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OBLIGATIONS AND CONTRACTS ARTICLE 1162 violation which appeared in the records of the Bureau of Public Works

available to be public and to himself. Therefore, he must indemnify


plaintiffs under the provisions of article 1903 of the Civil Code.
G.R. No. L-48006 July 8, 1942

The main theory of the defense is that the liability of Fausto Barredo is
FAUSTO BARREDO, petitioner,
governed by the Revised Penal Code; hence, his liability is only subsidiary,
vs.
and as there has been no civil action against Pedro Fontanilla, the person
SEVERINO GARCIA and TIMOTEA ALMARIO, respondents.
criminally liable, Barredo cannot be held responsible in the case. The
petitioner's brief states on page 10:
Celedonio P. Gloria and Antonio Barredo for petitioner.
Jose G. Advincula for respondents.
... The Court of Appeals holds that the petitioner is being sued for his
failure to exercise all the diligence of a good father of a family in the
BOCOBO, J.: selection and supervision of Pedro Fontanilla to prevent damages
suffered by the respondents. In other words, The Court of Appeals
This case comes up from the Court of Appeals which held the petitioner herein, insists on applying in the case article 1903 of the Civil Code. Article
Fausto Barredo, liable in damages for the death of Faustino Garcia caused by 1903 of the Civil Code is found in Chapter II, Title 16, Book IV of the
the negligence of Pedro Fontanilla, a taxi driver employed by said Fausto Civil Code. This fact makes said article to a civil liability arising from a
Barredo. crime as in the case at bar simply because Chapter II of Title 16 of
Book IV of the Civil Code, in the precise words of article 1903 of the
At about half past one in the morning of May 3, 1936, on the road between Civil Code itself, is applicable only to "those (obligations) arising from
Malabon and Navotas, Province of Rizal, there was a head-on collision wrongful or negligent acts or commission not punishable by law.
between a taxi of the Malate Taxicab driven by Pedro Fontanilla and a
carretela guided by Pedro Dimapalis. The carretela was overturned, and one The gist of the decision of the Court of Appeals is expressed thus:
of its passengers, 16-year-old boy Faustino Garcia, suffered injuries from
which he died two days later. A criminal action was filed against Fontanilla in ... We cannot agree to the defendant's contention. The liability sought
the Court of First Instance of Rizal, and he was convicted and sentenced to an to be imposed upon him in this action is not a civil obligation arising
indeterminate sentence of one year and one day to two years of prision from a felony or a misdemeanor (the crime of Pedro Fontanilla,), but
correccional. The court in the criminal case granted the petition that the right an obligation imposed in article 1903 of the Civil Code by reason of
to bring a separate civil action be reserved. The Court of Appeals affirmed the his negligence in the selection or supervision of his servant or
sentence of the lower court in the criminal case. Severino Garcia and Timotea employee.
Almario, parents of the deceased on March 7, 1939, brought an action in the
Court of First Instance of Manila against Fausto Barredo as the sole proprietor
The pivotal question in this case is whether the plaintiffs may bring this
of the Malate Taxicab and employer of Pedro Fontanilla. On July 8, 1939, the
separate civil action against Fausto Barredo, thus making him primarily and
Court of First Instance of Manila awarded damages in favor of the plaintiffs for
directly, responsible under article 1903 of the Civil Code as an employer of
P2,000 plus legal interest from the date of the complaint. This decision was
Pedro Fontanilla. The defendant maintains that Fontanilla's negligence being
modified by the Court of Appeals by reducing the damages to P1,000 with legal
punishable by the Penal Code, his (defendant's) liability as an employer is only
interest from the time the action was instituted. It is undisputed that Fontanilla
subsidiary, according to said Penal code, but Fontanilla has not been sued in
's negligence was the cause of the mishap, as he was driving on the wrong
a civil action and his property has not been exhausted. To decide the main
side of the road, and at high speed. As to Barredo's responsibility, the Court
issue, we must cut through the tangle that has, in the minds of many confused
of Appeals found:
and jumbled together delitos and cuasi delitos, or crimes under the Penal Code
and fault or negligence under articles 1902-1910 of the Civil Code. This should
... It is admitted that defendant is Fontanilla's employer. There is proof be done, because justice may be lost in a labyrinth, unless principles and
that he exercised the diligence of a good father of a family to prevent remedies are distinctly envisaged. Fortunately, we are aided in our inquiry by
damage. (See p. 22, appellant's brief.) In fact it is shown he was the luminous presentation of the perplexing subject by renown jurists and we
careless in employing Fontanilla who had been caught several times are likewise guided by the decisions of this Court in previous cases as well as
for violation of the Automobile Law and speeding (Exhibit A)
by the solemn clarity of the consideration in several sentences of the Supreme Owners or directors of an establishment or business are equally liable
Tribunal of Spain. for any damages caused by their employees while engaged in the
branch of the service in which employed, or on occasion of the
Authorities support the proposition that a quasi-delict or "culpa aquiliana " is a performance of their duties.
separate legal institution under the Civil Code with a substantivity all its own,
and individuality that is entirely apart and independent from delict or crime. The State is subject to the same liability when it acts through a special
Upon this principle and on the wording and spirit article 1903 of the Civil Code, agent, but not if the damage shall have been caused by the official
the primary and direct responsibility of employers may be safely anchored. upon whom properly devolved the duty of doing the act performed, in
which case the provisions of the next preceding article shall be
The pertinent provisions of the Civil Code and Revised Penal Code are as applicable.
follows:
Finally, teachers or directors of arts trades are liable for any damages
CIVIL CODE caused by their pupils or apprentices while they are under their
custody.
ART. 1089 Obligations arise from law, from contracts and quasi-
contracts, and from acts and omissions which are unlawful or in which The liability imposed by this article shall cease in case the persons
any kind of fault or negligence intervenes. mentioned therein prove that they are exercised all the diligence of a
good father of a family to prevent the damage.
xxx xxx xxx
ART. 1904. Any person who pays for damage caused by his
employees may recover from the latter what he may have paid.
ART. 1092. Civil obligations arising from felonies or misdemeanors
shall be governed by the provisions of the Penal Code.
REVISED PENAL CODE
ART. 1093. Those which are derived from acts or omissions in which
fault or negligence, not punishable by law, intervenes shall be subject ART. 100. Civil liability of a person guilty of felony. Every person
to the provisions of Chapter II, Title XVI of this book. criminally liable for a felony is also civilly liable.

xxx xxx xxx ART. 101. Rules regarding civil liability in certain cases. The
exemption from criminal liability established in subdivisions 1, 2, 3, 5,
and 6 of article 12 and in subdivision 4 of article 11 of this Code does
ART 1902. Any person who by an act or omission causes damage to
another by his fault or negligence shall be liable for the damage so not include exemption from civil liability, which shall be enforced to the
following rules:
done.

First. In cases of subdivision, 1, 2 and 3 of article 12 the civil liability


ART. 1903. The obligation imposed by the next preceding article is
enforcible, not only for personal acts and omissions, but also for those for acts committed by any imbecile or insane person, and by a person
of persons for whom another is responsible. under nine years of age, or by one over nine but under fifteen years of
age, who has acted without discernment shall devolve upon those
having such person under their legal authority or control, unless it
The father and in, case of his death or incapacity, the mother, are appears that there was no fault or negligence on their part.
liable for any damages caused by the minor children who live with
them.
