin v. CA Dr. Batiquin performed a Caesarean section on Mrs. Villegas. After the delivery of her baby, Mrs. Villegas began to suffer abdominal pains and fever. When, despite taking medication prescribed by Dr. Batiquin, she still did not get 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 a piece 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. Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 14

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 that the injury was caused by an agency or instrumentality under the exclusive control and management of the defendant, and that the occurrence was such that in the ordinary course of things would not happen if reasonable care had been used. The doctrine of res ipsa loquitur as a rule of evidence is peculiar to the law of negligence which recognizes that prima facie negligence may be established without direct proof and furnishes a substitute for specific proof of negligence. The doctrine can be invoked only when, under the circumstances, direct evidence is absent and not readily available. In this case, all the requisites for recourse to the doctrine are present. First, the entire proceedings of the caesarean section were under the exclusive control of Dr. Batiquin. Mrs. Villegas did not have any direct evidence as to the actual culprit or the exact cause of the foreign object finding its way into her body, which could not have occurred unless through the intervention of negligence. Second, since aside from the caesarean section, Villegas underwent no other operation which could have caused the piece of rubber to appear in her uterus, it stands to reason 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 the adverse effects thereof. Reyes v. Sisters of Mercy Jorge Reyes had been suffering from recurring fever with chills for around 5 days. Home medication afforded him no relief so he went to Mercy Community Clinic. Because typhoid was common at the time, the Widal Test was performed. Jorge came out positive for typhoid. Dr. Blanes ordered that Jorge be tested for compatibility with chloromycetin, an antibiotic. Nurse Pagente administered the test. As there was no adverse reaction, Dr. Blanes administered 500 mg of the antibiotic. Another dose was given 3 hours later. Subsequently, Jorge developed high 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 typhoid fever.” 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 teach that the injury would not have occurred if due care had been exercised, the doctrine of res ipsa loquitur can be invoked to establish negligence. The elements of res ipsa loquitur are: a. b. c. the accident will not normally occur unless someone is negligent; the instrumentality which caused the injury was under the control of the person in charge; and 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 to admission. Furthermore, as to the charge of misdiagnosis, res ipsa loquitur cannot apply to suits involving the merits of a diagnosis.

b. respondeat superior Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in Articles 1733 and 1755.

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

15

Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case.

Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in Articles 1755 and 1756.

Art. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or wilful acts of the former's employees, although such employees may have acted beyond 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 diligence of 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 negligence of 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 common carriers 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 his widow 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 faith that the lease in favor of Irene Sto. Domingo was covered by Administrative Order No. 5, series of 1975 which provided 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 was ready for exhumation. In accordance with this certification, the authorities of the North Cemetery exhumed the remains of Vivencio and put them in a bag which was then stored inside a bodega. The lot was then leased to another party. During All Saints Day, Irene Sto. Domingo and her family were shocked to find that the lot no longer had the stone marker which they placed on the tomb. When she asked what happened to the remains of her husband, she was told to look for them in the bodega. Aggrieved, Irene Sto. Domingo filed a claim for damages 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 ex contractu or ex delicto. The superior or employer must answer civilly for the negligence or want of skill of its agent or servant in the course or line of his employment, by which another, who is free from contributory fault is injured. 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 committed by its agents who failed to verify and check the duration of the contract of lease. The contention of the petitionercity that the lease is covered by Administrative Order No. 5, series of 1975 for five (5) years only beginning from June 6, 1971 is not meritorious for the said administrative order covers new leases. When subject lot was certified on January 25, 1978 as ready for exhumation, the lease contract for fifty (50) years was still in full force and effect. The City of Manila is ordered to give Sto. Domingo the right to use a burial lot in the North Cemetery corresponding to the unexpired term of the fully paid lease sued upon, to search for the remains of the late Vivencio Domingo, and to bury the same in a substitute lot to be chosen by the Sto. Domingos. Moreover, moral and exemplary damages are awarded. Calalas v. CA and Jujeurche Sunga and Salva Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 16

Eliza Jujeurche Salva was a college freshman majoring in Physical Education at the Siliman University in Dumaguete 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 the vehicle. Along the route, the jeepney stopped to let a passenger off. As she was seated at the rear of the vehicle, Sunga gave way to the outgoing passenger. Just as she was doing so, an Isuzu truck driven by Verena and owned by Salva bumped the left rear portion of the jeepney. As a result, Sunga was injured. Because of her injury, she decided 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 was decided 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. Calalas filed 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 ruling was 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 of the tortfeasor. The BOC case is premised upon the negligence of the carrier in the performance of the contractual obligation. Sunga’s complaint was based on BOC. It does not matter that a third person’s act was the proximate cause of the injury. The doctrine of proximate cause is applicable only to QD. In BOC, it is sufficient to show that there is a contractual 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 in case 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 to unload, its rear was protruding around two meters into the highway. Also, it was overloaded, hence the employment of the extension seat. There is no fortuitous event because the dangers could have been foreseen and avoided. * moral damages awarded by the CA were deleted because they are generally not available in cases of BOC of carriage. 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 a junction, they were hit by a passenger bus driven by Pestano and owned by Metro Cebu Autobus Corp. The bus had tried to overtake them, but it hit them instead. Both Sumayang and Romagos died in the accident. Criminal charges were instituted against Pestano. The heirs of Sumayang also filed a civil action for damages against Pestano (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 to overtake the victim’s motorcycle at the junction, while Metro Cebu was negligent in allowing the bus to ply its route 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 the motorcycle. As a professional driver operating a public transport bus, he should have anticipated that overtaking at a junction was a perilous maneuver, and he should have thus exercised extreme caution. Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 17

Metro Cebu is also guilty of negligence. Under Articles 2180 and 2176 of the Civil Code, owners and managers are responsible for damages caused by their employees. When an injury is caused by the negligence of a servant or an employee, the master or employer is presumed to be negligent either in the selection or in the supervision of that employee. This presumption may be overcome only by satisfactorily showing that the employer exercised the care and the diligence of a good father of a family in the selection and the supervision of its employee. In this case, Metro Cebu showed laxity in the operation of its business and in the supervision of its employees when it allowed Pestano to ply his route with a defective speedometer. It was remiss in the supervision of its employees and 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, who was in the vehicle, could have, by the use of the due diligence, prevented the misfortune. It is disputably presumed that a driver was negligent, if he had been found guilty or reckless driving or violating 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 vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation. The driver is disputably presumed negligent if:

1. 2. 3.

he had been found guilty of reckless driving at least twice within the next preceding two months; he had been found guilty of violating traffic regulations at least twice within the next preceding two months; or 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 was negotiating the zigzag road in Camarines Norte, was hit on its left side by a bus. The bus was owned by petitioner Superlines Transportation, Co., Inc. and was driven by petitioner Emiliano Manuel. Due to the impact, the Scout car was thrown backwards against a protective railing. Were it not for the railing, the Scout car would have fallen into a deep ravine. All its ten occupants, which included four children, were injured, seven of the victims sustained serious 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 was ordered 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 no driver’s license. Proof of this according to them was a woman passenger heard saying ‘. 'Iyan na nga ba ang sinasabi 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 as evidence that the Superlines bus encroached on the lane of the Scout car. According to them, the sketch made by the police investigator showing flue skid marks of the bus, is inadmissible as evidence because it was prepared the day after the incident and the alleged "tell-tale" skid marks and other details had already been obliterated by the heavy 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 of skidmarks were inaccurate, nonetheless, the finding of the Court of Appeals that the collision took place within the lane of the Scout car was supported by other conclusive evidence. "Indeed, a trail of broken glass which was scattered along the car's side of the road, whereas the bus lane was entirely clear of debris.”

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

18

Furthermore, the fact that the Scout car was found after the impact at rest against the guard railing shows that it must 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 or injury 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 or substances. The defendant may invoke the defense that possession or use of such dangerous weapons or substances is indispensable 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 750 metric tons of alkyl benzene and methyl methacrylate monomer. Catalino Borja, Customs Inspector was then on board the vessel to perform his duties. At around noon, while M/T King Family was unloading chemicals unto 2 barges owned by respondent ITTC, a sudden explosion occurred setting the vessels afire. Upon hearing the explosion, Borja who was at that time inside the cabin preparing reports, went outside to check what had happened, and another explosion was heard, seeing the fire and fearing his life, jumped overboard to save himself. However, the water was likewise on fire due mainly to the spilled chemicals. Despite the tremendous heat, he swam his way for 1 hour until he was rescued by the 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. He made demands against Smith Bell and ITTC for the damages caused by the explosion. However, both denied liabilities 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 the claim 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 Marine Inquiry. 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 and not aboard. Negligence is conduct that creates undue risk of harm to another. It is the failure to observe that degree of care, precaution and vigilance that the circumstances justly demand, whereby that other person suffers injury. Petitioner’s vessel was carrying chemical cargo -- alkyl benzene and methyl methacrylate monomer. While knowing that their vessel was carrying dangerous inflammable chemicals, its officers and crew failed to take all the necessary 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, Respondent Borja suffered burns that will permanently disable him Hence, the owner or the person in possession and control of a vessel and the vessel are liable for all natural and proximate damage caused to persons and property by reason 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, including security guards (contracted out through a security agency), to tighten security. X, a security guard at the front door of the bank, takes this to heart and has his shotgun ready. A, a customer of the bank, arrives at the front door and opens her bag to take out a gun for the purpose of surrendering it to the guard. The guard, upon seeing Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 19

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 he possessed a gun because his possession of it was indispensable to his occupation as a security guard. This is one of 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. b. c. d. e. f. g. h. contributory negligence assumption of risk last clear chance prescription fortuitous events diligence mistake and waiver 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 and proximate cause of the injury being the defendant's lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded. 2179 talks of two cases: a. b. The defendant can show that the immediate and proximate cause of the injury was the negligence of the plaintiff himself. In this case, the defendant is not liable at all. The defendant can also show that although the proximate cause of the injury was the defendant’s lack of due care, the plaintiff also contributed to the injury with his own negligence. In case of contributory negligence on the part of the plaintiff, the defendant is still liable, but his liability may be mitigated by the court.

Atty Abaño: There was a case where the victim was a child below 9 years old. The defendant wanted his liability mitigated on the ground that the victim had contributed with his own negligence. The court held that a child below 9 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 using a railroad hand car, Rakes broke his leg when the hand car toppled over and the rails fell on him. It appears that the hand car fell due to a sagging portion of the track that gave with the weight of the rails. Atlantic knew of the weak 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 own negligence in walking alongside the car, instead of in front or behind it, as the laborers were told to do. ISSUES: 1. 2. HELD: Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 20 Whether Rakes was negligent. Whether Atlantic is liable to Rakes.

1. 2.

Rakes was negligent. He disobeyed the orders of his superiors when he walked alongside the car instead of in front or behind it. Atlantic is liable to Rakes. The negligence of Rakes will not totally bar him from recovering anything from Atlantic, 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 accident was still the weak rails which Atlantic refused to repair. Distinction must be made between the accident and the injury, between the event itself, without which there could have been no accident, and those acts of the victim not entering into it, independent of it, but contributing 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 the amount that the defendant responsible for the event should pay for such injury, less a sum deemed equivalent 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 street when his headlights [allegedly] suddenly failed. He switched them to bright but it was too late for him to avoid a dump truck looming 2 ½ meters away from his car. He crashed into the dump truck, which was parked on the right 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 had an early morning job. Dionisio suffered some physical injuries including some permanent facial scars, a “nervous breakdown” and loss of two 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 favor of 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 was that he had no curfew pass and so, along that stretch of road, which, incidentally, had a police station on it, he switched off his lights and sped to avoid detection. This is corroborated by the report of the police officer who found 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 scene moments after the collision [he was manning the nearby police station] people who witnessed the accident told him that Dionisio was driving fast and without headlights. This testimony was an exception to the hearsay rule for being excited utterances of the bystanders. However, there is no doubt that the reckless parking of the truck was the indispensable and efficient cause of the accident. Dionisio's negligence, although later in point of time than the truck driver's negligence and therefore closer to the accident, was not an efficient intervening or independent cause – it was merely a foreseeable consequence of the risk 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 of causation in fact between the improper parking of the dump truck and the accident, nor to sever the juris vinculum of liability. * There was no evidence to prove that Dionisio was so heavily under the influence of liquor as to constitute his driving 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 owned by LBC Air Cargo driven by Jaime Tano Jr. was coming from the opposite direction, on the way to the airport. On board the van were Fernando Yu, manager of LBC, and his son. When Tano was approaching the vicinity of the Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 21

airport road entrance on his left, he saw two vehicles racing against each other from the opposite direction. Tano stopped the van and waited for the two racing vehicles to pass. The racing vehicles produced a cloud of dust that made visibility extremely bad. However, instead of waiting for the dust to settle, Tano started to make a sharp turn towards the airport road. Suddenly, the motorcycle driving by Monterola emerged from the cloud of dust and smashed head-on against the LBC van. Monterola died. The heirs of Monterola filed a case for homicide through reckless 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 presumptive negligence as employer of Tano. Yu is not liable, there being no employer-employee relationship between him and Tano. The proximate cause of the accident was the negligence of Tano who, despite extremely poor visibility, hastily executed a left turn without first waiting for the dust to settle. It was this negligent act of Tano, which had placed the LBC van directly on the path of the motorcycle coming from the opposite direction, that almost instantaneously caused the collision to occur. Simple prudence required him not to attempt to cross the other lane until after it would 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 "supervening negligence" or as "discovered peril"). The doctrine, in essence, is to the effect that where both parties are negligent, but the negligent act of one is appreciably later in time than that of the other, or when it is impossible to determine whose fault or negligence should be attributed to the incident, the one who had the last clear opportunity to avoid the impending harm and failed to do so is chargeable with the consequences thereof. In this case, the victim was traveling along the lane where he was rightly supposed to be. The incident occurred in an instant. No appreciable time had elapsed, from the moment Tano swerved to his left to the actual impact, that could have afforded the victim a last clear opportunity to avoid the collision. Therefore, the doctrine is not applicable. It is true, however, that the deceased was not all that free from negligence in evidently speeding too closely behind the vehicle he was following. There was contributory negligence on the victim's part that could warrant a mitigation of petitioners' liability for damages. Hence, the damages due the heirs of Monterola should be reduced by 20%. b. Assumption of Risk Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. Assumption of risk involves an action to which one consents, and the injury suffered is due to a risk involved in that action. Example: Engaging in contact sports – In this case, there is an assumption of risk, but there are still rules which must be followed in order to minimize the risk. The defense of assumption of risk by the plaintiff cannot be invoked 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. She seeks 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 such animal 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 person who may have suffered it. The lower court ruled that article 1905 [2183] does not apply where damage is caused to the caretaker.

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

22

ISSUE: Whether Article 1905 [2183] makes the owner of the animal liable where the injured party is the caretaker. 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,” and this is for the obvious reason that the possessor or user has the custody and control of the animal and is therefore the 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 his work as such. Obviously, it was the caretaker’s business to try to prevent the animal from causing injury or damage to anyone, including himself. And being injured by the animal under those circumstances was one of the risks of the occupation which he had voluntarily assumed and for which he must take the consequences. 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 would probably have been different had it been decided today. Under current laws, the employer has the duty to adapt the 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 it was 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 fortuitous event – carnapping. ISSUE: Whether a repair shop can be held liable for the loss of a customer’s vehicle while the same is in its custody 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 fortuitous event if the nature of the obligation requires the assumption of risk. Carnapping is a normal business risk for those 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 secure and insurance policy for the shop covering the property entrusted by its customer for repair, service, and maintenance as a pre-requisite for such accreditation/registration. Violation of this statutory duty constitutes negligence 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 opponent is 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 the plaintiff] The negligence of the plaintiff does not preclude recovery for the negligence of the defendant where it appears that the defendant, by exercising reasonable care and prudence, might have avoided injurious consequences to the 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 injured person is entitled to recovery. Elements: 1. 2. 3. 4. CASES: Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 23 prior negligence on the part of the plaintiff defendant is aware of the plaintiff defendant had the last clear chance/opportunity to avoid the peril by taking the necessary precaution, but failed to do so accident occurs because of the negligence of the defendant.

Bustamante v. CA A collision occurred between a cargo truck and a passenger bus. The cargo truck and passenger bus were approaching each other, coming from the opposite sides of the highway. The bus driver claimed that from 30 meters away, he could see that the front tires of the truck were wriggling, and that the truck was rapidly headed towards his lane. He thought that the truck driver was a jokester, so despite the circumstances, he downshifted to increase 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 out and five people died as a result of the injuries they sustained. The heirs of the victims filed an action for damages against the drivers and owners of the truck and bus. The CA held that the truck driver and owner were not liable to 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 only in a suit between the owners and drivers of the colliding vehicles. It does not apply where a passenger 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 the heirs of the deceased passengers against both owners and drivers of the colliding vehicles. Therefore, the doctrine 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 the two kids and collided head-on with a truck. Koh and two of his pasengers died, while three others were seriously injured. One of the survivors, McKee, filed a civil action for quasi-delict against the truck’s owners. Despite evidence showing that the driver of the truck was driving over the speed limit and failed to step on the brakes even if he had enough time to do so as he saw Koh swerving in his direction, the IAC held that Koh’s negligence was 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 to act without time to consider the best means that may be adopted to avoid the impending danger is not guilty of negligence. In this case, any reasonable and ordinary prudent man would have tried to avoid running over the two 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 negligence of the party injured will not defeat his claim for damages if it is shown that the defendant might, by the exercise of reasonable care and prudence, have avoided the negligence of said injured party. In this case, it was proven by the testimony of an uninterested party that the driver of the truck had the last clear chance to avoid the mishap if only he stepped on the truck’s brakes as he had time to do so. Since he failed to do so, he is considered by the law 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 out to be insufficiently funded. Mañosca managed to mortgage the two parcels to Atty. Magno with the help of two impostors who introduced themselves as the spouses Canlas. He again mortgaged the properties to the Asian Savings Bank with the aid of the two impostors. When Mañosca defaulted on his loan, the bank foreclosed the mortgage. The real Canlas spouses then informed the bank that the property had been mortgaged without their consent and filed an action for the annulment of the mortgage contract. The CA held that the Canlas spouses were not entitled to relief since they were negligent and must bear the loss. It also held that the bank exercised due 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 of Mañosca. Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 24

The degree of diligence required of banks is more than that of a good father of a family, in keeping with their responsibility to exercise the necessary care and prudence in dealing with registered or titled property. The business of a bank is affected with public interest, holding in trust the money of the depositors, which bank deposits 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 the couple who introduced themselves as the spouses Canlas. Not even a single identification card was exhibited by the said impostors to show their true identity; and yet, the bank acted on their representations simply on the basis of the residence certificates bearing signatures which tended to match the signatures affixed on a previous deed of mortgage 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 resulting loss. In essence, the doctrine of last clear chance is to the effect that where both parties are negligent but the negligent act of one is appreciably later in point of time than that of the other, or where it is impossible to determine whose fault or negligence brought about the occurrence of the incident, the one who had the last clear opportunity to avoid the impending harm but failed to do so, is chargeable with the consequences arising therefrom. Assuming that Canlas was negligent in giving Mañosca the opportunity to perpetrate the fraud, by entrusting to latter the certificates of title to the parcels of land, it cannot be denied that the bank had the last clear chance to prevent the fraud, by the simple expedient of faithfully complying with the requirements for banks to ascertain the identity of the persons transacting with them. For not observing the degree of diligence required of banking institutions, whose business is impressed with public interest, 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 officer involving the exercise of powers or authority arising from Martial Law including the arrest, detention and/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 point is 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 shows symptoms 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 its occurrence. 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 purchase If 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, on the other hand, is a relative term. It means the inaction of someone who has a right; it is the failure to exercise this right. CASES: United Airlines v. Uy [not assigned but discussed by Atty. Abaño] Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 25

On a flight to the UK, Uy was required by UA to check in his briefcase. He refused because the other passengers were not required to do so. He was treated rudely by the staff and crew of UA. Finally, he checked in the briefcase. When he reached his destination, the briefcase was lost. At this point, Uy had two causes of action. He could have filed an action for damages under the Civil Code (for the rude treatment that he got from the staff) and another action under the Warsaw Convention which provides for compensation for lost baggage. The prescriptive period 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 complaint and 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 yet prescribed 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 prescription period of 4 years shall begin to run—that is from the day the action may be brought—from the day the quasi-delict occurred 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 Trust Corporation (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 in the Philippines. Later that same year, a resolution was issued ordering the liquidation of Genbank. Again, in the same year, the liquidator and Allied Bank entered into an agreement whereby Allied Bank acquired all the assets and 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 should be annulled became final and executory. In 1987, Yujuico filed a third party complaint to implead the Central Bank and the liquidator in the case. Yujuico alleged that by reason of the tortuous interference by the Central Bank with the affairs of Genbank, he was prevented 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 the admission 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 act or deed complained of by the plaintiff, may be brought into the case with leave of court, by the defendant, who acts as third-party plaintiff to enforce against such third-party defendant a right for contribution, indemnity, subrogation or any other relief, in respect of the plaintiffs claim. In this case, the third-party complaint is “in respect of “Allied Bank’s claim and therefore procedurally sound in itself. However, since the claim is based on tortuous interference, which is a quasi-delict, the complaint should have been filed within four years from the time the cause of action accrued [1981, or four years after the 1977 order of liquidation]. Contrary to Yujuico’s claim that the pprescriptive period should be counted from the CA’s decision annulling the liquidation, it is an established rule that it is from the date of the act or omission violative of the right of a party when the cause of action arises and it is from this date that the prescriptive period must be reckoned. Delos Reyes v. CA Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 26

