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FIRST DIVISION

[G.R. No. L-24101. September 30, 1970.]


MARIA TERESA Y. CUADRA, minor represented by her father ULISES P. CUADRA, ET
AL.,Plaintiffs-Appellees, v. ALFONSO MONFORT, Defendant-Appellant.
Rodolfo J. Herman for Plaintiffs-Appellees.
Luis G. Torres & Abraham E. Tionko for defendant appellant.

DECISION

MAKALINTAL, J.:

This is an action for damages based on quasi-delict, decided by the Court of First Instance of Negros
Occidental favorably to the plaintiffs and appealed by the defendant to the Court of Appeals, which
certified the same to us since the facts are not in issue.
Maria Teresa Cuadra, 12, and Maria Teresa Monfort, 13, were classmates in Grade Six at the Mabini
Elementary School in Bacolod City. On July 9, 1962 their teacher assigned them, together with three
other classmates, to weed the grass in the school premises. While thus engaged Maria Teresa Monfort
found a plastic headband, an ornamental object commonly worn by young girls over their hair.
Jokingly she said aloud that she had found an earthworm and, evidently to frighten the Cuadra girl,
tossed the object at her. At that precise moment the latter turned around to face her friend, and the
object hit her right eye. Smarting from the pain, she rubbed the injured part and treated it with some
powder. The next day, July 10, the eye became swollen and it was then that the girl related the
incident to her parents, who thereupon took her to a doctor for treatment. She underwent surgical
operation twice, first on July 20 and again on August 4, 1962, and stayed in the hospital for a total of
twenty-three days, for all of which the parents spent the sum of P1,703.75. Despite the medical
efforts, however, Maria Teresa Cuadra completely lost the sight of her right eye.
In the civil suit subsequently instituted by the parents in behalf of their minor daughter against
Alfonso Monfort, Maria Teresa Monforts father, the defendant was ordered to pay P1,703.00 as actual
damages; P20,000.00 as moral damages; and P2,000.00 as attorneys fees, plus the costs of the suit.
The legal issue posed in this appeal is the liability of a parent for an act of his minor child which causes
damage to another under the specific facts related above and the applicable provisions of the Civil
Code, particularly Articles 2176 and 2180 thereof, which read:jgc:chanrobles.com.ph
"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."cralaw virtua1aw library
"ART. 2180. The obligation imposed by Article 2176 is demandable not only for ones 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.
x

The responsibility treated of in this Article shall cease when the persons herein mentioned prove that
they observed all the diligence of a good father of a family to prevent damage."cralaw virtua1aw
library
The underlying basis of the liability imposed by Article 2176 is the fault or negligence accompanying
the act or the omission, there being no willfulness or intent to cause damage thereby. When the act or
omission is that of one person for whom another is responsible, the latter then becomes himself liable
under Article 2180, in the different cases enumerated therein, such as that of the father or the mother
under the circumstances above quoted. The basis of this vicarious, although primary, liability is, as in
Article 2176, 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. This is the clear and
logical inference that may be drawn from the last paragraph of Article 2180, which states "that 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."cralaw virtua1aw library
Since the fact thus required to be proven is a matter of defense, the burden of proof necessarily rests
on the defendant. But what is the exact degree of diligence contemplated, and how does a parent
prove it in connection with a particular act or omission of a minor child, especially when it takes place
in his absence or outside his immediate company? Obviously there can be no meticulously calibrated
measure applicable; and when the law simply refers to "all the diligence of a good father of the family
to prevent damage," it implies a consideration of the attendant circumstances in every individual case,
to determine whether or not by the exercise of such diligence the damage could have been prevented.
In the present case there is nothing from which it may be inferred that the defendant 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 less guard
against. Nor did it reveal any mischievous propensity, or indeed any trait in the childs character which
would reflect unfavorably on her upbringing and for which the blame could be attributed to her
parents.
The victim, no doubt, deserves no little commiseration and sympathy for the tragedy that befell her.
But if the defendant is at all obligated to compensate her suffering, the obligation has no legal
sanction enforceable in court, but only the moral compulsion of good conscience.
The decision appealed from is reversed, and the complaint is dismissed, without pronouncement as to
costs.
Reyes, J.B.L., Actg. C.J., Dizon, Zaldivar, Castro, Teehankee, Villamor and Makasiar, JJ., concur.
Concepcion, C.J., is on leave.
Fernando, J., did not take part.
Barredo, J., dissents in a separate opinion.
Separate Opinions
BARREDO, J., dissenting:chanrob1es virtual 1aw library
I am afraid I cannot go along with my esteemed colleagues in holding that the act of appellants
daughter does not constitute fault within the contemplation of our law on torts. She was 13 years and
should have known that by jokingly saying "aloud that she had found an earthworm and, evidently to
frighten the Cuadra girl, tossed the object at her," it was likely that something would happen to her
friend, as in fact, she was hurt.

As to the liability of appellant as father, I prefer to hold that there being no evidence that he had
properly advised his daughter to behave properly and not to play dangerous jokes on her classmate
and playmates, he can be liable under Article 2180 of the Civil Code. There is nothing in the record to
show that he had done anything at all to even try to minimize the damage caused upon plaintiff child.
FIRST DIVISION
G.R. No. 141538 : March 23, 2004
Hermana R. Cerezo, Petitioner, v. David Tuazon, Respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari[1 to annul the Resolution[2 dated 21 October 1999
of the Court of Appeals in CA-G.R. SP No. 53572, as well as its Resolution dated 20 January
2000 denying the motion for reconsideration.The Court of Appeals denied the petition for
annulment of the Decision[3 dated 30 May 1995 rendered by the Regional Trial Court of
Angeles City, Branch 56 (trial court), in Civil Case No. 7415.The trial court ordered
petitioner Hermana R. Cerezo (Mrs. Cerezo) to pay respondent David Tuazon (Tuazon)
actual damages, loss of earnings, moral damages, and costs of suit.
Antecedent Facts
Around noontime of 26 June 1993, a Country Bus Lines passenger bus with plate number
NYA 241 collided with a tricycle bearing plate number TC RV 126 along Captain M. Palo
Street, Sta. Ines, Mabalacat, Pampanga.On 1 October 1993, tricycle driver Tuazon filed a
complaint for damages against Mrs. Cerezo, as owner of the bus line, her husband Attorney
Juan Cerezo (Atty. Cerezo), and bus driver Danilo A. Foronda (Foronda).The complaint
alleged that:
7.At the time of the incident, plaintiff [Tuazon] was in his proper lane when the secondnamed defendant [Foronda], being then the driver and person in charge of the Country Bus
with plate number NYA 241, did then and there willfully, unlawfully, and feloniously operate
the said motor vehicle in a negligent, careless, and imprudent manner without due regard
to traffic rules and regulations, there being a Slow Down sign near the scene of the
incident, and without taking the necessary precaution to prevent loss of lives or injuries, his
negligence, carelessness and imprudence resulted to severe damage to the tricycle and
serious physical injuries to plaintiff thus making him unable to walk and becoming disabled,
with his thumb and middle finger on the left hand being cut[.][4
On 1 October 1993, Tuazon filed a motion to litigate as a pauper.Subsequently, the trial
court issued summons against Atty. Cerezo and Mrs. Cerezo (the Cerezo spouses) at the
Makati address stated in the complaint.However, the summons was returned unserved
on 10 November 1993 as the Cerezo spouses no longer held office nor resided in
Makati.On 18 April 1994, the trial court issued alias summons against the Cerezo spouses at

their address in Barangay Sta. Maria, Camiling, Tarlac.The alias summons and a copy of the
complaint were finally served on 20 April 1994 at the office of Atty. Cerezo, who was then
working as Tarlac Provincial Prosecutor.Atty. Cerezo reacted angrily on learning of the
service of summons upon his person.Atty. Cerezo allegedly told Sheriff William
Canlas: Punyeta, ano ang gusto mong mangyari?Gusto mong hindi ka makalabas ng buhay
dito?Teritoryo ko ito.Wala ka sa teritoryo mo.[5
The records show that the Cerezo spouses participated in the proceedings before the trial
court.The Cerezo spouses filed a comment with motion for bill of particulars dated 29 April
1994 and a reply to opposition to comment with motion dated 13 June 1994.[6 On 1 August
1994, the trial court issued an order directing the Cerezo spouses to file a comment to the
opposition to the bill of particulars.Atty. Elpidio B. Valera (Atty. Valera) of Valera and Valera
Law Offices appeared on behalf of the Cerezo spouses. On 29 August 1994, Atty. Valera
filed an urgent ex-parte motion praying for the resolution of Tuazons motion to litigate as a
pauper and for the issuance of new summons on the Cerezo spouses to satisfy proper
service in accordance with the Rules of Court.[7
On 30 August 1994, the trial court issued an order resolving Tuazons motion to litigate as a
pauper and the Cerezo spouses urgent ex-parte motion.The order reads:
At the hearing on August 30, 1994, the plaintiff [Tuazon] testified that he is presently
jobless; that at the time of the filing of this case, his son who is working in Malaysia helps
him and sends him once in a while P300.00 a month, and that he does not have any real
property.Attached to the Motion to Litigate as Pauper are his Affidavit that he is
unemployed; a Certification by the Barangay Captain of his poblacion that his income is not
enough for his familys subsistence; and a Certification by the Office of the Municipal
Assessor that he has no landholding in the Municipality of Mabalacat, Province of
Pampanga.
The Court is satisfied from the unrebutted testimony of the plaintiff that he is entitled to
prosecute his complaint in this case as a pauper under existing rules.
On the other hand, the Court denies the prayer in the Appearance and Urgent Ex-Parte
Motion requiring new summons to be served to the defendants.The Court is of the opinion
that any infirmity in the service of the summons to the defendant before plaintiff was
allowed to prosecute his complaint in this case as a pauper has been cured by this Order.
If within 15 days from receipt of this Order, the defendants do not question on appeal this
Order of this Court, the Court shall proceed to resolve the Motion for Bill of Particulars.[8
On 27 September 1994, the Cerezo spouses filed an urgent ex-parte motion for
reconsideration.The trial court denied the motion for reconsideration.
On 14 November 1994, the trial court issued an order directing the Cerezo spouses to file
their answer within fifteen days from receipt of the order.The Cerezo spouses did not file an
answer.On 27 January 1995, Tuazon filed a motion to declare the Cerezo spouses in
default.On 6 February 1995, the trial court issued an order declaring the Cerezo spouses in
default and authorizing Tuazon to present his evidence. [9

On 30 May 1995, after considering Tuazons testimonial and documentary evidence, the trial
court ruled in Tuazons favor.The trial court made no pronouncement on Forondas liability
because there was no service of summons on him.The trial court did not hold Atty. Cerezo
liable as Tuazon failed to show that Mrs. Cerezos business benefited the family, pursuant to
Article 121(3) of the Family Code.The trial court held Mrs. Cerezo solely liable for the
damages sustained by Tuazon arising from the negligence of Mrs. Cerezos employee,
pursuant to Article 2180 of the Civil Code.The dispositive portion of the trial courts decision
reads:
WHEREFORE, judgment is hereby rendered ordering the defendant Hermana Cerezo to pay
the plaintiff:
a) For Actual Damages
1)Expenses for operation and medical
Treatment-P69,485.35
2)Cost of repair of the tricycle-39,921.00
b)For loss of earnings -43,300.00
c)For moral damages -20,000.00
d)And to pay the cost of the suit.
The docket fees and other expenses in the filing of this suit shall be lien on whatever
judgment may be rendered in favor of the plaintiff.
SO ORDERED.[10
Mrs. Cerezo received a copy of the decision on 25 June 1995.On 10 July 1995, Mrs. Cerezo
filed before the trial court a petition for relief from judgment on the grounds of fraud,
mistake or excusable negligence.Testifying before the trial court, both Mrs. Cerezo and Atty.
Valera denied receipt of notices of hearings and of orders of the court.Atty. Valera added
that he received no notice before or during the 8 May 1995 elections, when he was a
senatorial candidate for the KBL Party, and very busy, using his office and residence as
Party National Headquarters.Atty. Valera claimed that he was able to read the decision of
the trial court only after Mrs. Cerezo sent him a copy.[11
Tuazon did not testify but presented documentary evidence to prove the participation of the
Cerezo spouses in the case.Tuazon presented the following exhibits:
Exhibit 1-Sheriffs return and summons;
Exhibit 1-A-Alias summons dated April 20, 1994;
Exhibit 2-Comment with Motion;

Exhibit 3-Minutes of the hearing held on August 1, 1994;


Exhibit 3-A-Signature of defendants counsel;
Exhibit 4-Minutes of the hearing held on August 30, 1994;
Exhibit 4-A-Signature of the defendants counsel;
Exhibit 5-Appearance and Urgent Ex-Parte Motion;
Exhibit 6-Order dated November 14, 1994;
Exhibit 6-A-Postal certification dated January 13, 1995;
Exhibit 7-Order dated February [illegible];
Exhibit 7-A-Courts return slip addressed to Atty. Elpidio
Valera;
Exhibit 7-B-Courts return slip addressed to Spouses Juan
and Hermana Cerezo;
Exhibit 8-Decision dated May [30], 1995
Exhibit 8-A-Courts return slip addressed to defendant Hermana
Cerezo;
Exhibit 8-B-Courts return slip addressed to defendants counsel,
Atty. Elpidio Valera;
Exhibit 9-Order dated September 21, 1995;
Exhibit 9-A-Second Page of Exhibit 9;
Exhibit 9-B-Third page of Exhibit 9;
Exhibit 9-C-Fourth page of Exhibit 9;
Exhibit 9-D-Courts returnslip addressed to Atty. Elpidio Valera;
and
Exhibit 9-E- Courts return slip addressed to plaintiffs counsel,

Atty. Norman Dick de Guzman.[12


On 4 March 1998, the trial court issued an order[13 denying the petition for relief from
judgment.The trial court stated that having received the decision on 25 June 1995, the
Cerezo spouses should have filed a notice of appeal instead of resorting to a petition for
relief from judgment.The trial court refused to grant relief from judgment because the
Cerezo spouses could have availed of the remedy of appeal. Moreover, the Cerezo spouses
not only failed to prove fraud, accident, mistake or excusable negligence by conclusive
evidence, they also failed to prove that they had a good and substantial defense.The trial
court noted that the Cerezo spouses failed to appeal because they relied on an expected
settlement of the case.
The Cerezo spouses subsequently filed before the Court of Appeals a petition
for certiorari under Section 1 of Rule 65. The petition was docketed as CA-G.R. SP No.
48132.[14The petition questioned whether the trial court acquired jurisdiction over the
case considering there was no service of summons on Foronda, whom the Cerezo spouses
claimed was an indispensable party. In a resolution[15 dated 21 January 1999, the Court of
Appeals denied the petition for certiorari and affirmed the trial courts order denying the
petition for relief from judgment.The Court of Appeals declared that the Cerezo spouses
failure to file an answer was due to their own negligence, considering that they continued
to participate in the proceedings without filing an answer.There was also nothing in the
records to show that the Cerezo spouses actually offered a reasonable settlement to
Tuazon.The Court of Appeals also denied Cerezo spouses motion for reconsideration for lack
of merit.
The Cerezo spouses filed before this Court a petition for review on certiorari under Rule
45.Atty. Cerezo himself signed the petition, docketed as G.R. No. 137593.On 13 April 1999,
this Court rendered a resolution denying the petition for review on certiorari for failure to
attach an affidavit of service of copies of the petition to the Court of Appeals and to the
adverse parties.Even if the petition complied with this requirement, the Court would still
have denied the petition as the Cerezo spouses failed to show that the Court of Appeals
committed a reversible error.The Courts resolution was entered in the Book of Entries and
Judgments when it became final and executory on 28 June 1999.[16
Undaunted, the Cerezo spouses filed before the Court of Appeals on 6 July 1999 a petition
for annulment of judgmentunder Rule 47 with prayer for restraining order.Atty. Valera and
Atty. Dionisio S. Daga (Atty. Daga) represented Mrs. Cerezo in the petition, docketed as CAG.R. SP No. 53572.[17 The petition prayed for the annulment of the 30 May 1995 decision of
the trial court and for the issuance of a writ of preliminary injunction enjoining execution of
the trial courts decision pending resolution of the petition.
The Court of Appeals denied the petition for annulment of judgment in a resolution dated 21
October 1999.The resolution reads in part:
In this case, records show that the petitioner previously filed with the lower court a Petition
for Relief from Judgment on the ground that they were wrongfully declared in default while
waiting for an amicable settlement of the complaint for damages.The court a quo correctly
ruled that such petition is without merit.The defendant spouses admit that during the initial
hearing they appeared before the court and even mentioned the need for an amicable
settlement.Thus, the lower court acquired jurisdiction over the defendant spouses.