Should there be no person having such insane, imbecile or minor
under his authority, legal guardianship, or control, or if such person be
Guardians are liable for damages done by minors or incapacitated insolvent, said insane, imbecile, or minor shall respond with their own
persons subject to their authority and living with them. property, excepting property exempt from execution, in accordance
with the civil law.
Second. In cases falling within subdivision 4 of article 11, the person ART. 365. Imprudence and negligence. Any person who, by
for whose benefit the harm has been prevented shall be civilly liable reckless imprudence, shall commit any act which, had it been
in proportion to the benefit which they may have received. intentional, would constitute a grave felony, shall suffer the penalty of
arresto mayor in its maximum period to prision correccional in its
The courts shall determine, in their sound discretion, the proportionate amount minimum period; if it would have constituted a less grave felony, the
for which each one shall be liable. penalty of arresto mayor in its minimum and medium periods shall be
imposed.
When the respective shares can not be equitably determined, even
approximately, or when the liability also attaches to the Government, or to the Any person who, by simple imprudence or negligence, shall commit
majority of the inhabitants of the town, and, in all events, whenever the damage an act which would otherwise constitute a grave felony, shall suffer the
has been caused with the consent of the authorities or their agents, penalty of arresto mayor in its medium and maximum periods; if it
indemnification shall be made in the manner prescribed by special laws or would have constituted a less serious felony, the penalty of arresto
regulations. mayor in its minimum period shall be imposed."

Third. In cases falling within subdivisions 5 and 6 of article 12, the persons It will thus be seen that while the terms of articles 1902 of the Civil Code seem
using violence or causing the fear shall be primarily liable and secondarily, or, to be broad enough to cover the driver's negligence in the instant case,
if there be no such persons, those doing the act shall be liable, saving always nevertheless article 1093 limits cuasi-delitos to acts or omissions "not
to the latter that part of their property exempt from execution. punishable by law." But inasmuch as article 365 of the Revised Penal Code
punishes not only reckless but even simple imprudence or negligence, the fault
ART. 102. Subsidiary civil liability of innkeepers, tavern keepers and or negligence under article 1902 of the Civil Code has apparently been
proprietors of establishment. In default of persons criminally liable, crowded out. It is this overlapping that makes the "confusion worse
confounded." However, a closer study shows that such a concurrence of scope
innkeepers, tavern keepers, and any other persons or corporation
in regard to negligent acts does not destroy the distinction between the civil
shall be civilly liable for crimes committed in their establishments, in
all cases where a violation of municipal ordinances or some general liability arising from a crime and the responsibility for cuasi-delitos or culpa
extra-contractual. The same negligent act causing damages may produce civil
or special police regulation shall have been committed by them or their
liability arising from a crime under article 100 of the Revised Penal Code, or
employees.
create an action for cuasi-delito or culpa extra-contractual under articles 1902-
1910 of the Civil Code.
Innkeepers are also subsidiarily liable for the restitution of goods taken
by robbery or theft within their houses lodging therein, or the person,
The individuality of cuasi-delito or culpa extra-contractual looms clear and
or for the payment of the value thereof, provided that such guests shall
unmistakable. This legal institution is of ancient lineage, one of its early
have notified in advance the innkeeper himself, or the person
ancestors being the Lex Aquilia in the Roman Law. In fact, in Spanish legal
representing him, of the deposit of such goods within the inn; and shall
terminology, this responsibility is often referred to as culpa aquiliana. The
furthermore have followed the directions which such innkeeper or his
representative may have given them with respect to the care of and Partidas also contributed to the genealogy of the present fault or negligence
vigilance over such goods. No liability shall attach in case of robbery under the Civil Code; for instance, Law 6, Title 15, of Partida 7, says: "Tenudo
es de fazer emienda, porque, como quier que el non fizo a sabiendas en dao
with violence against or intimidation against or intimidation of persons
al otro, pero acaescio por su culpa."
unless committed by the innkeeper's employees.

ART. 103. Subsidiary civil liability of other persons. The subsidiary The distinctive nature of cuasi-delitos survives in the Civil Code. According to
liability established in the next preceding article shall also apply to article 1089, one of the five sources of obligations is this legal institution
of cuasi-delito or culpa extra-contractual: "los actos . . . en que intervenga
employers, teachers, persons, and corporations engaged in any kind
cualquier genero de culpa o negligencia." Then article 1093 provides that this
of industry for felonies committed by their servants, pupils, workmen,
kind of obligation shall be governed by Chapter II of Title XVI of Book IV,
apprentices, or employees in the discharge of their duties.
meaning articles 1902-0910. This portion of the Civil Code is exclusively
devoted to the legal institution of culpa aquiliana.
xxx xxx xxx
Some of the differences between crimes under the Penal Code and the culpa del Norte. Maura's opinion was in the affirmative, stating in part
aquiliana or cuasi-delito under the Civil Code are: (Maura, Dictamenes, Vol. 6, pp. 511-513):

1. That crimes affect the public interest, while cuasi-delitos are only of private Quedando las cosas asi, a proposito de la realidad pura y neta de
concern. los hechos, todavia menos parece sostenible que exista cosa
juzgada acerca de la obligacion civil de indemnizar los quebrantos y
2. That, consequently, the Penal Code punishes or corrects the criminal act, menoscabos inferidos por el choque de los trenes. El titulo en que se
while the Civil Code, by means of indemnification, merely repairs the damage. funda la accion para demandar el resarcimiento, no puede
confundirse con las responsabilidades civiles nacidas de delito,
siquiera exista en este, sea el cual sea, una culpa rodeada de notas
3. That delicts are not as broad as quasi-delicts, because the former are
agravatorias que motivan sanciones penales, mas o menos severas.
punished only if there is a penal law clearly covering them, while the
latter, cuasi-delitos, include all acts in which "any king of fault or negligence La lesion causada por delito o falta en los derechos civiles, requiere
intervenes." However, it should be noted that not all violations of the penal law restituciones, reparaciones o indemnizaciones, que cual la pena
produce civil responsibility, such as begging in contravention of ordinances, misma ataen al orden publico; por tal motivo vienen encomendadas,
de ordinario, al Ministerio Fiscal; y claro es que si por esta via se
violation of the game laws, infraction of the rules of traffic when nobody is hurt.
enmiendan los quebrantos y menoscabos, el agraviado excusa
(See Colin and Capitant, "Curso Elemental de Derecho Civil," Vol. 3, p. 728.)
procurar el ya conseguido desagravio; pero esta eventual
coincidencia de los efectos, no borra la diversidad originaria de las
Let us now ascertain what some jurists say on the separate existence of quasi- acciones civiles para pedir indemnizacion.
delicts and the employer's primary and direct liability under article 1903 of the
Civil Code.