Spouses Genaro and Evarista delos Reyes owned a parcel of land measuring 13,405 square meters. Evarista sold to spouses Catalina and Eulalio Pena 10,000 square meters of the property. On June 4, 1943, the Penas were able to secure a TCT covering not only the 10,000 square meters sold to them but also the remaining 3,405 square meters left unsold. The Penas then sold the whole property to the spouses de Guzman. The de Guzmans sold it again. Eventually, the land was acquired by Rodolfo and Zenaida Caina spouses. On July 17, 1963, a TCT over the entire property was issued in favor of the Cainas. On October 3, 1978, the heirs of Evarista delos Reyes filed an action against the Cainas for reconveyance of the 3,405 square meters, claiming that this portion was invalidly included by the Pena Spouses in the titling of the 10,000 sqaure meters that they had purchased from Evarista. 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 when Evarista delos Reyes died, or on 17 July 1963 when the TCT was issued to Rodolfo Caiña and his sister Zenaida Caiña. 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 when the Pena spouses caused the registration in their name of the entire 13,405 square meters instead of the 10,000 square meters that they actually bought from Evarista delos Reyes. For it was on this date that the right of ownership of Evarista over the remaining 3,405 square meters was transgressed, and from that very moment sprung the right of the owner, and hence all her successors in interest, to file a suit for reconveyance of the property 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 apply the 30-year prescriptive period in accordance with the above legal provisions, petitioners' right to recover has already been effectively foreclosed by the lapse of time, having been initiated only after 36 years from the accrual of 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 appeared in the transfer certificate of title in the name of their transferor. They were innocent purchasers for value having acquired 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 sold to an innocent purchaser for value, is to file an action for damages against the person who perpetrated the fraud within four (4) years after the discovery of the deception. Unfortunately in this case we may never know why Evarista delos Reyes chose not to go after the Pena spouses to recover what could be rightfully hers, 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. 2.
CASES:

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

NAPOCOR v. CA In the early morning hours of October 27, 1978, at the height of typhoon "Kading", a massive flood covered the towns near Angat Dam, particularly the town of Norzagaray, causing several deaths and the loss and destruction of 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 and imprudent opening of all the three (3) floodgates of the Angat Dam spillway, without prior warning to the people living near or within the vicinity of the dam. Among the defenses of NAPOCOR were: it observed the necessary diligence, it gave written warnings of the opening of the floodgates, there was no causal relationship between the damage and the acts or omissions, there Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 27

was assumption of risk on the part of the victims, and the damages were caused by fortuitous event and hence, 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, are extraordinary 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 is commonly believed, but it must be one impossible to foresee or to avoid. As a general rule, no person shall be responsible 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 solely by the violence of nature. Human intervention is to be excluded from creating or entering into the cause of the mischief. When the effect is found to be in part the result of the participation of man, whether due to his active intervention or neglect or failure to act, the whole occurrence is then humanized and removed from the rules applicable to the acts of God. In the case at bar, although the typhoon "Kading" was an act of God, petitioners can not escape liability 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 in anticipation of the coming rain; (2) The release of the water was not gradual; the lower court found that the opening of the spillways was sudden and 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 was cancelled. 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 learned that co-passengers were reimbursed by PAL for their expenses. PAL offered him P300 when he threatened to sue on the ground of undue discrimination. ISSUE: Whether PAL is liable for damages for its failure to provide hotel accommodations for Pantejo and to reimburse him for his expenses incurred by reason of the cancellation of his connecting flight due to force majeure. HELD: Pal is liable. A contract to transport passengers is quite different in kind and degree from any other contractual relation, and this is because of the relation which an air carrier sustains with the public. Its business is mainly with the travelling public. It invites people to avail of the comforts and advantages it offers. The contract of air carriage, therefore, generates a relation attended with a public duty. Neglect or malfeasance of the carrier's employees naturally could give ground for an action for damages. Assuming arguendo that the airline passengers have no vested right to this amenities in case a flight is cancelled due to force majeure, what makes petitioner liable for damages in this particular case and under the facts obtaining herein is its blatant refusal to accord the so-called amenities equally to all its stranded passengers who were bound for Surigao City. No compelling or justifying reason was advanced for such discriminatory and prejudicial conduct. More importantly, it has been sufficiently established that it is petitioner's standard company policy, whenever a flight has been cancelled, to extend to its hapless passengers cash assistance or to provide them accommodations in hotels with which it has existing tie-ups.

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

28

Petitioner acted in bad faith in disregarding its duties as a common carrier to its passengers and in discriminating against herein respondent Pantejo. It was even oblivious to the fact that this respondent was exposed to humiliation and embarrassment especially because of his government position and social prominence, which altogether 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 of quasi-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 of the bus exploded. The bus fell into a ravine around three (3) feet from the road & struck a tree. The incident resulted 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 against Alberta Yobido, the owner of the bus, & Cresencio Yobido, its driver.The Yobidos raised the affirmative defense of caso fortuito. The Tumboys asserted that violation of the contract of carriage between them & the Yobidos was brought about by the driver's failure to exercise the diligence required of the carrier in transporting passengers safely to their place of destination. According to Leny Tumboy, the winding road it traversed was not cemented & was wet due to the rain. The bus which was full of passengers had cargoes on top. Since it was "running fast," she cautioned the driver to slow down 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, that the bus was running at a speed of "60-50" & was going slow because of the zigzag road. He affirmed that the left front 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 has taken. After all, a carrier is not an insurer of the safety of its passengers & is not bound absolutely & at all events to carry them safely & without injury. However, when a passenger is injured or dies, while traveling, the law 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 have acted negligently. This disputable presumption may only be overcome by evidence that the carrier had observed extraordinary diligence as prescribed by Articles 1733, 10 1755 & 1756 of the Civil Code or that the death or injury 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 hold it 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 entirely free from manufacturing defects or that it was properly mounted on the vehicle. Neither may the fact that the tire bought & used in the vehicle is of a brand name noted for quality, resulting in the conclusion that it could not explode within five days' use. Be that as it may, it is settled that an accident caused either by defects in the automobile or through the negligence of its driver is not a caso fortuito that would exempt the carrier from liability for 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 an accident. 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. Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 29

The passengers were billeted in Hotel Nikko Narita for the night. The ff day, they learned that Mt. Pinatubo erupted and all flights to Mla were cancelled indefinitely because NAIA was closed. JAL rebooked their flights for the 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 no longer shoulder their expenses. Respondents stayed in Japan until the 22nd and they were forced to pay meals & accommodations from their personal 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 about by the eruption of Pinatubo. HELD: No. Common carriers are NOT absolutely responsible for all injuries or damages even if the same were caused by a fortuitous 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 held liable for damages for non-performance. Airline passengers must take such risks incident to traveling. Adverse weather conditions/ extreme climate changes are some of the perils involved in air travel, the consequences of which 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 for damages 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 herein mentioned 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 to moor at Smith’s wharf, struck the wharf, partially demolishing it and throwing the timber piled thereon into the water. 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 C 2. 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 and Cadwallader 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 family in 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 in the 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 revive him, 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. Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 30

ISSUE: Whether the death of Ong can be attributed to the negligence of MWD and/or its employees so as to entitle 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 and supervision over its employees and that it had observed the diligence required by law—in that it has taken all necessary 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 the person 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 last clear chance doctrine can never apply where the party charged is required to act instantaneously, and if the injury cannot 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 the passengers to their destination. This duty is of care is NOT excused by proof that they exercised the diligence of a good father of the family in the selection and supervision of their employee. PBCom v. CA As elucidated in Simex International (Manila), Inc. In the case of banks, however, the degree of diligence required is more than that of a good father of a family. Considering the fiduciary nature of their relationship with their depositors, 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 thing which is the object of the contract, or to those conditions which have principally moved one or both parties 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 was parcel 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

2 4 According to 1 the Survey/ What3 Calson’s believed 1 Unaware of this mistake by which Calson’s appeared to be the owner of parcel no. 4, Calson’s sold what it thought was parcel nos. 2 and 3 (but what was actually parcel no. 4) to the Theis spouses. Upon execution of the deed of sale, Calson’s delivered the certificates of title to parcel nos. 2 and 3 to the spouses. The spouses then went to Germany. About three years later, they returned to Tagaytay to plan the construction of their house. It was then that they discovered that parcel no. 4, which was sold to them, was owned by someone else, and that what was actually sold to them were parcel nos. 2 and 3. The real parcel no. 3, however, could not have been sold to them since a house had already been built thereon by Calson’s even before the execution of the contract, and its construction cost far exceeded the price paid by the spouses for the two parcels of land. The spouses insisted that they wanted parcel no. 4, but this was impossible, since Calson’s did not own it. Calson’s offered them the real parcel nos. 1 and 2 instead since these were really what it intended to sell to the spouses. The spouses refused and insisted that they wanted parcel nos. 2 and 3 since the TCTs to these lots were the ones that had been issued in their name. Calson’s then offered to return double the amount already paid by the spouses. The spouses still refused. 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 that contracts 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 have principally 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 about said thing, or a belief in the existence of some fact, circumstance, or event, which in reality does not exist. In both cases, there is a lack of full and correct knowledge about the thing. Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 31

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 is evident in the fact that when the mistake was discovered, it immediately offered two other vacant lots to the spouses 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 by them is unreasonable. This would constitute unjust enrichment. Moreover, when the witness for the spouses testified, he stated that what was pointed out to the spouses was a vacant lot. Therefore, they could not have intended 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 "a snapping 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, turned turtle 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 and medical expenses. She also gave Gatchalian P12.00 with which to pay her transportation expense in going home from the hospital. Mrs. Delim also asked the injured passengers to sign an already prepared Joint Affidavit which stated “That we are no longer interested to file a complaint, criminal or civil against the said driver and owner of the said Thames, because it was an accident and the said driver and owner of the said Thames have gone to the extent of helping us to be treated upon our injuries.” Notwithstanding the document, Gatchalian filed an action extra contractu to recover compensatory and moral damages. (inferiority complex, lost beauty and employment opportunities) Delims averred that the vehicular mishap was due to force majeure, and that Gatchalian had already been paid and 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 leave no doubt as to the intention of a person to give up a right or benefit which legally pertains to him. A waiver may not casually be attributed to a person when the terms thereof do not explicitly and clearly evidence an intent to abandon 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 of whose safety a common carrier must exercise extraordinary diligence, we must construe any such purported waiver 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. We believe this purported waiver is offensive to public policy because it dilutes the degree of care required of common carriers. In case of death or injuries to passengers, a statutory presumption arises that the common carrier was at fault or had acted negligently unless it proves that it [had] observed extraordinary diligence as prescribed in Articles 1733 and 1755. h. Others Damnum Absque Injuria (damage without injury): There is damage but no liability because the person who caused the injury was exercising a legal right. Simon v. David The dismissal by the office of the fiscal of the complaint for estafa filed by the plaintiffs insufficient to warrant a judgment 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

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

32

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-respondent Monico 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 regarding the 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 volleyballs marked "Spalding" were seized and confiscated by the NBI. UNIVERSAL’S factory was sealed and padlocked as the materials & machineries were too heavy to be removed from the premises and brought under the actual physical custody of the court. Upon motion of UNIVERSAL, Judge ordered the lifting of the seal and padlock on the machineries. The petners filed a petn for certiorari in the CA. Also, the petners filed a criminal complaint for unfair competition against Sehwani. The complaint was dropped but an info was later filed by the Ministry of Justice. The case against Sehwani did not propser b/c they were unable to prove that Sehwani sold the fake Spalding products (-- the selling being an essential element of the crime). UNIVERSAL and Sehwani filed a civil case for damages (malicious prosecution) charging that PRO LINE and QUESTOR 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 the trademark is engaged in the unauthorized manufacture of products bearing the same TM engenders a reasonable belief 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 the action, 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 without injury—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 of the TRO amounted to an insidious abuse of his right—his acts constituted not only an abuse of a right, but an invalid 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 ab initio 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 for damages. Catalan moved for the dismissal of the case filed by Mariscal on the ground of litis pendentia. The case was dismissed by the CA. Mariscal contends that the case should not have been dismissed because its resolution would NOT 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. Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 33

In litis pendnetia what is essential is the identity and similarity of the issues under consideration. In his effort to have the case resolved in a different venue, petitioner has resorted to nit-picking and in the process has lost track of 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. To interpose a cause of action in a counterclaim and again invoke it in a complaint against the same person or party would 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-Tan and 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 the Lims 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 an award of damages because of the sale of their property. The RTC denied the claim on the ground that the Lims failed 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 had failed to file a supersedeas bond to stay the execution of the MTC judgment. The immediate execution of a judgment 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 at the 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 legal rights, 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 own acts or omissions, but also for those of persons for whom one is responsible. The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the minor children who live in their company. Guardians are liable for damages caused by the minors or incapacitated persons who are under their authority and live in their company. The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions. Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry. The State is responsible in like manner when it acts through a special agent; but not when the damage has been caused by the official to whom the task done properly pertains, in which case what is provided in Article 2176 shall be applicable. Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and students or apprentices, so long as they remain in their custody. The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage.

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

34

Article 2181. Whoever pays for the damage caused by his dependents or employees may recover 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, the minor or insane person shall be answerable with his own property in an action against him where a guardian ad litem shall be appointed.

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

35

PERSON VICARIOUSLY LIABLE Father/Mother Guardian Owner and manager of establishment

NEGLIGENT PERSON Minor child (below 21 years old) Minor ward or incapacitated person Employee

REQUISITE CONDITION Living with parents Under the custody of the guardian this means that there must be a court appointment In the service of the branches or on the occasion of their functions (whether or not acting within the scope of their assigned tasks) It is necessary to prove that there is an employer-employee relationship Acting within the scope of assigned tasks Definite order to do some task, foreign to his usual functions Student or apprentice must be in their custody Teacher-in-charge is liable if the school is an academic institution; Head of school is liable if the school is an institution of arts and trades

Employers even though not engaged in business or industry State Teachers Heads of Schools

Employees and household helpers Special agent Student or apprentice

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, majority commences at the age of eighteen years. Effects of emancipation: Terminates parental authority over the person and property of the child, who shall then be qualified and responsible for all acts of civil life, EXCEPT: 1. 2. Contracting marriage shall require parental consent until the age of 21. 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 weed the grass in the school premises. Monfort found a plastic headband and jokingly said aloud that she had found an earthworm. 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 was taken to the doctor. She underwent surgical operation, but eventually, she lost sight in her right eye. Cuadra’s parents 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 for whom another is responsible, the latter becomes himself liable under Article 2180. The basis of this vicarious liability 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 damage by the observance of due care, or that he was in any way remiss in the exercise of his parental authority in failing to foresee such damage, or the act which caused it. On the contrary, his child was at school, where it was his duty to send her, and where she was, as he had the right to expect her to be, under the care and supervision of the teacher. And as far as the act which caused the injury was concerned, it was an innocent prank not unusual among children at play and which no parent, however careful, would have any special reason to anticipate, much Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 36

less guard against. Nor did it reveal any mischievous propensity, or indeed any trait in the child’s character which would 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 behave properly 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 with mistake. The parents of Elcano filed an action for damages against Reginald and Marvin Hill. Defendants moved to dismiss on the grounds of res judicata and lack of cause of action against Marvin Hill. They claim that Marvin Hill was relieved as guardian of Reginald through emancipation by marriage. Hence, the Elcanos could not claim damages 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 the Civil 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 sue and 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 children who live in their company. In this case, Reginald, although married, was living with his father and getting subsistence 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 is the obligation of the parent to supervise their minor children in order to prevent them from causing damage to third persons. On the other hand, the clear implication of Article 399, in providing that a minor emancipated by marriage may not sue or be sued without the assistance of the parents is that such emancipation does not carry with it freedom to enter into transactions or do any act that can give rise to judicial litigation. Surely, the killing of a 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 subsidiary to 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 the morning, 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 and some members of the crew were negligent in operating the vessel. The Board imposed upon them a penalty of suspension and/or revocation of their license. However, the decision could not be executed against the captain who 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 concurring negligence on the part of the captain, Compania cannot be held liable based on the principle of limited liability of the 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 of Compania 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 which may 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 her equipments and the freight it may have earned during the voyage. Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 37

Under this provision, a shipowner or agent has the right of abandonment, and his liability is confined to that which he has a right to abandon – the vessel with all her equipments and the freight it may have earned during the voyage. However, this article applies only where the fault or negligence is committed solely by the captain. In cases where the shipowner is likewise to be blamed, Article 587 does not apply. The situation will instead be covered by the provisions of the Civil Code on Common Carriers. Common carriers are tasked to observe extraordinary diligence in the vigilance over the goods and for the safety of its passengers. Whenever death or injury to a passenger occurs, common carriers are presumed to have been at fault or to have acted negligently unless 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 the typhoon 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 account the surrounding circumstances. The CA held that the captain was negligent in overloading the ship. However, Maritima shared in this negligence. 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, the encounter with the typhoon could have been avoided. While the ship was seaworthy and had lifesaving equipment, Maritima failed to show evidence that it had installed a radar which could have allowed the vessel to navigate safely for shelter during a storm.

2.

3.

Since the foregoing shows the lack of extraordinary diligence and the negligence of Maritima, it is liable for damages. 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 a picnic at a beach organized by his teachers. His parents allowed him only to bring food to the picnic and to go straight home after. However, he went and stayed at the picnic. While the students and teachers were in the water, one of the female teachers appeared to be drowning. Ferdinand came to her rescue, but in the process, he himself drowned. His parents filed an action for damages against the teachers, the school, and the owners of the school. 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 his employee, the act or omission which caused damage or prejudice must have occurred while an employee was in the performance of his assigned tasks. In this case, the teachers were not in the actual performance of their assigned tasks. The incident happened not within school premises, not on a school day, and while the teachers and students were holding a purely private affair. The picnic had not permit from the school principal; it was neither a school-sanctioned activity nor an extra-curricular activity. Mere knowledge by the principal of the picnic does not show consent to the holding of the same. Therefore, Article 2180 is not applicable. To apply it would make employers liable for acts or omissions of employees even if such were not committed by the employees in the 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 to prevent any untoward incident or damages to the students who joined the picnic. In fact, the class adviser invited two male teachers who were PE instructors and scout masters with knowledge of First Aid and swimming. Both these 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 because they failed to exercise diligent supervision over the children BEFORE the incident took place. They did not test the waters to see the possible dangers of swimming in the beach. Moreover, the male teachers who were supposed to act as lifeguards were nowhere within the vicinity of the beach at the time the incident happened. They might even 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 of authority of the school by reason of the participation of several teachers. The principal not only knew of the Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 38

excursion but was even invited to attend. Having knowledge of the activity, he should have taken appropriate measures 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 5 are applicable in this situation. No proof was presented by the owners of the school that they exercised the care and diligence of a good father of a family in the selection and/or supervision of the employees causing the injury or 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. The Franco Bus took the lane of an incoming Isuzu Mini Bus driven by Lugue. The two vehicles collided, resulting in the 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 the Mini 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 and supervising their employees, including the deceased driver. The RTC held that this defense of due diligence could not be invoked by the spouses since the case was one for criminal negligence punishable under Article 102 and 103 of the Revised Penal Code and not from Article 2180 of the Civil Code. It held the spouses liable for damages to the plaintiffs. The CA agreed with the lower court. ISSUES: 1. 2. Whether the action for damages was predicated upon crime or quasi delict and whether the defense of due diligence can be invoked by the spouses. 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 be invoked 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 the employer’s primary liability under the Civil Code, which is quasi-delictual or tortious in character. The first type of liability is governed by Articles 102 and 103 of the RPC, which provide that employers have subsidiary 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 liability of employers for those damages caused by their employees acting within the scope of their assigned tasks. In this second kind, the employer’s liability ceases upon proof that he observed all the diligence of a good father of a family to prevent damage. Under Article 103 of the RPC, the liability of the employer is subsidiary to the liability of the employee. Before the employer’s subsidiary liability may be proceeded against, it is imperative that there should be a criminal action where the employee’s criminal negligence are proved. Without such criminal action being instituted, the employer’s liability cannot be predicated under Article 103. In this case, there was no criminal action instituted because the driver who should stand 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 on crime, but on culpa aquiliana, where the defense of the exercise of the diligence of a good father of a family may be raised by the employer. The employers are liable since they failed to prove that they exercised the diligence of a good father of a family in selecting and/or supervising the driver. They admitted that the only kind of supervision given to the drivers referred to the running time between the terminal points of the line. They only had two inspectors whose duties were only ticket inspections. There is no evidence that they were really safety inspectors.

2.