Therefore, petitioner having availed of a petition for relief, the remedy of an annulment of
judgment is no longer available.The proper action for the petitioner is to appeal the order of
the lower court denying the petition for relief.
Wherefore, the instant petition could not be given due course and should accordingly be
dismissed.
SO ORDERED.[18
On 20 January 2000, the Court of Appeals denied the Cerezo spouses motion for
reconsideration.[19 The Court of Appeals stated:
A distinction should be made between a courts jurisdiction over a person and its jurisdiction
over the subject matter of a case.The former is acquired by the proper service of summons
or by the parties voluntary appearance; while the latter is conferred by law.
Resolving the matter of jurisdiction over the subject matter, Section 19(1) of B[atas]
P[ambansa] 129 provides that Regional Trial Courts shall exercise exclusive original
jurisdiction in all civil actions in which the subject of the litigation is incapable of pecuniary
estimation.Thus it was proper for the lower court to decide the instant case for damages.
Unlike jurisdiction over the subject matter of a case which is absolute and conferred by law;
any defects [sic] in the acquisition of jurisdiction over a person (i.e., improper filing of civil
complaint or improper service of summons) may be waived by the voluntary appearance of
parties.
The lower court admits the fact that no summons was served on defendant Foronda.Thus,
jurisdiction over the person of defendant Foronda was not acquired, for which reason he
was not held liable in this case.However, it has been proven that jurisdiction over the other
defendants was validly acquired by the court a quo.
The defendant spouses admit to having appeared in the initial hearings and in the hearing
for plaintiffs motion to litigate as a pauper.They even mentioned conferences where
attempts were made to reach an amicable settlement with plaintiff.However, the possibility
of amicable settlement is not a good and substantial defense which will warrant the
granting of said petition.
xxx
Assuming arguendo that private respondent failed to reserve his right to institute a
separate action for damages in the criminal action, the petitioner cannot now raise such
issue and question the lower courts jurisdiction because petitioner and her husband have
waived such right by voluntarily appearing in the civil case for damages.Therefore, the
findings and the decision of the lower court may bind them.
Records show that the petitioner previously filed with the lower court a Petition for Relief
from Judgment on the ground that they were wrongfully declared in default while waiting
for an amicable settlement of the complaint for damages.The court a quo correctly ruled
that such petition is without merit, jurisdiction having been acquired by the voluntary
appearance of defendant spouses.

Once again, it bears stressing that having availed of a petition for relief, the remedy of
annulment of judgment is no longer available.
Based on the foregoing, the motion for reconsideration could not be given due course and is
hereby DENIED.
SO ORDERED.[20
The Issues
On 7 February 2000, Mrs. Cerezo, this time with Atty. Daga alone representing her, filed the
present petition for review on certiorari before this Court.Mrs. Cerezo claims that:
1.In dismissing the Petition for Annulment of Judgment, the Court of Appeals assumes that
the issues raised in the petition for annulment is based on extrinsic fraud related to the
denied petition for relief notwithstanding that the grounds relied upon involves questions of
lack of jurisdiction.
2.In dismissing the Petition for Annulment, the Court of Appeals disregarded the allegation
that the lower court[s] findings of negligence against defendant-driver Danilo Foronda
[whom] the lower court did not summon is null and void for want of due process and
consequently, such findings of negligence which is [sic] null and void cannot become the
basis of the lower court to adjudge petitioner-employer liable for civil damages.
3.In dismissing the Petition for Annulment, the Court of Appeals ignored the allegation that
defendant-driver Danilo A. Foronda whose negligence is the main issue is an indispensable
party whose presence is compulsory but [whom] the lower court did not summon.
4.In dismissing the Petition for Annulment, the Court of Appeals ruled that
assuming arguendo that private respondent failed to reserve his right to institute a
separate action for damages in the criminal action, the petitioner cannot now raise such
issue and question the lower courts jurisdiction because petitioner [has] waived such right
by voluntarily appearing in the civil case for damages notwithstanding that lack of
jurisdiction cannot be waived.[21
The Courts Ruling
The petition has no merit.As the issues are interrelated, we shall discuss them jointly.
Remedies Available
to a Party Declared in Default
An examination of the records of the entire proceedings shows that three lawyers filed and
signed pleadings on behalf of Mrs. Cerezo, namely, Atty. Daga, Atty. Valera, and Atty.
Cerezo.Despite their number, Mrs. Cerezos counsels failed to avail of the proper remedies.It
is either by sheer ignorance or by malicious manipulation of legal technicalities that they
have managed to delay the disposition of the present case, to the detriment of pauper
litigant Tuazon.

Mrs. Cerezo claims she did not receive any copy of the order declaring the Cerezo spouses
in default.Mrs. Cerezo asserts that she only came to know of the default order on 25 June
1995, when she received a copy of the decision.On 10 July 1995, Mrs. Cerezo filed before
the trial court a petition for relief from judgment under Rule 38, alleging fraud, mistake, or
excusable negligence as grounds.On 4 March 1998, the trial court denied Mrs. Cerezos
petition for relief from judgment.The trial court stated that Mrs. Cerezo could have availed
of appeal as a remedy and that she failed to prove that the judgment was entered through
fraud, accident, mistake, or excusable negligence.Mrs. Cerezo then filed before the Court of
Appeals a petition for certiorari under Section 1 of Rule 65 assailing the denial of the
petition for relief from judgment.On 21 January 1999, the Court of Appeals dismissed Mrs.
Cerezos petition.On 24 February 1999, the appellate court denied Mrs. Cerezos motion for
reconsideration. On 11 March 1999, Mrs. Cerezo filed before this Court a petition for review
on certiorari under Rule 45, questioning the denial of the petition for relief from
judgment.We denied the petition and our resolution became final and executory on 28 June
1999.
On 6 July 1999, a mere eight days after our resolution became final and executory, Mrs.
Cerezo filed before the Court of Appeals a petition for annulment of the judgment of the
trial court under Rule 47.Meanwhile, on 25 August 1999, the trial court issued over the
objection of Mrs. Cerezo an order of execution of the judgment in Civil Case No. 7415.On 21
October 1999, the Court of Appeals dismissed the petition for annulment of judgment.On 20
January 2000, the Court of Appeals denied Mrs. Cerezos motion for reconsideration.On 7
February 2000, Mrs. Cerezo filed the present petition for review on certiorari under Rule 45
challenging the dismissal of her petition for annulment of judgment.
Lina v. Court of Appeals[22 enumerates the remedies available to a party declared in
default:
a)The defendant in default may, at any time after discovery thereof and before judgment,
file a motion under oath to set aside the order of default on the ground that his failure to
answer was due to fraud, accident, mistake or excusable negligence, and that he has a
meritorious defense (Sec. 3, Rule 18 [now Sec. 3(b), Rule 9]);
b)If the judgment has already been rendered when the defendant discovered the default,
but before the same has become final and executory, he may file a motion for new
trial under Section 1 (a) of Rule 37;
c)If the defendant discovered the default after the judgment has become final and
executory, he may file a petition for relief under Section 2 [now Section 1] of Rule 38; and
d)He may also appeal from the judgment rendered against him as contrary to the evidence
or to the law, even if no petition to set aside the order of default has been presented by him
(Sec. 2, Rule 41). (Emphasis added)
Moreover, a petition for certiorari to declare the nullity of a judgment by default is also
available if the trial court improperly declared a party in default, or even if the trial court
properly declared a party in default, if grave abuse of discretion attended such declaration.
[23

Mrs. Cerezo admitted that she received a copy of the trial courts decision on 25 June
1995.Based on this admission, Mrs. Cerezo had at least three remedies at her disposal: an
appeal, a motion for new trial, or a petition for certiorari.
Mrs. Cerezo could have appealed under Rule 41[24 from the default judgment within 15
days from notice of the judgment.She could have availed of the power of the Court of
Appeals to try cases and conduct hearings, receive evidence, and perform all acts necessary
to resolve factual issues raised in cases falling within its appellate jurisdiction.[25
Mrs. Cerezo also had the option to file under Rule 37[26 a motion for new trial within the
period for taking an appeal.If the trial court grants a new trial, the original judgment is
vacated, and the action will stand for trial de novo.The recorded evidence taken in the
former trial, as far as the same is material and competent to establish the issues, shall be
used at the new trial without retaking the same.[27
Mrs. Cerezo also had the alternative of filing under Rule 65[28 a petition
for certiorari assailing the order of default within 60 days from notice of the judgment.An
order of default is interlocutory, and an aggrieved party may file an appropriate special civil
action under Rule 65.[29 In a petition for certiorari, the appellate court may declare void
both the order of default and the judgment of default.
Clearly, Mrs. Cerezo had every opportunity to avail of these remedies within the
reglementary periods provided under the Rules of Court.However, Mrs. Cerezo opted to file
a petition for relief from judgment, which is available only in exceptional cases.A petition
for relief from judgment should be filed within the reglementary period of 60 days from
knowledge of judgment and six months from entry of judgment, pursuant to
Rule 38 of the Rules of Civil Procedure.[30 Tuason v. Court of Appeals[31 explained the
nature of a petition for relief from judgment:
When a party has another remedy available to him, which may either be a motion for new
trial or appeal from an adverse decision of the trial court, and he was not prevented by
fraud, accident, mistake or excusable negligence from filing such motion or taking such
appeal, he cannot avail himself of this petition.Indeed, relief will not be granted to a party
who seeks avoidance from the effects of the judgment when the loss of the remedy at law
was due to his own negligence; otherwise the petition for relief can be used to revive the
right to appeal which has been lost thru inexcusable negligence.
Evidently, there was no fraud, accident, mistake, or excusable negligence that prevented
Mrs. Cerezo from filing an appeal, a motion for new trial or a petition for certiorari.It was
error for her to avail of a petition for relief from judgment.
After our resolution denying Mrs. Cerezos petition for relief became final and executory,
Mrs. Cerezo, in her last ditch attempt to evade liability, filed before the Court of Appeals a
petition for annulment of the judgment of the trial court.Annulment is available only on the
grounds of extrinsic fraud and lack of jurisdiction.If based on extrinsic fraud, a party must
file the petition within four years from its discovery, and if based on lack of jurisdiction,
before laches or estoppel bars the petition.Extrinsic fraud is not a valid ground if such fraud
was used as a ground, or could have been used as a ground, in a motion for new trial or
petition for relief from judgment.[32

Mrs. Cerezo insists that lack of jurisdiction, not extrinsic fraud, was her ground for filing the
petition for annulment of judgment.However, a party may avail of the remedy of annulment
of judgment under Rule 47 only if the ordinary remedies of new trial, appeal, petition for
relief from judgment, or other appropriate remedies are no longer available through no
fault of the party.[33 Mrs. Cerezo could have availed of a new trial or appeal but through
her own fault she erroneously availed of the remedy of a petition for relief, which was
denied with finality.Thus, Mrs. Cerezo may no longer avail of the remedy of annulment.
In any event, the trial court clearly acquired jurisdiction over Mrs. Cerezos person.Mrs.
Cerezo actively participated in the proceedings before the trial court, submitting herself to
the jurisdiction of the trial court.The defense of lack of jurisdiction fails in light of her active
participation in the trial court proceedings.Estoppel or laches may also bar lack of
jurisdiction as a ground for nullity especially if raised for the first time on appeal by a party
who participated in the proceedings before the trial court, as what happened in this case.
[34
For these reasons, the present petition should be dismissed for utter lack of merit.The
extraordinary action to annul a final judgment is restricted to the grounds specified in the
rules.The reason for the restriction is to prevent this extraordinary action from being used
by a losing party to make a complete farce of a duly promulgated decision that has long
become final and executory.There would be no end to litigation if parties who have
unsuccessfully availed of any of the appropriate remedies or lost them through their fault
could still bring an action for annulment of judgment.[35 Nevertheless, we shall discuss the
issues raised in the present petition to clear any doubt about the correctness of the decision
of the trial court.
Mrs. Cerezos Liability and the
Trial Courts Acquisition of Jurisdiction
Mrs. Cerezo contends that the basis of the present petition for annulment is lack of
jurisdiction.Mrs. Cerezo asserts that the trial court could not validly render judgment since
it failed to acquire jurisdiction over Foronda.Mrs. Cerezo points out that there was no
service of summons on Foronda.Moreover, Tuazon failed to reserve his right to institute a
separate civil action for damages in the criminal action.Such contention betrays a faulty
foundation.Mrs. Cerezos contention proceeds from the point of view of criminal law and not
of civil law, while the basis of the present action of Tuazon is quasi-delict under the Civil
Code, not delict under the Revised Penal Code.
The same negligent act may produce civil liability arising from a delict under Article 103 of
the Revised Penal Code, or may give rise to an action for a quasi-delict under Article 2180
of the Civil Code.An aggrieved party may choose between the two remedies. An action
based on a quasi-delict may proceed independently from the criminal action.[36 There is,
however, a distinction between civil liability arising from a delict and civil liability arising
from a quasi-delict.The choice of remedy, whether to sue for a delict or a quasi-delict,
affects the procedural and jurisdictional issues of the action.[37
Tuazon chose to file an action for damages based on a quasi-delict.In his complaint, Tuazon
alleged that Mrs. Cerezo, without exercising due care and diligence in the supervision and
management of her employees and buses, hired Foronda as her driver.Tuazon became

disabled because of Forondas recklessness, gross negligence and imprudence, aggravated


by Mrs. Cerezos lack of due care and diligence in the selection and supervision of her
employees, particularly Foronda.[38
The trial court thus found Mrs. Cerezo liable under Article 2180 of the Civil Code.Article
2180 states in part:
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.
Contrary to Mrs. Cerezos assertion, Foronda is not an indispensable party to the case.An
indispensable party is one whose interest is affected by the courts action in the litigation,
and without whom no final resolution of the case is possible.[39 However, Mrs. Cerezos
liability as an employer in an action for a quasi-delict is not only solidary, it is also primary
and direct.Foronda is not an indispensable party to the final resolution of Tuazons action for
damages against Mrs. Cerezo.
The responsibility of two or more persons who are liable for a quasi-delict is solidary.
[40 Where there is a solidary obligation on the part of debtors, as in this case, each debtor
is liable for the entire obligation.Hence, each debtor is liable to pay for the entire obligation
in full.There is no merger or renunciation of rights, but only mutual representation.
[41 Where the obligation of the parties is solidary, either of the parties is indispensable,
and the other is not even a necessary party because complete relief is available from either.
[42 Therefore, jurisdiction over Foronda is not even necessary as Tuazon may collect
damages from Mrs. Cerezo alone.
Moreover, an employers liability based on a quasi-delict is primary and direct, while the
employers liability based on a delict is merely subsidiary.[43 The words primary and direct,
as contrasted with subsidiary, refer to the remedy provided by law for enforcing the
obligation rather than to the character and limits of the obligation.[44 Although liability
under Article 2180 originates from the negligent act of the employee, the aggrieved party
may sue the employer directly.When an employee causes damage, the law presumes that
the employer has himself committed an act of negligence in not preventing or avoiding the
damage.This is the fault that the law condemns.While the employer is civilly liable in a
subsidiary capacity for the employees criminal negligence, the employer is also civilly liable
directly and separately for his own civil negligence in failing to exercise due diligence in
selecting and supervising his employee.The idea that the employers liability is solely
subsidiary is wrong.[45
The action can be brought directly against the person responsible (for another), without
including the author of the act.The action against the principal is accessory in the sense
that it implies the existence of a prejudicial act committed by the employee, but it is not
subsidiary in the sense that it can not be instituted till after the judgment against the
author of the act or at least, that it is subsidiary to the principal action; the action for
responsibility (of the employer) is in itself a principal action.[46
Thus, there is no need in this case for the trial court to acquire jurisdiction over
Foronda.The trial courts acquisition of jurisdiction over Mrs. Cerezo is sufficient to dispose
of the present case on the merits.

In contrast, an action based on a delict seeks to enforce the subsidiary liability of the
employer for the criminal negligence of the employee as provided in Article 103 of the
Revised Penal Code.To hold the employer liable in a subsidiary capacity under a delict, the
aggrieved party must initiate a criminal action where the employees delict and
corresponding primary liability are established.[47 If the present action proceeds from a
delict, then the trial courts jurisdiction over Foronda is necessary.However, the present
action is clearly for the quasi-delict of Mrs. Cerezo and not for the delict of Foronda.
The Cerezo spouses contention that summons be served anew on them is untenable in light
of their participation in the trial court proceedings.To uphold the Cerezo spouses contention
would make a fetish of a technicality.[48 Moreover, any irregularity in the service of
summons that might have vitiated the trial courts jurisdiction over the persons of the
Cerezo spouses was deemed waived when the Cerezo spouses filed a petition for relief from
judgment.[49
We hold that the trial court had jurisdiction and was competent to decide the case in favor
of Tuazon and against Mrs. Cerezo even in the absence of Foronda.Contrary to Mrs. Cerezos
contention, Foronda is not an indispensable party to the present case.It is not even
necessary for Tuazon to reserve the filing of a separate civil action because he opted to file
a civil action for damages against Mrs. Cerezo who is primarily and directly liable for her
own civil negligence.The words of Justice Jorge Bocobo in Barredo v. Garcia still hold true
today as much as it did in 1942:
x x x [T]o hold that there is only one way to make defendants liability effective, and that is,
to sue the driver and exhaust his (the latters) property first, would be tantamount to
compelling the plaintiff to follow a devious and cumbersome method of obtaining
relief.True, there is such a remedy under our laws, but there is also a more expeditious
way, which is based on the primary and direct responsibility of the defendant under article
[2180] of the Civil Code.Our view of the law is more likely to facilitate remedy for civil
wrongs, because the procedure indicated by the defendant is wasteful and productive of
delay, it being a matter of common knowledge that professional drivers of taxis and other
similar public conveyances do not have sufficient means with which to pay damages.Why,
then, should the plaintiff be required in all cases to go through this roundabout,
unnecessary, and probably useless procedure?In construing the laws, courts have
endeavored to shorten and facilitate the pathways of right and justice.[50
Interest at the rate of 6% per annum is due on the amount of damages adjudged by the
trial court.[51 The 6% per annum interest shall commence from 30 May 1995, the date of
the decision of the trial court.Upon finality of this decision, interest at 12% per annum, in
lieu of 6% per annum, is due on the amount of damages adjudged by the trial court until
full payment.
WHEREFORE, we DENY the instant petition for review.The Resolution dated 21 October
1999 of the Court of Appeals in CA-G.R. SP No. 53572, as well as its Resolution dated 20
January 2000 denying the motion for reconsideration, is AFFIRMED with
the MODIFICATION that the amount due shall earn legal interest at 6% per
annum computed from 30 May 1995, the date of the trial courts decision.Upon finality of
this decision, the amount due shall earn interest at 12% per annum, in lieu of 6% per
annum, until full payment.
SO ORDERED.

Davide, Jr., C.J., (Chairman), Ynares-Santiago, and Azcuna, JJ., concur.