Estas, para el caso actual (prescindiendo de culpas contractuales,
que no vendrian a cuento y que tiene otro regimen), dimanan, segun
Dorado Montero in his essay on "Responsibilidad" in the "Enciclopedia el articulo 1902 del Codigo Civil, de toda accion u omision, causante
Juridica Espaola" (Vol. XXVII, p. 414) says: de daos o perjuicios, en que intervenga culpa o negligencia. Es trivial
que acciones semejantes son ejercitadas ante los Tribunales de lo
El concepto juridico de la responsabilidad civil abarca diversos civil cotidianamente, sin que la Justicia punitiva tenga que mezclarse
aspectos y comprende a diferentes personas. Asi, existe una en los asuntos. Los articulos 18 al 21 y 121 al 128 del Codigo Penal,
responsabilidad civil propiamente dicha, que en ningun casl lleva atentos al espiritu y a los fines sociales y politicos del mismo,
aparejada responsabilidad criminal alguna, y otra que es desenvuelven y ordenan la materia de responsabilidades
consecuencia indeclinable de la penal que nace de todo delito o falta." civiles nacidas de delito, en terminos separados del regimen por ley
comun de la culpa que se denomina aquiliana, por alusion a
The juridical concept of civil responsibility has various aspects and precedentes legislativos del Corpus Juris. Seria intempestivo un
comprises different persons. Thus, there is a civil responsibility, paralelo entre aquellas ordenaciones, y la de la obligacion de
properly speaking, which in no case carries with it any criminal indemnizar a titulo de culpa civil; pero viene al caso y es necesaria
responsibility, and another which is a necessary consequence of the una de las diferenciaciones que en el tal paralelo se notarian.
penal liability as a result of every felony or misdemeanor."
Los articulos 20 y 21 del Codigo Penal, despues de distribuir a su
Maura, an outstanding authority, was consulted on the following case: There modo las responsabilidades civiles, entre los que sean por diversos
had been a collision between two trains belonging respectively to the conceptos culpables del delito o falta, las hacen extensivas a las
Ferrocarril Cantabrico and the Ferrocarril del Norte. An employee of the latter empresas y los establecimientos al servicio de los cuales estan los
had been prosecuted in a criminal case, in which the company had been made delincuentes; pero con caracter subsidiario, o sea, segun el texto
a party as subsidiarily responsible in civil damages. The employee had been literal, en defecto de los que sean responsables criminalmente. No
acquitted in the criminal case, and the employer, the Ferrocarril del Norte, had coincide en ello el Codigo Civil, cuyo articulo 1903, dice; La obligacion
also been exonerated. The question asked was whether the Ferrocarril que impone el articulo anterior es exigible, no solo por los actos y
Cantabrico could still bring a civil action for damages against the Ferrocarril omisiones propios, sino por los de aquellas personas de quienes se
debe responder; personas en la enumeracion de las cuales figuran
los dependientes y empleados de los establecimientos o empresas, omission causing losses and damages in which culpa or negligence
sea por actos del servicio, sea con ocasion de sus funciones. Por esto intervenes. It is unimportant that such actions are every day filed
acontece, y se observa en la jurisprudencia, que las empresas, before the civil courts without the criminal courts interfering therewith.
despues de intervenir en las causas criminales con el caracter Articles 18 to 21 and 121 to 128 of the Penal Code, bearing in mind
subsidiario de su responsabilidad civil por razon del delito, son the spirit and the social and political purposes of that Code, develop
demandadas y condenadas directa y aisladamente, cuando se trata and regulate the matter of civil responsibilities arising from a crime,
de la obligacion, ante los tribunales civiles. separately from the regime under common law, of culpa which is
known as aquiliana, in accordance with legislative precedent of
Siendo como se ve, diverso el titulo de esta obligacion, y formando the Corpus Juris. It would be unwarranted to make a detailed
verdadero postulado de nuestro regimen judicial la separacion entre comparison between the former provisions and that regarding the
justicia punitiva y tribunales de lo civil, de suerte que tienen unos y obligation to indemnify on account of civil culpa; but it is pertinent and
otros normas de fondo en distintos cuerpos legales, y diferentes necessary to point out to one of such differences.
modos de proceder, habiendose, por aadidura, abstenido de asistir
al juicio criminal la Compaia del Ferrocarril Cantabrico, que se Articles 20 and 21 of the Penal Code, after distriburing in their own
reservo ejercitar sus acciones, parece innegable que la de way the civil responsibilities among those who, for different reasons,
indemnizacion por los daos y perjuicios que le irrogo el choque, no are guilty of felony or misdemeanor, make such civil responsibilities
estuvo sub judice ante el Tribunal del Jurado, ni fue sentenciada, sino applicable to enterprises and establishments for which the guilty
que permanecio intacta, al pronunciarse el fallo de 21 de marzo. Aun parties render service, but with subsidiary character, that is to say,
cuando el veredicto no hubiese sido de inculpabilidad, mostrose mas according to the wording of the Penal Code, in default of those who
arriba, que tal accion quedaba legitimamente reservada para despues are criminally responsible. In this regard, the Civil Code does not
del proceso; pero al declararse que no existio delito, ni coincide because article 1903 says: "The obligation imposed by the
responsabilidad dimanada de delito, materia unica sobre que tenian next preceding article is demandable, not only for personal acts and
jurisdiccion aquellos juzgadores, se redobla el motivo para la omissions, but also for those of persons for whom another is
obligacion civil ex lege, y se patentiza mas y mas que la accion para responsible." Among the persons enumerated are the subordinates
pedir su cumplimiento permanece incolume, extraa a la cosa and employees of establishments or enterprises, either for acts during
juzgada. their service or on the occasion of their functions. It is for this reason
that it happens, and it is so observed in judicial decisions, that the
As things are, apropos of the reality pure and simple of the facts, it companies or enterprises, after taking part in the criminal cases
seems less tenable that there should beres judicata with regard to the because of their subsidiary civil responsibility by reason of the crime,
civil obligation for damages on account of the losses caused by the are sued and sentenced directly and separately with regard to
collision of the trains. The title upon which the action for reparation is theobligation, before the civil courts.
based cannot be confused with the civil responsibilities born of a
crime, because there exists in the latter, whatever each nature, Seeing that the title of this obligation is different, and the separation
a culpasurrounded with aggravating aspects which give rise to penal between punitive justice and the civil courts being a true postulate of
measures that are more or less severe. The injury caused by a felony our judicial system, so that they have different fundamental norms in
or misdemeanor upon civil rights requires restitutions, reparations, or different codes, as well as different modes of procedure, and
indemnifications which, like the penalty itself, affect public order; for inasmuch as the Compaa del Ferrocarril Cantabrico has abstained
this reason, they are ordinarily entrusted to the office of the from taking part in the criminal case and has reserved the right to
prosecuting attorney; and it is clear that if by this means the losses exercise its actions, it seems undeniable that the action for
and damages are repaired, the injured party no longer desires to seek indemnification for the losses and damages caused to it by the
another relief; but this coincidence of effects does not eliminate the collision was not sub judice before the Tribunal del Jurado, nor was it
peculiar nature of civil actions to ask for indemnity. the subject of a sentence, but it remained intact when the decision of
March 21 was rendered. Even if the verdict had not been that of
Such civil actions in the present case (without referring to contractual acquittal, it has already been shown that such action had been
faults which are not pertinent and belong to another scope) are legitimately reserved till after the criminal prosecution; but because of
derived, according to article 1902 of the Civil Code, from every act or the declaration of the non-existence of the felony and the non-
existence of the responsibility arising from the crime, which was responsabilidad sea subsidiaria es, por lo tanto, completamente
the sole subject matter upon which the Tribunal del Juradohad inadmisible.
