P

a
g
e
1

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

V TOLENTINO pages 506 & 507




PICART V SMITH
37 Phil 809 Street March 15, 1918
FACTS
y Amando Picart seeks to recover from the defendant
Frank Smith the sum of Php
31,100 as damages alleged to have been caused by
an automobile driven by Smith.
The incident happened on Dec 12, 1912, at the
Carlatan Bridge, San Fernando, La
Union.
y Picart was riding on his pony aver the said bridge.
Before he had gotten half way
across, Smith approached from the opposite direction
driving his vehicle at 10 to 12 miles per hour.
y Smith blew his horn to give warning as he observed
that the man was not observing rules of the road.
Smith continued his course and made two more
blasts.
y Picart was perturbed by the rapidity of the approach
that he pulled his pony to the right side of the railing.
y As the automobile approached, Smith guided the
automobile to its left, that being
the proper side of the road for the machine.
y Smith noticed that the pony was not frightened so he
continued without diminution of speed.
y When he learned that there was no possibility for the
pony to go on the other side,
Smith drove his car to the right to avoid hitting the
pony, but in so doing the vehicle passed in a close
proximity to the horse that it became frightened and
turned its belly across the bridge with its head towards
the railing.
y The horse was struck on the hock of the left hind leg
by the flange of the car and
the limb was broken.
y The horse fell and its rider was thrown off with some
violence.
y It showed that the free space where the pony stood
between the automobile and the railing was probably
less than one half meters.
y The horse died and Picart received contusions
which caused temporary
unconsciousness and required medical attention for
several days.
ISSUES & ARGUMENTS
Whether or not Smith was guilty of negligence that gives rise to
a civil obligation to repair the damage done to Picart and his
pony.
HOLDING & RATIO DECIDENDI
Yes, the court ruled that Smith that he is liable to pay Picart the
amount of P200. The sum is computed to include the value of
the horse, medical expenses of the plaintiff, the loss or damage
occasioned to articles of his apparel.
In the nature of things, this change in situation
occurred while the automobile was
still some distance away. From this moment it was
no longer possible for Picart to escape being run
down by going to a place for greater safety.
The control of the situation had then passed entirely
to Smith, and it was his duty to bring his car to an
immediate stop or seeing no other persons on the
bridge, to take the other side and pass sufficiently far
away from the horse to avoid collision. There was an
appreciable risk that a horse not acquainted with
vehicles would react that way.
The Test to Determine the Existence of Negligence
in a particular case may be
stated as follows: Did the defendant in doing the
alleged negligent act use that reasonable care and
caution which an ordinarily prudent person would
have used the same situation? If not then he is guilty
of negligence.
The law in effect adopts the standard supposed to be
supplied by the imaginary
conduct of the discreet paterfamilias of the
Roman Law. The existence of
negligence in a given case is not determined by
reference to the personal judgment of the actor in the
situation before him. The law considers what would
be reckless,blameworthy or negligent in the man of
ordinary intelligence and prudence and determines
liability by that.
A prudent man, placed in the position of Smith in the
Courts opinion would have
recognized that the course which he was pursuing
was fraught with risk and would therefore have
foreseen harm to the horse and the rider as a
reasonable consequence of that course.

2. STANDARD OF CONDUCT
2.1. ORDINARY PRUDENT PERSON
1 Sangco, pages 7 & 8




2.2. SPECIAL CASES
CHILDREN
TAYLOR V MANILA RAILROAD
CARSON; March 22, 1910
NATURE
An action to recover damages for the loss of an eye and other
injuries, instituted by David Taylor, a minor, by his father, his
nearest relative., the son of a mechanical engineer, more
mature than the average boy of his age, and having
considerable aptitude and training in mechanics.
P
a
g
e
2

FACTS:
y The defendant is a foreign corporation engaged in the
operation of a street railway and an electric light
system in the city of Manila. Its power plant is situated
at the eastern end of a small island in the Pasig River
within the city of Manila, known as the Isla del
Provisor. The power plant may be reached by boat or
by crossing a footbridge, impassable for vehicles, at
the westerly end of the island.
y The plaintiff, David Taylor, was at the same time when
he received the injuries complained of, 15 yrs of age.
y On the 30th of September, 1905, plaintiff, with a boy
named Manuel Claparols, about 12 years of age,
crossed the footbridge of the Isla del Provisor, for the
purpose of visiting one Murphy, an employee of the
defendant, who had promised to make them a
cylinder for a miniature engine. Finding on inquiry that
Mr. Murphy was not in his quarters, the boys, impelled
apparently by youthful curiosity and perhaps by the
unusual interest which both seem to have taken in
machinery, spent some time in wandering about the
company's premises. The visit made on a Sunday
afternoon, and it does not appear that they saw or
spoke to anyone after leaving the power house where
they had asked for Mr. Murphy.
y After watching the operation of the traveling crane
used in handling the defendant's coal, they walked
across the open space in the neighborhood of the
place where the company dumped the cinders and
ashes from its furnaces. Here they found some twenty
or thirty brass fulminating caps scattered on the
ground. These caps are approximately of the size and
appearance of small pistol cartridges and each has
attached to it two long thin wires by means of which it
may be discharged by the use of electricity. They are
intended for use in the explosion of blasting charges
of dynamite, and have in themselves considerable
explosive power. After some discussion as to the
ownership of caps, and their right to take them, the
boys picked up all they could find, hung them of a
stick, of which each took one end, and carried them
home. After crossing the footbridge, they met a little
girl named Jessie Adrian, less than 9 years old, and
all three went to the home of the boy Manuel. The
boys then made a series of experiments with the
caps. They thrust the ends of the wires into an electric
light socket and obtained no result. They next tried to
break the cap with a stone and failed. Manuel looked
for a hammer, but could not find one. They then
opened one of the caps with a knife, and finding that it
was filled with a yellowish substance they got
matches, and David held the cap while Manuel
applied a lighted match to the contents. An explosion
followed, causing more or less serious injuries to all
three. Jessie, who, when the boys proposed purring a
match to the contents of the cap, became frightened
and started to run away, received a slight cut in the
neck. Manuel had his hand burned and wounded, and
David was struck in the face by several particles of
the metal capsule, one of which injured his right eye
to such an extent as to necessitate its removal by the
surgeons who were called in to care for his wounds.
y The Defendant Companys defense that the caps
were under the duty of independent contractors
deserves scant consideration since these workers
have been under the supervision of one of the
companys foremen.
y Plaintiff Taylor appears to have rested his case, as did
the trial judge his decision in plaintiff's favor, upon the
provisions of article 1089 of the Civil Code read
together with articles 1902, 1903, and 1908 of that
Code.
"ART. 1089. Obligations are created by law, by
contracts, by quasicontracts, and by illicit acts and
omissions or by those in which any kind of fault or
negligence occurs."
"ART. 1902. Any person who by an act or
omission causes damage to another when there is
fault or negligence shall be obliged to repair the
damage so done.
"ART. 1903. The obligation imposed by the
preceding article is demandable, not only for personal
acts and omission, but also for those of the persons
for whom they should be responsible.
o "The father, and on his death or incapacity
the mother, is liable for the damages caused
by the minors who alive with them.
xxx xxx xxx
"Owners or directors of an establishment or
enterprises are equally liable for the damages caused
by their employees in the service of the branches in
which the latter may be employed or on account of
their duties.
xxx xxx xxx
y "The liability referred to in this article shall cease when
the persons mentioned therein prove that they
employed all the diligence of a good father of a family
to avoid the damage."
"ART. 1908.The owners shall be also be liable for the
damages caused "1. By the explosion of
machines which may not have been cared for with
due diligence, and for kindling of explosive substance
which may not have been placed in a safe and proper
place."
y In support of his contention, counsel for plaintiff relied
on the doctrine laid down in many of the courts of last
result in the United States in the cases known as the
"Torpedo" and "Turntable" cases, and the cases
based thereon.In the typical cases, the question
involved has been whether a railroad company is
liable for an injury received by an infant of tender
years, who from mere idle curiosity, or for purposes of
amusement, enters upon the railroad company's
premises, at a place where the railroad company's
premises, at a place where the railroad company
knew, or had a good reason to suppose, children who
would likely to come, and there found explosive signal
torpedoes left exposed by the railroad company's
employees, one of which when carried away by the
visitor, exploded and injured him; or where such infant
found upon the premises a dangerous machine, such
as a turntable left in such condition as to make it
probable that children in playing with it would be
exposed to accident or injury therefrom and where the
infant did in fact suffer injury in playing with such
machine.
y In these, and in a great variety of similar cases, the
great weight of authority holds the owner of the
premises liable.
y As laid down in Railroad Co. vs. Stout ( 17 Wall. (84
U.S.), 657), (wherein the principal question was
whether a railroad company was liable for an injury
received by an infant while upon its premises, from
idle curiosity, or for purposed of amusement, if such
injury was, under the circumstances, attributable to
the negligence of the company), the principles on
which these cases turn are that "while railroad
company is not bound to the same degree of care in
P
a
g
e
3