Panganiban, J., on official leave.

FIRST DIVISION
[G.R. No. 132266. December 21, 1999]
CASTILEX INDUSTRIAL CORPORATION, Petitioner, v. VICENTE VASQUEZ, JR. and LUISA SO
VASQUEZ, and CEBU DOCTORS HOSPITAL, INC., Respondents.
DECISION
DAVIDE, JR., C.J.:
The pivotal issue in this petition is whether an employer may be held vicariously liable for the death
resulting from the negligent operation by a managerial employee of a company-issued vehicle.
The antecedents, as succinctly summarized by the Court of Appeals, are as follows:
On 28 August 1988, at around 1:30 to 2:00 in the morning, Romeo So Vasquez, was driving a
Honda motorcycle around Fuente Osmea Rotunda. He was traveling counter-clockwise, (the
normal flow of traffic in a rotunda) but without any protective helmet or goggles. He was also
only carrying a Students Permit to Drive at the time. Upon the other hand, Benjamin Abad [was
a] manager of Appellant Castilex Industrial Corporation, registered owner [of] a Toyota Hi-Lux
Pick-up with plate no. GBW-794. On the same date and time, Abad drove the said company car
out of a parking lot but instead of going around the Osmea rotunda he made a short cut against
[the] flow of the traffic in proceeding to his route to General Maxilom St. or to Belvic St.
In the process, the motorcycle of Vasquez and the pick-up of Abad collided with each other
causing severe injuries to the former. Abad stopped his vehicle and brought Vasquez to the
Southern Islands Hospital and later to the Cebu Doctors Hospital.
On September 5, 1988, Vasquez died at the Cebu Doctors Hospital. It was there that Abad
signed an acknowledgment of Responsible Party (Exhibit K) wherein he agreed to pay whatever
hospital bills, professional fees and other incidental charges Vasquez may incur.
After the police authorities had conducted the investigation of the accident, a Criminal Case was
filed against Abad but which was subsequently dismissed for failure to prosecute. So, the present
action for damages was commenced by Vicente Vasquez, Jr. and Luisa So Vasquez, parents of

the deceased Romeo So Vasquez, against Jose Benjamin Abad and Castilex Industrial
Corporation. In the same action, Cebu Doctors Hospital intervened to collect unpaid balance for
the medical expense given to Romeo So Vasquez.1
The trial court ruled in favor of private respondents Vicente and Luisa Vasquez and ordered Jose
Benjamin Abad (hereafter ABAD) and petitioner Castilex Industrial Corporation (hereafter CASTILEX)
to pay jointly and solidarily (1) Spouses Vasquez, the amounts ofP8,000.00 for burial
expenses; P50,000.00 as moral damages; P10,000.00 as attorneys fees; and P778,752.00 for loss of
earning capacity; and (2) Cebu Doctors Hospital, the sum of P50,927.83 for unpaid medical and
hospital bills at 3% monthly interest from 27 July 1989 until fully paid, plus the costs of litigation. 2
CASTILEX and ABAD separately appealed the decision.
In its decision3 of 21 May 1997, the Court of Appeals affirmed the ruling of the trial court holding
ABAD and CASTILEX liable but held that the liability of the latter is only vicarious and not solidary with
the former. It reduced the award of damages representing loss of earning capacity from P778,752.00
to P214,156.80; and the interest on the hospital and medical bills, from 3% per month to 12% per
annum from 5 September 1988 until fully paid.
Upon CASTILEXs motion for reconsideration, the Court of Appeals modified its decision by (1) reducing
the award of moral damages from P50,000 to P30,000 in view of the deceaseds contributory
negligence; (b) deleting the award of attorneys fees for lack of evidence; and (c) reducing the interest
on hospital and medical bills to 6% per annum from 5 September 1988 until fully paid. 4
Hence, CASTILEX filed the instant petition contending that the Court of Appeals erred in (1) applying
to the case the fifth paragraph of Article 2180 of the Civil Code, instead of the fourth paragraph
thereof; (2) that as a managerial employee, ABAD was deemed to have been always acting within the
scope of his assigned task even outside office hours because he was using a vehicle issued to him by
petitioner; and (3) ruling that petitioner had the burden to prove that the employee was not acting
within the scope of his assigned task.
Jose Benjamin ABAD merely adopted the statement of facts of petitioner which holds fast on the
theory of negligence on the part of the deceased.
On the other hand, respondents Spouses Vasquez argue that their sons death was caused by the
negligence of petitioners employee who was driving a vehicle issued by petitioner and who was on his
way home from overtime work for petitioner; and that petitioner is thus liable for the resulting injury
and subsequent death of their son on the basis of the fifth paragraph of Article 2180. Even if the
fourth paragraph of Article 2180 were applied, petitioner cannot escape liability therefor. They
moreover argue that the Court of Appeals erred in reducing the amount of compensatory damages
when the award made by the trial court was borne both by evidence adduced during the trial
regarding deceaseds wages and by jurisprudence on life expectancy. Moreover, they point out that the
petition is procedurally not acceptable on the following grounds: (1) lack of an explanation for serving
the petition upon the Court of Appeals by registered mail, as required under Section 11, Rule 13 of the
Rules of Civil Procedure; and (2) lack of a statement of the dates of the expiration of the original
reglementary period and of the filing of the motion for extension of time to file a petition for review.
For its part, respondent Cebu Doctors Hospital maintains that petitioner CASTILEX is indeed
vicariously liable for the injuries and subsequent death of Romeo Vasquez caused by ABAD, who was
on his way home from taking snacks after doing overtime work for petitioner. Although the incident

occurred when ABAD was not working anymore the inescapable fact remains that said employee would
not have been situated at such time and place had he not been required by petitioner to do overtime
work. Moreover, since petitioner adopted the evidence adduced by ABAD, it cannot, as the latters
employer, inveigle itself from the ambit of liability, and is thus estopped by the records of the case,
which it failed to refute.
We shall first address the issue raised by the private respondents regarding some alleged procedural
lapses in the petition.
Private respondents contention of petitioners violation of Section 11 of Rule 13 and Section 4 of Rule
45 of the 1997 Rules of Civil Procedure holds no water.
Section 11 of Rule 13 provides:
SEC. 11. Priorities in modes of service and filing. -- Whenever practicable, the service and filing
of pleadings and other papers shall be done personally. Except with respect to papers emanating
from the court, a resort to other modes must be accompanied by a written explanation why the
service or filing was not done personally. A violation of this Rule may be cause to consider the
paper as not filed.
The explanation why service of a copy of the petition upon the Court of Appeals was done by
registered mail is found on Page 28 of the petition. Thus, there has been compliance with the
aforequoted provision.
As regards the allegation of violation of the material data rule under Section 4 of Rule 45, the same is
unfounded. The material dates required to be stated in the petition are the following: (1) the date of
receipt of the judgment or final order or resolution subject of the petition; (2) the date of filing of a
motion for new trial or reconsideration, if any; and (3) the date of receipt of the notice of the denial of
the motion. Contrary to private respondents claim, the petition need not indicate the dates of the
expiration of the original reglementary period and the filing of a motion for extension of time to file the
petition. At any rate, aside from the material dates required under Section 4 of Rule 45, petitioner
CASTILEX also stated in the first page of the petition the date it filed the motion for extension of time
to file the petition.
Now on the merits of the case.
The negligence of ABAD is not an issue at this instance. Petitioner CASTILEX presumes said negligence
but claims that it is not vicariously liable for the injuries and subsequent death caused by ABAD.
Petitioner contends that the fifth paragraph of Article 2180 of the Civil Code should only apply to
instances where the employer is not engaged in business or industry. Since it isengaged in the
business of manufacturing and selling furniture it is therefore not covered by said provision. Instead,
the fourth paragraph should apply.
Petitioners interpretation of the fifth paragraph is not accurate. The phrase even though the former are
not engaged in any business or industry found in the fifth paragraph should be interpreted to mean
that it is not necessary for the employer to be engaged in any business or industry to be liable for the
negligence of his employee who is acting within the scope of his assigned task. 5

A distinction must be made between the two provisions to determine what is applicable. Both
provisions apply to employers: the fourth paragraph, to owners and managers of an establishment or
enterprise; and the fifth paragraph, to employers in general, whether or not engaged in any business
or industry. The fourth paragraph covers negligent acts of employees committed either in the service
of the branches or on the occasion of their functions, while the fifth paragraph encompasses negligent
acts of employees acting within the scope of their assigned task. The latter is an expansion of the
former in both employer coverage and acts included. Negligent acts of employees, whether or not the
employer is engaged in a business or industry, are covered so long as they were acting within the
scope of their assigned task, even though committed neither in the service of the branches nor on the
occasion of their functions. For, admittedly, employees oftentimes wear different hats. They perform
functions which are beyond their office, title or designation but which, nevertheless, are still within the
call of duty.
This court has applied the fifth paragraph to cases where the employer was engaged in a business or
industry such as truck operators 6 and banks.7 The Court of Appeals cannot, therefore, be faulted in
applying the said paragraph of Article 2180 of the Civil Code to this case.
Under the fifth paragraph of Article 2180, whether or not engaged in any business or industry, an
employer is liable for the torts committed by employees within the scope of his assigned tasks. But it
is necessary to establish the employer-employee relationship; once this is done, the plaintiff must
show, to hold the employer liable, that the employee was acting within the scope of his assigned task
when the tort complained of was committed. It is only then that the employer may find it necessary to
interpose the defense of due diligence in the selection and supervision of the employee. 8
It is undisputed that ABAD was a Production Manager of petitioner CASTILEX at the time of the tort
occurrence. As to whether he was acting within the scope of his assigned task is a question of fact,
which the court a quo and the Court of Appeals resolved in the affirmative.
Well-entrenched in our jurisprudence is the rule that the factual findings of the Court of Appeals are
entitled to great respect, and even finality at times. This rule is, however, subject to exceptions such
as when the conclusion is grounded on speculations, surmises, or conjectures. 9 Such exception obtain
in the present case to warrant review by this Court of the finding of the Court of Appeals that since
ABAD was driving petitioners vehicle he was acting within the scope of his duties as a manager.
Before we pass upon the issue of whether ABAD was performing acts within the range of his
employment, we shall first take up the other reason invoked by the Court of Appeals in holding
petitioner CASTILEX vicariously liable for ABADs negligence, i.e., that the petitioner did not present
evidence that ABAD was not acting within the scope of his assigned tasks at the time of the motor
vehicle mishap. Contrary to the ruling of the Court of Appeals, it was not incumbent upon the
petitioner to prove the same. It was enough for petitioner CASTILEX to deny that ABAD was acting
within the scope of his duties; petitioner was not under obligation to prove this negative averment. Ei
incumbit probatio qui dicit, non qui negat (He who asserts, not he who denies, must prove). The Court
has consistently applied the ancient rule that if the plaintiff, upon whom rests the burden of proving
his cause of action, fails to show in a satisfactory manner facts which he bases his claim, the
defendant is under no obligation to prove his exception or defense. 10
Now on the issue of whether the private respondents have sufficiently established that ABAD was
acting within the scope of his assigned tasks.

ABAD, who was presented as a hostile witness, testified that at the time of the incident, he was
driving a company-issued vehicle, registered under the name of petitioner. He was then leaving the
restaurant where he had some snacks and had a chat with his friends after having done overtime work
for the petitioner.
No absolutely hard and fast rule can be stated which will furnish the complete answer to the problem
of whether at a given moment, an employee is engaged in his employers business in the operation of
a motor vehicle, so as to fix liability upon the employer because of the employees action or inaction;
but rather, the result varies with each state of facts. 11
In Filamer Christian Institute v. Intermediate Appellate Court,12 this Court had the occasion to hold
that acts done within the scope of the employees assigned tasks includes any act done by an
employee in furtherance of the interests of the employer or for the account of the employer at the
time of the infliction of the injury or damages.
The court a quo and the Court of Appeals were one in holding that the driving by a manager of a
company-issued vehicle is within the scope of his assigned tasks regardless of the time and
circumstances.
We do not agree. The mere fact that ABAD was using a service vehicle at the time of the injurious
incident is not of itself sufficient to charge petitioner with liability for the negligent operation of said
vehicle unless it appears that he was operating the vehicle within the course or scope of his
employment.
The following are principles in American Jurisprudence on the employers liability for the injuries
inflicted by the negligence of an employee in the use of an employers motor vehicle:
I. Operation of Employers Motor Vehicle in Going to or from Meals

It has been held that an employee who uses his employers vehicle in going from his work to a place
where he intends to eat or in returning to work from a meal is not ordinarily acting within the scope of
his employment in the absence of evidence of some special business benefit to the employer. Evidence
that by using the employers vehicle to go to and from meals, an employee is enabled to reduce his
time-off and so devote more time to the performance of his duties supports the finding that an
employee is acting within the scope of his employment while so driving the vehicle. 13
II. Operation of Employers Vehicle in Going to or from Work

In the same vein, traveling to and from the place of work is ordinarily a personal problem or concern
of the employee, and not a part of his services to his employer. Hence, in the absence of some special
benefit to the employer other than the mere performance of the services available at the place where
he is needed, the employee is not acting within the scope of his employment even though he uses his
employers motor vehicle.14
The employer may, however, be liable where he derives some special benefit from having the
employee drive home in the employers vehicle as when the employer benefits from having the
employee at work earlier and, presumably, spending more time at his actual duties. Where the
employees duties require him to circulate in a general area with no fixed place or hours of work, or to
go to and from his home to various outside places of work, and his employer furnishes him with a
vehicle to use in his work, the courts have frequently applied what has been called the special errand

or roving commission rule, under which it can be found that the employee continues in the service of
his employer until he actually reaches home. However, even if the employee be deemed to be acting
within the scope of his employment in going to or from work in his employers vehicle, the employer is
not liable for his negligence where at the time of the accident, the employee has left the direct route
to his work or back home and is pursuing a personal errand of his own.
III. Use of Employers Vehicle Outside Regular Working Hours

An employer who loans his motor vehicle to an employee for the latters personal use outside of
regular working hours is generally not liable for the employees negligent operation of the vehicle
during the period of permissive use, even where the employer contemplates that a regularly assigned
motor vehicle will be used by the employee for personal as well as business purposes and there is
some incidental benefit to the employer. Even where the employees personal purpose in using the
vehicle has been accomplished and he has started the return trip to his house where the vehicle is
normally kept, it has been held that he has not resumed his employment, and the employer is not
liable for the employees negligent operation of the vehicle during the return trip. 15
The foregoing principles and jurisprudence are applicable in our jurisdiction albeit based on the
doctrine of respondeat superior, not on the principle of bonus pater familias as in ours. Whether the
fault or negligence of the employee is conclusive on his employer as in American law or jurisprudence,
or merely gives rise to the presumption juris tantum of negligence on the part of the employer as in
ours, it is indispensable that the employee was acting in his employers business or within the scope of
his assigned task.16
In the case at bar, it is undisputed that ABAD did some overtime work at the petitioners office, which
was located in Cabangcalan, Mandaue City. Thereafter, he went to Goldies Restaurant in Fuente
Osmea, Cebu City, which is about seven kilometers away from petitioners place of business. 17 A
witness for the private respondents, a sidewalk vendor, testified that Fuente Osmea is a lively place
even at dawn because Goldies Restaurant and Back Street were still open and people were drinking
thereat. Moreover, prostitutes, pimps, and drug addicts littered the place. 18
At the Goldies Restaurant, ABAD took some snacks and had a chat with friends. It was when ABAD
was leaving the restaurant that the incident in question occurred. That same witness for the private
respondents testified that at the time of the vehicular accident, ABAD was with a woman in his car,
who then shouted: Daddy, Daddy!19 This woman could not have been ABADs daughter, for ABAD was
only 29 years old at the time.
To the mind of this Court, 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 a vehicular accident. It was then about
2:00 a.m. of 28 August 1988, way beyond the normal working hours. ABADs working day had ended;
his overtime work had already been completed. His being at a place which, as petitioner put it, was
known as a haven for prostitutes, pimps, and drug pushers and addicts, had no connection to
petitioners business; neither had it any relation to his duties as a manager. Rather, using his service
vehicle even for personal purposes was a form of a fringe benefit or one of the perks attached to his
position.
Since there is paucity of evidence that ABAD was acting within the scope of the functions entrusted to
him, petitioner CASTILEX had no duty to show that it exercised the diligence of a good father of a
family in providing ABAD with a service vehicle. Thus, justice and equity require that petitioner be
relieved of vicarious liability for the consequences of the negligence of ABAD in driving its vehicle. 20

WHEREFORE, the petition is GRANTED, and the appealed decision and resolution of the Court of
Appeals is AFFIRMED with the modification that petitioner Castilex Industrial Corporation be absolved
of any liability for the damages caused by its employee, Jose Benjamin Abad.
SO ORDERED.
Puno, Kapunan, Pardo, and Ynares-Santiago, JJ., concur.
SECOND DIVISION
[G.R. No. 188288 : January 16, 2012]
SPOUSES FERNANDO AND LOURDES VILORIA, PETITIONERS, VS. CONTINENTAL AIRLINES,
INC., RESPONDENT.
DECISION
REYES, J.:
This is a petition for review under Rule 45 of the Rules of Court from the January 30, 2009
Decision[1]of the Special Thirteenth Division of the Court of Appeals (CA) in CA-G.R. CV No. 88586
entitledSpouses Fernando and Lourdes Viloria v. Continental Airlines, Inc., the dispositive portion of
which states:cralaw
WHEREFORE, the Decision of the Regional Trial Court, Branch 74, dated 03 April 2006, awarding
US$800.00 or its peso equivalent at the time of payment, plus legal rate of interest from 21 July 1997
until fully paid, [P]100,000.00 as moral damages, [P]50,000.00 as exemplary damages, [P]40,000.00
as attorneys fees and costs of suit to plaintiffs-appellees is hereby REVERSED and SET ASIDE.
Defendant-appellants counterclaim is DENIED.
Costs against plaintiffs-appellees.
SO ORDERED.[2]
On April 3, 2006, the Regional Trial Court of Antipolo City, Branch 74 (RTC) rendered a Decision, giving
due course to the complaint for sum of money and damages filed by petitioners Fernando Viloria
(Fernando) and Lourdes Viloria (Lourdes), collectively called Spouses Viloria, against respondent
Continental Airlines, Inc. (CAI). As culled from the records, below are the facts giving rise to such
complaint.
On or about July 21, 1997 and while in the United States, Fernando purchased for himself and his
wife, Lourdes, two (2) round trip airline tickets from San Diego, California to Newark, New Jersey on
board Continental Airlines. Fernando purchased the tickets at US$400.00 each from a travel agency
called Holiday Travel and was attended to by a certain Margaret Mager (Mager). According to
Spouses Viloria, Fernando agreed to buy the said tickets after Mager informed them that there were
no available seats at Amtrak, an intercity passenger train service provider in the United States. Per the
tickets, Spouses Viloria were scheduled to leave for Newark on August 13, 1997 and return to San
Diego on August 21, 1997.
Subsequently, Fernando requested Mager to reschedule their flight to Newark to an earlier date or
August 6, 1997. Mager informed him that flights to Newark via Continental Airlines were already fully
booked and offered the alternative of a round trip flight via Frontier Air. Since flying with Frontier Air
called for a higher fare of US$526.00 per passenger and would mean traveling by night, Fernando
opted to request for a refund. Mager, however, denied his request as the subject tickets are nonrefundable and the only option that Continental Airlines can offer is the re-issuance of new tickets
within one (1) year from the date the subject tickets were issued. Fernando decided to reserve two (2)

seats with Frontier Air.