jurisdiction, there is greater reason for the civil obligation ex lege, and
it becomes clearer that the action for its enforcement remain intact and Question No. 1. Is the responsibility declared in article 1903 for the
is not res judicata. acts or omissions of those persons for who one is responsible,
subsidiary or principal? In order to answer this question it is necessary
Laurent, a jurist who has written a monumental work on the French Civil Code, to know, in the first place, on what the legal provision is based. Is it
on which the Spanish Civil Code is largely based and whose provisions true that there is a responsibility for the fault of another person? It
on cuasi-delito or culpa extra-contractual are similar to those of the Spanish seems so at first sight; but such assertion would be contrary to justice
Civil Code, says, referring to article 1384 of the French Civil Code which and to the universal maxim that all faults are personal, and that
corresponds to article 1903, Spanish Civil Code: everyone is liable for those faults that can be imputed to him. The
responsibility in question is imposed on the occasion of a crime or
The action can be brought directly against the person responsible (for fault, but not because of the same, but because of the cuasi-delito,
another), without including the author of the act. The action against that is to say, the imprudence or negligence of the father, guardian,
the principal is accessory in the sense that it implies the existence of proprietor or manager of the establishment, of the teacher, etc.
a prejudicial act committed by the employee, but it is not subsidiary in Whenever anyone of the persons enumerated in the article referred to
the sense that it can not be instituted till after the judgment against the (minors, incapacitated persons, employees, apprentices) causes any
author of the act or at least, that it is subsidiary to the principal action; damage, the law presumes that the father, guardian, teacher, etc.
the action for responsibility (of the employer) is in itself a principal have committed an act of negligence in not preventing or avoiding the
action. (Laurent, Principles of French Civil Law, Spanish translation, damage. It is this fault that is condemned by the law. It is, therefore,
Vol. 20, pp. 734-735.) only apparent that there is a responsibility for the act of another; in
reality the responsibility exacted is for one's own act. The idea that
such responsibility is subsidiary is, therefore, completely inadmissible.
Amandi, in his "Cuestionario del Codigo Civil Reformado" (Vol. 4, pp. 429,
430), declares that the responsibility of the employer is principal and not
subsidiary. He writes: Oyuelos, in his "Digesto: Principios, Doctrina y Jurisprudencia, Referentes al
Codigo Civil Espaol," says in Vol. VII, p. 743:
Cuestion 1. La responsabilidad declarada en el articulo 1903 por las
acciones u omisiones de aquellas personas por las que se debe Es decir, no responde de hechos ajenos, porque se responde solo de
responder, es subsidiaria? es principal? Para contestar a esta su propia culpa, doctrina del articulo 1902; mas por excepcion, se
pregunta es necesario saber, en primer lugar, en que se funda el responde de la ajena respecto de aquellas personas con las que
precepto legal. Es que realmente se impone una responsabilidad por media algun nexo o vinculo, que motiva o razona la responsabilidad.
una falta ajena? Asi parece a primera vista; pero semejante afirmacion Esta responsabilidad, es directa o es subsidiaria? En el orden penal,
seria contraria a la justicia y a la maxima universal, segun la que las el Codigo de esta clase distingue entre menores e incapacitados y los
faltas son personales, y cada uno responde de aquellas que le son demas, declarando directa la primera (articulo 19) y subsidiaria la
imputables. La responsabilidad de que tratamos se impone con segunda (articulos 20 y 21); pero en el orden civil, en el caso del
ocasion de un delito o culpa, pero no por causa de ellos, sino por articulo 1903, ha de entenderse directa, por el tenor del articulo que
causa del causi delito, esto es, de la imprudencia o de la negligencia impone la responsabilidad precisamente "por los actos de aquellas
del padre, del tutor, del dueo o director del establecimiento, del personas de quienes se deba responder."
maestro, etc. Cuando cualquiera de las personas que enumera el
articulo citado (menores de edad, incapacitados, dependientes, That is to say, one is not responsible for the acts of others, because
aprendices) causan un dao, la ley presume que el padre, el tutor, el one is liable only for his own faults, this being the doctrine of article
maestro, etc., han cometido una falta de negligencia para prevenir o 1902; but, by exception, one is liable for the acts of those persons with
evitar el dao. Esta falta es la que la ley castiga. No hay, pues, whom there is a bond or tie which gives rise to the responsibility. Is
responsabilidad por un hecho ajeno, sino en la apariencia; en realidad this responsibility direct or subsidiary? In the order of the penal law,
la responsabilidad se exige por un hecho propio. La idea de que esa the Penal Code distinguishes between minors and incapacitated
persons on the one hand, and other persons on the other, declaring
that the responsibility for the former is direct (article 19), and for the sin invadir atribuciones ajenas a su jurisdiccion propia, ni contrariar en
latter, subsidiary (articles 20 and 21); but in the scheme of the civil lo mas minimo el fallo recaido en la causa.
law, in the case of article 1903, the responsibility should be understood
as direct, according to the tenor of that articles, for precisely it imposes Considering that the first ground of the appeal is based on the
responsibility "for the acts of those persons for whom one should be mistaken supposition that the trial court, in sentencing the Compaia
responsible." Madrilea to the payment of the damage caused by the death of
Ramon Lafuente Izquierdo, disregards the value and juridical effects
Coming now to the sentences of the Supreme Tribunal of Spain, that court has of the sentence of acquittal rendered in the criminal case instituted on
upheld the principles above set forth: that a quasi-delict or culpa extra- account of the same act, when it is a fact that the two jurisdictions had
contractual is a separate and distinct legal institution, independent from the taken cognizance of the same act in its different aspects, and as the
civil responsibility arising from criminal liability, and that an employer is, under criminal jurisdiction declared within the limits of its authority that the
article 1903 of the Civil Code, primarily and directly responsible for the act in question did not constitute a felony because there was no grave
negligent acts of his employee. carelessness or negligence, and this being the only basis of acquittal,
it does no exclude the co-existence of fault or negligence which is not
One of the most important of those Spanish decisions is that of October 21, qualified, and is a source of civil obligations according to article 1902
1910. In that case, Ramon Lafuente died as the result of having been run over of the Civil Code, affecting, in accordance with article 1903, among
by a street car owned by the "compaia Electric Madrilea de Traccion." The other persons, the managers of establishments or enterprises by
conductor was prosecuted in a criminal case but he was acquitted. Thereupon, reason of the damages caused by employees under certain
the widow filed a civil action against the street car company, paying for conditions, it is manifest that the civil jurisdiccion in taking cognizance
damages in the amount of 15,000 pesetas. The lower court awarded damages; of the same act in this latter aspect and in ordering the company,
so the company appealed to the Supreme Tribunal, alleging violation of appellant herein, to pay an indemnity for the damage caused by one
articles 1902 and 1903 of the Civil Code because by final judgment the non- of its employees, far from violating said legal provisions, in relation
existence of fault or negligence had been declared. The Supreme Court of with article 116 of the Law of Criminal Procedure, strictly followed the
Spain dismissed the appeal, saying: same, without invading attributes which are beyond its own
jurisdiction, and without in any way contradicting the decision in that
cause. (Emphasis supplied.)