regard to mere strangers who are unlawfully upon its
premises that it owes to passengers conveyed by it, it
is not exempt from responsibility to such strangers for
injuries arising from its negligence or from its tortious
acts;" and that "the conduct of an infant of tender
years is not to be judged by the same rule which
governs that of an adult. While it is the general rule in
regard to an adult that to entitle him to recover
damages for an injury resulting from the fault or
negligence of another he must himself have been free
from fault, such is not the rule in regard to an infant of
tender years. The care and caution required of a child
is according to his maturity and capacity only, and this
is to be determined in such case by the circumstances
of the case."
y The doctrine of the case of Railroad Company vs.
Stout was vigorously controverted and sharply
criticized in severally state courts, saying that (1) That
the owner of land is not liable to trespassers thereon
for injuries sustained by them, not due to his wanton
or willful acts; (2) that no exception to this rule exists
in favor of children who are injured by dangerous
machinery naturally calculated to attract them to the
premises; (3) that an invitation of license to cross the
premises of another can not be predicated on the
mere fact that no steps have been taken to interfere
with such practice; (4) that there is no difference
between children and adults of an invitation or a
license to enter upon another's premises. However,
after an exhaustive and critical analysis and review of
may of the adjudged cases, both English and
America, formally declared that it adhered "to the
principles announced in the case of Railroad Co. vs.
Stout." Chief Justice Cooley, voicing the opinion of the
supreme court of Michigan, in the case of Powers vs.
Marlow, said that: Children, wherever they go, must
be expected to act upon childlike instincts and
impulses; and others who are chargeable with a duty
of care and caution toward them must calculate upon
this, and take precautions accordingly. If they leave
exposed to the observation of children anything which
would be tempting to them, and which they in their
immature judgment might naturally suppose they were
at liberty to handle or play with, they should expect
that liberty to be taken."
y The owners of premises, therefore, whereon things
attractive to children are exposed, or upon which the
public are expressively or impliedly permitted to enter
to or upon which the owner knows or ought to know
children are likely to roam about for pastime and in
play, "must calculate upon this, and take precautions
accordingly." In such cases the owner of the premises
can not be heard to say that because the child has
entered upon his premises without his express
permission he is a trespasser to whom the owner
owes no duty or obligation whatever. The owner's
failure to take reasonable precautions to prevent the
child form entering premises at a place where he
knows or ought to know that children are accustomed
to roam about or to which their childish instincts and
impulses are likely to attract them is at least
equivalent to an implied license to enter, and where
the child does not enter under such conditions the
owner's failure to make reasonable precaution to
guard the child against the injury from unknown or
unseen dangers, placed upon such premises by the
owner, is clearly a breach of duty, a negligent
omission, for which he may and should be held
responsible, if the child is actually injured, without
other fault on its part than that it had entered on the
premises of a stranger without his express invitation
or permission. To hold otherwise would be expose to
all the children in the community to unknown perils
and unnecessary danger at the whim of the owners or
occupants of land upon which they might naturally
and reasonably be expected to enter.
ISSUE
WON the defendants negligence was the proximate cause of
the injuries, making the company liable
HELD
NO
Just because the kids trespassed doesnt mean that
the company is not liable for anything bad that might
happen to them. However, we also have to look at the
proximate cause and the maturity of the plaintiff if it
was his negligence that contributed to the principal
occurrence of the tragedy. In the case at bar, the
Court said that it is of the opinion that under all the
circumstances of this case the negligence of the
defendant in leaving the caps exposed on its
premises was not the proximate cause of the injury
received by the plaintiff, which therefore was not,
properly speaking, "attributable to the negligence of
the defendant," and, on the other hand, we are
satisfied that plaintiff's action in cutting open the
detonating cap and putting a match to its contents
was the proximate cause of the explosion and of the
resultant injuries inflicted upon the plaintiff, and that
the defendant, therefore, is not civilly responsible for
the injuries thus incurred. "While it is the general rule
in regard to an adult that entitle him to recover
damages for an injury resulting from the fault or
negligence of another he must himself have been free
from fault, such is not the rule in regard to an infant of
tender years. The care and caution required of a child
is according to his maturity and capacity only, and this
is to be determined in each case by the circumstance
of the case."
As regards the maturity of the child, this has to be
examined on a case-to-case basis. In the case at bar,
plaintiff at the time of the accident was wellgrown
youth of 15, more mature both mentally and physically
than the average boy of his age; he had been to sea
as a cabin boy; was able to earn P2.50 a day as a
mechanical draftsman thirty days after the injury was
incurred; and the record discloses throughout that he
was exceptionally well qualified to take care. The
evidence of record leaves no room for doubt that,
despite his denials on the witness stands, he well
knew the explosive character of the cap with which he
was amusing himself. The series of experiments
made by him in his attempt to produce an explosion,
as described by the little girl who was present, admit
of no other explanation. His attempt to discharge the
cap by the use of electricity, followed by his efforts to
explode it with a stone or a hammer, and the final
success of his endeavors brought about by the
applications of a match to the contents of the cap,
show clearly that he knew what he was about. Nor
can there be any reasonable doubt that he had
reason to anticipate that the explosion might be
dangerous, in view of the fact that the little girl, 9
years of age, who was with him at the time when he
put the match to the contents of the cap, became
frightened and ran away.
We think it is quite clear that under the doctrine thus
stated, the immediate cause of the explosion , the
accident which resulted in plaintiff's injury, was his
P
a
g
e
4

own act of putting a match to the contents of the cap,
and that having "contributed to the principal
occurrence, as one of its determining factors, he can
not recover."
DISPOSITION The petition is DISMISSED.