Go v. IAC Floverto Jazmin was a US citizen, residing in the Philippines at 34 Maravilla St. Mangatarem, Pangasinan. He regularly received checks from the US government through the Mangatarem post office, which he encashed at the Prudential 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 about the delay in receiving his check. He received a substitute check which he encashed. Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 39

Meanwhile, in April 1975, Agustin Go, in his capacity as branch manager of Solidbank (which later became Consolidated Bank) in Baguio City, allowed a person named Floverto Jazmin to open a savings account by depositing two US treasury checks for $1810 and $913.40 both payable to the order of Floverto Jasmin of Maranilla St. Mangatarem, Pangasinan. The depositor indicated in his information sheet that he was Floverto Jazmin 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 drawee bank after three weeks, so it allowed the depositor to withdraw the amount indicated in the checks. More than a year later, the checks were returned to Solidbank with the notation that the amounts were altered. Go reported the matter to the Philippine Constabulary in Baguio. The real Jazmin was required to appear before the PC headquarters in Benguet for investigation regarding the complain filed by Go against him for estafa. Eventually the 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 he suffered 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 negligence in fact led to the swindling of his employer Consolidated. Had Go exercised the diligence expected of him as a bank officer and employee, he would have noticed the glaring disparity between the payee’s name and address on the 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 is liable 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 in the 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 a short cut against the flow of traffic. In the process, he collided with the motorcycle driven by Vasquez. He rushed Vasquez 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 filed an 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 and subsequent death caused by Abad. Under the fifth paragraph of Article 2180, an employer is liable for the torts committed by employees within the scope of his assigned tasks, whether or not the employer is engaged in any business or industry. To make the employer liable under the fifth paragraph, the plaintiff must: 1. 2. establish an employer-employee relationship; and 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 may interpose 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 in Fuente Osmena, which is known to be a place where prostitutes, pimps, and drug addicts liked to hang out. At the Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 40

restaurant, Abad had some snacks and chatted with friends. It was when he left the restaurant that the incident happened. Parenthetically, there was a woman with him in the car who shouted “Daddy, Daddy!” but there was no 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 duties at the time he figured in the accident. It was around 2 am, way beyond normal working hours. Abad’s working day had ended, and his overtime work had already been completed. His being at a pimp-prosti-druggie haven had no relation to the business of Castilex or to his duties as a manager. Rather, Abad was merely using his service vehicle 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 a service 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 liable vicariously. 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 allow him and his carabao to pass. However, as Andres was crossing, a Victory Liner Bus, driven by Joson, bypassed the Dalin bus and hit Andres and the carabao he was riding. Andres was thrown off the carabao, while the beast toppled over. The Victory Liner bus sped past the old man, while the Dalin bus proceeded to its destination without 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 against Joson. Subsequently, the heirs of Malecdan brought a suit for damages against Joson and Victory Liner. The RTC held that Joson was negligent in driving the bus, while Victory Liner was guilty of negligence in the selection and supervision 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 of their duties is primary and, therefore, the injured party may recover from the employers directly, regardless of the solvency of their employees. Employers may be relieved of responsibility for the negligent acts of their employees acting within the scope of their assigned task only if they can show that they observed all the diligence of a good father of a family to prevent damage. They have the burden of proving that they exercised such diligence in the selection and supervision of the employee. In the selection of prospective employees, employers are required to examine them as to their qualifications, experience and service records. With respect to the supervision of employees, employers must formulate standard operating procedures, monitor their implementation and impose disciplinary measures for breaches thereof. These facts must be shown by concrete proof, including documentary evidence. In this case, Victory liner presented the results of Joson’s written examination, actual driving tests, x-ray examination, psychological examination, NBI clearance, physical examination, hematology examination, urinalysis, student driver training, shop training, birth certificate, high school diploma, and reports from the General Maintenance Manager and the Personnel Manager showing that he had passed all the tests and training sessions and was ready to work as a professional driver. However, Victory Liner did not present proof that Joson had nine years of driving experience. There is also no record that Joson ever attended the seminars on driving safety given by the company to its drivers at least twice a year. Victory Liner also failed to establish the speed of its buses during its daily trips or to submit in evidence the trip tickets, speed meters, and reports of filed inspectors. The finding of the trial court that the Victory Liner bus was running at a very fast speed when it overtook the Dalin bus and hit the deceased was not disputed. For these reasons, Victory Liner should be considered as negligent in the supervision of Joson. d. State General Rule: The State cannot be sued without its consent Exceptions: 1. 2. 3. When the state is performing a proprietary function When the state enters into a contract with a private person Under Article 2180 – when it acts through a special agent 41

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

Fontanilla v. Maliaman A pick-up owned by the National Irrigation Administration driven officially by Hugo Garcia, an employee of the NIA as its regular driver, bumped a bicycle ridden by Francisco Fontanilla and Restituto Deligo. As a result, Fontanilla and 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. 2. its public or governmental aspects where it is liable for the tortious acts of special agents only; and 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’s agent, if a public official, must not only be specially commissioned to do a particular task, but such task must be foreign to said official’s usual governmental functions. If the state’s agent is not a public official, and is commissioned to perform non-governmental functions, then the state assumes the role of an ordinary employer and will be held liable as such for its agent’s tort. When the government commissions a private individual for a special 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 a service which might as well be provided by a private corporation, and when it collects revenues therefrom, the state is performing a proprietary function. It is in this instance where there may be liability for the torts of agents within the scope of their employment. The NIA is an agency of the government exercising proprietary functions. Therefore, it may be liable for damages caused by accidents resulting from the tortious acts of its employees. It assumes responsibility as an ordinary employer and as such, it becomes answerable for damages, if it fails to prove that it observed due diligence in the selection and supervision of its employees. In this case, the victim was thrown 50 meters away from the point of impact. The pick-up suffered substantial damage, but the people on board did not even bother to stop to find out what they had bumped. There are thus strong indications that the driver Garcia was driving at a high speed. Evidently, there was negligence in the supervision of the driver for the reason that they were traveling at a high speed within city limits and yet the supervisor of the group failed to caution and make the driver observe the proper speed limit. The negligence is further aggravated by their desire to reach their destination without even checking whether or not the vehicle suffered damage from the object it bumped, thus showing imprudence on the part both of the driver and the supervisor of the group. Even if the employer can prove the diligence in the selection and supervision of the employee, 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 to death by his classmate Pablito Daffon. Daffon was convicted of homicide through reckless imprudence. The parents of Amadora filed an action for damages under Article 2180 of the Civil Code against Colegio de San Recoletos, its rector, the high school principal, the dean of boys, and the physics teacher, together with Daffon and 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 under the custody of the school. The school, on the other hand, claims that Amadora had gone to school only for the purpose of submitting his physics report and that he was no longer in their custody because the semester had already ended. ISSUE: Whether private respondents are liable to Amadora’s parents. HELD: No.

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

42

Article 2180 should apply to all schools, academic as well as non-academic. Where the school is academic rather than technical or vocational in nature, responsibility for the tort committed by the student will attach to the teacher in charge of such student, following the first part of the provision. This is the general rule. In the case of establishments of arts and trades, it is the head thereof, and only he, who shall be held liable as an exception to the general rule. The student is deemed in the custody of the school authorities as long as he is under the control and influence of the school and within its premises, whether the semester has not yet begun or has already ended. During all these occasions, it is the teacher-in-charge who must answer for his students' torts. He is the one designated by the dean, principal, or other administrative superior to exercise supervision over the pupils in the specific classes or sections to which they are assigned. It should be noted that the liability imposed by this article is supposed to fall directly on the teacher or the head of the school of arts and trades and not on the school itself. If at all, the school, whatever its nature, may be held to answer for the acts of its teachers or even of the head thereof under the general principle of respondeat superior, but then it may exculpate itself from liability by proof that it had exercised 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 held to answer for the tort committed by the student. As long as the defendant can show that he had taken the necessary precautions to prevent the injury complained of, he can exonerate himself from the liability imposed by Article 2180. It should also be noted that the teacher is held answerable by the law for the act of the student under 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 them was the teacher-in-charge as previously defined. Each of them was exercising only a general authority over the student body and not the direct control and influence exerted by the teacher placed in charge of particular classes or sections and thus immediately involved in its discipline. The evidence of the parties does not disclose who the teacher-in-charge of the offending student was. The mere fact that Alfredo Amadora had gone to school that day in 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 in enforcing discipline upon Daffon or that he had waived observance of the rules and regulations of the school or condoned their nonobservance. His absence when the tragedy happened cannot be considered against him because he was not supposed or required to report to school on that day. And while it is true that the offending student was still in the custody of the teacher-in-charge even if the latter was physically absent when the tort was committed, 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 the enforcement of the school regulations, in maintaining that discipline. The Colegio de San JoseRecoletos cannot be held directly liable under the article because only the teacher or the head of the school of arts and trades is made responsible 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 an ROTC Unit. Jimmy Abon, the appointed armorer of the ROTC unit was a commerce student of the BCF. Abon shot Napoleon Castro, a student of the University of Baguio in the parking lot of BCF with an unlicensed firearm taken from the armory of the ROTC Unity of the BCF. Castro died, and Abon was prosecuted for and convicted of homicide. 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 to have 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 record shows that before the shooting incident, Roberto B. Ungos ROTC Unit Commandant, AFP, had instructed Abon "not to leave the office and [to keep the armory] well guarded." Apart from negating a finding that Jimmy B. Abon was under 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 his superior, 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 school premised by elements from outside the school. Bautista’s parents filed an action for damages against PSBA and Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 43

its corporate officers on the ground that they were guilty of negligence, recklessness, and lack of security precautions, 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 of the Civil Code, the complaint states no cause of action against them, as jurisprudence on the subject is to the affect 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 damage should have been caused or inflicted by pupils or students of the educational institution sought to be held liable for the acts of its pupils or students while in its custody. However, this situation does not exist in this case, since the assailants 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 students for enrollment, there is established a contract between them, resulting in bilateral obligations which both parties are bound to comply with. One of these obligations is that the school must ensure that adequate steps are taken to 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 whether PSBA 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 the damage which it may cause, although it may escape or be lost. This responsibility shall cease only in case the damage should come from force majeure or from the fault of the person who has suffered damage. Damage caused by: an animal Person primarily liable: a. the possessor of an animal; or b. whoever may make use of the same Defenses: a. that the damage was caused by force majeure b. 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 the Vestils in the house of the late Vicente Miranda, father of Purita Vestil. Theness was rushed to the hospital where she was treated for multiple lacerated wounds on the forehead and was given an anti-rabies shot. She was discharged after nine days but was re-admitted a week later. She died the following day, due to bronchopneumonia. Seven months later, the Uys sued the Vestils for damages, alleging that the Vestils were liable to them as the possessors of Andoy. The Vestils denied liability, claiming that the dog belonged to the deceased Vicente Miranda. Purita Vestil insisted that she was not liable since she was not the owner of the house or of the dog, 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 the dog, since Article 2183 holds liable the possessor of the animal that causes damage. In this case, Purita Vestil and her husband were the possessors of the house at the time when the incident happened. Meanwhile, the dog stayed in the house and even remained there after the death of Vicente Miranda, up to the time when it bit Theness. 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 liable because there was no causal connection between the broncho-pneumonia that caused the death of Theness and Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 44

the dog bite. Moreover, they argued that the dog was tame and was provoked by Theness into biting. The court rejected 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 found unacceptable. Article 2183 holds the possessor liable even if the animal should escape or be lost and so be removed from his control. It does not matter either that the dog was tame and was merely provoked by the child into biting her. The law does not speak only of vicious animals but covers even tame ones as long as they cause injury. As for the alleged provocation, Theness was only three years old at that time and cannot be faulted for whatever 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, who was in the vehicle, could have, by the use of the due diligence, prevented the misfortune. It is disputably presumed that a driver was negligent, if he had been found guilty of reckless driving or violating 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. 2. owner is in the vehicle at the time of the mishap 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 or violating 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 swerved to the right. Manlangit and Castillo managed to jump off the jeepney before it plunged into a river. The passengers 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 Judge Urgel 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 ruled favorably and dropped him from the complaint. Manlangit then filed this administrative complaint against Judge Urgel 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 owner of the jeepney. HELD: Yes. It is a basic postulate in criminal law that the criminal act of one person cannot be charged to another without a showing that the other participated directly or constructively in the act or that the act was done in furtherance of a common design or purpose for which the parties were united in intention. In cases of employeremployee relations, an employer is not criminally liable for the criminal acts of his employee or agent unless he, in some way, participates in, counsels or abets his employee’s acts or omissions. In such case, the employer himself becomes a participant to the criminal act of his employee. His liability under the circumstances is direct and criminal. However, under Article 102, in relation to Article 103 of the RPC, the employer liability for the criminal negligence of his employee is subsidiary in nature and is limited only to civil indemnity. Thus, an employer is party to a criminal case for the criminal negligence of his employee only by reason of his subsidiary civil liability under the law. In this case, nowhere is it shown that Manlangit abetted or even approved the negligent and reckless manner in which the driver maneuvered the vehicle on that blind curve. Moreover, it does not appear that the driver continuously pursued a reckless and thoughtless control of the wheel throughout the journey, without any admonition or reproof on the part of Manlangit. It is evident that the driver’s decision to go on the wrong lane while approaching a blind curve was a split second judgment which left neither Manlangit nor the other passengers time to react to the perilous maneuver. Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 45

c. Manufacturers and Processors Art. 2187. Manufacturers and processors of foodstuffs, drinks, toilet articles and similar goods shall be liable for death or injuries caused by any noxious or harmful substances used, although no contractual relation exists between them and the consumers. 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 has shards 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 Documentary – doctor’s bills, x-ray, receipt from the store (the receipt is the best evidence of the sale; need to prove the purchase and connect the seller to the injury) Real – the shard of glass taken from the throat of the child, the container of the ice cream

b.
c.

d. Municipal Corporations Art. 2189. Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered by, any person by reason of the defective condition of roads, streets, bridges, public buildings, 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 supervision of 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 not for 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 she accidentally fell into an open manhole. Her right leg was fractured, resulting in her hospitalization and continuing difficulty 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 not under 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 or street to belong to the province, city or municipality. The article only requires that either control or supervision is exercised 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 City Engineer, whose duties include the care and custody of the public system of waterworks and sewers. The charter of Dagupan provides that the laying out, construction, and improvement of streets, avenues, and alleys and sidewalks and the regulation of the use thereof may be legislated by the Municipal Board. Thus, the charter clearly indicates that the city indeed has supervision and control over the sidewalk where the open drainage hole is located. Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 46

The express provision in the charter holding the city not liable for damages or injuries sustained by persons or property due to the failure of any city officer to enforce the provisions of the charter cannot be used to exempt the city. The charter only lays down the general rules regulating the liability of the city. On the other hand, Article 2189 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 its total 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 the inflammation 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 without precautions suitable to the place. Art. 2193. The head of a family that lives in a building or a part thereof, is responsible for damages caused 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 theater owned by the Gotesco Investment Corporation. Hardly ten minutes after the two entered the theater, the ceiling of its balcony collapsed. The theater was plunged into darkness and pandemonium ensued. Gloria and Lina were able to crawl under the fallen ceiling and out of the theater. They were later confined and treated for the injuries that 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 5 or 6 times. Gloria and Lina Chatto filed an action for damages against Gotesco. Gotesco denied liability on the ground that the 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 was indeed caused by force majeure. However, Gotesco’s claim that the collapse of the ceiling was due to force majeure 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 any explanation does not imply force majeure. Force majeure is an inevitable accident produced by any physical cause which is irresistible, such as lightning, tempest, perils of the sea, inundation, or earthquake. Gotesco could have easily discovered the cause of the collapse if indeed it were due to force majeure. It appears that the real reason why Mr. Ong could not explain the reason for the collapse is that either he did not actually conduct the investigation or that he is incompetent. On the other hand, the trial court found that the collapse was due to construction defects. There was no evidence offered to overturn this finding. The building was constructed barely 4 years prior to the accident. It was not shown that any of the causes denominated as force majeure obtained immediately before or at the time of the collapse of the ceiling. Such defects could have been easily discovered had 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 a theater or other place of public amusement is injured, and the thing that caused the injury is wholly and exclusively under the control and management of the defendant, and the accident is such as in the ordinary course of events would not have happened if proper care had been exercised, its occurrence raises a presumption or Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 47

permits of an inference of negligence on the part of the defendant. That presumption or inference was not overcome by Gotesco. And even assuming that the collapse was due to force majeure, Gotesco still cannot escape liability since the trial court 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 in the construction mentioned in Article 1723, the third person suffering damages may proceed only against the engineer or architect or contractor in accordance with said article, within the period therein fixed. Art. 1723. The engineer or architect who drew up the plans and specifications for a building is liable for damages if within fifteen years from the completion of the structure, the same should collapse by reason of a defect in those plans and specifications, or due to the defects in the ground. The contractor is likewise responsible for the damages if the edifice falls, within the same period, on account of defects in the construction or the use of materials of inferior quality furnished by him, or due to any violation of the terms of the contract. If the engineer or architect supervises the construction, 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 by reason of any defect mentioned in the preceding paragraph.

The action must be brought within ten years following the collapse of the building. OWNER/PROPRIETOR TIME OF COLLAPSE CAUSE OF COLLAPSE Anytime Lack of necessary repairs ARCHITECT/ENGINEE R Within 15 years after completion Defects in the plans/specifications Defects in the ground 10 years CONTRACTOR Within 15 years after completion Inferior materials furnished by him Violation of the contract 10 years

PRESCRIPTIVE PERIOD Nakpil & Sons v. CA

4 years

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 an administration basis. The building was completed in 1966. In 1968, an unusually strong earthquake hit Manila, and the building sustained major damage. The front columns of the building buckled, causing the building to tilt forward dangerously. As a temporary measure, the building was shored up by United. The PBA filed an action against United and its President and General Manager Juan Carlos, claiming that the collapse of the building was caused by defects in construction. United, in turn, filed a third-party complaint against 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 building was caused directly by the earthquake, they were also caused by the defects in the plans and specifications prepared by the Nakpils and United’s deviation from said plans and specifications and its failure to observe the requisite workmanship in the construction of the building. Such wanton negligence of both United and the Nakpils in effecting the plans, designs, specifications, and construction of the PBA building is equivalent to bad faith in the performance of their respective tasks. Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 48

United argues that it is the legal duty of the PBA to provide full-time and active supervision in the construction of the building. This claim has no legal or contractual basis. The ordinary practice is for the owner of a building to avail himself of the services of architects and engineers whose training and expertise make them more qualified to provide 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 Law Library Building. The agreement contained a guarantee whereby EPG undertook to repair any defective work at is own cost and expenses for a period of 1 year from the date of substantial completion and acceptance of the work by UP. On Jan. 13, 1983, the building was formally turned over by EPG to UP, which issued a certification of acceptance indicating that the building was completed without any defects whatsoever. In July 1983, UP complained to EPG that 6 air-conditioning units were not working properly. EPG agreed to shoulder the expenses for the repair in the amount of 38K. However, the repair was never undertaken. After demands made by UP for EPG to repair the units were unanswered, UP contracted with another company, which repaired the defects for 190K. UP then demanded reimbursement of the 190K plus damages from EPG. EPG denied liability and argued that 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 of acceptance. All UP certified to was that the building was in good condition at the time it was turned over. It did not thereby relieve the petitioner of liability for any defect that might arise of be discovered later during the oneyear period of the guarantee. Moreover, acceptance of the work by the employer generally relieves the contractor of liability except if the defect is hidden or if the employer expressly reserves his rights against the contractor by reason of the defect. In this case, the defects complained against were hidden and there was an express reservation 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 Metro Manila is not meritorious. The recurrent power cut-offs cannot be classified as a fortuitous event. The real cause of 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 the scope 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 are solidarily liable. Singapore Airlines v. CA Sancho Rayos was an OCW who had a contract with Arabian American Oil Company (ARAMCO). As part of ARAMCO’s policy, its employees returning to Saudi from Manila were allowed to claim reimbursement for amounts paid for excess baggage up to 50Kg as long as supported by receipt. Rayos took a Singapore Airlines (SLA) flight to Saudi with a 50Kg excess baggage for which he paid about 4K. ARAMCO reimbursed the amount upon presentation of the excess baggage ticket. Later, Rayos learned that he was being investigated by ARAMCO for fraudulent claims. He asked his wife in Manila to obtain a written confirmation from SLA the he paid an excess baggage of 50Kg. SLA’s manager notified the wife of its inability to issue the certification because the records showed that only 3Kg were entered and charged Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 49

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 for damages against SLA. SLA filed a third-party complaint against its handling agent PAL, claiming that the tampering was committed not by SLA but by PAL. PAL denied any participation in the tampering and attributed it to the SLA personnel. The lower court held SLA liable to the spouses for damages and ordered PAL as third party defendant 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 it paid to the Rayos spouses. PAL cannot be held solely liable for the satisfaction of the entire judgment. While the proximate cause of the nonrenewal of Rayos’ employment contract was the tampering of his excess baggage ticket by PAL’s personnel, the immediate cause of such non-renewal was SLA’s delayed transmittal of the certification needed by Rayos to prove his innocence to his employer. Thus, the non-renewal of Rayos’ employment contract was the natural and probable consequence of the separate tortious acts of SLA and PAL. Under Article 2176, Rayos is entitled to compensation for such damages. Inasmuch as the responsibility of two or more persons, or tort-feasors, liable for a 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 among the respondents in a complaint for illegal dismissal and non-payment of statutory benefits filed by former employees of AMAL. The employees filed the complaint following AMAL’s refusal to pay their monetary claims after AMAL decided to cease its operations in 1986. De Guzman was impleaded for allegedly selling part of AMAL’s assets and applying the proceeds to satisfy his own claims against the company. He also formed a new company named 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 not solidarily 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, De Guzman 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 appropriating the assets of AMAL to satisfy his own claims to the prejudice of the employees’ pending claims, De Guzman is directly 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 for death 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 10 persons, 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 quasidelict; GSIS as insurer of the truck; Uy for breach of contract of carriage; and MIGC as insurer of the Toyota Tamaraw. At the trial, it was found that the proximate cause of the collision was the negligence of Corbeta. The findings of the trial court stated that the truck was speeding and was in the wrong lane at the time of the collision. The trial court dismissed the complaint against Uy. It ordered MIGC, Corbeta, NFA, and GSIS to jointly and severally pay damages to the victims of the collision. ISSUE: Whether GSIS is solidarily liable with NFA. Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 50

HELD: GSIS is directly liable to the victims but only up to the extent of what is provided in the contract of insurance 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 the insurer of the vehicle. However, the third party liability of the insurer is only up to the extent of the insurance policy and those required by law. While it is true that where the insurance contract provides for indemnity against liability to third persons, and such third persons can directly sue the insurer, the direct liability of the insurer under indemnity contracts against third party liability does not mean that the insurer can be held liable in solidum with the 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 contract is direct, but not solidary with that of the NFA. The latter’s liability is based separately on Article 2180 of the Civil Code. In this case, the Compulsory Motor Vehicle Liability Insurance coverage provided that the maximum indemnity for death was 12K per victim. Hence, the heirs of the victims who dies in the incident could proceed against GSIS for the indemnity of 12K for each dead victim, and against NFA and Corbeta for any other damages or expenses claimed; or against NFA and Corbeta to pay them all their claims in full. The other injured victims may also claim their medical expenses from any of the following: GSIS, NFA, or Corbeta. As to damages exceeding that allowed under the insurance, they may proceed only against NFA or Corbeta.