Considerando que el primer motivo del recurso se funda en el
equivocado supuesto de que el Tribunal a quo, al condonar a la
compaia Electrica Madrilea al pago del dao causado con la muerte It will be noted, as to the case just cited:
de Ramon La fuente Izquierdo, desconoce el valor y efectos juridicos
de la sentencia absolutoria deictada en la causa criminal que se siguio First. That the conductor was not sued in a civil case, either separately or with
por el mismo hecho, cuando es lo cierto que de este han conocido las the street car company. This is precisely what happens in the present case:
dos jurisdicciones bajo diferentes as pectos, y como la de lo criminal the driver, Fontanilla, has not been sued in a civil action, either alone or with
declrao dentro de los limites de su competencia que el hecho de que his employer.
se trata no era constitutivo de delito por no haber mediado descuido
o negligencia graves, lo que no excluye, siendo este el unico Second. That the conductor had been acquitted of grave criminal negligence,
fundamento del fallo absolutorio, el concurso de la culpa o negligencia but the Supreme Tribunal of Spain said that this did not exclude the co-
no califacadas, fuente de obligaciones civiles segun el articulo 1902 existence of fault or negligence, which is not qualified, on the part of the
del Codigo, y que alcanzan, segun el 1903, netre otras perosnas, a conductor, under article 1902 of the Civil Code. In the present case, the taxi
los Directores de establecimientos o empresas por los daos driver was found guilty of criminal negligence, so that if he had even sued for
causados por sus dependientes en determinadas condiciones, es his civil responsibility arising from the crime, he would have been held primarily
manifesto que la de lo civil, al conocer del mismo hehco baho este liable for civil damages, and Barredo would have been held subsidiarily liable
ultimo aspecto y al condenar a la compaia recurrente a la for the same. But the plaintiffs are directly suing Barredo, on his primary
indemnizacion del dao causado por uno de sus empleados, lejos de responsibility because of his own presumed negligence which he did not
infringer los mencionados textos, en relacion con el articulo 116 de la overcome under article 1903. Thus, there were two liabilities of Barredo:
Ley de Enjuciamiento Criminal, se ha atenido estrictamente a ellos, first, the subsidiary one because of the civil liability of the taxi driver arising
from the latter's criminal negligence; and, second, Barredo's primary liability
as an employer under article 1903. The plaintiffs were free to choose which Considerando que sobre esta base hay necesidad de estimar los
course to take, and they preferred the second remedy. In so doing, they were cuatro motivos que integran este recurso, porque la demanda inicial
acting within their rights. It might be observed in passing, that the plaintiff del pleito a que se contrae no contiene accion que nazca del
choose the more expeditious and effective method of relief, because Fontanilla incumplimiento del contrato de transporte, toda vez que no se funda
was either in prison, or had just been released, and besides, he was probably en el retraso de la llegada de las mercancias ni de ningun otro vinculo
without property which might be seized in enforcing any judgment against him contractual entre las partes contendientes, careciendo, por tanto, de
for damages. aplicacion el articulo 371 del Codigo de Comercio, en que
principalmente descansa el fallo recurrido, sino que se limita a pedir
Third. That inasmuch as in the above sentence of October 21, 1910, the la reparaction de los daos y perjuicios producidos en el patrimonio
employer was held liable civilly, notwithstanding the acquittal of the employee del actor por la injustificada y dolosa negativa del porteador a la
(the conductor) in a previous criminal case, with greater reason should entrega de las mercancias a su nombre consignadas, segun lo
Barredo, the employer in the case at bar, be held liable for damages in a civil reconoce la sentencia, y cuya responsabilidad esta claramente
suit filed against him because his taxi driver had been convicted. The degree sancionada en el articulo 1902 del Codigo Civil, que obliga por el
of negligence of the conductor in the Spanish case cited was less than that of siguiente a la Compaia demandada como ligada con el causante de
the taxi driver, Fontanilla, because the former was acquitted in the previous aquellos por relaciones de caracter economico y de jurarquia
criminal case while the latter was found guilty of criminal negligence and was administrativa.
sentenced to an indeterminate sentence of one year and one day to two years
of prision correccional. Considering that the sentence, in question recognizes, in virtue of the
facts which it declares, in relation to the evidence in the case: (1) that
(See also Sentence of February 19, 1902, which is similar to the one above the invoice issued by the railroad company in favor of the plaintiff
quoted.) contemplated that the empty receptacles referred to in the complaint
should be returned to the consignors with wines and liquors; (2) that
when the said merchandise reached their destination, their delivery to
In the Sentence of the Supreme Court of Spain, dated February 14, 1919, an
the consignee was refused by the station agent without justification
action was brought against a railroad company for damages because the
station agent, employed by the company, had unjustly andfraudulently, and with fraudulent intent, and (3) that the lack of delivery of these
goods when they were demanded by the plaintiff caused him losses
refused to deliver certain articles consigned to the plaintiff. The Supreme Court
and damages of considerable importance, as he was a wholesale
of Spain held that this action was properly under article 1902 of the Civil Code,
vendor of wines and liquors and he failed to realize the profits when
the court saying:
he was unable to fill the orders sent to him by the consignors of the
receptacles:
Considerando que la sentencia discutida reconoce, en virtud de los
hechos que consigna con relacion a las pruebas del pleito: 1., que
Considering that upon this basis there is need of upholding the four
las expediciones facturadas por la compaia ferroviaria a la
assignments of error, as the original complaint did not contain any
consignacion del actor de las vasijas vacias que en su demanda
cause of action arising from non-fulfillment of a contract of
relacionan tenian como fin el que este las devolviera a sus remitentes
con vinos y alcoholes; 2., que llegadas a su destino tales mercanias transportation, because the action was not based on the delay of the
no se quisieron entregar a dicho consignatario por el jefe de la goods nor on any contractual relation between the parties litigant and,
therefore, article 371 of the Code of Commerce, on which the decision
estacion sin motivo justificado y con intencion dolosa, y 3., que la
appealed from is based, is not applicable; but it limits to asking for
falta de entrega de estas expediciones al tiempo de reclamarlas el
reparation for losses and damages produced on the patrimony of the
demandante le originaron daos y perjuicios en cantidad de bastante
plaintiff on account of the unjustified and fraudulent refusal of the
importancia como expendedor al por mayor que era de vinos y
alcoholes por las ganancias que dejo de obtener al verse privado de carrier to deliver the goods consigned to the plaintiff as stated by the
sentence, and the carrier's responsibility is clearly laid down in article
servir los pedidos que se le habian hecho por los remitentes en los
1902 of the Civil Code which binds, in virtue of the next article, the
envases:
defendant company, because the latter is connected with the person
who caused the damage by relations of economic character and by
administrative hierarchy. (Emphasis supplied.)