JARCO MARKETING CORP V CA (AGUILAR)
DAVIDE; December 21, 1999
FACTS
y Petitioner Jarco Marketing Corporation is the owner of
Syvel's Department Store, Makati City. Petitioners
Leonardo Kong, Jose Tiope and Elisa Panelo are the
store's branch manager, operations manager, and
supervisor, respectively. Private respondents are spouses
and the parents of Zhieneth Aguilar.
y On May 9, 1983, Criselda and Zhieneth were at the 2
nd
flr
or Syvels Dept. Store. Criselda momentarily let go of her
daughters hand to sign her credit card slip at the payment
and verification counter. She suddenly felt a gust of wind
and heard a loud thud. She looked behind her and saw her
daughter on the floor, pinned by the gift-wrapping counter.
Zhieneth was crying and screaming for help. Criselda was
able to ask people to help her and bring her daughter to
the hospital.
y She was operated on immediately at the hospital.
Gonzales, a former employee of Syvels Dept Store who
helped bring Zhieneth to the hospital, heard her tell the
doctor that she nothing. I did not come near the counter
and the counter just fell on me, when asked what did you
do? She died 14 days later, on the hospital bed. She was
6 years old. The cause of her death was attributed to the
injuries she sustained.
y After the burial of their daughter, the Aguilars demanded
from the petitioners the reimbursement of hospital and
medical bills, and wake and funeral expenses. Petitioners
refused to pay. So the Aguilars filed a complaint for
damages wherein they sought the payment of
P157,522.86 for actual damages, P300,000 for moral
damages, P20,000 for attorney's fees and an unspecified
amount for loss of income and exemplary damages.
y RTC for Jarco Marketing Corp, et al. RTC mfr for the
Aguilars. CA and CA mfr for the Aguilars.
y - Jarco Mktg Corp, et als side: Criselda was negligent in
taking care of her daughter for allowing her to roam freely.
Zhieneth was guilty of contributory negligence because
she tried to climb the counter. The counter was made of
sturdy wood with a strong base and was used without
incident for the past 15 years. It was deliberately placed at
a corner to avoid such accidents. The testimony of two
former employees, Gonzales and Guevarra, should not be
believed because he might have ill feelings towards
petitioners. The testimony of the present employees (that
Zhieneth climbed the counter so it fell) should instead be
believed.
y - The Aguilars side: While in the dept store, Criselda
never let go of her daughter except to sign the credit card
slip. Gonzales testified that the gift wrapping counter was
right beside the verification counter where Criselda was
signing. Both Gonzales and Guevarra testified to the
structural instability and shakiness of the counter which is
in the shape of and inverted L, with a base smaller than
the top. The protruding part of the counter was at the
costumer side. They both had informed management
(while they were still working there) that the counter should
be nailed to the floor. The management did nothing.
ISSUE:
WON the incident is accident or attributable to negligence. If
negligence, who was negligent?
HELD:
NEGLIGENCE.
An accident pertains to an unforeseen event in which
no fault or negligence attaches to the defendant. It is
"a fortuitous circumstance, event or happening; an
event happening without any human agency, or if
happening wholly or partly through human agency, an
event which under the circumstances is unusual or
unexpected by the person to whom it happens."
On the other hand, negligence is the omission to do
something which a reasonable man, guided by those
considerations which ordinarily regulate the conduct
of human affairs, would do, or the doing of something
which a prudent and reasonable man would not do.
Negligence is "the failure to observe, for the
protection of the interest of another person, that
degree of care, precaution and vigilance which the
circumstances justly demand, whereby such other
person suffers injury."
Accident and negligence are intrinsically
contradictory; one cannot exist with the other.
Accident occurs when the person concerned is
exercising ordinary care, which is not caused by fault
of any person and which could not have been
prevented by any means suggested by common
prudence.
The test in determining the existence of negligence is
enunciated in the landmark case of Picart v. Smith,
thus: Did the defendant in doing the alleged negligent
act use that reasonable care and caution which an
ordinary prudent person would have used in the same
situation? If not, then he is guilty of negligence.
Gonzales testimony about what Zhieneth said to the
doctor should be accepted because at the time she
said it, she was in so much pain and she answered
right away. This means she wasnt making it up. It is
axiomatic that matters relating to declarations of pain
or suffering and statements made to a physician are
generally considered declarations and admissions. All
that is required for their admissibility as part of the res
gestae is that they be made or uttered under the
influence of a startling event before the declarant had
the time to think and concoct a falsehood as
witnessed by the person who testified in court. Under
the circumstances thus described, it is unthinkable for
ZHIENETH, a child of such tender age and in extreme
pain, to have lied to a doctor whom she trusted with
her life. We therefore accord credence to Gonzales'
testimony on the matter, i.e., ZHIENETH performed
no act that facilitated her tragic death. Sadly,
petitioners did, through their negligence or omission to
secure or make stable the counter's base.
JARCO MKTG, ET AL.
Petitioner Panelo and another store supervisor were
personally informed of the danger posed by the
unstable counter. Yet, neither initiated any concrete
action to remedy the situation nor ensure the safety of
the store's employees and patrons as a reasonable
and ordinary prudent man would have done. Thus, as
confronted by the situation petitioners miserably failed
to discharge the due diligence required of a good
father of a family.
No contributory negligence from Zhieneth
The conclusive presumption favors children below
nine (9) years old in that they are incapable of
contributory negligence. In our jurisdiction, a person
under nine years of age is conclusively presumed to
have acted without discernment, and is, on that
account, exempt from criminal liability. The same
P
a
g
e
5

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


DEL ROSARIO V MANILA ELECTRIC CO.
57 PHIL 478 STREET; November 5, 1932
FACTS
y This action was instituted by Julian del Rosario for the
purpose of recovering damages from Meralco for the
death of his son, Alberto, resulting from a shock from a
wire used by the defendant for the transmission of
electricity.
y Aug 4, 1930 2pm: a wire used by the defendant on
Dimas- Alang St for the purpose of conducting electricity
used in lighting the City of Manila and its suburbs.
y Jose Noguera saw that the wire was burning and its
connections smoking. One of the ends of the wire fell to
the ground among some shrubbery close to the way.
y As soon as Noguera took cognizance of the trouble, he
stepped into a garage which was located nearby and
asked Jose Soco to telephone the Malabon station of
MERALCO that an electrical wire was burning at that
place.
y Soco transmitted the message at 2.25 p.m. and received
answer from the station to the effect that they would send
an inspector.
y At the time that message was sent the wire had not yet
parted, but from the testimony of Demetrio Bingao, one of
the witnesses for the defense, it is clear that the end of the
wire was on the ground shortly after 3 p.m.
y At 4 p. m. the neighborhood school was dismissed and the
children went home.
y Alberto del Rosario, 9 yrs old, who was a few paces
ahead of his classmates, Jose Salvador and Saturnino
Endrina, all members of the second grade in the public
school.
y As the three neared the place where the wire was down,
Saturnino made a motion as if it touch it.
y Jose, who happened to be the son of an electrician, knew
never to touch a broken electrical wire (as his dad told him
so!)- stopped Saturnino- telling him that the wire might be
charged.
y Saturnino yielded to this admonition and stopped, but
Alberto, who was somewhat ahead, said, I have for some
time been in the habit of touching wires.
y Jose rejoined that he should into touch wires as they carry
a current, but Alberto, no doubt feeling that he was
challenged in the matter, put out his index finger and touch
the wire.
y He immediately fell face downwards, exclaiming "Ay!
madre".
y The end of the wire remained in contact with his body
which fell near the post.
y A crowd soon collected, and some one cut the wire and
disengaged the body. Upon being taken to St. Luke's
Hospital the child was pronounced dead.
y The wire was an ordinary number 6 triple braid weather
proof wire, such as is commonly used by the defendant
company for the purpose of conducting electricity for
lighting.
y The wire was cased in the usual covering, but this had
been burned off for some distance from the point where
the wire parted.
y The engineer of the company says that it was customary
for the company to make a special inspection of these
wires at least once in six months, and that all of the
company's inspectors were required in their daily
rounds to keep a lookout for trouble of this kind.
There is nothing in the record indicating any particular
cause for the parting of the wire.l
ISSUE:
WON Manila Electric is liable
HELD
YES
Reasoning
When notice was received at the Malabon station at 2.25
p. m., somebody should have been dispatched to the
scene of the trouble at once, or other measures taken to
guard the point of danger; but more than an 1 hours
passed before anyone from MERALCO appeared on the
scene, and in the meantime Alberto had been claimed as
a victim.
The mere fact that the deceased ignored the caution of
Jose (8 yrs old), doesnt alter the case.
But even supposing that contributory negligence could in
some measure be properly imputed to the deceased, such
negligence would not be wholly fatal to the right of action
in this case, not having been the determining cause of
P
a
g
e
6