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

51

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 his duties, 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, including Shell, 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 same day, acting upon the knowledge of (1) the insolvency of CALI, and (2) the existence of the plane, Shell assigned its credit to Shell USA. Shell USA then sued CALI in a California court and attached the plane as security. Thus, the plane was placed beyond the reach of CALI and the other creditors. The assignee in insolvency of CALI filed an action against Shell for damages for taking advantage of the information 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 the creditors did not come to an understanding as to the distribution of the insolvent’s assets among them. Believing that it was improbable for the creditors to arrive at such an understanding, it schemed and effected the transfer of credit to its sister corporation in the US, thereby disposing of CALI’s plane and depriving CALI of the opportunity to recover it. It is liable for damages under Article 19 of the Civil Code, which provides that any person must, in the exercise of his rights and in the performances of his duties, act with justice, give everyone his due and observe honesty and good faith. This is implemented by Article 21 which prescribes that any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. 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, the general manager of AMAL, in the case because he sold part of AMAL’s assets and applied the proceeds of 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 employees is personal and not as agent of AMAL). De Guzman is not solidarily liable with AMAL for the employees’ claims. As mere managerial employee, De Guzman 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 appropriating the assets of AMAL to satisfy his own claims to the prejudice of the employees’ pending claims, De Guzman is directly liable for moral and exemplary damages 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 the regular final exam in Practice Court for which he was given an incomplete grade. He enrolled for the second sem. Before graduation, he took an exam to make up the incomplete grade. He was then
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 52

included in the list of candidates for graduation and actually participated in the graduation ceremonies, receiving a pretend-diploma, taking pictures, and even throwing a graduation bash. After graduation, he started preparing for the bar. However, in May, his professor in Practice Court submitted 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 bar examinations 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 when he 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 inform Jader of his grade. It cannot feign ignorance that Jader will not prepare himself for the bar exams since that is precisely the immediate concern after a law student graduates. UE cannot just give out its student's grades at any time because a student has to comply with certain deadlines set by the Supreme Court on the submission of requirements for taking the bar. UE's liability arose from its failure to promptly inform Jader of the result of an examination and in misleading the latter into believing 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 the bar, he brought this upon himself by not verifying if he had satisfied all the requirements including his school records, before preparing himself for the bar examination. Hence, UE is liable for actual damages 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 company wanted to take the truck and had one of its personnel impersonate the sheriff in order to seize the truck. Plaintiff filed a re-delivery bond to get back the truck, but by then, it had already been cannibalized. HELD: Financing company is liable for damages under Article 19. It had the right to seize the car by virtue of a writ of replevin, but it acted in bad faith when it had its representative impersonate the sheriff 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 the dealer 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 discontinue the dealership under the terms of the contract, it did not act in good faith when it allowed the dealer to invest in promotion expenses only to terminate the dealership later on so that it could then benefit from the dealer’s investment. Sir’s example: Two society matrons – one owned a bank and the other mortgaged her property to the 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 of a newspaper of general circulation. Liable for damages?

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

53

A: Bank-owner matron is liable for damages to debtor-matron under Article 19. Though the bank had the right to foreclose the mortgage and the obligation to publish a notice of foreclosure, it should not have 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 to another, shall indemnify the latter for the same.

Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. Article 20 – “contrary to law” Even if the particular provision of law does not expressly provide for indemnification in case of violation, so long as there is a violation of law and damage resulting therefrom, there is liability for damages under Article 20. Hermosisima v. CA Soledad Cagigas, was going out with Francisco Hermosisima, who was almost ten (10) years younger than 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 marry her. 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 as natural 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 by designing women and unscrupulous men. The CA awarded moral damages to Soledad on the ground that she was seduced by Francisco. The SC held that Francisco was not morally guilty of seduction. He was approximately 10 years younger than Soledad, 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 by her love" for him, she "wanted to bind" him "by having a fruit of their engagement even before they had the benefit of clergy.” In other words, pinikot siya, therefore, an award of moral damages is not in order. 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 bride to go through the preparations only to walk out at the last minute, such as in this case, it is actionable. Sir’s example: This is even worse than Wassmer v. Velez. On the day of the wedding, the groom was late. Feeling impatient as well as excited to live her dream of walking down the aisle, the bride
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 54

proceeded to walk down the aisle even if the groom was not yet there. She waited for him at the altar and 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 letting the 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 employer under 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 of 500K 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 acceleration and penalty clause, which provided that should they fail to pay any amortization when due, all other installments together with all interest accrued shall immediately be due and payable, with penalty interest 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 loan including interests and other charges. The debtors question the validity of the interest rate (5.5% per month) 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 removed interest ceilings, making the “Usury Law” non-existent. [Sir says that technically, the Usury Law is not non-existent since there has been no repeal by the legislature. It is merely inoperative, since the CB has suspended interest ceilings.] However, the rate of interest at 5.5% per month or 66% per annum is excessive, iniquitous, unconscionable, and exorbitant. It is contrary to morals, if not against the law, and as such, is void. The courts shall reduce equitably liquidated damages, whether intended as an indemnity or a penalty if they are iniquitous or unconscionable. Consequently, under the circumstances, interest at 12% per annum, and an additional 1% a month penalty charge as liquidated 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 gave Pascual 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 consolidate ownership over the property. The trial court found that the Pascuals had made payments in the total sum of 344K, and that with interest at 7% per annum, the Pascuals had overpaid the loan by P141,500. The trial court dismissed the petition to consolidate ownership and awarded the Pascuals P141,500 as overpayment on the loan and interests. Ramos moved for reconsideration, alleging that the trial court erred in using the rate of 7% per annum instead of 7% per month as stipulated in the agreement of the parties. Thus, the Pascuals had not overpaid interest, but even had a balance of P643K in interest. The trial court acknowledged that it had inadvertently declared the interest rate to be 7% per annum instead of 7% per month. However, since the rate was too burdensome and onerous, it reduced it to 5% per month and ordered the Pascuals to pay the principal plus interest at 5% per month. The Pascuals now question the legality of the interest rate of 5% per month on the ground that it is exorbitant, unconscionable, unreasonable, usurious, and inequitable, citing Medel v. CA. ISSUE: Whether the interest rate is valid.
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 55

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, the debtors were also required to pay service charge of 2% per annum, a penalty charge of 1% per month, and attorney’s fee of 25%. Thus, taken in conjunction with the stipulated service charge and penalty, 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 and void. In this case, however, there is no other stipulation for the payment of an extra amount except interest on the principal of the loan. Considering this variance in the factual circumstances of the Medel case and this one, the court is not prepared to apply the former, lest it be construed that interest rates agreed upon by the parties in a loan transaction can be struck down anytime by the court. The interest rate of 7% per month was voluntarily agreed upon by Ramos and the Pascuals. There is no showing that the Pascuals were victims of fraud when they entered into the agreement with Ramos. Neither is there a showing that in their contractual relations with Ramos, the Pascuals were at a disadvantage on account of their moral dependence, ignorance, mental weakness, tender age or other handicap, which would entitle them to the vigilant protection of the courts as mandated by Article 24 of the Civil Code.

Sir’s example: A five-year loan agreement had the following terms: Year 1 2 3 4 5 Interest rate 3%/month 4%/month 5%/month 6%/month 7%/month

By the end of the five years, the balance of the P8M loan had ballooned to P17M with all the accumulated interest. Creditor filed an action to foreclose the mortgage. If you were the lawyer for the debtor, how would you approach the case? A: File an action for injunction of the foreclosure proceedings. Then, file for annulment of the loan agreement based on the nullity of the interest on the ground that the rates are iniquitous and unconscionable. 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 are unconscionable. (Comment from the SecTrans nerd: I don’t think this is a valid argument. When the interest rate is void for being iniquitous and unconscionable or for any other reason, the loan agreement itself is not void and should not be annulled. Only the interest is annulled, and it is just as if there were no interest charged, or it can be reduced according to terms that are just, in the discretion of the court. But this is not SecTrans, so of course, we follow what Sir said.)
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 56

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 just or 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 to the fault or negligence of the defendant, the latter shall be liable for indemnity if through the act or event he was benefited. Elements of Unjust Enrichment: 1. 2. 3. There must be enrichment on the part of the defendant. There is a concomitant injury to the plaintiff. 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. For failure to pay realty taxes amounting to 12K, the lot was sold at public auction by the City Treasurer to Nepomuceno. Nepomuceno in turn sold the property to the spouses Nuguid. Pecson filed a case questioning the validity of the auction sale. The trial court dismissed the complaint but held that the sale did not include the apartment building. The Nuguid spouses filed a motion for delivery of possession of the lot and the apartment building, citing Article 546 of the Civil Code (rules on builder in good faith). The spouses offered to pay the cost of construction spent by Pecson in 1965 as indemnity 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 the lot. 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. It was formulated in trying to adjust the rights of the owner and possessor in good faith of a piece of land, to administer complete justice to both of them in such a way as neither one nor the other may enrich himself of that which does not belong to him. Guided by this precept, it is therefore the current market value of the improvements which should be made the basis of reimbursement. A contrary ruling would unjustly enrich the Nuguid spouses who would otherwise be allowed to acquire a highly valued 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
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 57

for 1.76M. The contract provided that Ferrer would finish construction in 200 working days. Ferrer was able to complete the construction within that period, but he was compelled by a drastic increase in the cost of construction materials to incur expenses of about 300K on top of the original cost. SBTC refused 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 in prices of construction materials and/or labor, the owner (SBTC) shall equitably make the appropriate adjustment on mutual agreement of both parties. Since there was no such mutual agreement, there was no obligation on its part to pay above the original contract price. Ferrer then filed a complaint for breach 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 (no man ought to be made rich out of another’s injury). In this case, Ferrer incurred additional expenses in constructing SBTC’s building. SBTC derived benefits when Ferrer completed the construction even at an increased cost. Hence, to allow SBTC to acquire the constructed building at a price far below its actual construction cost would undoubtedly constitute unjust enrichment for the bank, to the prejudice of 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 land for 3.225M pesos. The agreement, entitled a “Deed of Conditional Sale” provided that should Arellano fail to pay three (3) successive monthly installments or any one year-end lump sum payment within the period stipulated, the sale shall be considered automatically rescinded without the necessity of judicial action and all payments made by the vendee shall be forfeited in favor of the vendors by way of rental for the use and occupancy of the property and as liquidated damages. After Arellano had already 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 the Valaraos’ 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 consigned the money in court. On the same date, the Valaraos sent Arellano a letter notifying her that they were enforcing the automatic rescission stipulation in the contract and that they were forfeiting the P2M in installments 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 forfeited because the refusal of payment was unjustified. Under the Maceda Law, Arellano had a grace period of three months from December within which to pay the unpaid installments. Thus, the spouses Valarao did not have the right to rescind the contract yet. And even if the contract could be rescinded, the automatic forfeiture clause could not be enforced because it would be inequitable to allow the forfeiture of the amount of more than P2M 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 cannot enforce the automatic forfeiture clause of the contract. To rule in favor of the Valaraos would result in patent injustice and unjust enrichment. The SC is not merely a court of law, but also a court of justice.

EPG Construction v. Vigilar
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 58

The ministry of Public Works and Highways forged individual contracts with petitioners EPG Construction 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. After the contractors performed their work on 2/3 of the units, DPWH Undersecretary Canlas requested that they perform additional constructions to complete the units and gave his verbal assurance that additional funds would be available and forthcoming. The contractors performed the additional constructions and completed the units. They were paid the contract price, representing 2/3 of the work actually done, leaving an unpaid balance of about 6M for the additional constructions for the completion of the existing housing units. DPWH Secretary Vigilar denied the money claims for the additional amount. ISSUE: Whether the contractors have a right to be compensated for the additional constructions done. HELD: Yes, they should be compensated. The Administrative Code provides that the existence of appropriations and availability of funds as certified to and verified by the proper accounting officials are conditions sine qua non for the execution of government contracts. In this case, the additional work was pursued through a verbal request of DPWH Undersecretary Canlas despite the absence of the corresponding supplemental contracts and appropriate funding. Because of this, DPWH Secretary Vigilar claims that the implied contracts are null 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, in the interest of substantial justice, upholds the right of the contractors to be compensated for the additional construction, applying the principle of quantum meruit. The peculiar circumstances in this case necessitate the allowance of the contractors’ money claims. They believed in good faith and in the interest of the government and the public in general that appropriations to cover the additional constructions and completion of the project would be available and forthcoming. The construction of the housing units had already been completed by the contractors and the subject housing units had been, since their completion, under the control and disposition of the government pursuant to its public works housing project. It would thus be the apex of injustice and highly inequitable to defeat the contractors’ right to be duly compensated for actual work performed and services rendered, where both the government and the public have, for years, received and accepted benefits from said housing project and reaped the fruits of 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 portion where B’s cattle grazed was submerged in water. The cattle went up the slope in order to avoid getting drowned. Unfortunately, the cattle trampled and destroyed A’s crops. Does B have to compensate A for the damage? A: Yes. B was enriched – his cattle were saved. On the other hand, A suffered a loss – his crops got trampled. 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
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 59

turned the house into a P10M property. ground of unjust enrichment?

Can you refuse to convey the house to the buyer on the

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

You owe someone P100K. Ten years lapse without payment. Therefore, the loan has prescribed. Not knowing this, you pay. When you find out that you no longer had a legal obligation to pay, you ask for the 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 was able to contract a company to perform the service on short notice. The COA then disallowed payment because there was no public bidding, and the other formalities for government projects were not followed. Can the government refuse to pay? A: No. The government must pay the contractor. It would constitute unjust enrichment if it is not paid just because the requirements of public bidding, etc. were not followed, given the emergency situation at the time.

4. Judicial Vigilance Art. 24. In all contractual, property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, 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 terminated him on the ground that he was blind. HELD: He was illegally dismissed. The court exercised judicial vigilance here in protecting the rights of the handicapped, under Article 24.

Deaf-mute was accused of murder. The court appointed counsel de oficio who happened to be a very old guy who did not object even once and did not cross-examine the witnesses for the prosecution. Naturally, the deaf-mute was convicted.
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 60

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

5. Thoughtless Extravagance Art. 25. Thoughtless extravagance in expenses for pleasure or display during a period of acute public want or emergency may be stopped by order of the courts at the instance of any government or private charitable institution. 6. Disrespect for Person Art. 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons. The following and similar acts, though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief: (1) Prying into the privacy of 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 also contributed capital to the business that the Nicolas spouses were engaged in. One day, Florence’s brother-in-law, Rodrigo, accused Mr. Nicolas in front of his children and friends of having an affair with Florence. As a result of the incident, Mr. Nicolas felt extreme embarrassment and shame to the extent that he could no longer face his neighbors. Florence also ceased to do business with him by not contributing capital anymore so much so that the business venture of the Nicolas spouses declined as they could no longer cope with their commitments to their clients and customers. To make matters worse, Mrs. Nicolas started to doubt Mr. Nicolas’s fidelity, resulting in frequent bickerings and quarrels during which Mrs. Nicolas even expressed her desire to leave her husband. Consequently, Mr. Nicolas was forced to write Rodrigo demanding public apology and payment of damages. Rodrigo pointedly ignored 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 for violations of a person's dignity, personality, privacy and peace of mind. The violations mentioned in Article 26 are not exclusive but are merely examples and do not preclude other similar or analogous
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 61

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 from Ombudsman Aniano Desierto to produce several bank documents for purposes of inspection in camera relative to various accounts maintained at the bank. Marquez asked Desierto for an extension to produce the checks in question, since they were payable to cash or bearer and could not be easily identified. Desierto issued an order requiring the production of the documents and threatened to cite Marquez in indirect contempt and for obstruction of justice. Marquez filed an action for declaratory relief to clarify how she could comply with the order without violating the Secrecy of Bank Deposits Act. 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 documents requested by the Ombudsman. Whether the order of the Ombudsman to have an in camera inspection of the questioned account is allowed as an exception to the law on secrecy of bank deposits.

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

The exceptions to the law on secrecy of bank deposits are: 1. Where the depositor consents in writing; 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.

2.

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

In this case, there is yet no pending litigation before any court of competent authority. What is existing is an investigation by the Office of the Ombudsman. In short, what the office of the ombudsman would wish to do is to fish for additional evidence. There was no pending case in court which 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 person shall 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. It also holds a public officer or employee or any private individual liable for damages for any violation of the rights and liberties of another person, and recognizes the privacy of letters and other private communications. The Revised Penal Code makes a crime the violation of secrets by an officer,
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 62

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

7. Dereliction of Duty

Art. 27. Any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against he latter, without prejudice to any disciplinary administrative action that may be taken. Javellana v. Tayo Mayor Tayo, the Vice Mayor two councilors, and the secretary of Buenavista, Iloilo were always absent from the sessions of the council. Thus, the remaining council members elected 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 of all their proceedings were presented to Mayor Tayo for action, the mayor refused to act upon them, or particularly to approve or disapprove the resolution they had been working on and which they, as a council, had approved. According to the mayor, the sessions were null and void. Mayor Tayo even refused to affix his signature to their payrolls covering the per 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 NCC to Exequiel Golez who had testified and proved that he had suffered as a consequence of the refusal of Mayor 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 that according to the trial court, Golez was able to prove that he suffered as a consequence of the mayor’s refusal to perform his official duty, notwithstanding the action taken by the provincial 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 through the use of force, intimidation, deceit, machination or any other unjust, oppressive or highhanded method 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 criminal offense. 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 to the content, scheme of presentation, illustrations, and examples. Several pages of Robles’ book directly plagiarized his own book. Habana sued Robles for copyright infringement, unfair competition, and damages. ISSUE: Whether Robles is liable for damages.
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 63

HELD: Yes. Robles is guilty of copyright infringement. Infringement of copyright consists in doing by any person, without the consent of the owner of the copying, of anything, the sole right to do which is conferred by statute on said owner. Said infringement is in fact a trespass on a private domain owned by the owner of the copyright. With regard to books and other literary works, the purpose of copywriting is to give protection to the intellectual product of an author. In such a case, copying alone 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 much is taken that the value of the original work is substantially diminished, then Robles is indeed guilty of infringement. With regard to the injurious effect, the least Robles could have done was to acknowledge Habana’s book as the source of the contested portions of her own book. To allow another to copy the book without appropriate acknowledgment is injury enough, hence the requisite of injurious 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 same town. B puts up a funeral parlor across the street from St. Peter’s Hospital and names it St. Peter’s Funeral 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 unfair competition? A: Yes.

9. Violation of Civil/Political Rights Art. 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the following rights 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;

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

64

(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 against unreasonable 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 contrary to law;

(13) The right to take part in a peaceable assembly to petition the government for redress 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 the nature and cause of the accusation against him, to have a speedy and public trial, to meet the witnesses face to face, and to have compulsory process to secure the attendance of witness in his behalf;

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

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

65

(18) Freedom from excessive fines, or cruel and unusual punishment, unless the same is imposed or inflicted in accordance with a statute which has not been judicially declared unconstitutional; 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 or omission constitutes a criminal offense, the aggrieved party has a right to commence an entirely separate and distinct civil action for damages, and for other relief. Such civil action 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 or omission 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 under Article 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 32 covers violations committed even by private individuals. Moreover, Article 32 covers not only direct violations of civil rights, but also INDIRECT violations. For example, under Article 32, even a witness for the application of a search warrant who lies in his testimony may be liable for damages to the aggrieved party.

MHP Garments v. CA MHP had the exclusive franchise to sell and distribute official Boy Scout uniforms and supplies. Acting upon information that private respondents were selling Boy Scout items without authority, MHP sent one of its employees, together with three members of the Philippine Constabulary, to the store of private respondents. The employee and the members of the PC seized the merchandise in the store without any warrant. The items were then turned over to MHP. When private respondents demanded the return of the goods, not all items were returned, while the others were of inferior quality. Private respondents filed an action for damages against MHP. MHP denies liability on the ground that it was the PC that conducted the raid, and its participation was only to report the alleged illegal activity of private 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 damages under Article 32. The person indirectly responsible must also answer for the damages or injury caused to the aggrieved party. Article 32 of the Civil Code makes the persons who are directly, as well as indirectly, responsible for the transgression as joint tortfeasors. In this case, MHP was indirectly involved in transgressing the right of private respondents against unreasonable search and seizure. It instigated the raid, which was even conducted with the active participation of one of the employees of MHP. It received for safekeeping the goods unreasonably seized and refused to surrender them upon demand. It failed to report the unlawful peddling of the goods to the Boy Scouts of the Philippines so that the latter could have properly applied for a warrant.
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 66

Obra v. CA Obra, the Regional Director of the Bureau of Mines and Geo-Sciences (BMGS), received from Jeanette Grybos a letter on behalf of the Gillies heirs complaining that the spouses Brett had been conducting illegal mining activities in a mining area belonging to the Gillies family. Obra requested the assistance of 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 was entering the contested mining area. The truck was impounded. The spouses filed a complaint for damages 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 against unreasonable searches and seizure were violated. Article 32 of the Civil Code makes liable any public officer who is directly or indirectly responsible for violation of the constitutional right. The language of Article 32 makes both the actor (the one directly responsible) and the person indirectly responsible liable for damages. Thus, Dumpit could not claim that he had no knowledge of the acts of his subordinates who seized the truck. Neither can he evade responsibility for his acts by claiming that he merely 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 only carrying out a ministerial duty.

VI. Interference in Contractual Relation
Art. 1314. Any third person who induces another to violate his contract shall be liable for damages to the other contracting party. Elements of Interference in Contractual Relation: 1. 2. 3. 4. Valid contract; Outsider knows of the existence of the contract; The third party induces one party to breach his obligation under the contract; 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 (So Ping Bun v. CA). So if you’re the lawyer for the plaintiff, you should try to prove it anyway just to be sure. What are the defenses available to the defendant? business competition & the purpose is (i) furtherance of the business; & (ii) lawful means are used. 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 he intermeddles.