The above case is pertinent because it shows that the same act may come "Owners or directors of an establishment or enterprise are
under both the Penal Code and the Civil Code. In that case, the action of the equally liable for the damages caused by their employees in
agent was unjustified and fraudulent and therefore could have been the the service of the branches in which the latter may be
subject of a criminal action. And yet, it was held to be also a proper subject of employed or in the performance of their duties.
a civil action under article 1902 of the Civil Code. It is also to be noted that it
was the employer and not the employee who was being sued. xxx xxx xxx

Let us now examine the cases previously decided by this Court. "The liability referred to in this article shall cease when the
persons mentioned therein prove that they employed all the
In the leading case of Rakes vs. Atlantic Gulf and Pacific Co. (7 Phil., 359, diligence of a good father of a family to avoid the damage."
362-365 [year 1907]), the trial court awarded damages to the plaintiff, a laborer
of the defendant, because the latter had negligently failed to repair a tramway As an answer to the argument urged in this particular action it may be
in consequence of which the rails slid off while iron was being transported, and sufficient to point out that nowhere in our general statutes is the
caught the plaintiff whose leg was broken. This Court held: employer penalized for failure to provide or maintain safe appliances
for his workmen. His obligation therefore is one 'not punished by the
It is contended by the defendant, as its first defense to the action that laws' and falls under civil rather than criminal jurisprudence. But the
the necessary conclusion from these collated laws is that the remedy answer may be a broader one. We should be reluctant, under any
for injuries through negligence lies only in a criminal action in which conditions, to adopt a forced construction of these scientific codes,
the official criminally responsible must be made primarily liable and his such as is proposed by the defendant, that would rob some of these
employer held only subsidiarily to him. According to this theory the articles of effect, would shut out litigants against their will from the civil
plaintiff should have procured the arrest of the representative of the courts, would make the assertion of their rights dependent upon the
company accountable for not repairing the track, and on his selection for prosecution of the proper criminal offender, and render
prosecution a suitable fine should have been imposed, payable recovery doubtful by reason of the strict rules of proof prevailing in
primarily by him and secondarily by his employer. criminal actions. Even if these articles had always stood alone, such
a construction would be unnecessary, but clear light is thrown upon
This reasoning misconceived the plan of the Spanish codes upon this their meaning by the provisions of the Law of Criminal Procedure of
subject. Article 1093 of the Civil Code makes obligations arising from Spain (Ley de Enjuiciamiento Criminal), which, though never in actual
faults or negligence not punished by the law, subject to the provisions force in these Islands, was formerly given a suppletory or explanatory
of Chapter II of Title XVI. Section 1902 of that chapter reads: effect. Under article 111 of this law, both classes of action, civil and
criminal, might be prosecuted jointly or separately, but while the penal
action was pending the civil was suspended. According to article 112,
"A person who by an act or omission causes damage to
the penal action once started, the civil remedy should be sought
another when there is fault or negligence shall be obliged to
therewith, unless it had been waived by the party injured or been
repair the damage so done.
expressly reserved by him for civil proceedings for the future. If the
civil action alone was prosecuted, arising out of a crime that could be
"SEC. 1903. The obligation imposed by the preceeding article enforced only on private complaint, the penal action thereunder should
is demandable, not only for personal acts and omissions, but be extinguished. These provisions are in harmony with those of
also for those of the persons for whom they should be articles 23 and 133 of our Penal Code on the same subject.
responsible.
An examination of this topic might be carried much further, but the
"The father, and on his death or incapacity, the mother, is citation of these articles suffices to show that the civil liability was not
liable for the damages caused by the minors who live with intended to be merged in the criminal nor even to be suspended
them. thereby, except as expressly provided in the law. Where an individual
is civilly liable for a negligent act or omission, it is not required that the
xxx xxx xxx injured party should seek out a third person criminally liable whose
prosecution must be a condition precedent to the enforcement of the If it were true that the defendant, in coming from the southern part of
civil right. Solana Street, had to stop his auto before crossing Real Street,
because he had met vehicles which were going along the latter street
Under article 20 of the Penal Code the responsibility of an employer or were coming from the opposite direction along Solana Street, it is
may be regarded as subsidiary in respect of criminal actions against to be believed that, when he again started to run his auto across said
his employees only while they are in process of prosecution, or in so Real Street and to continue its way along Solana Street northward, he
far as they determine the existence of the criminal act from which should have adjusted the speed of the auto which he was operating
liability arises, and his obligation under the civil law and its until he had fully crossed Real Street and had completely reached a
enforcement in the civil courts is not barred thereby unless by the clear way on Solana Street. But, as the child was run over by the auto
election of the injured person. Inasmuch as no criminal proceeding precisely at the entrance of Solana Street, this accident could not have
had been instituted, growing our of the accident in question, the occurred if the auto had been running at a slow speed, aside from the
provisions of the Penal Code can not affect this action. This fact that the defendant, at the moment of crossing Real Street and
construction renders it unnecessary to finally determine here whether entering Solana Street, in a northward direction, could have seen the
this subsidiary civil liability in penal actions has survived the laws that child in the act of crossing the latter street from the sidewalk on the
fully regulated it or has been abrogated by the American civil and right to that on the left, and if the accident had occurred in such a way
criminal procedure now in force in the Philippines. that after the automobile had run over the body of the child, and the
child's body had already been stretched out on the ground, the
automobile still moved along a distance of about 2 meters, this
The difficulty in construing the articles of the code above cited in this
circumstance shows the fact that the automobile entered Solana
case appears from the briefs before us to have arisen from the
interpretation of the words of article 1093, "fault or negligence not Street from Real Street, at a high speed without the defendant having
punished by law," as applied to the comprehensive definition of blown the horn. If these precautions had been taken by the defendant,
the deplorable accident which caused the death of the child would not
offenses in articles 568 and 590 of the Penal Code. It has been shown
have occurred.
that the liability of an employer arising out of his relation to his
employee who is the offender is not to be regarded as derived from
negligence punished by the law, within the meaning of articles 1902 It will be noticed that the defendant in the above case could have been
and 1093. More than this, however, it cannot be said to fall within the prosecuted in a criminal case because his negligence causing the death of the
class of acts unpunished by the law, the consequence of which are child was punishable by the Penal Code. Here is therefore a clear instance of
regulated by articles 1902 and 1903 of the Civil Code. The acts to the same act of negligence being a proper subject-matter either of a criminal
which these articles are applicable are understood to be those not action with its consequent civil liability arising from a crime or of an entirely
growing out of pre-existing duties of the parties to one another. But separate and independent civil action for fault or negligence under article 1902
where relations already formed give rise to duties, whether springing of the Civil Code. Thus, in this jurisdiction, the separate individually of a cuasi-
from contract or quasi contract, then breaches of those duties are delito or culpa aquilianaunder the Civil Code has been fully and clearly
subject to articles 1101, 1103, and 1104 of the same code. A typical recognized, even with regard to a negligent act for which the wrongdoer could
application of this distinction may be found in the consequences of a have been prosecuted and convicted in a criminal case and for which, after
railway accident due to defective machinery supplied by the employer. such a conviction, he could have been sued for this civil liability arising from
His liability to his employee would arise out of the contract of his crime.
employment, that to the passengers out of the contract for passage,
while that to the injured bystander would originate in the negligent act Years later (in 1930) this Court had another occasion to apply the same
itself. doctrine. In Bernal and Enverso vs. House and Tacloban Electric & Ice Plant,
Ltd., 54 Phil., 327, the parents of the five-year-old child, Purificacion Bernal,
In Manzanares vs. Moreta, 38 Phil., 821 (year 1918), the mother of the 8 of 9- brought a civil action to recover damages for the child's death as a result of
year-old child Salvador Bona brought a civil action against Moreta to recover burns caused by the fault and negligence of the defendants. On the evening
damages resulting from the death of the child, who had been run over by an of April 10, 1925, the Good Friday procession was held in Tacloban, Leyte.