the accident. (Rakes vs. Atlantic, Gulf and Pacific Co., 7
Phil., 359.)
With respect to the amount of damages recoverable,
Julian is entitled to recover P250 for expenses incurred in
connection with the death and burial of the boy.
Citing Astudillo vs. Manila Electric Company: Julian should
recover the sum of P1,000 as general damages for loss
of service.
Disposition judgment reversed
SEPARATE OPINION
ABAD SANTOS [concur in part and dissent in part]
- He concurs that MERALCO is held liable for the death of
Alberto, but dissents in so far as the decision allows the
recovery of the father of the sum of P1,250 only as damages. It
should be P 2250.
- His reasoning: It is well settled in this jurisdiction that an
action will lie to recover damages for death caused by the
wrongful act. (Manzanares vs. Moreta, 38 Phil., 821.)
- In criminal cases- indemnity to the heirs of the deceased is
equivalent to P1,000
- Whatever may be the reasons for the rule followed in criminal
cases, I am of the opinion that those reasons do not obtain in
fixing the amount of the damages recoverable in the present
case.
- The indemnity allowed in criminal case is merely incidental to
the main object sought, which is the punishment of the guilty
party.
- In a civil action, the principal object is the recovery of
damages for wrongful death; and where, as in this case, the
defendant is a corporation, not subject to criminal prosecution
for the act complained of, the question assumes a vastly
different aspect.
- There should be a distinction between the civil liability of an
ordinary person who, by wrongful act, has caused the death of
another; and the civil liability of a corporation, organized
primarily for profit, which has caused the death of a person by
failure to exercise due care in the prosecution of its business.
- The liability of such a corporation for damages must be
regarded as a part of the risks which it assumes when it
undertakes to promote its own business; and just as it is
entitled to earn adequate profits from its business, so it should
be made adequately to compensate those who have suffered
damage by its negligence.

YLARDE V AQUINO
GANCAYCO; July 29, 1988
NATURE: Petition for review on certiorari
FACTS
y Soriano was principal. Aquino was a teacher. The school
was littered with concrete blocks. Teacher Banez started
burying them. Aquino gathered 18 male pupils to help.
He ordered them to dig. Work was unfinished.
y Ff day, Aquino called 4 of the 18 to continue. Aquino
continued digging while the pupils remained inside the pit
throwing out the loose soil. Aquino left the children to level
the loose soil and borrowed a key from Banez. Aquino
told the kids not to touch the stone.
y 3 of the 4 kids jumped into the pit. The remaining Abaga
jumped on the concrete block causing it to slide down. 2
were able to escape but student Ylarde sustained injuries.
3 days later he died.
y Parents filed suit against Aquino and Soriano. Lower court
dismissed and CA affirmed and said child Ylarde was
negligent.
ISSUE
WON Aquino and Soriano can be held liable for damages
HELD
Principal Soriano cannot be held liable, being head of
academic school and not school of arts and trades, in line
with Amadora case and Art 2180 of Civil Code. It is only
the teacher who should answer for torts committed by their
students. Besides, Soriano did not order the digging.
Based on Article 2180, Aquino can be held liable.
However, petition is based on Article 2176. Did the
acts/omissions of Aquino cause the death of Ylarde? Yes.
He is liable for damages. The work required adult
laborers. He required the children to remain in the pit after
they finished digging. He ordered them to level the soil
when a huge stone was at brink of falling. He went to
another place and left the kids.
Left by themselves, IT WAS BUT NATURAL FOR THE
CHILDREN TO PLAY AROUND. IN RULING THAT
YLARDE WAS IMPRUDENT, THE LOWER COURT DID
NOT CONSIDER HIS AGE AND MATURITY. A MINOR
SHOULD NOT BE HELD TO THE SAME DEGREE OF
CARE AS AN ADULT.
Aquino also said the digging was part of Work Education.
This is unacceptable. Work is too dangerous and it was
not even in the lesson plan.


EXPERTS/PROFESSIONALS
Art. 2187 of CC. Manufacturers and processors of foodstuffs,
drinks, toilet articles and similar goods shall be liable for death
or injuries caused by any noxious or harmful substances used,
although no contractual relation exists between them and the
consumers.

CULION ICE, FISH AND ELECTRIC CO V PHILIPPINE
MOTORS CORPORATION
STREET; November 3, 1930
NATURE: Appeal from decision of the CFI
FACTS
y Cranston was the representative of the plaintiff in Manila
and plaintiff was the registered owner of the motor
schooner Gwendoline.
y Cranston decided to have the engine on the Gwendoline
changed from a gasoline consumer to a crude oil burner.
He had a conference with Quest, Phil. Motors manager,
who agreed to do the job, with the understanding that
payment should be made upon completion of the work.
y The work was begun and conducted under the supervision
of Quest, chiefly by a mechanic whom Quest took with him
to the boat. Quest had the assistance of the members of
the crew of the Gwendoline, who had been directed by
Cranston to place themselves under Quest's directions.
y Upon preliminary inspection of the engine, Quest
concluded that a new carburetor was needed and thus
installed a Zenith carburetor. The engine was tried with
gasoline and the result was satisfactory. The next problem
was to introduce into the carburetor the baser fuel,
consisting of a low grade of oil mixed with distillate. A
temporary tank to contain the mixture was placed on deck
above and at a short distance from the compartment
covering the engine. This tank was connected with the
carburetor by a piece of tubing, which was apparently not
well fitted at the point where it was connected with the
tank. The fuel mixture leaked from the tank and dripped
sown into the engine compartment. The new fuel line and
that already in use between the gasoline tank and
carburetor were so fixed that it was possible to change
from the gasoline fuel to the mixed fuel. This arrangement
enables the operator to start the engine on gasoline and
then, after the engine had been operating for a few
moments, to switch to the new fuel supply.
y It was observed that the carburetor was flooding, and that
the gasoline, or other fuel, was trickling freely from the
lower part to the carburetor to the floor. This fact was
P
a
g
e
7