As he was having second thoughts on traveling via Frontier Air, Fernando went to the Greyhound
Station where he saw an Amtrak station nearby. Fernando made inquiries and was told that there are
seats available and he can travel on Amtrak anytime and any day he pleased. Fernando then
purchased two (2) tickets for Washington, D.C.
From Amtrak, Fernando went to Holiday Travel and confronted Mager with the Amtrak tickets, telling
her that she had misled them into buying the Continental Airlines tickets by misrepresenting that
Amtrak was already fully booked. Fernando reiterated his demand for a refund but Mager was firm in
her position that the subject tickets are non-refundable.
Upon returning to the Philippines, Fernando sent a letter to CAI on February 11, 1998, demanding a
refund and alleging that Mager had deluded them into purchasing the subject tickets. [3]
In a letter dated February 24, 1998, Continental Micronesia informed Fernando that his complaint had
been referred to the Customer Refund Services of Continental Airlines at Houston, Texas. [4]
In a letter dated March 24, 1998, Continental Micronesia denied Fernandos request for a refund and
advised him that he may take the subject tickets to any Continental ticketing location for the reissuance of new tickets within two (2) years from the date they were issued. Continental Micronesia
informed Fernando that the subject tickets may be used as a form of payment for the purchase of
another Continental ticket, albeit with a re-issuance fee. [5]
On June 17, 1999, Fernando went to Continentals ticketing office at Ayala Avenue, Makati City to have
the subject tickets replaced by a single round trip ticket to Los Angeles, California under his name.
Therein, Fernando was informed that Lourdes ticket was non-transferable, thus, cannot be used for
the purchase of a ticket in his favor. He was also informed that a round trip ticket to Los Angeles was
US$1,867.40 so he would have to pay what will not be covered by the value of his San Diego to
Newark round trip ticket.
In a letter dated June 21, 1999, Fernando demanded for the refund of the subject tickets as he no
longer wished to have them replaced. In addition to the dubious circumstances under which the
subject tickets were issued, Fernando claimed that CAIs act of charging him with US$1,867.40 for a
round trip ticket to Los Angeles, which other airlines priced at US$856.00, and refusal to allow him to
use Lourdes ticket, breached its undertaking under its March 24, 1998 letter.[6]
On September 8, 2000, Spouses Viloria filed a complaint against CAI, praying that CAI be ordered to
refund the money they used in the purchase of the subject tickets with legal interest from July 21,
1997 and to pay P1,000,000.00 as moral damages, P500,000.00 as exemplary damages and
P250,000.00 as attorneys fees.[7]
CAI interposed the following defenses: (a) Spouses Viloria have no right to ask for a refund as the
subject tickets are non-refundable; (b) Fernando cannot insist on using the ticket in Lourdes name for
the purchase of a round trip ticket to Los Angeles since the same is non-transferable; (c) as Mager is
not a CAI employee, CAI is not liable for any of her acts; (d) CAI, its employees and agents did not act
in bad faith as to entitle Spouses Viloria to moral and exemplary damages and attorneys fees. CAI
also invoked the following clause printed on the subject tickets:
3. To the extent not in conflict with the foregoing carriage and other services performed by each
carrier are subject to: (i) provisions contained in this ticket, (ii) applicable tariffs, (iii) carriers
conditions of carriage and related regulations which are made part hereof (and are available on
application at the offices of carrier), except in transportation between a place in the United States or
Canada and any place outside thereof to which tariffs in force in those countries apply.[8]
According to CAI, one of the conditions attached to their contract of carriage is the non-transferability
and non-refundability of the subject tickets.

The RTCs Ruling


Following a full-blown trial, the RTC rendered its April 3, 2006 Decision, holding that Spouses Viloria
are entitled to a refund in view of Magers misrepresentation in obtaining their consent in the purchase
of the subject tickets.[9] The relevant portion of the April 3, 2006 Decision states:
Continental Airlines agent Ms. Mager was in bad faith when she was less candid and diligent in
presenting to plaintiffs spouses their booking options. Plaintiff Fernando clearly wanted to travel via
AMTRAK, but defendants agent misled him into purchasing Continental Airlines tickets instead on the
fraudulent misrepresentation that Amtrak was fully booked. In fact, defendant Airline did not
specifically denied (sic) this allegation.
Plainly, plaintiffs spouses, particularly plaintiff Fernando, were tricked into buying Continental Airline
tickets on Ms. Magers misleading misrepresentations. Continental Airlines agent Ms. Mager further
relied on and exploited plaintiff Fernandos need and told him that they must book a flight immediately
or risk not being able to travel at all on the couples preferred date. Unfortunately, plaintiffs spouses
fell prey to the airlines and its agents unethical tactics for baiting trusting customers.[10]
Citing Articles 1868 and 1869 of the Civil Code, the RTC ruled that Mager is CAIs agent, hence, bound
by her bad faith and misrepresentation. As far as the RTC is concerned, there is no issue as to whether
Mager was CAIs agent in view of CAIs implied recognition of her status as such in its March 24, 1998
letter.
The act of a travel agent or agency being involved here, the following are the pertinent New Civil Code
provisions on agency:
Art. 1868. By the contract of agency a person binds himself to render some service or to do something
in representation or on behalf of another, with the consent or authority of the latter.
Art. 1869. Agency may be express, or implied from the acts of the principal, from his silence or lack of
action, or his failure to repudiate the agency, knowing that another person is acting on his behalf
without authority.
Agency may be oral, unless the law requires a specific form.
As its very name implies, a travel agency binds itself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter. This court takes
judicial notice of the common services rendered by travel agencies that represent themselves as such,
specifically the reservation and booking of local and foreign tours as well as the issuance of airline
tickets for a commission or fee.
The services rendered by Ms. Mager of Holiday Travel agency to the plaintiff spouses on July 21, 1997
were no different from those offered in any other travel agency. Defendant airline impliedly if not
expressly acknowledged its principal-agent relationship with Ms. Mager by its offer in the letter dated
March 24, 1998 an obvious attempt to assuage plaintiffs spouses hurt feelings. [11]
Furthermore, the RTC ruled that CAI acted in bad faith in reneging on its undertaking to replace the
subject tickets within two (2) years from their date of issue when it charged Fernando with the
amount of US$1,867.40 for a round trip ticket to Los Angeles and when it refused to allow Fernando to
use Lourdes ticket. Specifically:
Tickets may be reissued for up to two years from the original date of issue. When defendant airline
still charged plaintiffs spouses US$1,867.40 or more than double the then going rate of US$856.00 for
the unused tickets when the same were presented within two (2) years from date of issue, defendant
airline exhibited callous treatment of passengers. [12]
The Appellate Courts Ruling

On appeal, the CA reversed the RTCs April 3, 2006 Decision, holding that CAI cannot be held liable for
Magers act in the absence of any proof that a principal-agent relationship existed between CAI and
Holiday Travel. According to the CA, Spouses Viloria, who have the burden of proof to establish the
fact of agency, failed to present evidence demonstrating that Holiday Travel is CAIs agent.
Furthermore, contrary to Spouses Vilorias claim, the contractual relationship between Holiday Travel
and CAI is not an agency but that of a sale.
Plaintiffs-appellees assert that Mager was a sub-agent of Holiday Travel who was in turn a ticketing
agent of Holiday Travel who was in turn a ticketing agent of Continental Airlines. Proceeding from this
premise, they contend that Continental Airlines should be held liable for the acts of Mager. The trial
court held the same view.
We do not agree. By the contract of agency, a person binds him/herself to render some service or to
do something in representation or on behalf of another, with the consent or authority of the latter. The
elements of agency are: (1) consent, express or implied, of the parties to establish the relationship;
(2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a
representative and not for him/herself; and (4) the agent acts within the scope of his/her authority. As
the basis of agency is representation, there must be, on the part of the principal, an actual intention
to appoint, an intention naturally inferable from the principals words or actions. In the same manner,
there must be an intention on the part of the agent to accept the appointment and act upon it. Absent
such mutual intent, there is generally no agency. It is likewise a settled rule that persons dealing with
an assumed agent are bound at their peril, if they would hold the principal liable, to ascertain not only
the fact of agency but also the nature and extent of authority, and in case either is controverted, the
burden of proof is upon them to establish it. Agency is never presumed, neither is it created by the
mere use of the word in a trade or business name. We have perused the evidence and documents so
far presented. We find nothing except bare allegations of plaintiffs-appellees that Mager/Holiday Travel
was acting in behalf of Continental Airlines. From all sides of legal prism, the transaction in issue was
simply a contract of sale, wherein Holiday Travel buys airline tickets from Continental Airlines and
then, through its employees, Mager included, sells it at a premium to clients. [13]
The CA also ruled that refund is not available to Spouses Viloria as the word non-refundable was
clearly printed on the face of the subject tickets, which constitute their contract with CAI. Therefore,
the grant of their prayer for a refund would violate the proscription against impairment of contracts.
Finally, the CA held that CAI did not act in bad faith when they charged Spouses Viloria with the higher
amount of US$1,867.40 for a round trip ticket to Los Angeles. According to the CA, there is no
compulsion for CAI to charge the lower amount of US$856.00, which Spouses Viloria claim to be the
fee charged by other airlines. The matter of fixing the prices for its services is CAIs prerogative, which
Spouses Viloria cannot intervene. In particular:
It is within the respective rights of persons owning and/or operating business entities to peg the
premium of the services and items which they provide at a price which they deem fit, no matter how
expensive or exhorbitant said price may seem vis--vis those of the competing companies. The
Spouses Viloria may not intervene with the business judgment of Continental Airlines. [14]
The Petitioners Case
In this Petition, this Court is being asked to review the findings and conclusions of the CA, as the
latters reversal of the RTCs April 3, 2006 Decision allegedly lacks factual and legal bases. Spouses
Viloria claim that CAI acted in bad faith when it required them to pay a higher amount for a round trip
ticket to Los Angeles considering CAIs undertaking to re-issue new tickets to them within the period
stated in their March 24, 1998 letter. CAI likewise acted in bad faith when it disallowed Fernando to
use Lourdes ticket to purchase a round trip to Los Angeles given that there is nothing in Lourdes
ticket indicating that it is non-transferable. As a common carrier, it is CAIs duty to inform its
passengers of the terms and conditions of their contract and passengers cannot be bound by such
terms and conditions which they are not made aware of. Also, the subject contract of carriage is a
contract of adhesion; therefore, any ambiguities should be construed against CAI. Notably, the

petitioners are no longer questioning the validity of the subject contracts and limited its claim for a
refund on CAIs alleged breach of its undertaking in its March 24, 1998 letter.
The Respondents Case
In its Comment, CAI claimed that Spouses Vilorias allegation of bad faith is negated by its willingness
to issue new tickets to them and to credit the value of the subject tickets against the value of the new
ticket Fernando requested. CAI argued that Spouses Vilorias sole basis to claim that the price at which
CAI was willing to issue the new tickets is unconscionable is a piece of hearsay evidence an
advertisement appearing on a newspaper stating that airfares from Manila to Los Angeles or San
Francisco cost US$818.00.[15] Also, the advertisement pertains to airfares in September 2000 and not
to airfares prevailing in June 1999, the time when Fernando asked CAI to apply the value of the
subject tickets for the purchase of a new one. [16] CAI likewise argued that it did not undertake to
protect Spouses Viloria from any changes or fluctuations in the prices of airline tickets and its only
obligation was to apply the value of the subject tickets to the purchase of the newly issued
tickets.cralaw
With respect to Spouses Vilorias claim that they are not aware of CAIs restrictions on the subject
tickets and that the terms and conditions that are printed on them are ambiguous, CAI denies any
ambiguity and alleged that its representative informed Fernando that the subject tickets are nontransferable when he applied for the issuance of a new ticket. On the other hand, the word nonrefundable clearly appears on the face of the subject tickets.
CAI also denies that it is bound by the acts of Holiday Travel and Mager and that no principal-agency
relationship exists between them. As an independent contractor, Holiday Travel was without capacity
to bind CAI.
Issues
To determine the propriety of disturbing the CAs January 30, 2009 Decision and whether Spouses
Viloria have the right to the reliefs they prayed for, this Court deems it necessary to resolve the
following issues:
a.

Does a principal-agent relationship exist between CAI and Holiday Travel?

b.

Assuming that an agency relationship exists between CAI and Holiday Travel, is CAI bound by
the acts of Holiday Travels agents and employees such as Mager?

c.

Assuming that CAI is bound by the acts of Holiday Travels agents and employees, can the
representation of Mager as to unavailability of seats at Amtrak be considered fraudulent as to
vitiate the consent of Spouse Viloria in the purchase of the subject tickets?

d.

Is CAI justified in insisting that the subject tickets are non-transferable and non-refundable?

e.

Is CAI justified in pegging a different price for the round trip ticket to Los Angeles requested
by Fernando?

f.

Alternatively, did CAI act in bad faith or renege its obligation to Spouses Viloria to apply the
value of the subject tickets in the purchase of new ones when it refused to allow Fernando to
use Lourdes ticket and in charging a higher price for a round trip ticket to Los Angeles?
This Courts Ruling

I. A principal-agent relationship exists


between CAI and Holiday Travel.
With respect to the first issue, which is a question of fact that would require this Court to review and

re-examine the evidence presented by the parties below, this Court takes exception to the general rule
that the CAs findings of fact are conclusive upon Us and our jurisdiction is limited to the review of
questions of law. It is well-settled to the point of being axiomatic that this Court is authorized to
resolve questions of fact if confronted with contrasting factual findings of the trial court and appellate
court and if the findings of the CA are contradicted by the evidence on record. [17]
According to the CA, agency is never presumed and that he who alleges that it exists has the burden
of proof. Spouses Viloria, on whose shoulders such burden rests, presented evidence that fell short of
indubitably demonstrating the existence of such agency.
We disagree. The CA failed to consider undisputed facts, discrediting CAIs denial that Holiday Travel is
one of its agents. Furthermore, in erroneously characterizing the contractual relationship between CAI
and Holiday Travel as a contract of sale, the CA failed to apply the fundamental civil law principles
governing agency and differentiating it from sale.
In Rallos v. Felix Go Chan & Sons Realty Corporation,[18] this Court explained the nature of an agency
and spelled out the essential elements thereof:
Out of the above given principles, sprung the creation and acceptance of the relationship of
agency whereby one party, called the principal (mandante), authorizes another, called the agent
(mandatario), to act for and in his behalf in transactions with third persons. The essential elements of
agency are: (1) there is consent, express or implied of the parties to establish the relationship; (2) the
object is the execution of a juridical act in relation to a third person; (3) the agent acts as a
representative and not for himself, and (4) the agent acts within the scope of his authority.
Agency is basically personal, representative, and derivative in nature. The authority of the agent to act
emanates from the powers granted to him by his principal; his act is the act of the principal if done
within the scope of the authority. Qui facit per alium facit se. "He who acts through another acts
himself."[19]
Contrary to the findings of the CA, all the elements of an agency exist in this case. The first and
second elements are present as CAI does not deny that it concluded an agreement with Holiday
Travel, whereby Holiday Travel would enter into contracts of carriage with third persons on CAIs
behalf. The third element is also present as it is undisputed that Holiday Travel merely acted in a
representative capacity and it is CAI and not Holiday Travel who is bound by the contracts of carriage
entered into by Holiday Travel on its behalf. The fourth element is also present considering that CAI
has not made any allegation that Holiday Travel exceeded the authority that was granted to it. In fact,
CAI consistently maintains the validity of the contracts of carriage that Holiday Travel executed with
Spouses Viloria and that Mager was not guilty of any fraudulent misrepresentation. That CAI admits
the authority of Holiday Travel to enter into contracts of carriage on its behalf is easily discernible from
its February 24, 1998 and March 24, 1998 letters, where it impliedly recognized the validity of the
contracts entered into by Holiday Travel with Spouses Viloria. When Fernando informed CAI that it was
Holiday Travel who issued to them the subject tickets, CAI did not deny that Holiday Travel is its
authorized agent.
Prior to Spouses Vilorias filing of a complaint against it, CAI never refuted that it gave Holiday Travel
the power and authority to conclude contracts of carriage on its behalf. As clearly extant from the
records, CAI recognized the validity of the contracts of carriage that Holiday Travel entered into with
Spouses Viloria and considered itself bound with Spouses Viloria by the terms and conditions thereof;
and this constitutes an unequivocal testament to Holiday Travels authority to act as its agent. This
Court cannot therefore allow CAI to take an altogether different position and deny that Holiday Travel
is its agent without condoning or giving imprimatur to whatever damage or prejudice that may result
from such denial or retraction to Spouses Viloria, who relied on good faith on CAIs acts in recognition
of Holiday Travels authority. Estoppel is primarily based on the doctrine of good faith and the
avoidance of harm that will befall an innocent party due to its injurious reliance, the failure to apply it
in this case would result in gross travesty of justice. [20] Estoppel bars CAI from making such denial.
As categorically provided under Article 1869 of the Civil Code, [a]gency may be express, or implied
from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency,

knowing that another person is acting on his behalf without authority.