automobile driven and managed by the defendant. The trial court rendered Fortunata Enverso with her daughter Purificacion Bernal had come from
judgment requiring the defendant to pay the plaintiff the sum of P1,000 as another municipality to attend the same. After the procession the mother and
indemnity: This Court in affirming the judgment, said in part: the daughter with two others were passing along Gran Capitan Street in front
of the offices of the Tacloban Electric & Ice Plant, Ltd., owned by defendants As to selection, the defendant has clearly shown that he exercised the
J. V. House, when an automobile appeared from the opposite direction. The care and diligence of a good father of a family. He obtained the
little girl, who was slightly ahead of the rest, was so frightened by the machine from a reputable garage and it was, so far as appeared, in
automobile that she turned to run, but unfortunately she fell into the street good condition. The workmen were likewise selected from a standard
gutter where hot water from the electric plant was flowing. The child died that garage, were duly licensed by the Government in their particular
same night from the burns. The trial courts dismissed the action because of calling, and apparently thoroughly competent. The machine had been
the contributory negligence of the plaintiffs. But this Court held, on appeal, that used but a few hours when the accident occurred and it is clear from
there was no contributory negligence, and allowed the parents P1,000 in the evidence that the defendant had no notice, either actual or
damages from J. V. House who at the time of the tragic occurrence was the constructive, of the defective condition of the steering gear.
holder of the franchise for the electric plant. This Court said in part:
The legal aspect of the case was discussed by this Court thus:
Although the trial judge made the findings of fact hereinbefore
outlined, he nevertheless was led to order the dismissal of the action Article 1903 of the Civil Code not only establishes liability in cases of
because of the contributory negligence of the plaintiffs. It is from this negligence, but also provides when the liability shall cease. It says:
point that a majority of the court depart from the stand taken by the
trial judge. The mother and her child had a perfect right to be on the
"The liability referred to in this article shall cease when the
principal street of Tacloban, Leyte, on the evening when the religious
persons mentioned therein prove that they employed all the
procession was held. There was nothing abnormal in allowing the child
diligence of a good father of a family to avoid the damage."
to run along a few paces in advance of the mother. No one could
foresee the coincidence of an automobile appearing and of a
frightened child running and falling into a ditch filled with hot water. From this article two things are apparent: (1) That when an injury is
The doctrine announced in the much debated case of Rakes vs. caused by the negligence of a servant or employee there instantly
Atlantic Gulf and Pacific Co. ([1907]), 7 Phil., 359), still rule. Article arises a presumption of law that there was negligence on the part of
1902 of the Civil Code must again be enforced. The contributory the matter or employer either in the selection of the servant or
negligence of the child and her mother, if any, does not operate as a employee, or in supervision over him after the selection, or both; and
bar to recovery, but in its strictest sense could only result in reduction (2) that presumption is juris tantum and not juris et de jure, and
of the damages. consequently, may be rebutted. It follows necessarily that if the
employer shows to the satisfaction of the court that in selection and
supervision he has exercised the care and diligence of a good father
It is most significant that in the case just cited, this Court specifically applied of a family, the presumption is overcome and he is relieve from liability.
article 1902 of the Civil Code. It is thus that although J. V. House could have
been criminally prosecuted for reckless or simple negligence and not only
punished but also made civilly liable because of his criminal negligence, This theory bases the responsibility of the master ultimately on his own
nevertheless this Court awarded damages in an independent civil action for negligence and not on that of his servant.
fault or negligence under article 1902 of the Civil Code.
The doctrine of the case just cited was followed by this Court in Cerf vs.
In Bahia vs. Litonjua and Leynes (30 Phil., 624 [year 1915), the action was for Medel (33 Phil., 37 [year 1915]). In the latter case, the complaint alleged that
damages for the death of the plaintiff's daughter alleged to have been caused the defendant's servant had so negligently driven an automobile, which was
by the negligence of the servant in driving an automobile over the child. It operated by defendant as a public vehicle, that said automobile struck and
appeared that the cause of the mishap was a defect in the steering gear. The damaged the plaintiff's motorcycle. This Court, applying article 1903 and
defendant Leynes had rented the automobile from the International Garage of following the rule in Bahia vs. Litonjua and Leynes, said in part (p. 41) that:
Manila, to be used by him in carrying passengers during the fiesta of Tuy,
Batangas. Leynes was ordered by the lower court to pay P1,000 as damages The master is liable for the negligent acts of his servant where he is
to the plaintiff. On appeal this Court reversed the judgment as to Leynes on the owner or director of a business or enterprise and the negligent acts
the ground that he had shown that the exercised the care of a good father of are committed while the servant is engaged in his master's
a family, thus overcoming the presumption of negligence under article 1903. employment as such owner.
This Court said:
Another case which followed the decision in Bahia vs. Litonjua and Leynes was Unable to collect the indemnity from Eustaquio, the City of Manila filed an
Cuison vs. Norton & Harrison Co., 55 Phil., 18 (year 1930). The latter case action against the Manila Electric Company to obtain payment, claiming that
was an action for damages brought by Cuison for the death of his seven-year- the defendant was subsidiarily liable. The main defense was that the
old son Moises. The little boy was on his way to school with his sister Marciana. defendant had exercised the diligence of a good father of a family to prevent
Some large pieces of lumber fell from a truck and pinned the boy underneath, the damage. The lower court rendered judgment in favor of the plaintiff. This
instantly killing him. Two youths, Telesforo Binoya and Francisco Bautista, Court held, in part, that this case was governed by the Penal Code, saying:
who were working for Ora, an employee of defendant Norton & Harrison Co.,
pleaded guilty to the crime of homicide through reckless negligence and were With this preliminary point out of the way, there is no escaping the
sentenced accordingly. This Court, applying articles 1902 and 1903, held: conclusion that the provisions of the Penal Code govern. The Penal
Code in easily understandable language authorizes the determination
The basis of civil law liability is not respondent superior but the of subsidiary liability. The Civil Code negatives its application by
relationship of pater familias. This theory bases the liability of the providing that civil obligations arising from crimes or misdemeanors
master ultimately on his own negligence and not on that of his servant. shall be governed by the provisions of the Penal Code. The conviction
(Bahia vs.Litonjua and Leynes [1915], 30 Phil., 624; Cangco vs. of the motorman was a misdemeanor falling under article 604 of the
Manila Railroad Co. [1918], 38 Phil., 768.) Penal Code. The act of the motorman was not a wrongful or negligent
act or omission not punishable by law. Accordingly, the civil obligation
In Walter A. Smith & Co. vs. Cadwallader Gibson Lumber Co., 55 Phil., 517 connected up with the Penal Code and not with article 1903 of the Civil
(year 1930) the plaintiff brought an action for damages for the demolition of its Code. In other words, the Penal Code affirms its jurisdiction while the
wharf, which had been struck by the steamer Helen C belonging to the Civil Code negatives its jurisdiction. This is a case of criminal
defendant. This Court held (p. 526): negligence out of which civil liability arises and not a case of civil
negligence.