called to Quest's attention, but he said that, when the
engine had gotten to running well, the flooding would
disappear.
y The boat was taken out into the bay for a trial run. The
engine stopped a few times during the first part of the
course, owing to the use of an improper mixture of fuel. In
the course of the trial, Quest remained outside of the
engine compartment and occupied himself with making
distillate, with a view to ascertaining what proportion of the
two elements would give best results in the engine.
y As the boat was coming in from this run, the engine
stopped, and connection again had to be made with the
gasoline line to get a new start. After this had been done
the mechanic, or engineer, switched to the tube
connecting with the new mixture. A moment later a back
fire occurred in the cylinder chamber. This caused a flame
to shoot back into the carburetor, and instantly the
carburetor and adjacent parts were covered with a mass of
flames, which the members of the crew were unable to
subdue. The salvage from, the wreck, when sold, brought
only the sum of P150. The value of the boat, before the
accident occured, as the court found, was P10,000.
y CFI gave judgment in favor of the plaintiff to recover of the
defendant the sum of P9,850, with interest at 6 per centum
per annum from the date of the filing of the complaint, until
satisfaction of the judgment, with costs.
ISSUE
WON the loss of the boat is chargeable to the negligence and
lack of skill of Quest
HELD
YES
Ratio When a person holds himself out as being competent to
do things requiring professional skill, he will be held liable for
negligence if he fails to exhibit the care and skill of one
ordinarily skilled in the particular work which he attempts to do.
Reasoning
The temporary tank in which the mixture was prepared
was apparently at too great an elevation from the
carburetor, so that when the fuel line was opened, the
hydrostatic pressure in the carburetor was greater than the
delicate parts of the carburetor could sustain. This was the
cause of the flooding of the carburetor; and the result was
that; when the back fire occurred, the external parts of the
carburetor, already saturated with gasoline, burst into
flames, whence the fire was quickly communicated to the
highly inflammable material near-by. The leak along the
pipe line and the flooding of the carburetor had created a
dangerous situation, which a prudent mechanic, versed in
repairs of this nature, would have taken precautions to
avoid. The back fire may have been due either to the fact
that the spark was too advanced or the fuel improperly
mixed.
Proof shows that Quest had had ample experience in
fixing the engines of automobiles and tractors, but it does
not appear that he was experienced in the doing of similar
work on boats. Possibly the dripping of the mixture form
the tank on deck and the flooding of the carburetor did not
convey to his mind an adequate impression of the danger
of fire. Quest did not use the skill that would have been
exhibited by one ordinarily expert in repairing gasoline
engines on boats. There was here, on the part of Quest, a
blameworthy antecedent inadvertence to possible harm,
and this constitutes negligence. The burning of the
Gwendoline may be said to have resulted from accident,
but this accident was in no sense an unavoidable accident.
It would not have occured but for Quest's carelessness or
lack of skill. The test of liability is not whether the injury
was accidental in a sense, but whether Quest was free
from blame.
The trial judge seems to have proceeded on the idea that,
inasmuch as Quest had control of the Gwendoline during
the experimental run, the defendant corporation was in the
position of a bailee and that, as a consequence, the
burden of proof was on the defendant to exculpate itself
from responsibility by proving that the accident was not
due to the fault of Quest. As a rule workmen who make
repairs on a ship in its owner's yard, or a mechanic who
repairs a coach without taking it to his shop, are not
bailees, and their rights and liabilities are determined by
the general rules of law, under their contract. The true
bailee acquires possession and what is usually spoken of
as special property in the chattel bailed. As a
consequence of such possession and special property, the
bailee is given a lien for his compensation. These ideas
seem to be incompatible with the situation now under
consideration.
This action was instituted about two years after the
accident had occured, and after Quest had ceased to be
manager and had gone back to the US. Upon these facts,
the defendant bases the contention that the action should
be considered stale. It is sufficient reply to say that the
action was brought within the period limited by the statute
of limitations and the situation is not one where the
defense of laches can be properly invoked.
DISPOSITION Judgment appealed from affirmed.


UNITED STATES V PINEDA
37 Phil 456 MALCOLM; January 22, 1918
NATURE
Appeal requiring a construction and an application, for the first
time, of the penal provisions of the Pharmacy Law.
FACTS
Santiago Pineda is a registered pharmacist of long
standing and the owner of a drug store located at Calle
Santo Cristo, Manila. Feliciano Santos, having some sick
horses, presented a copy of a prescription obtained from
Dr. Richardson, and which on other occasions Santos had
given to his horses with good results, at Pineda's drug
store for filling. The prescription read: "clorato de potasa -
120 gramos - en seis papelitos de 20 gramos, para
caballo." Under the supervision of Pineda, the prescription
was prepared and returned to Santos in the form of six
papers marked, "Botica Pineda - Clorato potasa - 120.00 -
en seis papeles - Para caballo- Sto. Cristo , Binondo,
Manila." Santos, under the belief that he had purchased
the potassium chlorate which he had asked for, put two of
the packages in water and gave the doses to two of his
sick horses. Another package was mixed with water for
another horse, but was not used. The two horses, to
which had been given the preparation, died shortly
afterwards. Santos, thereupon, took the three remaining
packages to the Bureau of Science for examination. Drs.
Pea and Darjuan, of the Bureau of Science, found that
the packages contained not potassium chlorate but barium
chlorate. At the instance of Santos, the two chemists also
went to the drug store of the defendant and bought
potassium chlorate, which when analyzed was found to be
barium chlorate. (Barium chlorate, it should be noted, is a
poison; potassium chlorate is not.) Dr. Buencamino, a
veterinarian, performed an autopsy on the horses, and
found that death was the result of poisoning.
ISSUES
1. WON the lower court erred in admitting the testimony of the
chemist Pea and Darjuan as to their purchase of potassium
chlorate at the drug store of the accused, which proved to be
barium chlorate
2. WON the lower court erred in finding that the substance sold
P
a
g
e
8

by the accused to Feliciano Santos was barium chlorate and
not potassium chlorate
3. WON the lower court erred in finding that the accused has
been proved guilty beyond a reasonable doubt of an infraction
of the Pharmacy Law, Act No. 597, section 17, as amended
HELD
1. NO
Ratio On the trial of a criminal case where the question relates
to the tendency of certain testimony to throw light upon a
particular fact, or to explain the conduct of a particular person,
there is a certain discretion on the part of the trial judge which
a court of errors will not interfere with, unless it manifestly
appear that the testimony has no legitimate bearing upon the
question at issue, and is calculated to prejudice the accused.
Reasoning
What appellant is relying on is the maxim res inter alios
acta. As a general rule, the evidence of other offenses
committed by a defendant is inadmissible. But appellant
has confused this maxim and this rule with certain
exceptions thereto. The effort is not to convict the
accused of a second offense. Nor is there an attempt to
draw the mind away from the point at issue and thus to
prejudice defendant's case. The purpose is to ascertain
defendant's knowledge and intent, and to fix his
negligence. If the defendant has on more than one
occasion performed similar acts, accident in good faith is
possibly excluded, negligence is intensified and fraudulent
intent may even be established. It has been said that
there is no better evidence of negligence than the
frequency of accidents.
2. NO
Reasoning The proof demonstrates the contrary.
3. NO
Ratio In view of the tremendous and imminent danger to the
public from the careless sale of poisons and medicines, we do
not deem it too rigid a rule to hold that the law penalizes any
druggist who shall sell one drug for another whether it be
through negligence or mistake.
Reasoning
The care required must be commensurate with the danger
involved, and the skill employed must correspond with the
superior knowledge of the business which the law
demands.
Turning to the law, certain points therein as bearing on our
present facts must be admitted. Thus, defendant is a
pharmacist. As a pharmacist, he is made responsible for
the quality of all drugs and poisons which he sells. And
finally it is provided that it shall be unlawful for him to sell
any drug or poison under any "fraudulent name." It is the
word "fraudulent" which has given the court trouble. What
did the Legislature intend to convey by this restrictive
adjective?
Were we to adhere to the technical definition of fraud it
would be difficult, if not impossible, to convict any druggist
of a violation of the law. The prosecution would have to
prove to a reasonable degree of certainty that the druggist
made a material representation; that it was false; that
when he made it he knew that it was false or made it
recklessly without any knowledge of its truth and as a
positive assertion; that he made it with the intention that it
should be acted upon by the purchaser; that the purchaser
acted in reliance upon it, and that the purchaser suffered
injury. Such a construction with a literal following of well-
known principles on the subject of fraud would strip the
law of at least much of its force. It would leave the
innocent purchaser of drugs, who must blindly trust in the
good faith and vigilance of the pharmacist, at the mercy of
any unscrupulous vendor. We should not, therefore,
without good reason so devitalize the law.
The rule of caveat emptor cannot apply to the purchase
and sale of drugs. The vendor and the vendee do not
stand at arms length as in ordinary transactions. An
imperative duty is on the druggist to take precautions to
prevent death or serious injury to anyone who relies on his
absolute honesty and peculiar learning. The nature of
drugs is such that examination would not avail the
purchaser any thing. It would be idle mockery for the
customer to make an examination of a compound of which
he can know nothing. Consequently, it must be that the
druggist warrants that he will deliver the drug called for.
Remembering particularly the care and skill which are
expected of druggists, that in some jurisdictions they are
liable even for their mistake and in others have the burden
placed upon them to establish that they were not
negligent, it cannot be that the Philippine Legislature
intended to use the word "fraudulent" in all its strictness. A
plea of accident and mistake cannot excuse for they
cannot take place unless there be wanton and criminal
carelessness and neglect. How the misfortune occurs is
unimportant, if under all the circumstances the fact of
occurrence is attributable to the druggist as a legal fault.
Rather considering the responsibility for the quality of
drugs which the law imposes on druggists and the position
of the word "fraudulent" in juxtaposition to "name," what is
made unlawful is the giving of a false name to the drug
asked for. This view is borne out by the Spanish
translation, which we are permitted to consult to explain
the English text. In the Spanish "supuesto" is used, and
this word is certainly not synonymous with "fraudulent."
The usual badges of fraud, falsity, deception, and injury
must be present - but not scienter.
Dispositive Judgment of the lower court, sentencing the
defendant to pay a fine of P100, with subsidiary imprisonment
in case of insolvency, and to pay the costs, is affirmed with the
costs of this instance against the appellant, without prejudice to
any civil action which may be instituted.