Considering that the fundamental hallmarks of an agency are present, this Court finds it rather
peculiar that the CA had branded the contractual relationship between CAI and Holiday Travel as one
of sale. The distinctions between a sale and an agency are not difficult to discern and this Court, as
early as 1970, had already formulated the guidelines that would aid in differentiating the two (2)
contracts. In Commissioner of Internal Revenue v. Constantino, [21] this Court extrapolated that the
primordial differentiating consideration between the two (2) contracts is the transfer of ownership or
title over the property subject of the contract. In an agency, the principal retains ownership and
control over the property and the agent merely acts on the principals behalf and under his instructions
in furtherance of the objectives for which the agency was established. On the other hand, the contract
is clearly a sale if the parties intended that the delivery of the property will effect a relinquishment of
title, control and ownership in such a way that the recipient may do with the property as he pleases.
Since the company retained ownership of the goods, even as it delivered possession unto the dealer
for resale to customers, the price and terms of which were subject to the company's control, the
relationship between the company and the dealer is one of agency, tested under the following
criterion:
The difficulty in distinguishing between contracts of sale and the creation of an agency to sell has led
to the establishment of rules by the application of which this difficulty may be solved. The decisions
say the transfer of title or agreement to transfer it for a price paid or promised is the essence of sale.
If such transfer puts the transferee in the attitude or position of an owner and makes him liable to the
transferor as a debtor for the agreed price, and not merely as an agent who must account for the
proceeds of a resale, the transaction is a sale; while the essence of an agency to sell is the delivery to
an agent, not as his property, but as the property of the principal, who remains the owner and has the
right to control sales, fix the price, and terms, demand and receive the proceeds less the agent's
commission upon sales made. 1 Mechem on Sales, Sec. 43; 1 Mechem on Agency, Sec. 48; Williston
on Sales, 1; Tiedeman on Sales, 1. (Salisbury v. Brooks, 94 SE 117, 118-119) [22]
As to how the CA have arrived at the conclusion that the contract between CAI and Holiday Travel is a
sale is certainly confounding, considering that CAI is the one bound by the contracts of carriage
embodied by the tickets being sold by Holiday Travel on its behalf. It is undisputed that CAI and not
Holiday Travel who is the party to the contracts of carriage executed by Holiday Travel with third
persons who desire to travel via Continental Airlines, and this conclusively indicates the existence of a
principal-agent relationship. That the principal is bound by all the obligations contracted by the agent
within the scope of the authority granted to him is clearly provided under Article 1910 of the Civil Code
and this constitutes the very notion of agency.
II. In actions based on quasi-delict, a
principal can only be held liable for the tort
committed by its agents employees if it has
been established by preponderance of
evidence that the principal was also at fault
or negligent or that the principal exercise
control and supervision over them.
Considering that Holiday Travel is CAIs agent, does it necessarily follow that CAI is liable for the fault
or negligence of Holiday Travels employees? Citing China Air Lines, Ltd. v. Court of Appeals, et al.,
[23]
CAI argues that it cannot be held liable for the actions of the employee of its ticketing agent in the
absence of an employer-employee relationship.
An examination of this Courts pronouncements in China Air Lines will reveal that an airline company is
not completely exonerated from any liability for the tort committed by its agents employees. A prior
determination of the nature of the passengers cause of action is necessary. If the passengers cause
of action against the airline company is premised on culpa aquiliana or quasi-delict for a tort
committed by the employee of the airline companys agent, there must be an independent showing

that the airline company was at fault or negligent or has contributed to the negligence or tortuous
conduct committed by the employee of its agent. The mere fact that the employee of the airline
companys agent has committed a tort is not sufficient to hold the airline company liable. There is
novinculum juris between the airline company and its agents employees and the contractual
relationship between the airline company and its agent does not operate to create a juridical tie
between the airline company and its agents employees. Article 2180 of the Civil Code does not make
the principal vicariously liable for the tort committed by its agents employees and the principalagency relationshipper se does not make the principal a party to such tort; hence, the need to prove
the principals own fault or negligence.
On the other hand, if the passengers cause of action for damages against the airline company is
based on contractual breach or culpa contractual, it is not necessary that there be evidence of the
airline companys fault or negligence. As this Court previously stated in China Air Lines and reiterated
in Air France vs. Gillego,[24] in an action based on a breach of contract of carriage, the aggrieved party
does not have to prove that the common carrier was at fault or was negligent. All that he has to prove
is the existence of the contract and the fact of its non-performance by the carrier.
Spouses Vilorias cause of action on the basis of Magers alleged fraudulent misrepresentation is clearly
one of tort or quasi-delict, there being no pre-existing contractual relationship between them.
Therefore, it was incumbent upon Spouses Viloria to prove that CAI was equally at fault.
However, the records are devoid of any evidence by which CAIs alleged liability can be substantiated.
Apart from their claim that CAI must be held liable for Magers supposed fraud because Holiday Travel
is CAIs agent, Spouses Viloria did not present evidence that CAI was a party or had contributed to
Magers complained act either by instructing or authorizing Holiday Travel and Mager to issue the said
misrepresentation.
It may seem unjust at first glance that CAI would consider Spouses Viloria bound by the terms and
conditions of the subject contracts, which Mager entered into with them on CAIs behalf, in order to
deny Spouses Vilorias request for a refund or Fernandos use of Lourdes ticket for the re-issuance of
a new one, and simultaneously claim that they are not bound by Magers supposed misrepresentation
for purposes of avoiding Spouses Vilorias claim for damages and maintaining the validity of the
subject contracts. It may likewise be argued that CAI cannot deny liability as it benefited from Magers
acts, which were performed in compliance with Holiday Travels obligations as CAIs agent.
However, a persons vicarious liability is anchored on his possession of control, whether absolute or
limited, on the tortfeasor. Without such control, there is nothing which could justify extending the
liability to a person other than the one who committed the tort. As this Court explained in Cangco v.
Manila Railroad Co.:[25]
With respect to extra-contractual obligation arising from negligence, whether of act or
omission, it is competent for the legislature to elect and our Legislature has so elected to limit
such liability to cases in which the person upon whom such an obligation is imposed is morally
culpable or, on the contrary, for reasons of public policy, to extend that liability, without regard
to the lack of moral culpability, so as to include responsibility for the negligence of those
persons whose acts or omissions are imputable, by a legal fiction, to others who are in a
position to exercise an absolute or limited control over them. The legislature which adopted our
Civil Code has elected to limit extra-contractual liability with certain well-defined exceptions to
cases in which moral culpability can be directly imputed to the persons to be charged. This moral
responsibility may consist in having failed to exercise due care in one's own acts, or in having failed to
exercise due care in the selection and control of one's agent or servants, or in the control of persons
who, by reasons of their status, occupy a position of dependency with respect to the person made
liable for their conduct.[26] (emphasis supplied)
It is incumbent upon Spouses Viloria to prove that CAI exercised control or supervision over Mager by
preponderant evidence. The existence of control or supervision cannot be presumed and CAI is under
no obligation to prove its denial or nugatory assertion. Citing Belen v. Belen,[27] this Court ruled
inJayme v. Apostol,[28] that:

In Belen v. Belen, this Court ruled that it was enough for defendant to deny an alleged employment
relationship. The defendant is under no obligation to prove the negative averment. This Court said:
It is an old and well-settled rule of the courts that the burden of proving the action is upon the
plaintiff, and that if he fails satisfactorily to show the facts upon which he bases his claim, the
defendant is under no obligation to prove his exceptions. This [rule] is in harmony with the provisions
of Section 297 of the Code of Civil Procedure holding that each party must prove his own affirmative
allegations, etc.[29] (citations omitted)
Therefore, without a modicum of evidence that CAI exercised control over Holiday Travels employees
or that CAI was equally at fault, no liability can be imposed on CAI for Magers supposed
misrepresentation.
III. Even on the assumption that CAI may be
held liable for the acts of Mager, still, Spouses
Viloria are not entitled to a refund. Magers
statement cannot be considered a causal
fraud that would justify the annulment of the
subject contracts that would oblige CAI to
indemnify Spouses Viloria and return the
money they paid for the subject tickets.
Article 1390, in relation to Article 1391 of the Civil Code, provides that if the consent of the
contracting parties was obtained through fraud, the contract is considered voidable and may be
annulled within four (4) years from the time of the discovery of the fraud. Once a contract is annulled,
the parties are obliged under Article 1398 of the same Code to restore to each other the things subject
matter of the contract, including their fruits and interest.
On the basis of the foregoing and given the allegation of Spouses Viloria that Fernandos consent to
the subject contracts was supposedly secured by Mager through fraudulent means, it is plainly
apparent that their demand for a refund is tantamount to seeking for an annulment of the subject
contracts on the ground of vitiated consent.
Whether the subject contracts are annullable, this Court is required to determine whether Magers
alleged misrepresentation constitutes causal fraud. Similar to the dispute on the existence of an
agency, whether fraud attended the execution of a contract is factual in nature and this Court, as
discussed above, may scrutinize the records if the findings of the CA are contrary to those of the RTC.
Under Article 1338 of the Civil Code, there is fraud when, through insidious words or machinations of
one of the contracting parties, the other is induced to enter into a contract which, without them, he
would not have agreed to. In order that fraud may vitiate consent, it must be the causal (dolo
causante), not merely the incidental (dolo incidente), inducement to the making of the contract.
[30]
InSamson v. Court of Appeals,[31] causal fraud was defined as a deception employed by one party
prior to or simultaneous to the contract in order to secure the consent of the other.[32]
Also, fraud must be serious and its existence must be established by clear and convincing evidence. As
ruled by this Court in Sierra v. Hon. Court of Appeals, et al.,[33] mere preponderance of evidence is not
adequate:
Fraud must also be discounted, for according to the Civil Code:
Art. 1338. There is fraud when, through insidious words or machinations of one of the contracting
parties, the other is induced to enter into a contract which without them, he would not have agreed to.
Art. 1344. In order that fraud may make a contract voidable, it should be serious and should not have
been employed by both contracting parties.

To quote Tolentino again, the misrepresentation constituting the fraud must be established by full,
clear, and convincing evidence, and not merely by a preponderance thereof. The deceit must be
serious. The fraud is serious when it is sufficient to impress, or to lead an ordinarily prudent person
into error; that which cannot deceive a prudent person cannot be a ground for nullity. The
circumstances of each case should be considered, taking into account the personal conditions of the
victim.[34]
After meticulously poring over the records, this Court finds that the fraud alleged by Spouses Viloria
has not been satisfactorily established as causal in nature to warrant the annulment of the subject
contracts. In fact, Spouses Viloria failed to prove by clear and convincing evidence that Magers
statement was fraudulent. Specifically, Spouses Viloria failed to prove that (a) there were indeed
available seats at Amtrak for a trip to New Jersey on August 13, 1997 at the time they spoke with
Mager on July 21, 1997; (b) Mager knew about this; and (c) that she purposely informed them
otherwise.
This Court finds the only proof of Magers alleged fraud, which is Fernandos testimony that an Amtrak
had assured him of the perennial availability of seats at Amtrak, to be wanting. As CAI correctly
pointed out and as Fernando admitted, it was possible that during the intervening period of three (3)
weeks from the time Fernando purchased the subject tickets to the time he talked to said Amtrak
employee, other passengers may have cancelled their bookings and reservations with Amtrak, making
it possible for Amtrak to accommodate them. Indeed, the existence of fraud cannot be proved by mere
speculations and conjectures. Fraud is never lightly inferred; it is good faith that is. Under the Rules of
Court, it is presumed that "a person is innocent of crime or wrong" and that "private transactions have
been fair and regular."[35] Spouses Viloria failed to overcome this presumption.
IV. Assuming the contrary, Spouses Viloria
are nevertheless deemed to have ratified the
subject contracts.
Even assuming that Magers representation is causal fraud, the subject contracts have been impliedly
ratified when Spouses Viloria decided to exercise their right to use the subject tickets for the purchase
of new ones. Under Article 1392 of the Civil Code, ratification extinguishes the action to annul a
voidable contract.
Ratification of a voidable contract is defined under Article 1393 of the Civil Code as follows:
Art. 1393. Ratification may be effected expressly or tacitly. It is understood that there is a tacit
ratification if, with knowledge of the reason which renders the contract voidable and such reason
having ceased, the person who has a right to invoke it should execute an act which necessarily implies
an intention to waive his right.
Implied ratification may take diverse forms, such as by silence or acquiescence; by acts showing
approval or adoption of the contract; or by acceptance and retention of benefits flowing therefrom. [36]
Simultaneous with their demand for a refund on the ground of Fernandos vitiated consent, Spouses
Viloria likewise asked for a refund based on CAIs supposed bad faith in reneging on its undertaking to
replace the subject tickets with a round trip ticket from Manila to Los Angeles.
In doing so, Spouses Viloria are actually asking for a rescission of the subject contracts based on
contractual breach. Resolution, the action referred to in Article 1191, is based on the defendants
breach of faith, a violation of the reciprocity between the parties [37] and in Solar Harvest, Inc. v. Davao
Corrugated Carton Corporation,[38] this Court ruled that a claim for a reimbursement in view of the
other partys failure to comply with his obligations under the contract is one for rescission or
resolution.
However, annulment under Article 1390 of the Civil Code and rescission under Article 1191 are two (2)

inconsistent remedies. In resolution, all the elements to make the contract valid are present; in
annulment, one of the essential elements to a formation of a contract, which is consent, is absent. In
resolution, the defect is in the consummation stage of the contract when the parties are in the process
of performing their respective obligations; in annulment, the defect is already present at the time of
the negotiation and perfection stages of the contract. Accordingly, by pursuing the remedy of
rescission under Article 1191, the Vilorias had impliedly admitted the validity of the subject contracts,
forfeiting their right to demand their annulment. A party cannot rely on the contract and claim rights
or obligations under it and at the same time impugn its existence or validity. Indeed, litigants are
enjoined from taking inconsistent positions. [39]
V. Contracts cannot be rescinded
for a slight or casual breach.
CAI cannot insist on the non-transferability
of the subject tickets.
Considering that the subject contracts are not annullable on the ground of vitiated consent, the next
question is: Do Spouses Viloria have the right to rescind the contract on the ground of CAIs
supposed breach of its undertaking to issue new tickets upon surrender of the subject tickets?
Article 1191, as presently worded, states:
The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him.
The injured party may choose between the fulfilment and the rescission of the obligation, with the
payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment,
if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a
period.
This is understood to be without prejudice to the rights of third persons who have acquired the thing,
in accordance with articles 1385 and 1388 and the Mortgage Law.
According to Spouses Viloria, CAI acted in bad faith and breached the subject contracts when it
refused to apply the value of Lourdes ticket for Fernandos purchase of a round trip ticket to Los
Angeles and in requiring him to pay an amount higher than the price fixed by other airline companies.
In its March 24, 1998 letter, CAI stated that non-refundable tickets may be used as a form of
payment toward the purchase of another Continental ticket for $75.00, per ticket, reissue fee ($50.00,
per ticket, for tickets purchased prior to October 30, 1997).
Clearly, there is nothing in the above-quoted section of CAIs letter from which the restriction on the
non-transferability of the subject tickets can be inferred. In fact, the words used by CAI in its letter
supports the position of Spouses Viloria, that each of them can use the ticket under their name for the
purchase of new tickets whether for themselves or for some other person.
Moreover, as CAI admitted, it was only when Fernando had expressed his interest to use the subject
tickets for the purchase of a round trip ticket between Manila and Los Angeles that he was informed
that he cannot use the ticket in Lourdes name as payment.
Contrary to CAIs claim, that the subject tickets are non-transferable cannot be implied from a plain
reading of the provision printed on the subject tickets stating that [t]o the extent not in conflict with
the foregoing carriage and other services performed by each carrier are subject to: (a) provisions
contained in this ticket, x x x (iii) carriers conditions of carriage and related regulations which are
made part hereof (and are available on application at the offices of carrier) x x x. As a common
carrier whose business is imbued with public interest, the exercise of extraordinary diligence requires
CAI to inform Spouses Viloria, or all of its passengers for that matter, of all the terms and conditions