(1)

Gilchrist v. Cuddy
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 67

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. Gilchrist paid the money in advance. However, a few days before the screening date agreed upon, Cuddy sent the money back, saying that he had made other arrangements with his film. It turns out that Cuddy entered into another agreement with Espejo and Zaldarriaga (the partners) for the rental of the film for 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 contract between Gilchrist and Cuddy. HELD: Yes. The only motive for the interference by the partners in the Gilchrist-Cuddy contract was a desire 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 its breach. In the US case Angle v. Railway Co., the US Supreme Court held the third party liable for damages 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 causes damages. Article 1902 [of the old Civil Code] provides that a person who, by act or omission, causes damage 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 the tortfeasor 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 as soon as Endencia’s title to the land was perfected in the Court of Land Registration and a Torrens title issued in her name. When the Torrens title was issued, Endencia found out that the property measured 1,248 hectares instead of 452 hectares, as she initially believed. Because of this, she became reluctant to transfer the whole tract to Daywalt, claiming that she never intended to sell so large an amount and that she had been misinformed as to its area. Daywalt filed an action for specific performance. The SC ordered Endencia to convey the entire tract to Daywalt. Meanwhile, the La Corporacion de los Padres Agustinos Recoletos (Recoletos), was a religious corporation, which owned an estate immediately adjacent to the property sold by Endencia to Daywalt. It also happened that Fr. Sanz, the representative of the Recoletos, exerted some influence and ascendancy over Endencia, who was a woman of little force and easily subject to the influence of other people. Father Sanz knew of the existence of the contracts with Daywalt and discouraged her from conveying the entire tract. Daywalt filed an action for damages against the Recoletos on the ground that it unlawfully induced Endencia to refrain from the performance of her contract for the sale of the land in question and to withhold delivery of the Torrens title. Daywalt’s claim for damages against Recoletos was for the huge sum 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 conversion into 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 more extensively liable in damages for the nonperformance of the contract than the party in whose behalf he intermeddles. Hence, in order to determine the liability of the Recoletos, there is first a need to consider the liability of Endencia to Daywalt. The damages claimed by Daywalt from Endencia cannot be recovered from her, first, because these are special damages which were not within the contemplation of the parties when the contract was made, and secondly, these damages
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 68

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 perform the contract, the Recoletos could in no event render itself more extensively liable than the principal in the contract. Roble v. Arbasa (July 31, 2001) New doctrine when it comes to the sale of land: Whether the consideration for the sale of real property 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 the Rubios, leaving an unpaid balance of about P4.25M. The contract provided that the spouses had a right to rescind the sale in case ROPSI failed to pay the balance. Robert O. Phillips (the person) and his 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 for the sale of these same shares of stock to Alfonso Yuchengco. When he found out about the negotiations, Miguel Rubio wrote a letter reminding ROPSI and Yuchengco that the shares were subject to the payment of the unpaid balance, and that he still had the right to rescind the sale in case of non-payment. Rubio expressed no objections to the sale, provided that the obligations in their favor were satisfied. ROPSI wrote back, telling Rubio that the only obstacle to the consummation of the sale of the HBI shares to Yuchengco was the letter that Rubio sent. ROPSI warned that unless the letter was withdrawn, they would seek redress elsewhere. Rubio was also informed that Yuchengco had given the ultimatum that if the letter was not withdrawn, the transaction with ROPSI would be cancelled. [Yuchengco wanted the letter withdrawn because he did not want to purchase the shares of stock if they would later be involved in a collection suit]. Rubio refused to withdraw the letter and instead threatened to file an action for collection in case the balance of the purchase price was not paid when due. ROPSI, however, beat them to court and filed a case against the Rubios for unlawful interference in the transaction between ROPSI and Yuchengco. ISSUE: Whether the Rubios are liable for interfering in the transaction between ROPSI and Yuchengco. 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 that he still had the option to rescind the contract between him and ROPSI and in stating the existence of his 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, he admitted that the shares were already transferred to ROPSI and that he did not have a recorded lien therein. He merely made of record his right to rescind under the original contract of sale. The details pertaining to the earlier transaction governing the sale of the shares of stock between Rubio and ROPSI were in fact known to Yuchengco. Moreover, Rubio was only interested in recovering the P4.25M balance owing to him. He expressed his intention to withdraw the letter, provided his interests would be protected. Obviously, he felt that the payment of his P4.25M was not secured under the terms of payment proposed by Yuchengco. Thus, he had the right to refuse to withdraw the letter. 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 Tek Hua used to store its textiles. The successor of Tek Hua Trading, Tek Hua Enterprises, allowed So Ping Bun, the grandson of the managing partner of Tek Hua Trading, to use the premises to store his
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 69

own textiles. Later, Manual Tiong, one of the members of Tek Hua Enterprising Corp., asked So Ping Bun to vacate the warehouse within 14 days since Tiong needed it for his textile business. So Ping Bun refused to vacate. Instead, So Ping Bun entered into lease contracts with DCCSI over the same premises. Tek Hua Enterprises and Manuel Tiong filed an action to nullify the contracts of lease between So Ping Bun and DCCSI and also claimed damages against So Ping Bun for unlawful interference 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 a result, it was able to deprive Tek Hua Enterprises of its property right. Clearly, the three elements of tort interference are present since So Ping Bun prevailed upon DCCSI to lease the warehouse to his enterprise at the expense of Tek Hua Enterprises. However, So Ping Bun still cannot be held liable for damages. Though he took interest in the property of Tek Hua and benefited from it, nothing on record imputes deliberate wrongful motives or malice on him. The business desire is there to make some gain to the detriment of the contracting parties. Lack of 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 did not 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 the means 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 were unjust and unfair. A entered into a contract with B. A did not graduate high school. C, a lawyer, advised A not to comply 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 principle that 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 defense that he gave the advice in good faith.

VII. CIVIL LIABILITY ARISING FROM CRIME
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 70

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 is instituted, the civil action for the recovery of civil liability arising from the offense charged shall 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.

The reservation of the right to institute separately the civil action shall be made before the prosecution starts presenting its evidence and under circumstances affording the offended party a reasonable opportunity to make such reservation.

When the offended party seeks to enforce civil liability against the accused by way of moral, nominal, temperate, or exemplary damages without specifying the amount thereof in the complaint or information, the filing fees therefore shall constitute a first lien on the judgment awarding such damages.

Where the amount of damages, other than actual, is specified in the complaint or information, the corresponding filing fees shall be paid by the offended party upon the filing thereof in court.

Except as otherwise provided in these Rules, no filing fees shall be required for actual damages.

No counterclaim, cross-claim or third-party complaint may be filed by the accused in the criminal case, but any cause of action which could have been the subject thereof may be litigated in a separate civil action.

(b) The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to include the corresponding civil action. No reservation to file such civil action separately shall be allowed.

Upon filing of the aforesaid joint criminal and civil actions, the offended party shall pay in full the filing fees based on the amount of the check involved, which shall be considered as the actual damages claimed. Where the complaint or information also seeks to recover liquidated, moral, nominal, temperate or exemplary damages, the offended party shall pay additional filing fees based on the amounts alleged therein. If the amounts are not so alleged but any of these damages are subsequently awarded by the court, the filing fees based on the amount awarded shall constitute a first lien on the judgment.

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

71

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 the latter case. If the application is granted, the trial of both actions shall proceed in accordance with section 2 of this Rule governing consolidation of the civil and criminal actions. Clarification of this rule: This rule on civil actions instituted with the criminal action has been amended several times, hence the conflicting jurisprudence. Under the 2000 Revised Rules of Criminal Procedure, the civil liability arising from crime is deemed instituted and not merely “impliedly” instituted with the institution of the criminal action, unless:

1. 2. 3.

the offended party waives the civil action, reserves the right to institute it separately, or 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 for the recovery of the civil liability arising from the offense charged, and no other civil action. All decisions 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 NOT deemed 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 filed against his employee? A: No. Quasi delict under Article 2176 is not deemed instituted with the criminal action. If at all, the only civil liability of the employer in the criminal action would be his subsidiary liability under the Revised Penal Code. What is the difference between “separate civil action” under Section 2 of Rule 111 of the Rules of Court 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 the plaintiff. The separate civil action under Section 2 of Rule 111 refers to an action to recover civil liability arising from the crime. This is deemed instituted with the criminal action, unless the offended party 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 civil action which may be connected to the offense but does not necessarily arise from the crime (ex: civil case 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, and John Paul Tia, who were all members of the staff of a regional newspaper known as “Panay News,” for maliciously 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 suffered actual, moral, and exemplary damages in the amount of P10M. The trial court convicted the first three accused and acquitted the fourth. However, it dismissed the claim for civil indemnity by way of moral damages for lack of jurisdiction on the ground that Manuel did not pay the filing fees therefor.

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

72

Manuel filed this action for certiorari in the Supreme Court, questioning the validity of the dismissal of her 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 the CA. This is because the award of moral and exemplary damages by the trial court is inextricably linked to and necessarily dependent upon the factual finding and basis therefor – the existence of the crime of libel. There would thus be a possibility that the CA would reverse the trial court and acquit the accused. In such event, the appellate court’s action could collide with an SC ruling awarding damages in favor of Manuel. Such a situation would lead to absurdity and confusion and must be avoided. Manuel claims that Article 33 of the Civil Code allows an independent civil action for damages in cases of defamation, fraud, and physical injuries to be instituted separately and independently from the criminal. She then concludes that the civil aspect of the case is not dependent on the criminal, but rather, may proceed independently thereof, and that therefore, the review of the civil aspect by the SC may take place simultaneously with and separately from the review of the criminal aspect by the CA. This reasoning is misplaced. Sec. 1 of Rule 111 of the Rules of Court provides that the civil action for recovery of civil liability is impliedly instituted with the criminal action unless the offended party waives the civil action, reserves his right to institute it separately, or institutes the civil action prior to the criminal action. 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 the prosecution of the criminal case. Thus, there can no longer be any independent civil action to speak of, as the civil aspect had previously been included in the criminal. Manuel, by attempting to have recourse to the SC while the criminal aspect is still pending with the CA, was effectively trying to split a 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, the company “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 in lieu of reinstatement, backwages, and attorney’s fees. The decision was appealed to the NLRC but was 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 procedural requirements were met, it would still have been dismissed for failure to show grave abuse of discretion on the part of the NLRC. Subsequently, Oro Marketing filed a complaint for damages against Bañez in the RTC of Misamis Oriental. Oro Marketing claimed damages for lost profits and earnings due to the abandonment or neglect by Bañez of his duties as sales manager because he was preoccupied with his unauthorized installment sale scheme. It also claimed damages for the value of its property and supplies which Bañez used in conducting his own business. Bañez moved to dismiss on the ground that the action for damages, having arisen from an employer-employee relationship, was under the exclusive original jurisdiction 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 jurisdiction to hear and decide all claims for damages arising from employer-employee relations. This article
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 73

applies not only to claims for damages filed by employees but also to those filed by an employer for actual damages against its dismissed employee, where the basis for the claim arises from or is necessarily connected with the fact of termination, and should be entered as a counterclaim in the illegal dismissal case. In this case, the claim of Oro Marketing against Bañez for actual damages arose from a prior employer-employee relationship. Oro Marketing would not have taken issue with Bañez’s doing business of his own had the latter not been concurrently its employee. Second, to allow the RTC to proceed with the action for damages would be to open anew the factual issue of whether Bañez’s installment sale scheme resulted in business losses and the dissipation of Oro’s property. This issue had been duly raised and ruled upon in the illegal dismissal case. The Labor Arbiter found that no business losses may be attributed to Bañez, and it was in fact his installment plan which had brought more sales to the company. This should be differentiated from those labor cases where the employer-employee relationship is merely incidental and the cause of action proceeds from a different source of obligation. Thus, the jurisdiction of regular courts was upheld where the damages claimed were based on tort, malicious prosecution, or breach of contract. The remedy of Oro is not the filing of a separate action for damages but properly perfecting an appeal from the Labor Arbiter’s decision. Having lost the right to appeal on the ground of untimeliness, the decision in the labor case stands as a final judgment on the merits, and the instant action for damages cannot 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 Eriberta Villegas the amount of about P600K. Villegas entrusted this amount to Mandawe, an employee of DMPI-ECCI, for deposit with the teller of DMPI-ECCI. Subsequently, Villegas filed with the RTC a complaint against Mandawe and DMPI-ECCI for a sum of money and damages with preliminary attachment arising out of the same transaction. DMP-ECCI filed a motion to dismiss on the grounds that there was already a pending criminal case arising from the same facts, and that the complaint failed 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 on December 1, 2000, the civil action for the recovery of civil liability arising from the offense charged shall 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 separate civil action arising therefrom cannot be instituted until final judgment has been entered in the criminal action. However, only the civil liability arising from the offense charged is deemed instituted with the criminal action unless the offended party waives the civil action, reserves his right to institute it separately, or institutes the civil action prior to the criminal action. There is nor more need for a reservation of the right to file the independent civil actions under Articles 32, 33, 34, and 2176 of the Civil Code. The reservation refers only to the civil action for the recovery of the civil liability arising from the offense charged [under Article 100 of the RPC]. This does not include recovery of civil liability under Articles 32, 33, 34, and 2176 of the Civil Code arising from the same act or omission which may be prosecuted separately even without a reservation. Thus, the civil case instituted by Villegas, an independent civil action for damages on account of the fraud committed against him under Article 33 of the Civil Code, may proceed independently even if there was no reservation as to its filing. [This is the application of the present rule.]
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 74

b. Separate Civil Action Sec. 2. When separate civil action is suspended. – After the criminal action has been commenced, the separate civil action arising therefrom cannot be instituted until final judgment has been entered in the criminal action.

If the criminal action is filed after the said civil action has already been instituted, the latter shall be suspended in whatever state it may be found before judgment on the merits. 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 court trying the criminal action. In case of consolidation, the evidence already adduced in the civil action shall be deemed automatically reproduced in the criminal action without prejudice to the right of the prosecution to cross-examine the witness presented by the offended party in the criminal case and of the parties to present additional evidence. The consolidated criminal and civil actions shall be tried and decided jointly.

During the pendency of the criminal action, the running period of prescription of the civil action which cannot be instituted separately or whose proceeding has been suspended shall 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 finding in a final judgment in the criminal action that the act or omission from which the civil liability 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 injured party. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence. Summary of this Rule:

1.

This rule contemplates a situation where the offended party files a separate civil action to recover civil liability arising from the offense. This is a departure from the general rule in Section 1 that the civil action is deemed instituted with the criminal action. If the criminal action has bee commenced, and the offended party makes a reservation to separately file the civil action arising therefrom, he cannot institute the civil action until final judgment has been rendered in the criminal action. 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 may be found until final judgment is rendered in the criminal action.

2.

3.

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

75

4.

In case the criminal action is instituted after the civil action, the two actions may, upon motion of the offended party, be consolidated before judgment on the merits is rendered in the civil action. It will be tried and decided jointly by the court trying the criminal action. The only civil action that is deemed suspended is the civil action arising from the offense charged and not other civil actions that may be related to but do not arise from the offense. A civil action may not be suspended under Rule 111 where the action is not to enforce civil liability from the crime charged. As a general rule, there can only be consolidation of the criminal and civil actions if the civil action is for recovery of the civil liability arising from the offense. However, under certain exceptional circumstances, there can still be consolidation of the criminal and civil actions even if the civil action is not for the recovery of civil liability arising from the offense (ex: civil action based on contract). The requisites for consolidation in these cases are: a. b. c. d. e. the actions arise from the same act, event, or transaction; they involve the same or like issues; they depend largely or substantially on the same evidence the court must have jurisdiction over the cases to be consolidated; and a joint trial will not give one party an undue advantage or prejudice the substantial rights of any of the parties.

5.

6.

7.

The period of prescription of the civil action arising from a crime that has not been reserved or that was filed ahead of the criminal action and was subsequently suspended shall not run while the criminal action is pending.

Cojuangco v. CA A blind item was published in a magazine implying that Gretchen Oppen-Cojuangco was prostituting herself to speed up the approval of a loan from the government. The spouses Cojuangco filed a civil action for Damages based on Libel against the owner, publisher, general manager and editor of the magazine and writer of the article. Subsequently, the Fiscal filed with the same court a criminal case for libel against the defendants. The spouses filed motions to consolidate the civil and criminal cases, alleging that the evidence to be presented in both would be the same and that Article 360 of the RPC provides that in libel, the civil action shall be filed in the same court where the criminal action is filed and vice-versa, provided however, that the court where the criminal action or civil action for damages is filed shall acquire jurisdiction to the exclusion of other courts. Respondents opposed the motions to consolidate. They claimed that the spouses, having filed a separate 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, and 2176 of the Civil Code may be consolidated with the criminal case, subject to the condition that no final judgment has been rendered in the criminal case. Section 1, Rule 31 of the Rules of Court authorizes consolidation of actions involving common questions of law or fact pending before the court. The purpose or object of consolidation is to avoid multiplicity of suits, guard against oppression or abuse, prevent delay, clear congested dockets, simplify the work of the trial court, and save unnecessary costs. In this case, the civil and criminal cases involve common or identical questions of fact and law, and they would even have the same witnesses. Moreover, Article 360 of the RPC provides that the
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 76

criminal case for libel and the civil action for damages arising therefrom must be filed in the same court. 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 the payment 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 trust receipt came, but Limpin and Apostol failed to pay. A complaint was filed by the bank against them for Violation of the Trust Receipt Law. Limpin was convicted. The bank then filed a civil action to collect the 495K from Limpin and Sarmiento. Limpin now claims that the civil action is barred because it 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 a reservation of his right to institute a separate civil action. Jurisprudence instructs that such reservation need not be express but may be implied. It may be inferred not only from the acts of the offended party but also from acts other than those of the latter. For example, the SC has held in the Bernales case that the failure of the court to make any pronouncement in its decision concerning the civil liability of the accused must be due to the fact that the criminal action did not involve at all any claim for civil indemnity. This indicates an implied reservation of the right to institute a separate civil action. In the present case, nothing in the records show that the bank ever attempted to enforce its right to recover civil liability during the prosecution of the criminal action. Hence, it is deemed to have made the implied reservation. Moreover, the complaint of the bank against Limpin and Sarmiento was based on the failure of the latter to comply with their obligation as spelled out in the Trust Receipt executed by them. This breach of obligation is separate and distinct from any criminal liability for “misuse and/or misappropriation of goods or proceeds realized from the sale of goods, documents or instruments released under trust receipts,” punishable under Section 13 of the Trust Receipts Law in relation to Article 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 against petitioners 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 a criminal offense, and no criminal proceedings are instituted during the pendency of the civil case, a preponderance of evidence shall likewise be sufficient to prove the act complained of. Art. 31. When the civil action is based on an obligation not arising from the act or omission complained of as a felony, such civil action may proceed independently of the criminal 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 in Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines, the independent civil action may be brought by the offended party. It shall proceed independently of the criminal 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 in the criminal action. Andamo v. IAC
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 77

Emmanuel and Natividad Andamo owned a parcel of land adjacent to that of the Missionaries of Our Lady 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, damaged the Andamos’ crops and fences, and endangered their lives. The Andamos instituted a criminal action against the officers and directors of Our Lady for destruction by means of inundation under Art. 324 of the RPC. Subsequently, they filed a civil case for damages against the respondents. Upon motion of respondents, the civil case was dismissed for lack of jurisdiction, since the criminal case instituted ahead of the civil case was still unresolved. This was based on the provision of the Rules of Court which provides that criminal and civil actions arising from the same offense may be instituted separately, but after the criminal action has been commenced, the civil action cannot be instituted until 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 on quasi-delict under Article 2176 of the Civil Code. In quasi-delicts, the civil action is entirely independent of the criminal case according to Articles 33 and 2177 of the Civil Code. To subordinate the civil action contemplated in the said articles to the result of the criminal prosecution – whether it be conviction or acquittal – would render meaningless the independent character of the civil action and clear injunction in Article 31, that this action may proceed independently of the criminal proceedings and regardless of the result of 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 was dismissed. Subsequently, 3 cases for estafa were filed. The case was dismissed again. Cancio then filed a civil case for collection of sum of money to recover the value of the 3 checks from Isip. Isip moved to dismiss on the ground that the action is barred by res judicata and that Cancio was guilty of forum shopping. ISSUES: 3. 4. Whether the civil action for collection is barred by res judicata. 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. 4. ex delicto under Art. 100 of the RPC; and independent civil liabilities such as: c. d. 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 the Civil Code; where the injured party is granted a right to file an action independent and distinct from the criminal action (ex: Art. 33 of the Civil Code)

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

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

78

In this case, the basis of the complaint is culpa contractual. It is an independent civil action which is based on Isip’s breach of a contractual obligation. This may proceed independently of the criminal proceedings, regardless of the result of the latter. There is no res judicata because 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 ground that his guilt has not been proved beyond reasonable doubt, a civil action for damages for the same act or omission may be instituted. Such action requires only a preponderance of evidence. Upon motion of the defendant, the court may require the plaintiff to file a bond to 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 court shall so declare. In the absence of any declaration to that effect, it may be inferred from the 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 the civil action. However, the civil action based on delict shall be deemed extinguished if there is a finding in a final judgment in the criminal action that the act or omission from which the 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 accused and the aggravating or mitigating circumstances which attended its commission; (2) the participation of the accused in the offense, whether as principal, accomplice, or accessory after the fact; (3) the penalty imposed upon the accused; and (4) the civil liability or damages caused by his wrongful act or omission to be recovered from the accused by the offended party, if there is any, unless the enforcement of the civil liability by a separate civil action has been reserved or waived.