BPI V CA
216 SCRA 51 GUTIERREZ; November 26, 1992
FACTS
y In the afternoon of October 9, 1981, a person purporting to
be Eligia G. Fernando, who had a money market
placement as evidenced by a promissory note with a
maturity date of November 11, 1981 and a maturity value
of P2,462,243.19, called BPI's Money Market Department.
The caller wanted to preterminate the placement, but
Reginaldo Eustaquio, Dealer Trainee in BPI's Money
Market Department, told her "trading time" was over for
the day, which was a Friday, and suggested that she call
again the following week. The promissory note the caller
wanted to preterminate was a roll-over of an earlier 50-day
money market placement that had matured on September
24, 1981.
y Later that afternoon, Eustaquio conveyed the request for
pretermination to the officer who before had handled Eligia
G. Fernando's account, Penelope Bulan, but Eustaquio
was left to attend to the pretermination process.
y On October 12, 1981, the caller of the previous Friday
followed up with Eustaquio, merely by phone again, on the
pretermination of the placement. Although not familiar with
the voice of the real Eligia G. Fernando, Eustaquio "made
certain" that the caller was the real Eligia G. Fernando by
"verifying" that the details the caller gave about the
placement tallied with the details in "the ledger/folder" of
the account. Eustaquio knew the real Eligia G. Fernando
to be the Treasurer of Philippine American Life Insurance
Company (Philamlife) since he was handling Philamlife's
P
a
g
e
9

corporate money market account. But neither Eustaquio
nor Bulan who originally handled Fernando's account, nor
anybody else at BPI, bothered to call up Fernando at her
Philamlife office to verify the request for pretermination.
y Informed that the placement would yield less than the
maturity value because of its pretermination, the caller
insisted on the pretermination just the same and asked
that two checks be issued for the proceeds, one for
P1,800,000.00 and the second for the balance, and that
the checks be delivered to her office at Philamlife.
Eustaquio, thus, proceeded to prepare the "purchase
order slip" for the requested pretermination as required by
office procedure, and from his desk, the papers, following
the processing route, passed through the position analyst,
securities clerk, verifier clerk and documentation clerk,
before the two cashier's checks, nos. 021759 and 021760
for P1,800,000.00 and P613,215.16, respectively, both
payable to Eligia G. Fernando, covering the preterminated
placement, were prepared. The two cashier's checks,
together with the papers consisting of the money market
placement was to be preterminated and the promissory
note (No. 35623) to be preterminated, were sent to
Gerlanda E. de Castro and Celestino Sampiton, Jr.,
Manager and Administrative Assistant, respectively, in
BPI's Treasury Operations Department, both authorized
signatories for BPI, who signed the two checks that very
morning. Thereafter, the checks went to the dispatcher for
delivery.
y Later in the same morning, however, the same caller
changed the delivery instructions; instead of the checks
being delivered to her office at Philamlife, she would
herself pick up the checks or send her niece, Rosemarie
Fernando, to pick them up. Eustaquio then told her that if it
were her niece who was going to get the checks, her niece
would have to being a written authorization from her to
pick up the checks. This telephone conversation ended
with the caller's statement that "definitely" it would be her
niece, Rosemarie Fernando, who would pick up the
checks. Thus, Eustaquio had to hurriedly go to the
dispatcher, Bernardo Laderas, to tell him of the new
delivery instructions for the checks; in fact, he changed the
delivery instruction on the purchase order slip, writing
thereon "Rosemarie Fernando release only with authority
to pick up.
y It was, in fact Rosemarie Fernando who got the two
checks from the dispatcher, as shown by the delivery
receipt. As it turned out, the same person impersonated
both Eligia G. Fernando and Rosemarie Fernando.
Although the checks represented the termination proceeds
of Eligia G. Fernando's placement, not just a roll-over of
the placement, the dispatcher failed to get or to require the
surrender of the promissory note evidencing the
placement. There is also no showing that Eligia G.
Fernando's purported signature on the letter requesting
the pretermination and the latter authorizing Rosemarie
Fernando to pick up the two checks, both of which letters
were presumably handed to the dispatcher by Rosemarie
Fernando, was compared or verified with Eligia G.
Fernando's signature in BPI's file. Such purported
signature has been established to be forged although it
has a "close similarity" to the real signature of Eligia G.
Fernando. In the afternoon of October 13, 1981, a woman
who represented herself to be Eligia G. Fernando applied
at China Banking Corporation's Head Office for the
opening of a current account. She was accompanied and
introduced to Emily Sylianco Cuaso, Cash Supervisor, by
Antonio Concepcion whom Cuaso knew to have opened,
earlier that year, an account upon the introduction of
Valentin Co, a long-standing "valued client" of CBC. What
Cuaso indicated in the application form, however, was that
the new client was introduced by Valentin Co, and with her
initials on the form signifying her approval, she referred the
application to the New Accounts Section for processing.
As finally proceeds, the application form shows the
signature of "Eligia G. Fernando", "her" date of birth, sex,
civil status, nationality, occupation ("business woman"),
tax account number, and initial deposit of P10,000.00. This
final approval of the new current account is indicated on
the application form by the initials of Regina G. Dy,
Cashier, who did not interview the new client but affixed
her initials on the application form after reviewing it.
y On October 14, 1981, the woman holding herself out as
Eligia G. Fernando deposited the two checks in
controversy with Current Account No. 126310-3. Her
endorsement on the two checks was found to conform with
the depositor's specimen signature. CBC's guaranty of
prior endorsements and/or lack of endorsement was then
stamped on the two checks, which CBC forthwith sent to
clearing and which BPI cleared on the same day.
y Two days after, withdrawals began on Current Account
No. 26310-3: On October 16, 1981, by means of Check
No. 240005 dated the same day for P1,000,000.00,
payable to "cash", which the woman holding herself out as
Eligia G. Fernando encashed over the counter, and Check
No. 240003 dated October 15, 1981 for P48,500.00,
payable to "cash" which was received through clearing
from PNB Pasay Branch; on October 19, 1981, by means
of Check No. 240006 dated the same day for
P1,000,000.00, payable to "cash," which the woman
identifying herself as Eligia G. Fernando encashed over
the counter; on October 22, 1981, by means of Check No.
240007 dated the same day for P370,000.00, payable to
"cash" which the woman herself also encashed over the
counter; and on November 4, 1981, by means of Check
No. 240001 dated November 3, 1981 for P4,100.00,
payable to "cash," which was received through clearing
from Far East Bank. The last withdrawal on November 4,
1981 left Current Account No. 26310-3 with a balance of
only P571.61.
y On November 11, 1981, the maturity date of Eligia G.
Fernado's money market placement with BPI, the real
Eligia G. Fernando went to BPI for the roll-over of her
placement. She disclaimed having preterminated her
placement on October 12, 1981. She executed an affidavit
stating that while she was the payee of the two checks in
controversy, she never received nor endorsed them and
that her purported signature on the back of the checks was
not hers but forged. With her surrender of the original of
the promissory note (No. 35623 with maturity value of
P2,462,243.19) evidencing the placement which matured
that day, BPI issued her a new promissory note (No.
40314 with maturity date of December 23, 1981 and
maturity value of P2,500.266.77) to evidence a roll-over of
the placement.
y On November 12, 1981, supported by Eligia G.
Fernando's affidavit, BPI returned the two checks in
controversy to CBC for the reason "Payee's endorsement
forged". CBC, in turn, returned the checks for reason
"Beyond Clearing Time". These incidents led to the filing of
this case with the Arbitration Committee.
y The Arbitration Committee ruled in favor of BPI and
ordered CBC to pay the former the amount of
P1,206,607.58 with interest thereon at 12% per annum
from August 12, 1983.
y However, upon CBCs motion for reconsideration, the
Board of Directors of the PCHC reversed the Arbitration
Committee's decision and dismissed the complaint of BPI
while ordering it to pay CBC the sum of P1,206,607.58.
P
a
g
e
1
0