governing their contract of carriage. CAI is proscribed from taking advantage of any ambiguity in the
contract of carriage to impute knowledge on its passengers of and demand compliance with a certain
condition or undertaking that is not clearly stipulated. Since the prohibition on transferability is not
written on the face of the subject tickets and CAI failed to inform Spouses Viloria thereof, CAI cannot
refuse to apply the value of Lourdes ticket as payment for Fernandos purchase of a new ticket.
CAIs refusal to accept Lourdes ticket for the
purchase of a new ticket for Fernando is only a
casual breach.
Nonetheless, the right to rescind a contract for non-performance of its stipulations is not absolute. The
general rule is that rescission of a contract will not be permitted for a slight or casual breach, but only
for such substantial and fundamental violations as would defeat the very object of the parties in
making the agreement.[40] Whether a breach is substantial is largely determined by the attendant
circumstances.[41]
While CAIs refusal to allow Fernando to use the value of Lourdes ticket as payment for the purchase
of a new ticket is unjustified as the non-transferability of the subject tickets was not clearly stipulated,
it cannot, however be considered substantial. The endorsability of the subject tickets is not an
essential part of the underlying contracts and CAIs failure to comply is not essential to its fulfillment
of its undertaking to issue new tickets upon Spouses Vilorias surrender of the subject tickets. This
Court takes note of CAIs willingness to perform its principal obligation and this is to apply the price of
the ticket in Fernandos name to the price of the round trip ticket between Manila and Los Angeles. CAI
was likewise willing to accept the ticket in Lourdes name as full or partial payment as the case may be
for the purchase of any ticket, albeit under her name and for her exclusive use. In other words, CAIs
willingness to comply with its undertaking under its March 24, 1998 cannot be doubted, albeit tainted
with its erroneous insistence that Lourdes ticket is non-transferable.
Moreover, Spouses Vilorias demand for rescission cannot prosper as CAI cannot be solely faulted for
the fact that their agreement failed to consummate and no new ticket was issued to Fernando.
Spouses Viloria have no right to insist that a single round trip ticket between Manila and Los Angeles
should be priced at around $856.00 and refuse to pay the difference between the price of the subject
tickets and the amount fixed by CAI. The petitioners failed to allege, much less prove, that CAI had
obliged itself to issue to them tickets for any flight anywhere in the world upon their surrender of the
subject tickets. In its March 24, 1998 letter, it was clearly stated that [n]on-refundable tickets may be
used as a form of payment toward the purchase of another Continental ticket [42] and there is nothing
in it suggesting that CAI had obliged itself to protect Spouses Viloria from any fluctuation in the prices
of tickets or that the surrender of the subject tickets will be considered as full payment for any ticket
that the petitioners intend to buy regardless of actual price and destination. The CA was correct in
holding that it is CAIs right and exclusive prerogative to fix the prices for its services and it may not
be compelled to observe and maintain the prices of other airline companies. [43]
The conflict as to the endorsability of the subject tickets is an altogether different matter, which does
not preclude CAI from fixing the price of a round trip ticket between Manila and Los Angeles in an
amount it deems proper and which does not provide Spouses Viloria an excuse not to pay such price,
albeit subject to a reduction coming from the value of the subject tickets. It cannot be denied that
Spouses Viloria had the concomitant obligation to pay whatever is not covered by the value of the
subject tickets whether or not the subject tickets are transferable or not.
There is also no showing that Spouses Viloria were discriminated against in bad faith by being charged
with a higher rate. The only evidence the petitioners presented to prove that the price of a round trip
ticket between Manila and Los Angeles at that time was only $856.00 is a newspaper advertisement
for another airline company, which is inadmissible for being hearsay evidence, twice removed.
Newspaper clippings are hearsay if they were offered for the purpose of proving the truth of the
matter alleged. As ruled in Feria v. Court of Appeals,:[44]
[N]ewspaper articles amount to hearsay evidence, twice removed and are therefore not only
inadmissible but without any probative value at all whether objected to or not,unless offered for a
purpose other than proving the truth of the matter asserted. In this case, the news article is

admissible only as evidence that such publication does exist with the tenor of the news therein stated.
[45]
(citations omitted)
The records of this case demonstrate that both parties were equally in default; hence, none of them
can seek judicial redress for the cancellation or resolution of the subject contracts and they are
therefore bound to their respective obligations thereunder. As the 1 st sentence of Article 1192
provides:
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. (emphasis supplied)
Therefore, CAIs liability for damages for its refusal to accept Lourdes ticket for the purchase of
Fernandos round trip ticket is offset by Spouses Vilorias liability for their refusal to pay the amount,
which is not covered by the subject tickets. Moreover, the contract between them remains, hence, CAI
is duty bound to issue new tickets for a destination chosen by Spouses Viloria upon their surrender of
the subject tickets and Spouses Viloria are obliged to pay whatever amount is not covered by the
value of the subject tickets.
This Court made a similar ruling in Central Bank of the Philippines v. Court of Appeals.[46] Thus:
Since both parties were in default in the performance of their respective reciprocal obligations, that is,
Island Savings Bank failed to comply with its obligation to furnish the entire loan and Sulpicio M.
Tolentino failed to comply with his obligation to pay his P17,000.00 debt within 3 years as stipulated,
they are both liable for damages.
Article 1192 of the Civil Code provides that in case both parties have committed a breach of their
reciprocal obligations, the liability of the first infractor shall be equitably tempered by the courts. WE
rule that the liability of Island Savings Bank for damages in not furnishing the entire loan is offset by
the liability of Sulpicio M. Tolentino for damages, in the form of penalties and surcharges, for not
paying his overdue P17,000.00 debt. x x x.[47] cralaw
Another consideration that militates against the propriety of holding CAI liable for moral damages is
the absence of a showing that the latter acted fraudulently and in bad faith. Article 2220 of the Civil
Code requires evidence of bad faith and fraud and moral damages are generally not recoverable
inculpa contractual except when bad faith had been proven. [48] The award of exemplary damages is
likewise not warranted. Apart from the requirement that the defendant acted in a wanton, oppressive
and malevolent manner, the claimant must prove his entitlement to moral damages. [49]
WHEREFORE, premises considered, the instant Petition is DENIED.
SO ORDERED.
Carpio, (Chairperson), Perez, Sereno, Reyes, and Bernabe, JJ.,* concur.

SECOND DIVISION
G.R. No. L-25142 March 25, 1975
PHILIPPINE RABBIT BUS LINES, INC. and FELIX PANGALANGAN, plaintiffs-appellants,
vs. PHIL-AMERICAN FORWARDERS, INC., ARCHIMEDES J. BALINGIT and FERNANDO
PINEDA, defendants-appellees.
Angel A. Sison for plaintiffs-appellants.chanrobles virtual law library

Fidel Zosimo U. Canilao for defendants-appellees.


AQUINO, J.:
Philippine Rabbit Bus Lines, Inc. and Felix Pangalangan appealed on pure questions of law from the
order of the Court of First Instance of Tarlac, dismissing their complaint against Archimedes J.
Balingit.chanroblesvirtualawlibrarychanrobles virtual law library
The dismissal was based on the ground that Balingit as the manager of Phil-American Forwarders,
Inc., which together with Fernando Pineda and Balingit, was sued for damages in an action based on
quasi-delict or culpa aquiliana, is not the manager of an establishment contemplated in article 2180 of
the Civil Code (Civil Case No. 3865).chanroblesvirtualawlibrarychanrobles virtual law library
In the complaint for damages filed by the bus company and Pangalangan against Phil-American
Forwarders, Inc., Balingit and Pineda, it was alleged that on November 24, 1962, Pineda drove
recklessly a freight truck, owned by Phil-American Forwarders, Inc., along the national highway at Sto.
Tomas, Pampanga. The truck bumped the bus driven by Pangalangan, which was owned by Philippine
Rabbit Bus Lines, Inc. As a result of the bumping, Pangalangan suffered injuries and the bus was
damaged and could not be used for seventy-nine days, thus depriving the company of earnings
amounting to P8,665.51. Balingit was the manager of Phil-American Forwarders,
Inc.chanroblesvirtualawlibrarychanrobles virtual law library
Among the defenses interposed by the defendants in their answer was that Balingit was not Pineda's
employer.chanroblesvirtualawlibrarychanrobles virtual law library
Balingit moved that the complaint against him be dismissed on the ground that the bus company and
the bus driver had no cause of action against him. As already stated, the lower court dismissed the
action as to Balingit. The bus company and its driver appealed.chanroblesvirtualawlibrarychanrobles
virtual law library
The Civil Code provides:
ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this
Chapter.chanroblesvirtualawlibrarychanrobles virtual law library
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. chanrobles virtual law library
xxx xxx xxxchanrobles virtual law library
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.chanroblesvirtualawlibrarychanrobles virtual law library
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.chanroblesvirtualawlibrarychanrobles virtual law library
xxx xxx xxxchanrobles virtual law library
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. (1903a)

The novel and unprecedented legal issue in this appeal is whether the terms "employers" and "owners
and managers of an establishment or enterprise" (dueos o directores de un establicimiento o
empresa) used in article 2180 of the Civil Code, formerly article 1903 of the old Code, embrace the
manager of a corporation owning a truck, the reckless operation of which allegedly resulted in the
vehicular accident from which the damage arose.chanroblesvirtualawlibrarychanrobles virtual law
library
We are of the opinion that those terms do not include the manager of a corporation. It may be
gathered from the context of article 2180 that the term "manager" ("director" in the Spanish version)
is used in the sense of "employer".chanroblesvirtualawlibrarychanrobles virtual law library
Hence, under the allegations of the complaint, no tortious or quasi-delictual liability can be fastened
on Balingit as manager of Phil-American Forwarders, Inc., in connection with the vehicular accident
already mentioned because he himself may be regarded as an employee or dependiente of his
employer, Phil-American Forwarders, Inc.chanroblesvirtualawlibrarychanrobles virtual law library
Thus, it was held "que es dependiente, a los efectos de la responsabilidad subsidiaria establecida en el
num 3.0 del (art.) 1903, el director de un periodico explotado por una sociedad, porque cualquiera
que sea su jerarquia y aunque Ileve la direccion de determinadas convicciones politicas no por eso
deja de estar subordinado a la superior autoridad de la Empresa" (Decision of Spanish Supreme Court
dated December 6, 1912 cited in 12 Manresa, Codigo Civil Espaol 5th Ed. 662; 1913 Enciclopedia
Juridica Espaola 992).chanroblesvirtualawlibrarychanrobles virtual law library
The bus company and its driver, in their appellants' brief, injected a new factual issue which was not
alleged in their complaint. They argue that Phil- American Forwarders, Inc. is merely a business
conduit of Balingit because out of its capital stock with a par value of P41,200, Balingit and his wife
had subscribed P40,000 and they paid P10,000 on their subscription, while the other incorporators,
namely, Rodolfo Limjuco, Ponciano Caparas and Rafael Suntay paid P250.25 and P25,
respectively.chanroblesvirtualawlibrarychanrobles virtual law library
That argument implies that the veil of corporate fiction should be pierced and that Phil-American
Forwarders, Inc. and Balingit and his wife should be treated as one and the same civil
personality.chanroblesvirtualawlibrarychanrobles virtual law library
We cannot countenance that argument in this appeal. It was not raised in the lower court. The case
has to be decided on the basis of the pleadings filed in the trial court where it was assumed that PhilAmerican Forwarders, Inc. has a personality separate and distinct from that of the Balingit
spouses.chanroblesvirtualawlibrarychanrobles virtual law library
The legal issue, which the plaintiffs-appellants can ventilate in this appeal, is one which was raised in
the lower court and which is within the issues framed by the parties (Sec. 18, Rule 46, Rules of
Court).chanroblesvirtualawlibrarychanrobles virtual law library
When a party deliberately adopts a certain theory and the case is decided upon that theory in the
court below, he will not be permitted to change his theory on appeal because, to permit him to do so,
could be unfair to the adverse party (2 Moran's Comments on the Rules of Court, 1970 Ed. p.
505).chanroblesvirtualawlibrarychanrobles virtual law library
WHEREFORE, the lower court's order of dismissal is affirmed. Costs against the plaintiffsappellants.chanroblesvirtualawlibrarychanrobles virtual law library
SO ORDERED.
Fernando (Chairman), Barredo, Antonio and Fernandez, JJ., concur.

EN BANC
G.R. No. L-29025 October 4, 1971
Spouses MOISES P. PALISOC and BRIGIDA P. PALISOC, plaintiffs-appellants, vs.ANTONIO C.
BRILLANTES and TEODOSIO V. VALENTON, owner and President, respectively, of a school of
arts and trades, known under the name and style of "Manila Technical Institute" (M.I.T.),
VIRGILIO L. DAFFON and SANTIAGO M. QUIBULUE, defendants-appellees.
Leovillo C. Agustin for plaintiffs-appellants. .
Honorato S. Reyes for appellee Brillantes, et al. .
Villareal, Almacen Navarra & Amores for appellee Daffon. .
TEEHANKEE, J.:
An appeal in forma pauperis on pure questions of law from a decision of the Court of First Instance of
Manila. .chanroblesvirtualawlibrarychanrobles virtual law library
Plaintiffs-appellants as parents of their sixteen-year old son, Dominador Palisoc, and a student in
automotive mechanics at the Manila Technical Institute, Quezon Boulevard, Manila, had filed on May
19, 1966, the action below for damages arising from the death on March 10, 1966 of their son at the
hands of a fellow student, defendant Virgilio L. Daffon, at the laboratory room of the said
Institute. .chanroblesvirtualawlibrarychanrobles virtual law library
Defendants, per the trial court's decision, are: "(T)he defendant Antonio C. Brillantes, at the time
when the incident which gave rise to his action occurred was a member of the Board of Directors of
the institute; 1the defendant Teodosio Valenton, the president thereof; the defendant Santiago M.
Quibulue, instructor of the class to which the deceased belonged; and the defendant Virgilio L. Daffon,
a fellow student of the deceased. At the beginning the Manila Technical Institute was a single
proprietorship, but lately on August 2, 1962, it was duly incorporated."chanrobles virtual law library
The facts that led to the tragic death of plaintiffs' son were thus narrated by the trial court: "(T)he
deceased Dominador Palisoc and the defendant Virgilio L. Daffon were classmates, and on the
afternoon of March 10, 1966, between two and three o'clock, they, together with another classmate
Desiderio Cruz were in the laboratory room located on the ground floor. At that time the classes were
in recess. Desiderio Cruz and Virgilio L. Daffon were working on a machine while Dominador Palisoc
was merely looking on at them. Daffon made a remark to the effect that Palisoc was acting like a
foreman. Because of this remark Palisoc slapped slightly Daffon on the face. Daffon, in retaliation,
gave Palisoc a strong flat blow on the face, which was followed by other fist blows on the stomach.
Palisoc retreated apparently to avoid the fist blows, but Daffon followed him and both exchanged
blows until Palisoc stumbled on an engine block which caused him to fall face downward. Palisoc
became pale and fainted. First aid was administered to him but he was not revived, so he was
immediately taken to a hospital. He never regained consciousness; finally he died. The foregoing is the
substance of the testimony of Desiderio Cruz, the lone witness to the incident."chanrobles virtual law
library
The trial court expressly gave credence to this version of the incident, as testified to by the lone
eyewitness, Desiderio Cruz, a classmate of the protagonists, as that of a disinterested witness who
"has no motive or reason to testify one way or another in favor of any party" and rejected the selfexculpatory version of defendant Daffon denying that he had inflicted any fist blows on the
deceased. .chanroblesvirtualawlibrarychanrobles virtual law library

With the postmortem findings of Dr. Angelo Singian of the Manila Police Department who performed
the autopsy re "Cause of death: shock due to traumatic fracture of theribs (6th and 7th, left,
contusion of the pancreas and stomach with intra-gastric hemorrhage and slight subarachnoid
hemorrhage on the brain," and his testimony that these internal injuries of the deceased were caused
"probably by strong fist blows," the trial court found defendant Daffon liable for the quasi delict under
Article 2176 of the Civil Code. 3It held that "(T)he act, therefore, of the accused Daffon in giving the
deceased strong fistblows in the stomach which ruptured his internal organs and caused his death falls
within the purview of this article of the Code." 4chanrobles virtual law library
The trial court, however, absolved from liability the three other defendants-officials of the Manila
Technical Institute, in this wise:
... Their liabilities are based on the provisions of Article 2180 of the New Civil Code which reads:
Art. 2180. ... .chanroblesvirtualawlibrarychanrobles virtual law library
Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by
their pupils and students and apprentices, so long as they remain in their custody.
In the opinion of the Court, this article of the Code is not applicable to the case at bar, since this
contemplates the situation where the control or influence of the teachers and heads of school
establishments over the conduct and actions by the pupil supersedes those of the parents.
CIVIL LAW: DAMAGES ART 2180. NEW CIVIL CODE CONSTRUED: - The clause "so long as they remain
in their custody" contained in Article 2180 of the new civil code contemplated a situation where the
pupil lives and boards with the teacher, such that the control or influence on the pupil supersedes
those of the parents. In those circumstances the control or influence over the conduct and actions of
the pupil as well as the responsibilities for their sort would pass from the father and mother to the
teachers. (Ciriaco L. Mercado, Petitioner vs. the Court of Appeals, Manuel Quisumbing, Jr., et al.,
respondents, G.R. No. L-14862, May 30, 1960). 5chanrobles virtual law library
There is no evidence that the accused Daffon lived and boarded with his teacher or the other
defendant officials of the school. These defendants cannot therefore be made responsible for the tort
of the defendant Daffon.
Judgment was therefore rendered by the trial court as follows:
1. Sentencing the defendant Virgilio L. Daffon to pay the plaintiffs as heirs of the deceased Dominador
Palisoc (a) P6,000.00 for the death of Dominador Palisoc; (b) P3,375.00 for actual and compensatory
expenses; (c) P5,000.00 for moral damages; (d) P10,000.00 for loss of earning power, considering
that the deceased was only between sixteen and seventeen years, and in good health when he died,
and (e) P2,000.00 for attorney's fee, plus the costs of this
action. .chanroblesvirtualawlibrarychanrobles virtual law library
2. Absolving the other defendants. .chanroblesvirtualawlibrarychanrobles virtual law library
3. Dismissing the defendants' counterclaim for lack of merit.
Plaintiffs' appeal raises the principal legal question that under the factual findings of the trial court,
which are now beyond review, the trial court erred in absolving the defendants-school officials instead
of holding them jointly and severally liable as tortfeasors, with defendant Daffon, for the damages
awarded them as a result of their son's death. The Court finds the appeal, in the main, to be
meritorious. .chanroblesvirtualawlibrarychanrobles virtual law library