In case the judgment is of acquittal, it shall state whether the evidence of the prosecution absolutely failed to prove the guilt of the accused or merely failed to prove his guilt beyond reasonable doubt. In either case, the judgment shall determine if the act or omission 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 the market stalls and carting away the merchandise of complainants. The CFI convicted them. The judgment was appealed to the CA on the ground that it was not supported by the evidence. The CA modified 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.
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 79

ISSUE: Whether the CA erred in requiring Padilla et al to pay civil indemnity after acquitting them from the criminal charge. HELD: The CA was correct. Padilla et al were acquitted because of reasonable doubt and not because they did not commit the acts stated in the charge against them. There is no dispute over the forcible opening of the market stall, its demolition with axes and other instruments, and the carting away of the merchandise. The petitioners were acquitted because these acts were denominated coercion when they properly constituted some other offense such as threat or malicious mischief. They could not, however, be convicted 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 was also extinguished. However, the same act or omission gave rise to two kinds of civil liabilities: one arising from crime and the other arising from quasi-delict, subject to the rule on double recovery. It is on the latter that the award of damages was based. The only time that acquittal will result in extinction 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 of acquittal, there is no more need to institute a civil action in this case because all of the facts necessary to award damages were before the court. To require an action to be filed anew would be to clog the dockets unnecessarily. Heirs of Guaring v. CA A Philippine Rabbit bus collided with a car, killing the driver of the car. An action for damages based on quasi-delict was filed by the heirs of Guaring against Philippine Rabbit. The RTC found the driver of the bus at fault and awarded damages. On appeal, the CA set aside the RTC decision on the strength of a decision rendered by another RTC in a criminal case for reckless imprudence resulting in homicide acquitting the bus driver, based on reasonable doubt. The appellate court held that since the basis of petitioners’ action was the alleged negligence of the bus driver, the latter’s acquittal in the criminal case 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 quasidelict. HELD: No. Acquittal of the accused, even if based on a finding that he is not guilty, does not carry with it the extinction of the civil liability based on quasi-delict. Even if damages are sought on the basis of crime and not quasi-delict, the acquittal was based not on a finding that he was not guilty but only on reasonable doubt. The judgment of acquittal extinguishes the liability of the accused for damages only when it includes a declaration that the facts from which the civil liability might arise did not exist. Sapiera v. CA Sapiera bought merchandise from Sua and paid for them using two checks issued by Arturo de Guzman and signed at the back by Sapiera. The checks were dishonored. Sapiera was charged with four counts of estafa and De Guzman was charged with two violations of BP22. The RTC acquitted Sapiera of all the charges of estafa but did not rule on whether she could be held civilly liable for the checks she indorsed to Ramon Sua. De Guzman was convicted. Sua appealed on the civil aspect and prayed that the court order Sapiera to pay the aggregate value of the checks indorsed by her plus interest, etc. The CA denied the appeal but, on MR, held that Sapiera was liable for P335K minus P125k 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.
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 80

The judgment of acquittal extinguishes the liability of the accused for damages only when it includes a declaration that the fact from which the civil liability might arise did not exist. Thus, the civil liability is not extinguished by acquittal where: (a) the acquittal is based on reasonable doubt; (b) where the court 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 is acquitted. In this case, Sapiera’s acquittal was due to the fact that conspiracy was not proved before the trial court. However, despite the absence of conspiracy, she did sign the backs of the checks and became an 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 the civil action. However, the civil action based on delict shall be deemed extinguished if there is a finding in a final judgment in the criminal action that the act or omission from which the 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’s house where they lived together for 21 days. Bunag promised to marry her, but suddenly disappeared. A criminal action for forcible abduction was filed against Bunag, but this was dismissed by the fiscal at the preliminary investigation stage. Cirilo then filed a civil action for damages against Bunag on account of the forcible abduction. The trial court awarded Cirilo damages. Bunag claims that 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 unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil might arise did not exist. In this case, the dismissal of the complaint for forcible abduction with rape was by mere resolution of the fiscal at the preliminary investigation stage. There was no declaration in a final judgment that the fact from which the civil case might arise did not exist. Consequently, the dismissal did not in any way affect the right Cirilo to institute a civil action arising from the offense because such preliminary 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 may be instituted or may proceed, shall be governed by rules of court which the Supreme Court shall 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. – A petition for suspension of the criminal action based upon the pendency of a prejudicial question in a civil action may be filed in the office of the prosecutor or the court conducting the preliminary investigation. When the criminal action has been filed in court for trial, the petition to suspend shall be filed in the same criminal action at any time before 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 to the issue raised in the subsequent criminal action, and (b) the resolution of such issue determines whether or not the criminal action may proceed What is a prejudicial question?
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 81

A prejudicial question is one based on a fact separate and distinct from the crime but is so intimately connected with it that it determines the guilt or innocence of the accused. Elements:

1. 2.

the previously instituted civil action involves an issue similar or intimately related to the issue raised in the subsequent criminal action, and 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 to constitute 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 the accused built residential houses on Rosita Tigol’s land and against her will. Apa, et al moved for the suspension of the arraignment on the ground that there was a prejudicial question pending resolution in another case being tried in another branch the same court, where Apa, et al seek a declaration of the nullity of Rosita’s title to the lot in question and the partition of the lot in question among them and Rosita Tigol as heirs of Filomeno and Rita Taghoy. The case had been filed three years before the squatting complaint was filed. ISSUE: Whether the question of ownership over the lot, which was pending in a civil case, is a prejudicial 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 but so intimately connected with it that its resolution is determinative of the guilt or innocence of the accused. To justify suspension of the criminal action, it must appear not only that the civil case involves facts intimately related to those upon which the criminal prosecution is based but also that the decision of the issue or issues raised in the civil case would be decisive of the guilt or innocence of the accused. The elements of a prejudicial question are: (a) the civil action involves an issue similar or intimately related to the issue raised in the criminal action; and (b) the resolution of such issue determines whether 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 must first be determined who the owner is. In fact, subsequent to the filing of the information, the TCT of the lot in question was cancelled and the parties were held to be co-owners of the lot, which they inherited from their parents. Surely, if Apa, et al are co-owners of the lot in question, they cannot be found guilty of squatting because they are 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 with another woman. Wife subsequently filed a criminal complaint for concubinage against Husband and his paramour. The information was filed against them. Husband, in order to forestall the issuance of a warrant for his arrest, filed a motion to defer proceedings on the ground that there was a pending civil case for the declaration of nullity of his marriage, and this constituted a prejudicial question to the determination of the criminal case. ISSUE: Whether the pendency of the petition for declaration of nullity or marriage based on psychological incapacity is a prejudicial question to the criminal case for concubinage.
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 82

HELD: No. For a civil case to be considered prejudicial to a criminal action, it must appear not only that 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 or innocence of the accused would necessarily be determined. According to the Family Code and the case of Domingo v. CA, it is only for purposes of remarriage that a final judgment declaring a prior marriage void is the only acceptable proof of the nullity of such first marriage. In other cases, other evidence of the nullity of the marriage may be presented. Thus, in a case for concubinage, the accused need not present a final judgment declaring his marriage void, for he can adduce other evidence. 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 should his remarriage be declared void, suffice it to state that even a subsequent pronouncement that his marriage is void from the beginning is not a defense. Parties to the marriage should not be permitted to judge for themselves the nullity of their marriage. A marriage is presumed valid until declared void by the courts, and he who cohabits with a woman not his wife before judicial declaration of nullity of the 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 his first marriage on the ground that it was celebrated without a marriage license. Isagani then filed a motion to suspend the proceedings in the criminal case for bigamy invoking the pending civil case for nullity 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 marriage constitutes 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 his first marriage and thereafter to invoke that very same judgment to prevent his prosecution for bigamy. He cannot have his cake and eat it too. Otherwise, all that an adventurous bigamist has to do is to disregard Article 40 of the Family Code, contract a subsequent marriage and escape a bigamy charge by simply claiming that the first marriage is void and that the subsequent marriage is equally void 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 he contracted his second marriage with petitioner. Against this legal backdrop, any decision in the civil action for nullity would not erase the fact that Isagani entered into a second marriage during the subsistence of a first marriage. Thus, a decision in the civil case is not essential to the determination of the criminal charge. It is, therefore, not a prejudicial question. Isagani cannot be permitted to use his 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, no prejudicial 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 to marry 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 action should be suspended pending the determination of the validity of the marriage to Wife2. This is because if the trial court finds that the consent of the Husband was indeed vitiated, then that means
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 83

that he also did not willfully commit bigamy. Thus, the civil action is determinative of the guilt or innocence of the husband. Torres v. Garchitorena Susana Realty, Inc. owned parcels of land located at Cavite. These were adjacent to the sea and over time portions thereof were submerged by sea water. Mayor Torres caused the leveling and reclamation of the submerged portion of SRI’s property for the relocation of squatters. SRI filed with the Ombudsman a criminal complaint against Torres for violation of the Anti-Graft & Corrupt Practices Act. Ombudsman charged Torres & Alvarez. Subsequently, the Republic of the Philippines filed with the RTC a complaint against SRI for reversion of the property back to the State. The Republic alleged that said property had been ascertained by the DENR to be part of Manila Bay. Torres and Alvarez filed a motion with the Sandiganbayan for the suspension of the proceedings in the criminal case on the 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 to the institution of the criminal action. In this case, the information was filed with the Sandiganbayan ahead of the civil case. Thus, no prejudicial question exists. 4. Subsidiary Liability

Art. 102. Subsidiary civil liability of innkeepers, tavernkeepers and proprietors of establishments. — In default of the persons criminally liable, innkeepers, tavernkeepers, and any other persons or corporations shall be civilly liable for crimes committed in their establishments, in all cases where a violation of municipal ordinances or some general or special police regulation shall have been committed by them or their employees.

Innkeepers are also subsidiarily liable for the restitution of goods taken by robbery or theft within their houses from guests lodging therein, or for the payment of the value thereof, provided that such guests shall have notified in advance the innkeeper himself, or the person representing him, of the deposit of such goods within the inn; and shall furthermore have followed the directions which such innkeeper or his representative may have given them with respect to the care and vigilance over such goods. No liability shall attach in case of robbery with violence against or intimidation of persons unless committed by the innkeeper's employees.

Art. 103. Subsidiary civil liability of other persons. — The subsidiary liability established in the next preceding article shall also apply to employers, teachers, persons, and corporations engaged in any kind of industry for felonies committed by their servants, pupils, workmen, apprentices, or employees in the discharge of their duties. 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 of such duties); and (d) that said employee is insolvent. a. Concept and Requisites
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 84

Yonaha v. CA and the Heirs of Ouano Ouana, allegedly a driver of Evelyn Yonaha, was charged with and convicted of Reckless Imprudence Resulting In Homicide – he ran over and killed Hector Cañete. Ouano pleaded guilty and the trial court sentenced him to imprisonment and to pay the heirs of Cañete a total of P90k in damages. A writ of execution was issued for the satisfaction of the monetary award but the writ was returned unsatisfied after Ouano manifested his inability to pay the monetary obligation. The heirs of Ouano filed a motion for subsidiary execution and the trial court, without notice or hearing to Yonaha, ordered the issuance of a writ of subsidiary execution. The sheriff went to Yonaha's residence to enforce the writ, and it was then, allegedly for the first time, that Yonaha was informed of Ouano's conviction. Yonaha filed a motion to stay and to recall the subsidiary writ on the ground of denial of due process and on the fact that 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 criminal case, but to afford the employer due process, the court should hear and decide that liability on the basis of the conditions required therefor by law. There is a need for notice and hearing to determine whether the requisites for the subsidiary liability of an employer under Art. 103 of the RPC are present. Catacutan v. Heirs of Kadusale Driver hit a tricycle, killing its driver and passenger. He was convicted of reckless imprudence resulting in double homicide with physical injuries and damages to property and was sentenced to imprisonment & to pay damages. The writ of execution was returned unsatisfied as the driver had nothing to pay off the damages in the decision. A subsidiary writ of execution was served on his employer. Employer opposed claiming that she was never a party to the criminal case, and to proceed 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 the employer was not given due process. She was furnished a copy of the motion for subsidiary writ of execution to which she filed her opposition. Thus, she is deemed to have been given notice and hearing. b. diligence not a defense Connel Brothers Company v. Aduna Aduna, employed as a driver by Ex-Meralco Employees Transportation Company (EMETCO), while driving the latter’s bus in a negligent manner, bumped an Oldsmobile car owned by Connel Brothers Company. 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 imprudence and had served his prison sentence. At the trial of said criminal case, the injured parties reserved their right to file the corresponding civil suit for damages. The civil case was filed and Aduna and EMETCO were adjudged to be liable for damages, despite EMETCO’s allegation of diligence in selection and supervision. 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 which to recover damages: via the offender’s civil liability arising from conviction of a crime or via the offender’s civil liability arising from quasi-delict.
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 85

If he chooses the criminal avenue, and an employer’s subsidiary liability is sought to be enforced, the conviction of the employee is conclusive on the employer and the latter may be made to pay in the event that the former is insolvent. Here, the guilt of the accused must 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’s solidary liability attaches unless he proves diligence in the selection and supervision of the employee 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 case against Aduna or upon his civil liability arising from crime. There was no evidence presented in the civil 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. 2. 3. 4. 5. 6. Actual or compensatory; Moral; Nominal; Temperate or moderate; Liquidated; or 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 the plaintiff. Examples: A robber steals a ring. Actual damages = value of the ring Someone beats you up. Actual damages = expenses for going to the hospital, doctor, medicine Contract with supplier of raw materials. Supplier fails to comply and because of that, the buyer fails to manufacture his products. Actual damages = unrealized profit.

2.

Moral – Moral damages include: a. physical suffering b. mental anguish
86

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

c. d. e. f. g. h. i.

fright serious anxiety besmirched reputation wounded feelings moral shock social humiliation similar injury

Examples: Someone beats you up. Moral damages = pain, physical suffering Someone kills your wife. Moral damages = moral suffering, which is presumed by law once a family member dies.

3.

Nominal – Adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying 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 when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty. Example: Evidence presented at the trial to show the value of the damage was wrong, but the damage 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, the contractor 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, in addition to the moral, temperate, liquidated or compensatory damages. Example: When offender acted with evident bad faith and malice, such as in crimes attended by aggravating circumstances.

General Principles of Damages: 1. 2. The amount should be fair and just and commensurate to the damage. 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 present documentary evidence, such as receipts. But you probably don’t keep the receipts of your jewelry around, so you can also present testimonial evidence of an expert witness, such as a jewelry 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 would have produced.
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 87

Client appealed a case that he lost. His lawyer failed to file appellant’s brief, so his appeal was dismissed. Client filed for damages against the lawyer, claiming that he would have been awarded P1M by the appellate court had the brief been filed. SC held that this was too speculative. Client was proceeding from the assumption that he would win the case on appeal, when the probability of this happening was not very high since he already lost in the lower court. But the SC ordered the lawyer to pay damages for his gross negligence in failing to 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, and exemplary damages. This is because So Ping Bun was not motivated by any malicious intent in prevailing upon DCCSI to lease the warehouse to his enterprise at the expense of Tek Hua. Hence, he cannot be deemed a malicious interferor. However, this does not mean that So Ping Bun is totally exempt from liability. He is still liable for attorney’s fees. The recovery of attorney’s fees in the concept of actual or compensatory damages, is allowed under the circumstances provided for in Art. 2208 of the Civil Code. One such occasion is when the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. But it has been consistently held that the award of considerable damages should have clear factual and legal bases. In connection with attorney’s fees, the award should 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 review such that the award, if far too excessive, can be reduced. This ruling applies with equal force on the award of attorney’s fees. In a long line of cases, it has been said that it is not sound policy to place a penalty on the right to litigate. In this case, considering that the lease contract of Tek Hua ran only on a month-to-month basis, the SC 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 was delivered 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 on the ground that there was no report of mishandled baggage on flight PR 722, and no tracer telex from its Viena Station. It also claimed that if it is at all liable, its obligation was limited by the Warsaw Convention 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 of his baggage. In breach of contract of carriage by air, moral damages are awarded only if the defendant acted fraudulently or in bad faith. There was no bad faith on the part of PAL. In fact, upon complaint, it immediately coordinated with its central baggage services to trace the bag and found it. Exemplary damages cannot be awarded either. In case of contracts and quasi contracts, the defendant must
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 88

have acted in a fraudulent, oppressive, reckless, or malevolent manner for exemplary damages to be given. 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 a neighbor, Lolita Tigley, and robbed certain articles such as jewelry, a rolex watch, P200 cash, and a telescope, all valued at P180 K. They then hogtied Paraiso’s 4 children, afterwhich they took Tigley to another room and stabbed her to death. The lower court then held that Paraiso was guilty beyond reasonable doubt of the special complex crime of robbery with homicide attended by 3 aggravating circumstances: disregard of the respect due the victim on account of her sex, that the act was committed in the victim’s dwelling without provocation 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 moral damages (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 is awarded for the death of the victim Tagley. No other proof is necessary other than the fact of the death of the victim and the accused’s responsibility therefor. As regards moral damages, such is in order because of the obvious pain, anguish, and grief suffered by the victim’s children. However, since the purpose of such an award is not to enrich the victim’s children but to compensate them for the injuries to their feelings, the amount of P200K is reduced to P100 K. As regards exemplary damages, the presence of one or more aggravating circumstances justifies such after proof that the offended party is entitled to moral, temperate, or compensatory damages. However, in this case the amount of P100 K is reduced to P50 K as such is already reasonable. As regards actual damages, such can only be premised upon competent proof and on the best evidence obtainable. In this case, except for the amount of P200 cash, the value of the rest of the stolen articles (jewelry, rolex, etc) are not matters of public knowledge and in the absence of receipts or any other competent evidence besides the self-serving valuation of the prosecution, the award of actual damages should be reduced from P200K to P200 as this was the only amount which was sufficiently proven by the prosecution witnesses.

2.

3.

4.

Victory Liner v. Malecdan Andres Malecdan was a 75 year-old farmer. While crossing the street, he was hit by a Victory Liner bus, along with the carabao he was riding. Both Andres and the carabao died. A criminal complaint for 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. The RTC held that Joson was negligent in driving the bus, while Victory Liner was guilty of negligence in the 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;
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 89

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; and f. 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 amount of loss incurred in connection with the death, wake or burial of the victim. Receipts showing expenses incurred some time after the burial of the victim, such as expenses relating to the 9th day, 40th day and 1st year death anniversaries, should not be taken into account. In this case, the trial court awarded P88,339.00 as actual damages. While these were duly supported by receipts, these included the amount of P5,900.00, the cost of one pig which had been butchered for the 9th day death anniversary of the deceased. This item cannot be allowed. Therefore, the amount of actual damages is reduced to P82,439.00.00. Moral Damages: The award of P200,000.00 for moral damages should likewise be reduced. The trial court found that the wife and children of the deceased underwent “intense moral suffering” as a result of the latter’s death. Under Art. 2206 of the Civil Code, the spouse, legitimate children and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. Under the circumstances of this case, an award of P100,000.00 would 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 cases involving quasi-delicts if the defendant acted with gross negligence. Exemplary damages are imposed not to enrich one party or impoverish another but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions. In this case, petitioner’s driver Joson, Jr. was grossly negligent in driving at such a high speed along the national highway and overtaking another vehicle which had stopped to allow a pedestrian to cross. Worse, after the accident, Joson, Jr. did not stop the bus to help the victim. Under the circumstances, the trial court’s award of P50,000.00 as exemplary damages is proper. Attorney’s Fees: Private respondents are entitled to attorney’s fees. Under Art. 2008 of the Civil Code, attorney’s fees may be recovered when, as in the instant case, exemplary damages are awarded. In the recent case of Metro Manila Transit Corporation v. Court of Appeals, an award of P50,000.00 as attorney’s fees was held to be reasonable. Hence, private respondents are entitled to attorney’s fees in that amount. 3. Actual Damages Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages. Art. 2200. Indemnification for damages shall comprehend not only the value of the loss suffered, but also that of the profits which the obligee failed to obtain.

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

90

Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation.

Art. 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural and probable consequences of the act or omission complained of. It is not necessary that such damages have been foreseen or could have reasonably been foreseen by the defendant.

Art. 2203. The party suffering loss or injury must exercise the diligence of a good father of a 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 permanent personal 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 from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs 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, the legal interest, which is six per cent per annum. Article 2199 provides the general rule that one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. The exceptions are: 1. 2. provided by law: example is the fixed indemnity. If someone is killed, automatically, an indemnity of 50K is awarded. There is only a need to prove the fact of death. stipulation: if the parties stipulate the amount of damages in case of breach of contract, it becomes liquidated damages.

Actual damages may be: 1. Under Article 2200 a. value of the loss suffered b. 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 in his pocket. X and Y are liable for 100K in actual damages because they are liable for all the
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 91

damages attributed to their criminal act, even if they did not know of or contemplate the loss of the 100K. 2. Under Article 2205 a. 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 do the same job as before because of the injury how to prove this: present documentary evidence, such as the ITR, payroll b. injury to the plaintiff’s business standing or commercial credit how to prove this: present documentary evidence, such as contracts for future business or comparison or earnings before and after the injury. Fixed indemnity – The law provides a fixed indemnity in certain cases, such as death, rape, seduction, etc. For death: 50K. Loss of earning capacity – This presupposes that the person concerned is dead. How to compute: 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 2 How do you prove the net earnings per year: a. b. documentary evidence: ITR, payroll Oral testimony on minimum wage (but this is not always admitted) x life expectancy

3. 4.

The net earnings of the deceased is divided by two since the law presumes that half of it goes to his living expenses. But if other evidence is presented to establish the actual personal expenses of the deceased, then this figure may be used instead. 5. Interest Rules: a. b. If there is a stipulation as to the rate of interest, apply the rate unless it is contrary to law, morals, and good customs, in which case apply the legal rate. 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 of damage, the legal rate or interest is 6% computed as follows: (a) from date of demand if the amount of indemnities can be established with 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 or credits as well as judgment involving such loan or forbearance, the legal rate of interest shall be 12% per annum computed from default, that is, from judicial or extrajudicial demand.

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

92

(3) In both cases, the legal rate of interest shall be 12% from the finality of judgment 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 in the realty business and was earning P20,000 a month on the average. One day, they were on the way to a meeting where Rose would buy a land which she intended to resell at a profit of P200,000 when a speeding 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 land was lost or stolen. Compute for the actual damages. 2. Under Article 2200 a. value of the loss suffered: Hospital expenses Funeral expenses Car Money lost b. P100K P80K P500K P50K

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. 5.

Fixed indemnity: 50K for death of Andrew 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 Interest: 6%

6.