y BPI then filed a petition for review with the Regional Trial
Court of Makati who dismissed said petition but modified
the award by including a provision for attorneys fees in
favor of CBC, among others.
y The court of appeals affirmed the trial courts decision.
ISSUES
1. WON the collecting bank has absolute liability on a warranty
of the validity of all prior endorsements stamped at the back of
the checks
2. In the event that the payee's signature is forged, WON the
drawer/drawee bank (in this case BPI) may claim
reimbursement from the collecting bank which earlier paid the
proceeds of the checks after the same checks were cleared
HELD
1. NO
BPI contends that respondent CBC's clear warranty that
"all prior endorsements and/or lack of endorsements
guaranteed" stamped at the back of the checks was an
unrestrictive clearing guaranty that all prior endorsements
in the checks are genuine. Under this premise petitioner
BPI asserts that the presenting or collecting bank,
respondent CBC, had an unquestioned liability when it
turned out that the payee's signature on the checks were
forged. With these circumstances, petitioner BPI maintains
that considerations of relative negligence become totally
irrelevant.
In presenting the checks for clearing and for payment, the
collecting bank made an express guarantee on the validity
of "all prior endorsements." Thus, stamped at the back of
the checks are the clear warranty: ALL PRIOR
ENDORSEMENTS AND/OR LACK OF ENDORSEMENTS
GUARANTEED. Without such warranty, the drawee bank
would not have paid on the checks. No amount of legal
jargon can reverse the clear meaning of the warranty. As
the warranty has proven to be false and inaccurate, the
defendant is liable for any damage arising out of the falsity
of its representation.
Apropos the matter of forgery in endorsements, this Court
has emphasized that the collecting bank or last endorser
generally suffers the loss because it has the duty to
ascertain the genuineness of all prior endorsements
considering that the act of presenting the check for
payment to the drawee is an assertion that the party
making the presentment has done its duty to ascertain the
genuineness of the endorsements. If the drawee-bank
discovers that the signature of the payee was forged after
it has paid the amount of the check to the holder thereof, it
can recover the amount paid from the collecting bank.
However, the point that comes uppermost is whether the
drawee bank was negligent in failing to discover the
alteration or the forgery.
The general rule under Section 23 of the Negotiable
Instruments Law is to the effect that a forged signature is
"wholly inoperative", and payment made "through or under
such signature" is ineffectual or does not discharge the
instrument. The exception to this rule is when the party
relying in the forgery is "precluded from setting up the
forgery or want of authority. In this jurisdiction we
recognize negligence of the party invoking forgery as an
exception to the general rule.
In the present petition the payee's names in the checks
were forged. Following the general rule, the checks are
"wholly inoperative" and of no effect. However, the
underlying circumstances of the case show that the
general rule on forgery is not applicable. The issue as to
who between the parties should bear the loss in the
payment of the forged checks necessities the
determination of the rights and liabilities of the parties
involved in the controversy in relation to the forged checks.
The records show that petitioner BPI as drawee bank and
respondent CBC as representing or collecting bank were
both negligent resulting in the encashment of the forged
checks.
The Arbitration Committee in its decision analyzed the
negligence of the employees of petitioner BPI involved in
the processing of the pre-termination of Eligia G.
Fernando's money market placement and in the issuance
and delivery of the subject checks in this wise: a) The
impostor could have been readily unmasked by a mere
telephone call, which nobody in BPI bothered to make to
Eligia G. Fernando, a vice-president of Philamlife; b) The
officer who used to handle Eligia G. Fernando's account
did not do anything about the account's pre-termination; c)
Again no verification appears to have been made on Eligia
G. Fernando's purported signature on the letter requesting
the pre-termination and the letter authorizing her niece to
pick-up the checks, yet, her signature was in BPI's file;
and d) Another step that could have foiled the fraud, but
which BPI neglected to take, was requiring before the two
checks in controversy were delivered, the surrender of the
promissory note evidencing the money market placement
that was supposedly pre-terminated. The Arbitration
Committee, however, belittled petitioner BPI's negligence
compared to that of respondent CBC which it declared as
graver and the proximate cause of the loss of the subject
checks to the impostor who impersonated Eligia G.
Fernando.
The PCHC Board of Directors, however, stated that these
withdrawals, without any further showing that the CBC
employees had actual knowledge of the infirmity or defect,
or knowledge of such facts (Sec. 56, Negotiable
Instruments Law) that their action in accepting their checks
for deposit and allowing the withdrawals against the same
amounted to bad faith cannot be considered as basis for
holding CBC liable.
Banks handle daily transactions involving millions of
pesos. By the very nature of their work the degree of
responsibility, care and trustworthiness expected of their
employees and officials is far greater than those of
ordinary clerks and employees. For obvious reasons, the
banks are expected to exercise the highest degree of
diligence in the selection and supervision of their
employees.
In the present case, there is no question that the banks
were negligent in the selection and supervision of their
employees. The Arbitration Committee, the PCHC Board
of Directors and the lower court, however disagree in the
evaluation of the degree of negligence of the banks. While
the Arbitration Committee declared the negligence of
respondent CBC graver, the PCHC Board of Directors and
the lower courts declared that petitioner BPI's negligence
was graver. To the extent that the degree of negligence is
equated to the proximate cause of the loss, we rule that
the issue as to whose negligence is graver is relevant. No
matter how many justifications both banks present to avoid
responsibility, they cannot erase the fact that they were
both guilty in not exercising extraordinary diligence in the
selection and supervision of their employees.
2. NO
The next issue hinges on whose negligence was the
proximate cause of the payment of the forged checks by
an impostor. Petitioner BPI insists that the doctrine of last
clear chance should have been applied considering the
circumstances of this case. Under this doctrine, where
both parties were negligent and such negligence were not
contemporaneous, the person who has the last fair chance
to avoid the impending harm and fails to do so is
P
a
g
e
1
1