1. The lower court absolved defendants-school officials on the ground that the provisions of Article
2180, Civil Code, which expressly hold "teachers or heads of establishments of arts and trades ...
liable for damages caused by their pupils and students and apprentices, so long as they remain in
their custody," are not applicable to to the case at bar, since "there is no evidence that the accused
Daffon [who inflicted the fatal fistblows] 6lived and boarded with his teacher or the other defendantsofficials of the school. These defendants cannot therefore be made responsible for the tort of the
defendant Daffon."chanrobles virtual law library
The lower court based its legal conclusion expressly on the Court's dictum in Mercado vs. Court of
Appeals, 7that "(I)t would seem that the clause "so long as they remain in their custody," contemplates
a situation where the pupil lives and boards with the teacher, such that the control, direction and
influence on the pupil supersedes those of the parents. In these circumstances the control or influence
over the conduct and actions of the pupil would pass from the father and mother to the teacher; and
so would the responsibility for the torts of the pupil. Such a situation does not appear in the case at
bar; the pupils appear to go to school during school hours and go back to their homes with their
parents after school is over." This dictum had been made in rejecting therein petitioner father's
contention that his minor son's school, Lourdes Catholic School at Kanlaon, Quezon City [which was
not a party to the case] should be held responsible, rather than him as father, for the moral damages
of P2,000.00 adjudged against him for the physical injury inflicted by his son on a classmate. [A cut
on the right cheek with a piece of razor which costs only P50.00 by way of medical expenses to treat
and cure, since the wound left no scar.] The moral damages award was after all set aside by the Court
on the ground that none of the specific cases provided in Article 2219, Civil Code, for awarding moral
damages had been established, petitioner's son being only nine years old and not having been shown
to have "acted with discernment" in inflicting the injuries on his
classmate. .chanroblesvirtualawlibrarychanrobles virtual law library
The dictum in Mercado was based in turn on another dictum in the earlier case of Exconde vs.
Capuno, 8where the only issue involved as expressly stated in the decision, was whether the therein
defendant-father could be civilly liable for damages resulting from a death caused in a motor vehicle
accident driven unauthorizedly and negligently by his minor son, (which issue was resolved adversely
against the father). Nevertheless, the dictum in such earlier case that "It is true that under the law
abovequoted, teachers or directors of arts and trades are liable for any damage caused by their pupils
or apprentices while they are under their custody, but this provision only applies to an institution of
arts and trades and not to any academic educational institution" was expressly cited and quoted
in Mercado. .chanroblesvirtualawlibrarychanrobles virtual law library
2. The case at bar was instituted directly against the school officials and squarely raises the issue of
liability of teachers and heads of schools under Article 2180, Civil Code, for damages caused by their
pupils and students against fellow students on the school premises. Here, the parents of the student
at fault, defendant Daffon, are not involved, since Daffon was already of age at the time of the tragic
incident. There is no question, either, that the school involved is a non-academic school, 9the Manila
Technical Institute being admittedly a technical vocational and industrial
school. .chanroblesvirtualawlibrarychanrobles virtual law library
The Court holds that under the cited codal article, defendants head and teacher of the Manila Technical
Institute (defendants Valenton and Quibulue, respectively) are liable jointly and severally for damages
to plaintiffs-appellants for the death of the latter's minor son at the hands of defendant Daffon at the
school's laboratory room. No liability attaches to defendant Brillantes as a mere member of the
school's board of directors. The school itself cannot be held similarly liable, since it has not been
properly impleaded as party defendant. While plaintiffs sought to so implead it, by impleading
improperly defendant Brillantes, its former single proprietor, the lower court found that it had been
incorporated since August 2, 1962, and therefore the school itself, as thus incorporated, should have
been brought in as party defendant. Plaintiffs failed to do so, notwithstanding that Brillantes and his
co-defendants in their reply to plaintiffs' request for admission had expressly manifested and made of
record that "defendant Antonio C. Brillantes is not the registered owner/head of the "Manila Technical
Institute" which is now a corporation and is not owned by any individual person." 10chanrobles virtual
law library

3. The rationale of such liability of school heads and teachers for the tortious acts of their pupils and
students, so long as they remain in their custody, is that they stand, to a certain extent, as to their
pupils and students, in loco parentis and are called upon to "exercise reasonable supervision over the
conduct of the child." 11 This is expressly provided for in Articles 349, 350 and 352 of the Civil
Code. 12 In the law of torts, the governing principle is that the protective custody of the school heads
and teachers is mandatorily substituted for that of the parents, and hence, it becomes their obligation
as well as that of the school itself to provide proper supervision of the students' activities during the
whole time that they are at attendance in the school, including recess time, as well as to take the
necessary precautions to protect the students in their custody from dangers and hazards that would
reasonably be anticipated, including injuries that some student themselves may inflict willfully or
through negligence on their fellow students. .chanroblesvirtualawlibrarychanrobles virtual law library
4. As tersely summarized by Mr. Justice J.B.L. Reyes in his dissenting opinion in Exconde, "the basis of
the presumption of negligence of Art. 1903 [now 2180] is some culpa in vigilando that the parents,
teachers, etc. are supposed to have incurred in the exercise of their authority" 13and "where the
parent places the child under the effective authority of the teacher, the latter, and not the parent,
should be the one answerable for the torts committed while under his custody, for the very reason
that the parent is not supposed to interfere with the discipline of the school nor with the authority and
supervision of the teacher while the child is under instruction." The school itself, likewise, has to
respond for the fault or negligence of its school head and teachers under the same cited
article. 14chanrobles virtual law library
5. The lower court therefore erred in law in absolving defendants-school officials on the ground that
they could be held liable under Article 2180, Civil Code, only if the student who inflicted the fatal
fistblows on his classmate and victim "lived and boarded with his teacher or the other defendants
officials of the school." As stated above, the phrase used in the cited article - "so long as (the
students) remain in their custody" means the protective and supervisory custody that the school and
its heads and teachers exercise over the pupils and students for as long as they are at attendance in
the school, including recess time. There is nothing in the law that requires that for such liability to
attach the pupil or student who commits the tortious act must live and board in the school, as
erroneously held by the lower court, and the dicta in Mercado (as well as in Exconde) on which it
relied, must now be deemed to have been set aside by the present
decision. .chanroblesvirtualawlibrarychanrobles virtual law library
6. Defendants Valenton and Quibulue as president and teacher-in-charge of the school must therefore
be held jointly and severally liable for the quasi-delict of their co-defendant Daffon in the latter's
having caused the death of his classmate, the deceased Dominador Palisoc. The unfortunate death
resulting from the fight between the protagonists-students could have been avoided, had said
defendants but complied with their duty of providing adequate supervision over the activities of the
students in the school premises to protect their students from harm, whether at the hands of fellow
students or other parties. At any rate, the law holds them liable unless they relieve themselves of such
liability, in compliance with the last paragraph of Article 2180, Civil Code, by "(proving) that they
observed all the diligence of a good father of a family to prevent damage." In the light of the factual
findings of the lower court's decision, said defendants failed to prove such exemption from
liability. .chanroblesvirtualawlibrarychanrobles virtual law library
7. Plaintiffs-appellees' contention that the award of P6,000.00 as indemnity for the death of their son
should be increased to P12,000.00 as set by the Court in People vs. Pantoja,15 and observed in all
death indemnity cases thereafter is well taken. The Court, inPantoja, after noting the decline in the
purchasing power of the Philippine peso, had expressed its "considered opinion that the amount of
award of compensatory damages for death caused by a crime or quasi-delict should now be
P12,000.00." The Court thereby adjusted the minimum amount of "compensatory damages for death
caused by a crime orquasi-delict" as per Article 2206, Civil Code, from the old stated minimum of
P3,000.00 to P12,000.00, which amount is to be awarded "even though there may have been
mitigating circumstances" pursuant to the express provisions of said codal
article. .chanroblesvirtualawlibrarychanrobles virtual law library

8. Plaintiffs-appellees' other claims on appeal that the lower court should have awarded exemplary
damages and imposed legal interest on the total damages awarded, besides increasing the award of
attorney's fees all concern matters that are left by law to the discretion of the trial court and the Court
has not been shown any error or abuse in the exercise of such discretion on the part of the trial
court. 16 Decisive here is the touchstone provision of Article 2231, Civil Code, that "In quasi-delicts,
exemplary damages may be granted if the defendant acted with gross negligence." No gross
negligence on the part of defendants was found by the trial court to warrant the imposition of
exemplary damages, as well as of interest and increased attorney's fees, and the Court has not been
shown in this appeal any compelling reason to disturb such
finding. .chanroblesvirtualawlibrarychanrobles virtual law library
ACCORDINGLY, the judgment appealed from is modified so as to provide as
follows: .chanroblesvirtualawlibrarychanrobles virtual law library
1. Sentencing the defendants Virgilio L. Daffon, TeodosioV. Valenton and Santiago M. Quibulue jointly
and severally to pay plaintiffs as heirs of the deceased Dominador Palisoc (a) P12,000.00 for the death
of Dominador Palisoc; (b) P3,375.00 for actual and compensatory expenses; (c) P5,000.00 for moral,
damages; (d) P10,000.00 for loss of earning power and (e) P2,000.00 for attorney's fee, plus the
costs of this action in both instances; 2. absolving defendant Antonio C. Brillantes from the complaint;
and 3. dismissing defendants' counterclaims. .
Concepcion, C.J., Villamor and Makasiar, JJ., concur. .chanroblesvirtualawlibrarychanrobles virtual law
library
Dizon, J., took no part. .
REYES, J.B.L., J., concurring: .chanroblesvirtualawlibrarychanrobles virtual law library
I concur with the opinion of Mr. Justice Teehankee but would like to clarify that the argument of the
dissenting opinion of the effect that the responsibility of teachers and school officers under Articles
2180 should be limited to pupils who are minors (below the age of majority) is not in accord with the
plain text of the law. Article 2180 of the Civil Code of the Philippines is to the following effect: .
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. .chanroblesvirtualawlibrarychanrobles virtual
law library
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. .chanroblesvirtualawlibrarychanrobles virtual law
library
Guardians are liable for damages caused by the minors or incapacitated persons who are under their
authority and live in their company. .chanroblesvirtualawlibrarychanrobles virtual law library
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. .chanroblesvirtualawlibrarychanrobles virtual law library
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. .chanroblesvirtualawlibrarychanrobles virtual law library
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. .chanroblesvirtualawlibrarychanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library
The responsibility treated of in this article shall cease when the persons herein mentioned prove that
they observe all the diligence of a good father of a family to prevent damages.
Examination of the article shows that where the responsibility prescribed therein is limited to illegal
acts during minority, the article expressly so provides, as in the case of the parents and of the
guardians. It is natural to expect that if the law had intended to similarly restrict the civil responsibility
of the other categories of persons enumerated in the article, it would have expressly so stated. The
fact that it has not done so indicates an intent that the liability be not restricted to the case of persons
under age. Further, it is not without significance that the teachers and heads of scholarly
establishments are not grouped with parents and guardians but ranged with owners and managers of
enterprises, employers and the state, as to whom no reason is discernible to imply that they should
answer only for minors. .chanroblesvirtualawlibrarychanrobles virtual law library
Giorgi, in his well-known "Teoria de las Obligaciones en el Derecho Moderno", Volume 5, page 404, No.
272 (Sp. Ed.), after noting the split among commentators on the point it issue, observes with
considerable cogency that 272. Ante esta variedad de opiniones, ninguna de las cuales se funds en argumentos merecedores de
seria ponderacion, no es facil tomar un partido. Esto no obstante, debiendo manisfestar nuestra
opinion, nos acercamos a la de los que no estiman necesaria la menor edad del discipulo o del
aprendiz; porque si el aforismo ubi voluit dixit, ubi noluit tacuit, no es siempre argumento seguro para
interpreter la ley, es infalible cuanto se refiere a una misma disposicion relative a varios casos. Y tal es
el art. 1.153. Lo que haya establecido important poco si, elevandones a los principios de razon, puede
dudarse de la oportunidad de semajante diferencia; porque la voluntad cierta del legislador
prevalece in iure condito a cualquier otra consideracion. Por otra parte, si bien se considera, no puede
parecer extrano o absurdo el suponer que un discipulo y un aprendiz, aunque mayores de edad,
acepten voluntariamente la entera vigilancia de su preceptor mientras dura la educacion. Ni parece
dudoso desde el momento que los artesanos y los preceptores deben, al par de los padres, responder
civilmente de los daos comitidos por sus discipulos, aun cuando estos esten faltos de discernimiento.
Similarly, Planiol-Ripert, in their "Droit Civil Pratique," Volume VI, No. 635 (Spanish version), say that
635. Personas de quien responde. - Si bien la responsibilidad del maestro es originalmente una
estension de la de los padres (1), el art. 1384 no especifica que los alumnos y aprendices han de ser
menores de edad, por lo que la presuncion de culpa funcionara aun cuando sean mayores (2); pero, la
vigilancia no tendra que ser ejercida en iguales terminos. Aun respecto a los menores variara segun la
edad, extremo que tendra que ternese en ceunta a los fines de apreciar si el maestro ha podido
impedir el acto nocivo o no. .
I submit, finally, that while in the case of parents and guardians, their authority and supervision over
the children and wards end by law upon the latter reaching majority age, the authority and custodial
supervision over pupils exist regardless of the age of the latter. A student over twenty-one, by
enrolling and attending a school, places himself under the custodial supervision and disciplinary
authority of the school authorities, which is the basis of the latter's correlative responsibility for his
torts, committed while under such authority. Of course, the teachers' control is not as plenary as when
the student is a minor; but that circumstance can only affect the decree of the responsibility but
cannot negate the existence thereof. It is only a factor to be appreciated in determining whether or
not the defendant has exercised due diligence in endeavoring to prevent the injury, as prescribed in
the last paragraph of Article 2180. .
Barredo, J., concurs.

chanrobles virtual law library


chanrobles virtual law library
Separate Opinions
MAKALINTAL, J., dissenting:chanrobles virtual law library
I vote to affirm the decision appealed from. I see no reason to depart from the doctrine laid down by
this Court in Mercado v. Court of Appeals, 108 Phil. 414, where the clause "so long as they remain in
their custody" used in Article 2180 of the Civil Code was construed as referring to a "situation where
the pupil lives and boards with the teacher, such that the (latter's) control, direction and influence on
the pupil supersedes those of the parents." I think it is highly unrealistic and conducive to unjust
results, considering the size of the enrollment in many of our educational institutions, academic and
non-academic, as well as the temper, attitudes and often destructive activism of the students, to hold
their teachers and/or the administrative heads of the schools directly liable for torts committed by
them. When even the school authorities find themselves besieged, beleaguered and attacked, and
unable to impose the traditional disciplinary measures formerly recognized as available to them, such
as suspension or outright expulsion of the offending students, it flies in the face of logic and reality to
consider such students, merely from the fact of enrollment and class attendance, as "in the custody"
of the teachers or school heads within the meaning of the statute, and to hold the latter liable unless
they can prove that they have exercised "all the diligence of a good father of the family to prevent
damage." Article 2180, if applied as appellants construe it, would be bad law. It would demand
responsibility without commensurate authority, rendering teachers and school heads open to damage
suits for causes beyond their power to control. Present conditions being what they are, I believe the
restrictive interpretation of the aforesaid provision enunciated inMercado should be
maintained. .chanroblesvirtualawlibrarychanrobles virtual law library
With particular reference to the case at bar, one other factor constrains me to dissent. The opinion of
the majority states: "Here, the parents of the student at fault, defendant Daffon, are not involved,
since Daffon was already of age at the time of the tragic incident." This statement is of course in
accordance with Article 2180, which says that "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."
Note that for parental responsibility to arise the children must be minors who live in their company. If,
as stated also in the opinion of the majority, "the rationale of (the) liability of school heads and
teachers for the tortious acts of their pupils and students, so long as they remain in their custody, is
that they stand, to a certain extent, as to their pupils and students, in loco parentis and are called
upon to exercise reasonable supervision over the conduct of the child," then it stands to reason that
(1) the clause "so long as they remain in their custody" as used in reference to teachers and school
heads should be equated with the phrase "who live in their company" as used in reference to parents;
and (2) that just as parents are not responsible for damages caused by their children who are no
longer minors, so should teachers and school heads be exempt from liability for the tortious acts of
their students in the same age category. I find no justification, either in the law itself or in justice and
equity, to make a substitute parent liable where the real parent would be free from liability. .
Zaldivar, Castro and Fernando, JJ., concur.chanroblesvirtualawlibrarychanrobles virtual law library

Separate Opinions
MAKALINTAL, J., dissenting:
I vote to affirm the decision appealed from. I see no reason to depart from the doctrine laid down by
this Court in Mercado v. Court of Appeals, 108 Phil. 414, where the clause "so long as they remain in
their custody" used in Article 2180 of the Civil Code was construed as referring to a "situation where

the pupil lives and boards with the teacher, such that the (latter's) control, direction and influence on
the pupil supersedes those of the parents." I think it is highly unrealistic and conducive to unjust
results, considering the size of the enrollment in many of our educational institutions, academic and
non-academic, as well as the temper, attitudes and often destructive activism of the students, to hold
their teachers and/or the administrative heads of the schools directly liable for torts committed by
them. When even the school authorities find themselves besieged, beleaguered and attacked, and
unable to impose the traditional disciplinary measures formerly recognized as available to them, such
as suspension or outright expulsion of the offending students, it flies in the face of logic and reality to
consider such students, merely from the fact of enrollment and class attendance, as "in the custody"
of the teachers or school heads within the meaning of the statute, and to hold the latter liable unless
they can prove that they have exercised "all the diligence of a good father of the family to prevent
damage." Article 2180, if applied as appellants construe it, would be bad law. It would demand
responsibility without commensurate authority, rendering teachers and school heads open to damage
suits for causes beyond their power to control. Present conditions being what they are, I believe the
restrictive interpretation of the aforesaid provision enunciated inMercado should be maintained. .
With particular reference to the case at bar, one other factor constrains me to dissent. The opinion of
the majority states: "Here, the parents of the student at fault, defendant Daffon, are not involved,
since Daffon was already of age at the time of the tragic incident." This statement is of course in
accordance with Article 2180, which says that "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."
Note that for parental responsibility to arise the children must be minors who live in their company. If,
as stated also in the opinion of the majority, "the rationale of (the) liability of school heads and
teachers for the tortious acts of their pupils and students, so long as they remain in their custody, is
that they stand, to a certain extent, as to their pupils and students, in loco parentis and are called
upon to exercise reasonable supervision over the conduct of the child," then it stands to reason that
(1) the clause "so long as they remain in their custody" as used in reference to teachers and school
heads should be equated with the phrase "who live in their company" as used in reference to parents;
and (2) that just as parents are not responsible for damages caused by their children who are no
longer minors, so should teachers and school heads be exempt from liability for the tortious acts of
their students in the same age category. I find no justification, either in the law itself or in justice and
equity, to make a substitute parent liable where the real parent would be free from liability. .
Zaldivar, Castro and Fernando, JJ., concur.
EN BANC
[G.R. No. L-23052. January 29, 1968.]
CITY OF MANILA, Petitioner, v. GENERO M. TEOTICO and THE COURT OF
APPEALS,Respondents.
City Fiscal Manuel T. Reyes for Petitioner.
Sevilla, Daza & Associates for Respondents.