PNOC Shipping v. CA The plaintiff tried to prove actual damages by presenting his general manager who testified as to the value of the property damaged and also by presenting documentary evidence in the form of brochures quoting 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 to prove the actual amount of loss with reasonable degree of certainty premised upon competent proof on the best evidence available. In this case, actual damages were proven through the sole testimony of Maria Efigenia’s general manager and certain pieces of documentary evidence. The testimony of the general manager as to the valuation of the ship is not reliable because he is an interested party and because it was not within his
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 93

competence to determine the value of the property. On the other hand, the documentary evidence in the form of brochures are not admissible for being hearsay evidence. They do not constitute an exception to the hearsay rule since they are not commercial lists. Since the persons who prepared them were not presented in court, they cannot be admitted in evidence. Nominal damages were awarded instead. [Though, in reality, they should have been called temperate damages – 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 do business in the Philippines, organized under the laws of California. American Realty Corp. (ARC) is a domestic corporation. Bank of America Limited (BAIL) is a limited liability company organized under the laws of England. BANTSA and BAIL extended multi-million dollar loans to three corporate borrowers, all of which were existing under the laws of Panama and were foreign affiliates of ARC. The borrowers defaulted in payment, so they entered into a restructuring agreement with BANTSA. As additional security for the restructured loans, ARC, as third party mortgagor, executed two REMs over its parcels of land in Bulacan. The corporate borrowers defaulted, prompting BANTSA to file civil actions for collection before foreign courts (England and Hong Kong). ARC was not impleaded in this civil actions filed before foreign courts. Subsequently, BANTSA filed before the Office of the Provincial Sheriff of Bulacan an application for extrajudicial 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 mortgages despite 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 in extrajudicially foreclosing the REM constituted a clear violation of the rights of ARC as third party mortgagor. This is because BANTSA, in filing a collection case, had effectively abandoned or waived its 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 flimsy and non-substantial, no damages will be given. In this case, the valuation of the real properties which ARS lost as a result of the foreclosure was made by the Philippine Appraisal Company in a 23-page report. This was corroborated by the testimony of another witness presented by ARS. The judge also conducted an ocular inspection of the property. Based on these considerations, the SC affirms the ruling 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 is proved by evidence, and the adverse party was given the opportunity to refute and object to the evidence. 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 loss suffered, 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 acted in good faith is liable shall be those that are the natural and probable consequences of the
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 94

breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. People v. Degoma The Tagbilaran Friendly Bazaar was a victim of robbery on the evening of April 12, 1988, in the sums of US$300 and P200. During such robbery, the security guard of the store, Alexander Parilla, was allegedly shot and killed with the use of a firearm by Efren Degoma, who was one of the robbers. The lower court found the accused guilty and also ordered them to jointly and severally indemnify the owners of the Tagbilaran Bazaar the sum of P200.00 and the equivalent exchange rate prevailing for US$300, indemnify the heirs of Alexander Parilla in the sum of P36,000 for his death, P200,000 for moral 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 of the act or omission complained of. To seek recovery for actual damages, it is necessary to prove with a reasonable degree of certainty, premised upon competent proof and on the best evidence obtainable by the injured party the actual amount of loss. Courts cannot simply assume that damages were sustained by the injured party, nor can it rely on speculation or guesswork in determining the fact and amount of damages. In this case, the award of actual damages in the amount of P87,947.94 is not sustained by a review of the evidence of record. Of the expenses allegedly incurred, the Court can only give credence to those supported by a receipt and which appear to have been genuinely incurred in connection with the death, wake, or burial of the victim. The court cannot take account of receipts showing the following expenses: 1. 2. those incurred before the date of the slaying of the victim; 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 the victim at P10,175.85. The Court off-sets the amount of P6,400, representing the alms received by the heirs of the victim against the amount of P10,175.85, leaving the amount of P3,775.85 as the actual amount 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 present jurisprudence. Asuncion v. Evangelista

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

95

Evangelista in the 70s was the sole proprietor of a piggery. After a decade, he had it incorporated as Embassy Farms Inc. He was the majority stockholder of the corporation, with 90% of the shares in his name. He obtained loans from numerous banks and owed the millions. He was only able to pay around P200,000 of these debts. He probably then had no choice but to cede his treasured piggery to a rich fellow named Asuncion under a Memorandum of Agreement whereby Asuncion would pay the loans of Evangelista and Evangelista would in turn transfer to Asuncion his interest in Embassy Farms as well as title to several properties that he had mortgaged, free from the encumbrance. Asuncion regularly paid Evangelista the amounts that he was required to pay under the MOA. When Asuncion demanded that Evangelista transfer title to the shares and to the mortgaged properties, Evangelista refused. Asuncion later found out that some of the mortgaged properties had already been foreclosed. He thereafter filed for rescission of the MOA. The RTC found that it was Asuncion who breached the MOA; hence, it was Evangelista who was entitled to rescission and damages. The trial court declared the MOA rescinded and ordered Asuncion to pay Evangelista P32M as actual or compensatory damages arising from the rescission of the MOA. Asuncion was further ordered to pay around 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 to damages 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 to pay Evangelista’s overdue loans was justified, considering that Evangelista was the first to refuse to deliver to Asuncion the properties and certificates of stock that were the consideration for the almost 6 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 or compensatory damages cannot be presumed but must be duly proved with reasonable degree of certainty. Neither may the Court allow the grant of damages corresponding to the value of the land foreclosed by the creditors of Evangelista upon the latter’s failure to make his loan payments. Evangelista, in his amended counterclaim, prayed for the rescission of the MOA. In case of rescission, while damages may be assessed in favor of the prejudiced party, only those kinds of damages consistent with the remedy of rescission may be granted, keeping in mind that had the parties opted for specific performance, other kinds of damages would have been called for which are absolutely distinct from those kinds of damages accruing in the case of rescission. In this case, compensatory damages consisting of the value of Evangelista’s landholdings would have been proper in case he resorted to the remedy of specific performance, not rescission. Since his counterclaim prayed for the rescission of the MOA, it was grave error for the lower court to have enforced said agreement by ordering Asuncion to pay him the value of the landholdings. However, Asuncion is not entitled to recover the amount of P3M that he spent in compliance with his undertaking under the MOA. Mutual restitution is required in rescission, but this presupposes that both parties may be restored in their original situation. In this case, an essential part of the consideration of the amount of P3M paid by Asuncion was taking over the effective management of Embassy Farms. Mutual restitution would require Asuncion to restore Evangelista on the effective management of said corporation and that Evangelista return the amount to Asuncion. This has been rendered impossible by the foreclosure of the landholdings of Evangelista and the shutdown of the piggery’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 permanent personal injury; (2) For injury to the plaintiff’s business standing or commercial credit.
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 96

PNB v. CA Lily Pujol opened with PNB an account denominated as “Combo Account”, a combination of Savings Account and Current Account in her business name “Pujol Trading” under which checks drawn against her checking account could be charged against her savings account should the funds in her current account 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 were dishonored 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, PNB subsequently accepted and honored it. Lily, however, filed with the RTC a complaint for moral and exemplary damages against PNB for dishonoring her checks despite sufficiency of her funds. The trial court rendered a decision ordering PNB to pay Lily moral damages of P100,000 and atty’s fees of P20,000. it found that Lily had suffered mental anguish and besmirched reputation as a result of the dishonor of her checks, and that being a former member of the judiciary who was expected to be the embodiment of integrity and good behavior, 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. Responsibility arising from negligence in the performance of every kind of obligation is demandable. While PNB’s negligence in this case may not have been attended with malice and bad faith, nevertheless, it caused serious anxiety, embarrassment and humiliation to Lily for which she is entitled to recover reasonable moral damages. In the case of Leopold Araneta v. Bank of America it was held that it can hardly be possible that a customer’s check can be wrongfully refused payment without some impeachment of his credit which must in fact be an actual injury, although he cannot, from the nature of the case, furnish independent and distinct proof thereof. Damages are not intended to enrich the complainant at the expense of the defendant, and there is no hard and fast rule in the determination of what would be a fair amount of moral damages since each case must be governed by its own peculiar facts. The yardstick should be that it is not palpably and scandalously excessive. In this case, considering the reputation and social standing of Lily, the award of damages is reasonable. c. Fixed Indemnity Art. 1764. Damages in cases comprised in this Section (Common Carriers) shall be awarded in accordance with Title XVIII of this Book, concerning Damages. Art. 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier. Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least 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, and the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of his death; (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
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 97

or intestate succession, may demand support from the person causing the death, for a period not exceeding five years, the exact duration to be fixed by the court; (3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may 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 an accident with a jeepney where two Maranaos were killed. The Philippine Constabulary heard reports that other Maranaos were planning to take revenge on Fortune by burning some of its buses. The operations manager of Fortune assured the constabulary that the necessary precautions would be taken 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 to get off. One Atty. Caorong returned to the but to get something from the overhead rack. When he saw that the Maranaos were pouring gasolinve over the head of the driver, he pleaded with them to spare 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. Caorong from 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 the ambush was an event that could not be foreseen and not liability should attach to Fortune. It further claimed 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 the event was not unforeseen, as Fortune had been previously warned that there was a possibility that one of its buses would be ambushed, and that frisking should at least have been resorted to as a safety 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 injuries suffered by its passengers and for the death of Atty. Caorong. This is not a case of force majeure because Fortune had sufficient warning. Also, Atty. Caorong was not guilty of contributory negligence when he went back to the bus. The target of the assailants was the bus and not the passengers. His protracted stay inside was due to his desire to save the life of the driver. Thus, his act could not be considered an act of negligence, let alone recklessness. INDEMNITY FOR DEATH: Art. 1754 of the Civil Code, relative to Art. 2206 thereof, provides for the payment of indemnity for the death of passengers caused by the breach of contract of carriage by a common carrier. Initially fixed at P3,000 by Art. 2206, the amount has been increased gradually in view of the declining value of the peso. It is presently fixed at P50,000. The heirs of Atty. Caorong are entitled to this amount. They are also entitled to actual, moral and exemplary damages and attorney’s fees. They are also entitled to compensation for the loss of earning capacity in addition to indemnity 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 were gone, Baldos tried to rape Criselle but could not penetrate the latter’s vagina as it was too damn small.

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

98

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 was sentenced 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 circumstances under Art. 335 RPC for which the penalty of death is imposed, the civil liability for the victim shall be fixed at not less than P75K. In this case, since the rape is qualified by the fact that the victim was less than 7 years old at the time of the crime, the penalty of death is thus imposed and the civil liability 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 such crimes may also avail of moral damages. Therefore, in line with current jurisprudence, Criselle is thus also 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 at least 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, and the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of his death; (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 a period not exceeding five years, the exact duration to be fixed by the court; (3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may 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 of Davila, 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 of Davila to a larger amount. HELD: Yes, more than double pa nga dapat eh. Wanna know why? Read on then…
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 99

The deceased was employed as a manager of a radio station, from which he was earning P8,400 a year, consisting of a monthly salary of P600 and allowance of P100. As a lawyer and junior partner of his father in the law office, he had an annual income of P3,600. From farming, he was getting an average 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 the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter.” This article, while referring to “damages for death caused by crime or quasi-delict,” is expressly made applicable by Article 1764 “to the death of a passenger caused by the breach of contract by a common carrier.” The deceased, Pedro Davila Jr. was single and 30 years of age when he died. At that age, one’s normal life expectancy is 33-1/3 years, according to the formula (2/3 x [80 – 30]) adopted by this Court in the case of Villa Rey Transit Inc. v. CA on the basis of the American Expectancy Table of Mortality or the Actuarial of Combined Experience Table of Mortality. However, although the deceased was in relatively good health, his medical history shows that he had complained of and had been treated for such ailments as backaches, chest pains, and occasional feelings of tiredness. It is reasonable to make an allowance for these circumstances and consider, for purposes of this case, a reduction of his life expectancy to 25 years. In the same case of Villa Rey Transit, this court stated: “…earning capacity, as an element of damages to one’s estate for his death by wrongful act is necessarily his net earning capacity or his capacity to acquire money, less the necessary expense for his own living.” Stated otherwise, the amount recoverable is not loss of the entire earnings, but rather the loss of that portion of the earnings which the beneficiary would have received. In other words, only net earnings, not gross earnings, are to be considered, that is the total of the earnings less expenses necessary in the creation of such earnings or 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 incidental to the generation of such income were necessarily more than if he had only one source. Together with his living expenses, a deduction of P600 a month, or P7,200 a year seems reasonable, leaving a net yearly income of P7,800. This amount, multiplied by 25 years, or P195,000, is the amount which should be awarded to the plaintiffs. People v. Jerez

Jerez went around town looking for a carabao buyer. Reynaldo Ochoa and Joselito Balbastro expressed interest. Jerez told them that the carabaos were in Barangay Teddy, so the three took a tricycle to Barangay Tedd to check the condition of the carabaos. It was the last time, however, that the two were seen alive. When the latter failed to return the following day, a search was conducted. The bodies of Reynaldo and Joselito were later found lifeless, having sustained several mortally-inflicted stab wounds in different parts of their bodies. The victims were divested of their watches, rayban glasses, and a sum of money amounting to P37,000.00. Jerez was convicted of robbery with double homicide. The RTC ordered him to pay damages to the heirs of Reynaldo and Joselito, including P100,000 for loss of earning capacity. The RTC computed loss of earning capacity using the following formula: estimated income x life span.

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

100

ISSUE: Whether the RTC used the correct formula in computing loss of earning 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 - age of the victim at the time of death]). Thus, the award for loss of earning capacity for each victim shall be 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 crossing Katipunan Road. The driver was found guilty of reckless imprudence and the employers were found solidarily liable. The parents raised this appeal for an increase of amount of damages awarded to them. ISSUE: Whether petitioners are entitled to be compensated for loss of earning capacity of their minor child, 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 or quasi-delict, the “defendant shall be liable for loss of earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter…” Compensation of this nature is awarded not for loss of earnings but for loss of capacity to earn money. Evidence must be presented that the victim, if not yet employed at the time of death, was reasonably certain to complete training for a specific profession. 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 guidance counselor testified and a faculty member of UP Fine Arts who had been conducting workshops with her every 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 have enjoyed a successful professional career had it not been for her untimely death. Hence, it is proper that compensation for loss of earning capacity should be awarded to her heirs in accordance with the formula established for computing net earning capacity in decided cases:
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 101

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 the deceased. 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 nonagricultural sector in effect at the time of her death, then fixed at P37.00 is P14,630.46. Allowing for necessary living expenses of 50% of her projected gross annual income, her total net earning capacity amounts to P321,870.00.

e. Interest Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs 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, the legal interest, which is six per cent per annum. Art. 2210. Interest may, in the discretion of the court, be allowed upon damages awarded for breach of contract. Art. 2211. In crimes and quasi-delicts, interest as a part of the damages may, in a proper case, be adjudicated in the discretion of the court. Art. 2212. Interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent upon this point. Art. 2213. Interest cannot be recovered upon unliquidated claims or damages, except when the demand can be established with reasonably certainty.
Eastern Shipping v. CA Two drums of riboflavin were shipped from Japan for delivery on board the vessel “SS EASTERN COMET” owned by Eastern Shipping Lines. The shipment was insured by Mercantile Insurance Company. When the shipment arrived in Manila, one drum was found to be in bad order. As a result of the alleged fault and negligence of both Eastern Shipping Lines, the Metro Port Service, and the Allied Brokerage Corporation, the insurance company had to pay the consignee of the shipment around 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 the consignee against the defendants.

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

102

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. 2. Whether the interest should commence from the date of the filing of the complaint or from the date of the decision of the trial court. 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 the court a quo. A 12% interest, in lieu of 6%, shall be imposed on such amount upon finality of this decision until the payment thereof. When an obligation, regardless of its source (law, contracts, quasi-contracts, delicts, quasi-delicts) is breached, the contravenor can be held liable for damages. With regard to an award or interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed as follows: 1. When the obligation is breached, and it consists in the payment of a sum of money (i.e., a loan or forbearance of money), the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time 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 and subject to the provision of Article 1169 of the Civil Code. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except 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 run from the time the claim is made judicially or extrajudicially but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base of the computation of legal interest shall, in any case, be on the amount finally adjudged. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2 above shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

2.

3.

Medel v. CA Servando Franco and Leticia Medel obtained several loans from Veronica Gonzales at 6% interest per month. Due to their failure to pay the loans upon maturity, Franco and Medel consolidated all said loans bringing their indebtedness to a total of P500K, and executed a promissory note to cover said amount 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 filed against them by Gonzales. The lower court held that although the usury law was repealed, the interest charged by Gonzales was unconscionable and was therefore invalid. The CA however upheld the validity of the aforementioned stipulated interest and held that since the usury law was repealed, the lender 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?
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 103

HELD: No. Although Circular case of 5.5% per law and morals. reduce liquidated unconscionable. No. 905 of the Central Bank expressly repealed the usury law, the interest in this month or 66% per annum is iniquitous or unconscionable, and hence contrary to Such a stipulation of interest is void and the courts in such a case shall equitably damages, whether intended as an indemnity or a penalty, if they are iniquitous and

In this case, due to the iniquitousness of the stipulated interest, the SC imposed the “legal rate of interest for loan or forbearance of money, goods, or credit” which was 12% per annum, plus an additional 1% monthly penalty charge. David v. CA In a civil case between Jesus David (as plaintiff) and Peña and Afable (as defendants), Judge Diaz ordered 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 public auction. The Sheriff informed David that the total amount of the judgment was around P270K, which included a computation of simple interest. David claimed that the judgment award should be around P3M 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 auctioned properties. However, the Sheriff did not issue the Certificate of Sale because David did not pay the bid price. The Sheriff contended that the sale was not consummated since David had failed to pay around P2.94M of the bid price. The P2.94M was computed by deducting from the bid price of P3M the judgment award to which David was entitled in the amount of P270K. According to David, on the other 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 has accrued when demand was judicially made. In case where no interest had been stipulated by the parties, no accrued conventional interest could further earn interest upon judicial demand. In this case, no interest was stipulated by the parties. Therefore, David is not entitled to compounding interest. Example in class: First Metro Investment Corp case Loan agreement with fixed interest at 18%, plus officers of the bank were to be employed as consultants of the debtor for a fee. Held: Consultation fee is actually disguised interest. It is unconscionable and should be struck down. 4. Moral Damages Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act for omission. Art. 2218. In the adjudication of moral damages, the sentimental value of property, real or personal, may be considered.

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

104

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 this article, may also recover moral damages. The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned 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 if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith.

Art. 309. Any person who shows disrespect to the dead, or wrongfully interferes with a funeral shall be liable to the family of the deceased for damages, material and moral.

Francisco v. Ferrer
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 105

The wedding cake was not delivered on the wedding day. They had to eat sans rival instead. Moral damages were awarded in favor of the plaintiffs. Another case: The bride and groom hired someone to cover their wedding on video. But nothing was recorded on video kasi wala yatang lamang tape. Moral damages were not awarded because there was no bad faith. Just nominal damages. Requisites of award of moral damages: 1. 2. 3. One of the grounds under article 2177 (physical suffering, mental anguish, etc.) must be present. Such must be the proximate effect of the tortious act (fraud/bad faith). 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 medical records.

The wording of Article 2219 says that moral damages “may” be awarded, not “shall.” This is because in 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 also provides a fixed indemnity, which is 50K. For qualified rape, it is 75K. This fixed indemnity is different and apart from the moral damages under 2219 (3). Fixed indemnity is given for every count of 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 the body or chopping it up. Cases when moral suffering is presumed: 1. 2. 3. rape murder homicide

a. Amount of Award Moral damages must be proven, but the amount is determined by the judge. Plaintiff must prove the legal basis for the award; actual amount is up to the judge. Factors in determining the amount of moral damages: 1. 2. political, social, financial standing of offended party and offender mental anguish Example: Compare the mental anguish of two mothers whose sons died in two different incidents. One son was shot to death, and he died instantly. The other son was partying at Ozone when it burned down. He suffered for several weeks with painful burns before he finally died. The mental suffering of the Ozone victim’s mother is greater than that of the mother of the son who was shot to death, since the former had to watch as her son had to withstand the agony of the burns. 3. Sentimental value Example: Two rings – one with a huge stone that you won at a raffle and another with a tiny stone that was given to you by your one true love. Of course, the sentimental value of the second ring is greater.
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 106

Lopez v. PANAM Senator Lopez and his family were inadvertently bumped off first class and had to take coach. They sued 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 family suffered social humiliation, mental anguish, serious anxiety. A lot of schwar schwar on him being a senate president pro tempore, prestigious sya eklat. According to SC-- It may not be humiliating to travel as tourist passengers; it is humiliating to be compelled to travel as such, contrary to what is rightfully to be expected from the contractual undertaking. In conclusion, SC wanted to stress that amount of damages awarded in this appeal has been determined by adequately considering the official, political, social, and financial standing of the offended parties on the one hand, and the business and financial position of the offender on the other, And further considering the present rate of exchange and the terms at 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 economy class, 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 had overbooked. 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 practice in the COde of Federal Regulations in the Civil Aeronautic Board. HOwever, there was no document presented as evidence to that effect. ONly the sole statement of TWA's customer service agent was relied 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 informing its passengers beforehand that it could breach the contract of carriage even if they had confirmed tickets, in the event of overbooking. TWA should have incorporated stipulations in overbooking on the tickets or properly inform its passengers about such policies so that the passengers may be prepared for such an eventuality, or would have the choice of riding on 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 was found that the check bounced because the bank had made a mistake in crediting her deposits to another account. ISSUE: Whether Valenzuela is entitled to moral damages. HELD: Yes, Valenzuela is entitled to moral damages.
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 107

Prudential claims that Valenzuela is not entitled to moral damages because it acted in good faith and committed an honest mistake. This is untentable. As a business affected with public interest and because of the nature of its functions, the bank is under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship. Even if malice or bad faith was not sufficiently proved in this case, the fact remains that the bank committed a serious mistake. The bank’s negligence was the result of lack of due care and caution required of managers and employees of a firm engaged in so sensitive and demanding a business as banking. 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 only when there was fraud, malice, or bad faith. When the party breaching the contract is a bank, in the exercise of its fiduciary capacity, there is no need for bad faith in order for the moral damages to be awarded. c. malicious prosecution Elements of Malicious Prosecution: 1. 2. 3. 4. There must be a baseless prosecution The one who filed the criminal action must be aware that there was no probable cause There must be a dismissal of the criminal case at the time of the preliminary investigation (indicating that there was no probable cause) Malice