chargeable with the consequences, without reference to
the prior negligence of the other party.
Applying these principles, petitioner BPI's reliance on the
doctrine of last clear chance to clear it from liability is not
well-taken. CBC had no prior notice of the fraud
perpetrated by BPI's employees on the pretermination of
Eligia G. Fernando's money market placement. Moreover,
Fernando is not a depositor of CBC. Hence, a comparison
of the signature of Eligia G. Fernando with that of the
impostor Eligia G. Fernando, which respondent CBC did,
could not have resulted in the discovery of the fraud.
Hence, respondent CBC had no way to discover the fraud
at all. In fact the records fail to show that respondent CBC
had knowledge, actual or implied, of the fraud perpetrated
by the impostor and the employees of BPI.
BPI further argues that the acts and omissions of
respondent CBC are the cause "that set into motion the
actual and continuous sequence of events that produced
the injury and without which the result would not have
occurred." Petitioner BPI anchors its argument on its
stance that there was "a gap, a hiatus, an interval between
the issuance and delivery of said checks by petitioner BPI
to the impostor and their actual payment of CBC to the
impostor. Petitioner BPI points out that the gap of one (1)
day that elapsed from its issuance and delivery of the
checks to the impostor is material on the issue of
proximate cause. At this stage, according to petitioner BPI,
there was yet no loss and the impostor could have decided
to desist from completing the same plan and could have
held to the checks without negotiating them.
Petitioner BPI's contention that CBC alone should bear the
loss must fail. The gap of one (1) day between the
issuance and delivery of the checks bearing the impostor's
name as payee and the impostor's negotiating the said
forged checks by opening an account and depositing the
same with respondent CBC is not controlling. It is not
unnatural or unexpected that after taking the risk of
impersonating Eligia G. Fernando with the connivance of
BPI's employees, the impostor would complete her
deception by encashing the forged checks. There is
therefore, greater reason to rule that the proximate cause
of the payment of the forged checks by an impostor was
due to the negligence of petitioner BPI. This finding,
notwithstanding, we are not inclined to rule that petitioner
BPI must solely bear the loss of P2,413,215.16, the total
amount of the two (2) forged checks. Due care on the part
of CBC could have prevented any loss.
The Court cannot ignore the fact that the CBC employees
closed their eyes to the suspicious circumstances of huge
over-the-counter withdrawals made immediately after the
account was opened. The opening of the account itself
was accompanied by inexplicable acts clearly showing
negligence. And while we do not apply the last clear
chance doctrine as controlling in this case, still the CBC
employees had ample opportunity to avoid the harm which
befell both CBC and BPI. They let the opportunity slip by
when the ordinary prudence expected of bank employees
would have sufficed to seize it.
Both banks were negligent in the selection and supervision
of their employees resulting in the encashment of the
forged checks by an impostor. Both banks were not able to
overcome the presumption of negligence in the selection
and supervision of their employees. It was the gross
negligence of the employees of both banks which resulted
in the fraud and the subsequent loss. While it is true that
petitioner BPI's negligence may have been the proximate
cause of the loss, respondent CBC's negligence
contributed equally to the success of the impostor in
encashing the proceeds of the forged checks. Under these
circumstances, we apply Article 2179 of the Civil Code to
the effect that while respondent CBC may recover its
losses, such losses are subject to mitigation by the courts.
Disposition The questioned Decision and Resolution are
MODIFIED. BPI shall be responsible for 60% while CBC shall
share 40% of the loss of P2,413,215.16


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


P
a
g
e
1
2


INSANITY
Art. 2180. The obligation imposed by Article 2176 is
demandable not only for one's own acts or omissions, but also
for those of persons for whom one is responsible.
The father and, in case of his death or incapacity, the mother,
are responsible for the damages caused by the minor children
who live in their company.
Guardians are liable for damages caused by the minors or
incapacitated persons who are under their authority and live in
their company.
The owners and managers of an establishment or enterprise
are likewise responsible for damages caused by their
employees in the service of the branches in which the latter are
employed or on the occasion of their functions.
Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope of
their assigned tasks, even though the former are not engaged
in any business or industry.
The State is responsible in like manner when it acts through a
special agent; but not when the damage has been caused by
the official to whom the task done properly pertains, in which
case what is provided in Article 2176 shall be applicable.
Lastly, teachers or heads of establishments of arts and trades
shall be liable for damages caused by their pupils and students
or apprentices, so long as they remain in their custody.
The responsibility treated of in this article shall cease when the
persons herein mentioned prove that they observed all the
diligence of a good father of a family to prevent damage.
Art. 2181. Whoever pays for the damage caused by his
dependents or employees may recover from the latter what he
has paid or delivered in satisfaction of the claim.
Art. 2182. If the minor or insane person causing damage has
no parents or guardian, the minor or insane person shall be
answerable with his own property in an action against him
where a guardian ad litem shall be appointed.
US V BAGGAY
20 PHIL 142 TORRES; September 1, 1911
NATURE
Appeal by the defendant from the judgment rendered on April
28, 1910, whereby he was declared exempt from criminal
liability but was obliged to indemnify the heirs if the murdered
woman, Bil-liingan, in the sum of P1,000, to pay the costs in
the case and to be confined in an institution for the insane until
further order of the court.
FACTS
y About the 4th of October, 1909, several persons were
assembled in the defendant's house in the township of
Penarrubia, Abra, Province of Ilocos Sur, for the purpose
of holding a song service called "buni" according to the
Tinguian custom, when he, the non-Christian Baggay,
without provocation suddenly attacked the woman Bil-
liingan with a bolo, inflicting a serious wound on her head
from which she expired immediately; and with the same
bolo he like wise inflicted various wounds on the women
named Calabayan, Agueng, Quisamay, Calapini, and on
his own mother, named Dioalan.
y For this reason the provincial fiscal filed a complaint in the
court of Ilocos Sur, dated February 15, charging the non-
Christian Baggay, jr., with murder, because of the violent
death of the woman Bil-liingan. This cause was instituted
separately from the other, No. 1109, for lesiones. After trial
and proof that the defendant was suffering from mental
aberration, the judge on April 28 rendered the judgment
cited above, whereupon the defendant's counsel appealed
to this court.
ISSUE
WON an insane person, exempt from criminal liability can still
be civilly liable
HELD
YES
Ratio Civil liability accompanies criminal liability, because
every person liable criminally for a crime or misdemeanor is
also liable for reparation of damage and for indemnification of
the harm done, but there may be civil liability because of acts
ordinarily punishable, although the law has declared their
perpetrators exempt from criminal liability.
Reasoning
Such is the case of a lunatic or insane person who, in spite
of his irresponsibility on account of the deplorable
condition of his deranged mind, is still reasonably and
justly liable with his property for the consequences of his
acts, even though they be performed unwittingly, for the
reason that his fellows ought not to suffer for the
disastrous results of his harmful acts more than is
necessary, in spite of his unfortunate condition. Law and
society are under obligation to protect him during his
illness and so when he is declared to be liable with his
property for reparation and indemnification, he is still
entitled to the benefit of what is necessary for his decent
maintenance, but this protection does not exclude liability
for damage caused to those who may have the misfortune
to suffer the consequences of his acts.
Article 17 of the Penal Code states:
Every person criminally liable for a crime or misdemeanor
is also civilly liable.
Article 18 of the same code says:
The exemption from criminal liability declared in Nos. 1, 2,
3, 7, and 10 of article 8 does not include exemption from
civil liability, which shall be enforced, subject to the
following:
In cases 1, 2, and 3, the persons who are civilly liable for
acts committed by a lunatic or imbecile, or a person under
9 years of age, or over this age and under 15, who has not
acted with the exercise of judgment, are those who have
them under their authority, legal guardianship or power,
unless they prove that there was no blame or negligence
on their part.
Should there be no person having them under his
authority, legal guardian, or power, if such person be
insolvent, the said lunatics, imbeciles, or minors shall
answer with their own property, excepting that part which
is exempted for their support in accordance with the civil
law.
DISPOSITION Therefore, the judgment appealed from being
in accordance with law, affirmation thereof is proper, and it is
hereby affirmed, with costs against the appellant.