SYLLABUS

1. STATUTORY CONSTRUCTION; SPECIFIC PROVISIONS OF CIVIL CODE, THOUGH A GENERAL LAW,


PREVAIL OVER MANILA CHARTER, SPECIAL LAW. Insofar as its territorial application is concerned,
Republic Act 409 is a special law and the Civil Code is a general legislation; but as regards the subjectmatter of the provisions of sec. 4, Rep. Act 409 and Article 2189 of the Civil Code, the former
establishes a general rule regulating the liability of the City of Manila for damages or injury to persons
or property arising from the failure of city officers to enforce the provisions of said Act; while article
2189 of the Civil Code constitutes a particular prescription making provinces, cities and municipalities
liable for damages for the death or injury suffered by any person by reason of the defective condition

of roads, streets and other public works under the control or supervision of said municipal
governments. In other words, sec. 4 of Rep. Act 409 refers to liability arising from negligence in
general regardless of the object thereof, whereas Article 2189 of the Civil Code, governs liability due
to defective streets in particular. The Civil Code is decisive herein because the present action is based
on the alleged defective condition of a road.
2. PLEADINGS; ANSWER; ALLEGATIONS NOT SET FORTH IN ANSWER, CANNOT BE RAISED FOR FIRST
TIME ON APPEAL. The assertion that P. Burgos Avenue is a national highway for which the City of
Manila is not liable, was made for the first time in the petitioners motion for reconsideration of the
decision of the Court of Appeals. It was not alleged in the answer. Such assertion raised a question of
fact which had not been put in issue in the trial court and cannot, therefore, be raised for the first time
on appeal much less after the rendition of the decision of the appellate court.
3. ID.; FINDINGS OF FACT OF COURT OF APPEALS, CONCLUSIVE. The determination of whether or
not P. Burgos Avenue is under the control or supervision of the City of Manila and whether the latter is
guilty of negligence in connection with the maintenance of said road is a question of fact a question
already decided by the Court of Appeals and the factual findings of said Court are not subject to a
review by the Supreme Court.

DECISION

CONCEPCION, C.J.:

Appeal by certiorari from a decision of the Court of Appeals.


On January 27, 1958, at about 8:00 p.m., Genaro N. Teotico was at the corner of the Old Luneta and
P. Burgos Avenue, Manila, within a "loading and unloading" zone, waiting for a jeepney to take him
down town. After waiting for about five minutes, he managed to hail a jeepney that came along to a
stop. As he stepped down from the curb to board the jeepney, and took a few steps, he fell inside an
uncovered and unlighted catchbasin or manhole on P. Burgos Avenue. Due to the fall, his head hit the
rim of the manhole breaking his eyeglasses and causing broken pieces thereof to pierce his left eyelid.
As blood flowed therefrom, impairing his vision, several persons came to his assistance and pulled him
out of the manhole. One of them brought Teotico to the Philippine General Hospital, where his injuries
were treated, after which he was taken home. In addition to the lacerated wound in his left upper
eyelid, Teotico suffered contusions on the left thigh, the left upper arm, the right leg and the upper lip,
apart from an abrasion on the right infra-patella region. These injuries and the allergic eruptions
caused by anti-tetanus injections administered to him in the hospital, required further medical
treatment by a private practitioner who charged therefor P1,400.00.
As a consequence of the foregoing occurrence, Teotico filed, with the Court of First Instance of Manila,
a complaint which was, subsequently, amended for damages against the City of Manila, its
mayor, city engineer, city health officer, city treasurer and chief of police. As stated in the decision of
the trial court, and quoted with approval by the Court of Appeals,
"At the time of the incident, plaintiff was a practicing public accountant, a businessman and a
professor at the University of the East. He held responsible positions in various business firms like the
Philippine Merchandising Co., the A. U. Valencia and Co., the Silver Swan Manufacturing Company and
the Sincere Packing Corporation. He was also associated with several civic organizations such as the
Wack Wack Golf Club, the Chamber of Commerce of the Philippines, Ys Men Club of Manila and the
Knights of Rizal. As a result of the incident, plaintiff was prevented from engaging in his customary
occupation for twenty days. Plaintiff has lost a daily income of about P50.00 during his incapacity to
work. Because of the incident, he was subjected to humiliation and ridicule by his business associates
and friends. During the period of his treatment, plaintiff was under constant fear and anxiety for the
welfare of his minor children since he was their only support. Due to the filing of this case, plaintiff has
obligated himself to pay his counsel the sum of P2,000.00.

"On the other hand, the defense presented evidence, oral and documentary, to prove that the Storm
Drain Section, Office of the City Engineer of Manila, received a report of the uncovered condition of a
catchbasin at the corner of P. Burgos and Old Luneta Streets, Manila, on January 24, 1958, but the
same was covered on the same day (Exhibit 4); that again the iron cover of the same catchbasin was
reported missing on January 30, 1958, but the said cover was replaced the next day (Exhibit 5); that
the Office of the City Engineer never received any report to the effect that the catchbasin in question
was not covered between January 25 and 29, 1958; that it has always been a policy of the said office,
which is charged with the duty of installation, repair and care of storm drains in the City of Manila,
that whenever a report is received from whatever source of the loss of a catchbasin cover, the matter
is immediately attended to, either by immediately replacing the missing cover or covering the
catchbasin with steel matting; that because of the lucrative scrap iron business then prevailing,
stealing of iron catchbasin covers was rampant; that the Office of the City Engineer has filed
complaints in court resulting from theft of said iron covers; that in order to prevent such thefts, the
city government has changed the position and layout of catch basins in the City by constructing them
under the sidewalk with concrete cement covers and openings on the sides of the gutter; and that
these changes had been undertaken by the city from time to time whenever funds were
available."cralaw virtua1aw library
After appropriate proceedings the Court of First Instance of Manila rendered the aforementioned
decision sustaining the theory of the defendants and dismissing the amended complaint, without
costs.
On appeal taken by plaintiff, this decision was affirmed by the Court of Appeals, except insofar as the
City of Manila is concerned, which was sentenced to pay damages in the aggregate sum of P6,750.00.
1 Hence, this appeal by the City of Manila.
The first issue raised by the latter is whether the present case is governed by Section 4 of Republic Act
No. 409 (Charter of the City of Manila) reading:jgc:chanrobles.com.ph
"The city shall not be liable or held for damages or injuries to persons or property arising from the
failure of the Mayor, the Municipal Board, or any other city officer, to enforce the provisions of this
chapter, or any other law or ordinance, or from negligence of said Mayor, Municipal Board, or other
officers while enforcing or attempting to enforce said provisions."cralaw virtua1aw library
or by Article 2189 of the Civil Code of the Philippines, which provides:jgc:chanrobles.com.ph
"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."cralaw virtua1aw library
Manila maintains that the former provision should prevail over the latter, because Republic Act 409 is a
special law, intended exclusively for the City of Manila, whereas the Civil Code is a general law,
applicable to the entire Philippines.
The Court of Appeals, however, applied the Civil Code, and, we think, correctly. It is true that, insofar
as its territorial application is concerned, Republic Act No. 409 is a special law and the Civil Code a
general legislation; but, as regards the subject- matter of the provisions above quoted, Section 4 of
Republic Act 409 establishes a general rule regulating the liability of the City of Manila for "damages or
injury to persons or property arising from the failure of" city officers "to enforce the provisions of" said
Act "or any other law or ordinance, or from negligence" of the city "Mayor, Municipal Board, or other
officers while enforcing or attempting to enforce said provisions." Upon the other hand, Article 2189 of
the Civil Code constitutes a particular prescription making "provinces, cities and municipalities . . .
liable for damages for the death of, or injury suffered by, any person by reason" specifically "of
the defective condition of roads, streets, bridges, public buildings, and other public works under their
control or supervision." In other words, said section 4 refers to liability arising from negligence, in
general, regardless of the object thereof, whereas Article 2189 governs liability due to "defective
streets, "in particular. Since the present action is based upon the alleged defective condition of a road,
said Article 2189 is decisive thereon.

It is urged that the City of Manila cannot be held liable to Teotico for damages: 1) because the
accident involving him took place in a national highway; and 2) because the City of Manila has not
been negligent in connection therewith.
As regards the first issue, we note that it is based upon an allegation of fact not made in the answer of
the City. Moreover, Teotico alleged in his complaint, as well as in his amended complaint, that his
injuries were due to the defective condition of a street which is "under the supervision and control" of
the City. In its answer to the amended complaint, the City, in turn, alleged that "the streets
aforementioned were and have been constantly kept in good condition and regularly inspected and the
storm drains and manholes thereof covered, by the defendant City and its officers concerned" who
"have been ever vigilant and zealous in the performance of their respective functions and duties as
imposed upon them by law." Thus, the City had, in effect, admitted that P. Burgos Avenue was and is
under its control and supervision.
Moreover, the assertion to the effect that said avenue is a national highway was made, for the first
time, in its motion for reconsideration of the decision of the Court of Appeals. Such assertion raised,
therefore, a question of fact, which had not been put in issue in the trial court, and can not be set up,
for the first time, on appeal, much less after the rendition of the decision of the appellate court, in a
motion for the reconsideration thereof.
At any rate, under Article 2189 of the Civil Code, it is not necessary for the liability therein established
to attach that the defective roads or streets belong to the province, city or municipality from which
responsibility is exacted. What said article requires is that the province, city or municipality have
either "control or supervision" over said street or road. Even if P. Burgos avenue were, therefore, a
national highway, this circumstance would not necessarily detract from its "control or supervision" by
the City of Manila, under Republic Act 409. In fact Section 18(x) thereof
provides:jgc:chanrobles.com.ph
"SEC. 18. Legislative powers. The Municipal Board shall have the following legislative
powers:chanrob1es virtual 1aw library
x

"(x) Subject to the provisions of existing law to provide for the laying out, construction and
improvement, and to regulate the use of streets, avenues, alleys, sidewalks, wharves, piers, parks,
cemeteries, and other public places; to provide for lighting, cleaning, and sprinkling of streets and
public places; . . . to provide for the inspection of, fix the license fees for and regulate the openings in
the same for the laying of gas, water, sewer and other pipes, the building and repair of tunnels,
sewers, and drains, and all structures in and under the same and the erecting of poles and the
stringing of wires therein; to provide for and regulate cross-walks, curbs, and gutters therein; . . . to
regulate traffic and sales upon the streets and other public places; to provide for the abatement of
nuisances in the same and punish the authors or owners thereof; to provide for the construction and
maintenance, and regulate the use, of bridges, viaducts, and culverts; to prohibit and regulate ball
playing, kiteflying, hoop rolling, and other amusements which may annoy persons using the streets
and public places, or frighten horses or other animals; to regulate the speed of horses and other
animals, motor and other vehicles, cars, and locomotives within the limits of the city; to regulate the
lights used on all such vehicles, cars, and locomotives; . . . to provide for and change the location,
grade, and crossing of railroads, and compel any such railroad to raise or lower its tracks to conform
to such provisions or changes; and to require railroad companies to fence their property, or any part
thereof, to provide suitable protection against injury to persons or property, and to construct and
repair ditches, drains, sewers, and culverts along and under their tracts, so that the natural drainage
of the streets and adjacent property shall not be obstructed."cralaw virtua1aw library
This authority has been neither withdrawn nor restricted by Republic Act No. 917 and Executive Order
No. 113, dated May 2, 1955, upon which the City relies. Said Act governs the disposition or
appropriation of the highway funds and the giving of aid to provinces, chartered cities and
municipalities in the construction of roads and streets within their respective boundaries, and

Executive Order No. 113 merely implements the provisions of said Republic Act No. 917, concerning
the disposition and appropriation of the highway funds. Moreover, it provides that "the construction,
maintenance and improvement of national primary, national secondary and national aid provincial and
city roads shall be accomplished by the Highway District Engineers and Highway City Engineers under
the supervision of the Commissioner of Public Highways and shall be financed from such
appropriations as may be authorized by the Republic of the Philippines in annual or special
appropriation Acts."cralaw virtua1aw library
Then, again, the determination of whether or not P. Burgos Avenue is under the control or supervision
of the City of Manila and whether the latter is guilty of negligence, in connection with the maintenance
of said road, which were decided by the Court of Appeals in the affirmative, is one of fact, and the
findings of said Court, thereon are not subject to our review.
WHEREFORE, the decision appealed from should be as it is hereby affirmed, with costs against the City
of Manila. It is so ordered.
Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Ruiz Castro, Angeles and
Fernando,JJ., concur.
EN BANC
[G.R. No. L-2075. November 29, 1949.]
MARGARITA AFIALDA, Plaintiff-Appellant, v. BASILIO HISOLE and FRANCISCO
HISOLE,Defendants-Appellees.
Nicolas P. Nonato for Appellant.
Gellada, Mirasol & Ravena for Appellees.
SYLLABUS
1. DAMAGES; LIABILITY OF OWNER OF ANIMAL FOR DAMAGE CAUSED TO ITS CARETAKER. Under
article 1905 of the Civil Code, the owner of an animal is not liable for injury caused by it to its
caretaker.

DECISION

REYES, J.:

This is an action for damages arising from injury caused by an animal. The complaint alleges that the
now deceased, Loreto Afialda, was employed by the defendant spouses as caretaker of their carabaos
at a fixed compensation; that while tending the animals he was, on March 21, 1947, gored by one of
them and later died as a consequence of his injuries; that the mishap was due neither to his own fault
nor to force majeure; and that plaintiff is his elder sister and heir depending upon him for support.
Before filing their answer, defendants moved for the dismissal of the complaint for lack of a cause of
action, and the motion having been granted by the lower court, plaintiff has taken this appeal.
Plaintiff seeks to hold defendants liable under article 1905 of the Civil Code, which
reads:jgc:chanrobles.com.ph
"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."cralaw virtua1aw library
The question presented is whether the owner of the animal is liable when the damage is caused to its
caretaker.
The lower court took the view that under the above-quoted provision of the Civil Code, the owner of
an animal is answerable only for damages caused to a stranger, and that for damage caused to the
caretaker of the animal the owner would be liable only if he had been negligent or at fault under
article 1902 of the same code. Claiming that the lower court was in error, counsel for plaintiff contends
that article 1905 does not distinguish between damage caused to a stranger and damage caused to
the caretaker and makes the owner liable whether or not he has been negligent or at fault. For
authority counsel cites the following opinion which Manresa quotes from a decision of the Spanish
Supreme Court:jgc:chanrobles.com.ph
"El articulo 1905 del Codigo Civil no consiente otra interpretacion que la que, clara y evidentemente,
se deriva de sus terminos literales, bastando, segun el mismo, que un animal cause perjuicio para que
nazca la responsibilidad del dueo, aun no imputandose a este ninguna clase de culpa o negligencia,
habida, sin duda, cuenta por el legislador de que tal concepto de dueo es suficiente para que arrastre
las consecuencias favorables o adversas de esta clase de propiedad, salvo la excepcion en el mismo
contenida." (12 Manresa, Commentaries on the Spanish Civil Code, 573.)
This opinion, however, appears to have been rendered in a case where an animal caused injury to a
stranger or third person. It is therefore no authority for a case like the present where the person
injured was the caretaker of the animal. The distinction is important. For the statute names the
possessor or user of the animal as the person liable for "any damages it may cause," and this 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 caretakers 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.
In a decision of the Spanish Supreme Court, cited by Manresa in his Commentaries (Vol. 12, p. 578),
the death of an employee who was bitten by a feline which his master had asked him to take to his
establishment was by said tribunal declared to be "a veritable accident of labor" which should come
under the labor laws rather than under article 1905 of the Civil Code. The present action, however, is
not brought under the Workmens Compensation Act, there being no allegation that, among other
things, defendants business, whatever that might be, had a gross income of P20,000. As already
stated, defendants liability is made to rest on article 1905 of the Civil Code. But action under that
article is not tenable for the reasons already stated. On the other hand, if action is to be based on
article 1902 of the Civil Code, it is essential that there be fault or negligence on the part of the
defendants as owners of the animal that caused the damage. But the complaint contains no allegation
on those points.
There being no reversible error in the order appealed from, the same is hereby affirmed, but without
costs in view of the financial situation of the Appellant.
Moran, C.J., Ozaeta, Paras, Bengzon, Padilla, Tuason, Montemayor and Torres, JJ., concur.