Lao v. CA Lao was presented as a witness in a case filed by his employer against Espiritu. The case was filed by the 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 was his employer that was the complainant in the estafa case against Espiritu. Lao was only a witness, not the prosecutor in the estafa case. Moreover, there was probable cause for the charge of estafa against Espiritu, as found and certified by the investigating fiscal himself. Lao was not motivated by malice in making the affidavit upon which the fiscal based the filing of the information against Espiritu. He executed it as an employee, a salesman of the St. Joseph Lumber from whom Espiritu made his purchases of construction materials and who, therefore, had personal knowledge of the transaction. Although the prosecution of Espiritu for estafa did not prosper, the unsuccessful prosecution may not be labelled as malicious. [Note in this case that the decision of the CA finding Lao guilty of malicious prosecution had already become final and executory. But since Lao was deprived of due process due to the negligence of the lawyer, which was why he lost the case, and he had a valid defense against malicious prosecution, the SC allowed the action for annulment of judgment.] Lao v. CA G.R. 109205, 18 April 1997 Deuna pointed out to the police a jeepney used in running over Eduardo. The owner could not be found, so the police left word at the residence of the alleged driver that the jeepney was taken to the police 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
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 108

complaint was dismissed by the prosecutor/DOJ for lack of probable cause. Deuna filed an action for malicious 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 of malice 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 cannot validly claim that prior to the filing of the complaint for carnapping, she did not know the whereabouts of the vehicle. That there was no probable cause for the filing of the carnapping charge against and Frank led to the dismissal of the case. The vehicle was taken by policemen and brought to the station in 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 against labor 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 company terminated his services. Madolid filed a complaint with the Labor Arbiter, claiming that he was illegally dismissed. He asked for reinstatement, with full backwages, as well as moral and exemplary damages. 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. Moral and exemplary damages are recoverable only where the dismissal of an employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence, for the law always presumed good faith. It is not enough that one merely suffered sleepless nights, mental anguish, serious anxiety as the result of the actuations of the other party. Invariably, such action must be shown to have been willfully done in bad faith or with ill motive, and bad faith or ill motive under the law cannot be presumed but must be established with clear and convincing evidence. In this case, Madolid predicated his claim for such damages 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 by which the management of PLDT made the performance evaluation of its employees. He repeatedly complained about the rating system being unfair. After three years, Santos, his superior, transferred him to another office of the PLDT. His new position was actually a functionless position, with no office and staff, and without any opportunity to get any promotion or wage increase. Paguio complained to Ferido, a VP of PLDT, but the latter affirmed the authority of Santos to reassign employees according to 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 of management already arrived at, short of insubordination. Enrique Perez, COO of PLDT, affirmed the action taken by Ferido and explained to Paguio that his transfer was not in the nature of a disciplinary action that required compliance with the process of “investigation, confrontation, and evaluation”
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 109

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 manner that 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 to control the structure of its organization. The right to transfer or reassign an employee is decidedly an employer’s exclusive right and prerogative. However, such managerial prerogative must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the 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 his disagreement with his superiors with regard to company policies. Paguio is entitled to an award of moral and exemplary damages. In determining entitlement to moral damages, it suffices to prove that the claimant has suffered anxiety, sleepless nights, besmirched reputation and social humiliation by reason of the act complained of. Exemplary damages, on the other hand, are granted in addition to moral damages by way of example or correction for the public good. Furthermore, as Paguio was compelled to litigate and incur expenses to enforce and protect his rights, 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 and financial position of the offender. In this case, an award of P50,000.00 as moral damages, P20,000.00 as exemplary damages and attorney’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 an artificial person and is not capable of feeling pain, moral suffering, etc. However, the court may award damages if, as a result of the act of the defendant, the corporation suffers damage to its goodwill and reputation. Atty. Abaño does not seem to agree with this exception. He says it was in just one old, old case and was never repeated by the SC. Example: A committed a tortious act against Corp X, causing besmirched reputation of the Corporation. As a result, the Corp suffered losses. Is A liable for moral damages to the stockholders of 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, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for 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 any source 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 the right involved and all accessory questions, as between the parties to the suit, or their respective heirs and assigns.
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 110

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 the decision of the court below. However, in this case, there was a 16-year delay in the disposition of this case due to the multiple appeals filed by PAL. Mrs. Padilla herself has already joined her son in the Great Beyond without being able to receive the indemnity she well deserved. Considering how inflation has depleted the value of the judgment in her favor, in the interest of justice, PAL is ordered to 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. As an incentive for traveling with JAL, the flights made an overnight stopover in Japan at the airline’s expense. 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 cancelled indefinitely because NAIA was closed. JAL rebooked them on flights due to depart on June 16. JAL paid for their unexpected overnight stay. Unfortunately, the June 16 flight was also cancelled. JAL informed the stranded passengers that it would no longer shoulder their expenses. The passengers stayed in Japan until the 22nd and were forced 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 duty to provide care and comfort to its stranded passengers when it refused to pay for their hotel and accommodation expenses from June 16 to 21. ISSUE: Whether JAL is liable for the expenses incurred by its stranded passengers brought about by the 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 prevented from resuming its flight to Manila was due to the effects of the Mt. Pinatubo eruption, which was a fortuitous event. However, JAL is not completely absolved from liability. It must be noted that the passengers bought tickets from the US with Manila as their final destination. While JAL was no longer required to defray the passengers’ living expenses during their stay in Japan on account of the fortuitous event, JAL had the duty to make the necessary arrangements to transport the passenger on the first available connecting flight to Manila. JAL reneged on its obligation to look after the comfort and convenience of its passengers when it declassified them from “transit passengers” to “new passengers,” as a result of which 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 an available flight, they were compelled to stay in the airport the whole day of June 22, and it was only at 8 pm of that day that they were advised that they could be accommodated in said flight, which flew at about 9 am the next day. Because of JAL’s failure to make the necessary arrangements to transport the passengers on its first available flight to Manila, an award of P100,000 as nominal damages, in favor of each passenger, is in order. BPI Investment v. CA

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

111

Frank Roa obtained a loan at an interest rate of 16.25% per annum from Ayala Investment and Development Corp (AIDC), the predecessor of BPI Investment, for the construction of a house on his lot in Alabang. The house and lot was mortgaged to AIDC to secure the loan. Roa then sold the house 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’s indebtedness with AIDC. AIDC, however, was not willing to extend the old intrest rate to private respondents, so it granted them a new loan for 500K to be applied to Roa’s debt and secured by the same property, at an interest rate of 20% per annum. The mortgage deed stipulated that the payment 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 of P190,601.35. This reduced Roa’s principal balance to P457,204.90, which in turn, was paid off when BPIC applied thereto the proceeds of private respondents’ loan of 500K. Thereafter, on September 13, 1982, BPI released to private respondents P7,146.87, purporting to be what was left of their loan after full payment of Roa’s loan. Two years later, BPI instituted foreclosure proceedings against private respondents on the ground that they failed to pay their mortgage indebtedness. Private respondents filed a case against BPI, alleging that they were not in arrears in their payment. The trial court ruled that private respondents were not in arrears. It also found that they suffered damages when BPI caused their publication in a newspaper of general circulation as defaulting debtors. It thus awarded moral and exemplary damages. On appeal, the CA found that BPI had no basis in extrajudicially foreclosing the mortgage and publishing in newspapers that private respondents were delinquent debtors. It affirmed the grant of moral and exemplary 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, 1982 since that was the only time when its proceeds were released by BPI to private respondents. Before that time, they had no obligation to pay the monthly amortizations. Their obligation to pay arose only a 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’s loan + 7K released on September 13 = about 464K). Thus, the balance of about 36K which was not released 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 act maliciously when it initiated the foreclosure proceedings. It merely exercised its right under the mortgage contract because ALS and Litonjua were irregular in their monthly amortization. On the other hand, ALS and Litonjua claim the BPI was guilty of bad faith and should be liable for said damages 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 the actual amount of the loan released, and it immediately initiated foreclosure proceedings when ALS and Litonjua failed to make timely payment. The SC held that BPI cannot be liable for moral and exemplary damages. ALS and Litonjua admitted themselves that they were irregular in their payment of monthly amortizations. Hence, it cannot be said 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, without checking and correspondingly adjusting its records on the amount actually released to ALS and Litonjua 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 were violated by BPI. For this purpose, the amount of 25K is sufficient. 6. Temperate Damages

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

112

Art. 2224. Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount can not, from the nature of the case, be proved with certainty. 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 at Agno, Pangasinan. When the bus entered a wooden bridge, its front wheels swerved to the right. The driver 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 the accident was caused by the defective steering knuckle of the bus, which could not have been known by 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 merely conducted 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 whether its strength was up to standard, or that it had not hidden flaws that would impair its strength. This periodic 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’s failure 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 act fraudulently or in bad faith. Neither can exemplary damages be awarded, since the carrier has not acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. Hence, the court believes that for Precillano Necessito, and indemnity of P5,000 would be adequate for the abrasions and fracture of the femur, including medical and hospitalization expenses, there being no evidence that there would be any permanent impairment of his faculties or bodily functions, beyond the lack of anatomical 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 expenses of P490, but also for the loss of her earnings (average of P120 a month) and for the deprivation of her protection, guidance, and company. In the judgment of the court, an award of P15,000 would be adequate. The low income of the plaintiffs-appellants makes an award for attorney’s fees just and equitable. A fee 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 in Davao. Willie and Alfred Kho operated a fleet of hauling trucks. Consolidated entered into a verbal agreement with the Khos whereby the Khos undertook to haul the logs of Consolidated. The parties also 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 the cost of repairs and reconditioning of the trucks and other expenses necessary for the hauling operations. The 180K was in the nature of a cash advance obtained by the Khos from Equitable bank in the aggregate amount of 180K, on the guaranty of Henry Wee, President of Consolidated, payable
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 113

by the Khos. The agreement also provided that the hauling services shall continue unless and until the 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 and surreptitiously at nighttime, withdrew all its truck haulers from the jobsite. This was in violation of the agreement, 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 the cancellation fee that it had to pay for a chartered vessel, LC extension fee and other charges due to the failure of Consolidated to deliver logs which resulted from the failure of hauling by the Khos on the due date. Consolidated also failed to realize a profit of 150K because this sale was cancelled. 2. After the sudden abandonment by the Khos, Consolidated did not have immediate replacement haulers for a month. During this period, it could have produced 5,000 cu. m. of logs, representing a loss of P350K. 3. Because the Khos did not pay the 180K loan with Equitable, Henry Wee was exposed to liability to Equitable as guarantor of the loans. Demands for payment resulted in unduly annoying 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 cash vales, and the 56K reimbursement charges that Consolidated had to pay Aquarius. On appeal, the CA modified 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 claim apparently refers to an alleged commitment to a certain Ching Kee Trading of Taiwan, as distinguished from the claim for actual damages incurred in connection with its transaction with Aquarius. While the commitment to Aquarius Trading was sufficiently substantiated by documentary evidence, the alleged commitment of Consolidated to Ching Kee was not supported by evidence other than the self-serving statement of Wee. Nor did they present any other evidence which would show that they had other unfulfilled shipments for which they incurred damages because of the pull-out of the Khos’ trucks. But even assuming that there was a commitment to Ching Kee, the shipment was scheduled some 2 months after the Khos pulled out their trucks. That would have given them to find other trucks to do the job. Consolidated insists that if the CA did not consider the 350K damages for unfulfilled shipments, it should have been awarded this amount as a form of temperate or moderate damages. This is incorrect. Temperate or moderate damages may be recovered when the Court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty. In this case, the nature of the contract between the parties is such that damages which the innocent party may have incurred can be substantiated by evidence. Hence, it is not entitled to 350K as temperate or moderate damages. The court also awarded 50K as moral damages because the Khos acted in bad faith when they surreptitiously pulled out their trucks before the termination of the contract. From Ms. Ng’s Reviewer: 8) Exemplary Damages
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 114

Art. 2229. EXEMPLARY OR CORRECTIVE DAMAGES are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. Art. 2230. In (1) criminal offenses, exemplary damages as a part of the civil liability may be 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 acted with gross negligence. Art. 2232. In (3) contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. Art. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated. DISCRETIONARY Art. 2234. While the amount of the exemplary damages need not be proved, the plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded. In case liquidated damages have been agreed upon, although no proof of loss is necessary in order that such liquidated damages may be recovered, nevertheless, before the court may consider the question of granting exemplary in addition to the liquidated damages, the plaintiff must show that he would be entitled to moral, temperate or compensatory damages were it not for the stipulation for liquidated damages. Art. 2235. A stipulation whereby exemplary damages are renounced in advance shall be null and void. Octot v. Ybañez Diosdado 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, he sought reinstatement. His request was given due course but despite notices to him to fill up the necessary papers to support his new appointment, he failed to appear but instead filed the instant action for mandamus praying for reinstatement, payment of back salaries, cost of living allowance, compensatory, exemplary and moral damages. Is Octot entitled to backwages and damages? HELD: No, sorry Octot! (what a name… :P) In the absence of proof that the Regional Director acted in bad faith & with grave abuse of discretion, 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 desire to 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 communicated with him, directing him to report to the Regional Office & accomplish the necessary papers for his reinstatement, but he delayed doing so. Where it is clear that his separation from the government service had not been shown to be in bad faith, an award for moral damage under the circumstance would not be just and proper. Neither is it among the cases mentioned in 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 moral damages 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 mandamus UNLESS the defendant patently acted with vindictiveness or wantonness & not in the
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 115

exercise of honest judgment. The claim for exemplary damages must presuppose the existence of the circumstances under Art 2231 & 2232. Exemplary or corrective damages are imposed by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. Such damages are required by public policy, for wanton acts must be suppressed. They are an antidote so that the poison of wickedness 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. CA Pantejo, City Fiscal of Surigao City, boarded a PAL plane in Manila & disembarked in Cebu where he was supposed to take his connecting flight to Surigao. However, due to typhoon “Osang”, the flight was cancelled. PAL gave out cash assistance to its stranded passengers. Pantejo requested that he be billeted 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 reimbursed other passengers. PAL offered to reimburse him but Fiscal Pantejo sued PAL for discriminating against 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 flight is cancelled due to force majeure, what makes PAL liable for damages is its blatant refusal to accord the so-called amenities equally to all its stranded passengers who were bound for Surigao City. No compelling or justifying reason was advanced for such discriminatory and prejudicial conduct. The refund of hotel expenses was surreptitiously and discriminatorily made by PAL since the same was not made known to everyone except thru word of mouth to a handful of passengers. 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 especially because of his governmental position & social prominence. Moral, exemplary, and actual damages PLUS interest awarded! xtin ng 3D

People v. Las Piñas Iñego 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, 2000 Revised ROC on Crimpro may serve as basis for awarding exemplary damages even if not alleged in the 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’s father & therefore a relative of the family by affinity within the third civil degree. This circumstance justifies the imposition of exemplary damages in the amt of P25T.
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 116

Las Piñas should further pay the victim P50T as civil indemnity, in addition to moral damages of P50T awarded by the CA. 9) Attorney’s Fee

(1) (2)

as FEES: lawyer-client relationship; belongs to lawyer 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’s fees. 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% of the value of the land. If A wins, can A’s counsel file for an attorney’s lien on the property? No. Atty’s lien on real property subject of litigation is not allowed. But if the action was principally for damages and A wins, the atty’s fees can constitute a lien on the money awarded. The lien is allowed only if the subject 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, other than 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 the plaintiff'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 skilled workers; (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 fees and 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 of litigation. However, if case was for damages, atty can claim a lien over the award.
xtin ng 3D

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

117

(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 to cover an export of shipment of logs to Japan. LOC assigned to Lanuza Lumber. Later, Lanuza Lumber, obtained a P25T loan from PNB. Utility Assurance furnished the surety bond. Lanuza Lumber & UTASSCO defaulted. Thus, PNB filed an action to recover the amt of the PN with interest PLUS atty’s fees. UTASSCO claims that its obligation under the surety bond was to secure the performance of the T&C of the Letter of Credit & had not guaranteed performance of Lanuza’s obligation under its P25T loan from PNB. Is UTASSCO liable to pay the obligation & atty’s fees? HELD: YES. The surety bond was intended to secure the payment of Lanuza Lumber’s loan with PNB. (1) The surety bond explicitly stated the P25T loan was being secured by the bond. (2) While the bond & endorsement referred to the LOC, Lanuza Lumber had NO obligation under the LOC as it was the beneficiaryassignee of the LOC. Clause limiting the liability of UTASSCO does not prevent grant of interest & atty’s fees. Tagawa vs. Aldanese: creditors suing on a suretyship bond may recover from the surety as part of their damages, interest at the legal rate even if the surety would thereby become liable to pay more than the total amount stipulated in the bond. 'The theory is that interest is allowed only by way of damages for delay upon the part of the sureties in making payment after they should have done. " The surety is made to pay interest, not by reason of the contract, but by reason of its failure to pay when demanded and for having compelled the plaintiff to resort to the courts to obtain payment. The NCC permits recovery of attorney's fees in eleven cases enumerated in Art 2208, among them 'where the court deem it just and equitable that attorney's fees and expenses of litigation should be recovered' or 'when the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs plainly valid, just and demandable claim.' This gives the courts discretion in apportioning attorney's fees. Ibaan Rural Bank v. CA
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 118

Spouses Reyes mortgaged 3 parcels lf land with Ibaan Rural Bank. The Reyeses sold the same to the Tarnate spouses under a DOAS with Assumption of Mortgage. The Tarnates failed to pay the loan & the bank extra-judicially foreclosed the properties. No notice of the extra-judicial foreclosure was given to the Tarnates. Tarnates tried to redeem the properties but the bank & Sheriff refused. The Tarnates then filed a complaint to compel the bank to allow their redemption of the foreclosed lots. LC ordered redemption of the properties plus payment of atty’s fees as damages. Was the award of atty’s fees on the basis of the bank’s refusal to allow 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 to protect & 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 damages because of the public policy that no premium should be placed on the right to litigate. The award of atty’s fees must be deleted where the award of moral & exemplary damages are eliminated.
10) Mitigation of Damages Art. 1192. In case BOTH PARTIES HAVE COMMITTED A BREACH of the obligation, the liability of the first infractor shall be equitably tempered by the courts. If it cannot be determined which of the parties first violated the contract, the same shall be deemed extinguished, and each shall bear his own damages.

Art. 2203. The party suffering loss or injury must exercise the DILIGENCE OF A GOOD FATHER OF A FAMILY to minimize the damages resulting from the act or omission in question. Art. 2204. In crimes, the damages to be adjudicated may be respectively increased or lessened according to the AGGRAVATING OR MITIGATING CIRCUMSTANCES.
Art. 2214. In quasi-delicts, the CONTRIBUTORY NEGLIGENCE of the plaintiff shall reduce the damages that he may recover. Art. 2215. In contracts, quasi-contracts, and quasi-delicts, the court may EQUITABLY MITIGATE the damages under circumstances other than the case referred to in the preceding 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 upon the advice of counsel; (4) That the loss would have resulted in any event;

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

119

(5) That since the filing of the action, the defendant has done his best to lessen the plaintiff's loss or injury. EXTINGUISHES LIABILITY and EACH BEARS OWN LOSS: infractor can’t determine who was the first

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 of infection 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 or injury. (Example: if you run over someone, you should bring him to the hospital. Your liability will be mitigated.)

Malaysian Airlines v. CA Malaysina Airline System Bernad recruited Renato Arellano from PAL for his training & experience and contracted his services as pilot for two years. When the plane he was driving landed at Bintulo airport, all the tires burst, causing alarm among the passengers but causing no injuries. Arellano was found negligent by the investigating board in Malaysia & was dismissed by Malaysian Airlines. RTCPnas held that Arellano’s dismissal from service was improper as he was not negligent & ordered payment of P3M moral damages, P1M exemplary damages, among others. Was the amount of damages awarded excessive? HELD: YES. The inordinate amount granted to Arellano calls for the moderating of the Court, that justice may be tempered with reason instead of being tainted with what appears here to be a ruthless vindictiveness. The complaint prayed for payment of unpaid salaries from July 1981 to July 1982 which corresponds to the periods of the renewed contract. On the basis of his monthly salary of Malaysian $4,025, or P33,568.50, his total unearned salaries will be P402,822. To this should be added the amount of P123,098.40 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 sum of 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-Tierra Bricktown Development Corporation executed two Contracts to Sell in favor of Amor-Tierra Development Corp covering 96 residential lots at Multinational Village. Of the total purchase price of P21M, Amor-Tierra only paid P1.3M. Bricktown sent a notice of cancellation to Amor-Tierra. AmorTierra demanded a refund OR assign to it an equivalent number of lots. Bricktown refused. Amor filed 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 or cancelled, considering the negotiations which made Amor-Tierra believe that they would be entering into a new contract, it would be unconscionable to likewise sanction the forfeiture of payments. The relationship between parties in any contract must always be characterized and punctuated by good faith and fair dealing. Bricktown did fall well behind that standard. We
Digests by Sheryl, Cayo, Rosa Lecture Notes and Notes from Jona Bautista’s Reviewer 120

do not find it equitable, however, to adjudge any interest payment by Bricktown on the amount to be thus refunded, computed from judicial demand, for, indeed, Amor-Tierra should not be allowed to totally free itself from its own breach. 12% interest/annum to commence only from the finality of this decision until such refund is effected. International School v. CA Spouses Torralba filed a complaint for damages against IS for the death of their only son Eric, while in the custody of IS & its officers. RTC awarded damages. IS appealed. The Torralba’s moved for execution of judgment pending appeal on grounds that the appeal is merely dilatory & filing of a bond is another good reason for execution. RTC granted same. CA affirmed. Was the execution of judgment pending appeal improper? HELD: YES. Reason that an appeal is dilatory does NOT justify execution pending appeal, neither does the filing of a bond, without anything more, justify the same. IS could not be faulted for its withdrawal of its supersedeas bond inasmuch as the LC granted the execution pending appeal & rejected its offer of supersedeas bond. xtin ng 3D The awards for moral & exemplary damages CANNOT be the subject of execution pending appeal. RATIONALE: The execution of any award for moral & exemplary damages is dependent on the outcome of the main case. Unlike actual damages for which petitioners may clearly be held liable if they 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 resolution by the IAC & SC. The existence of the factual bases of these types of damages and their causal relation to the petitioner’s act will have to be determined in the light of errors on appeal. It is possible that the petitioners, after all, while liable for actual damages may not be liable for moral & exemplary damages. Or in some cases elevated to the SC, the awards may be reduced. IX. PROCEDURAL RULES ON DAMAGES - Just look at Sir’s handout. Ok yon. Good Luck!

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

121

Sign up to vote on this title
UsefulNot useful