The evidence shows that Captain Lasa at the time the plaintiff's wharf
collapsed was a duly licensed captain, authorized to navigate and xxx xxx xxx
direct a vessel of any tonnage, and that the appellee contracted his
services because of his reputation as a captain, according to F. C. Our deduction, therefore, is that the case relates to the Penal Code
Cadwallader. This being so, we are of the opinion that the presumption and not to the Civil Code. Indeed, as pointed out by the trial judge, any
of liability against the defendant has been overcome by the exercise different ruling would permit the master to escape scot-free by simply
of the care and diligence of a good father of a family in selecting alleging and proving that the master had exercised all diligence in the
Captain Lasa, in accordance with the doctrines laid down by this court selection and training of its servants to prevent the damage. That
in the cases cited above, and the defendant is therefore absolved from would be a good defense to a strictly civil action, but might or might
all liability. not be to a civil action either as a part of or predicated on conviction
for a crime or misdemeanor. (By way of parenthesis, it may be said
It is, therefore, seen that the defendant's theory about his secondary liability is further that the statements here made are offered to meet the
negatived by the six cases above set forth. He is, on the authority of these argument advanced during our deliberations to the effect that article
cases, primarily and directly responsible in damages under article 1903, in 0902 of the Civil Code should be disregarded and codal articles 1093
relation to article 1902, of the Civil Code. and 1903 applied.)

Let us now take up the Philippine decisions relied upon by the defendant. We It is not clear how the above case could support the defendant's proposition,
study first, City of Manila vs. Manila Electric Co., 52 Phil., 586 (year 1928). A because the Court of Appeals based its decision in the present case on the
collision between a truck of the City of Manila and a street car of the Manila defendant's primary responsibility under article 1903 of the Civil Code and not
Electric Co. took place on June 8, 1925. The truck was damaged in the amount on his subsidiary liability arising from Fontanilla's criminal negligence. In other
of P1,788.27. Sixto Eustaquio, the motorman, was prosecuted for the crime of words, the case of City of Manila vs. Manila Electric Co., supra, is predicated
damage to property and slight injuries through reckless imprudence. He was on an entirely different theory, which is the subsidiary liability of an employer
found guilty and sentenced to pay a fine of P900, to indemnify the City of arising from a criminal act of his employee, whereas the foundation of the
Manila for P1,788.27, with subsidiary imprisonment in case of insolvency. decision of the Court of Appeals in the present case is the employer's primary
liability under article 1903 of the Civil Code. We have already seen that this is separate responsibility for fault or negligence under articles 1902 to 1910 of
a proper and independent remedy. the Civil Code. Still more concretely, the authorities above cited render it
inescapable to conclude that the employer in this case the defendant-
Arambulo vs. Manila Electric Co. (55 Phil., 75), is another case invoked by the petitioner is primarily and directly liable under article 1903 of the Civil Code.
defendant. A motorman in the employ of the Manila Electric Company had
been convicted o homicide by simple negligence and sentenced, among other The legal provisions, authors, and cases already invoked should ordinarily be
things, to pay the heirs of the deceased the sum of P1,000. An action was then sufficient to dispose of this case. But inasmuch as we are announcing
brought to enforce the subsidiary liability of the defendant as employer under doctrines that have been little understood in the past, it might not be
the Penal Code. The defendant attempted to show that it had exercised the inappropriate to indicate their foundations.
diligence of a good father of a family in selecting the motorman, and therefore
claimed exemption from civil liability. But this Court held: Firstly, the Revised Penal Code in article 365 punishes not only reckless but
also simple negligence. If we were to hold that articles 1902 to 1910 of the
In view of the foregoing considerations, we are of opinion and so hold, Civil Code refer only to fault or negligence not punished by law, according to
(1) that the exemption from civil liability established in article 1903 of the literal import of article 1093 of the Civil Code, the legal institution of culpa
the Civil Code for all who have acted with the diligence of a good father aquiliana would have very little scope and application in actual life. Death or
of a family, is not applicable to the subsidiary civil liability provided in injury to persons and damage to property through any degree of negligence
article 20 of the Penal Code. even the slightest would have to be indemnified only through the principle
of civil liability arising from a crime. In such a state of affairs, what sphere would
The above case is also extraneous to the theory of the defendant in the instant remain for cuasi-delito or culpa aquiliana? We are loath to impute to the
case, because the action there had for its purpose the enforcement of the lawmaker any intention to bring about a situation so absurd and anomalous.
defendant's subsidiary liability under the Penal Code, while in the case at bar, Nor are we, in the interpretation of the laws, disposed to uphold the letter that
the plaintiff's cause of action is based on the defendant's primary and direct killeth rather than the spirit that giveth life. We will not use the literal meaning
responsibility under article 1903 of the Civil Code. In fact, the above case of the law to smother and render almost lifeless a principle of such ancient
destroys the defendant's contention because that decision illustrates the origin and such full-grown development as culpa aquiliana or cuasi-delito,
principle that the employer's primary responsibility under article 1903 of the which is conserved and made enduring in articles 1902 to 1910 of the Spanish
Civil Code is different in character from his subsidiary liability under the Penal Civil Code.
Code.
Secondly, to find the accused guilty in a criminal case, proof of guilt beyond
In trying to apply the two cases just referred to, counsel for the defendant has reasonable doubt is required, while in a civil case, preponderance of evidence
failed to recognize the distinction between civil liability arising from a crime, is sufficient to make the defendant pay in damages. There are numerous cases
which is governed by the Penal Code, and the responsibility for cuasi- of criminal negligence which can not be shown beyond reasonable doubt, but
delito or culpa aquiliana under the Civil Code, and has likewise failed to give can be proved by a preponderance of evidence. In such cases, the defendant
the importance to the latter type of civil action. can and should be made responsible in a civil action under articles 1902 to
1910 of the Civil Code. Otherwise, there would be many instances of
The defendant-petitioner also cites Francisco vs. Onrubia (46 Phil., 327). That unvindicated civil wrongs. Ubi jus ibi remedium.
case need not be set forth. Suffice it to say that the question involved was also
civil liability arising from a crime. Hence, it is as inapplicable as the two cases Thirdly, to hold that there is only one way to make defendant's liability effective,
above discussed. and that is, to sue the driver and exhaust his (the latter's) property first, would
be tantamount to compelling the plaintiff to follow a devious and cumbersome
The foregoing authorities clearly demonstrate the separate individuality method of obtaining relief. True, there is such a remedy under our laws, but
of cuasi-delitos or culpa aquiliana under the Civil Code. Specifically they show there is also a more expeditious way, which is based on the primary and direct
responsibility of the defendant under article 1903 of the Civil Code. Our view
that there is a distinction between civil liability arising from criminal negligence
of the law is more likely to facilitate remedy for civil wrongs, because the
(governed by the Penal Code) and responsibility for fault or negligence under
procedure indicated by the defendant is wasteful and productive of delay, it
articles 1902 to 1910 of the Civil Code, and that the same negligent act may
produce either a civil liability arising from a crime under the Penal Code, or a being a matter of common knowledge that professional drivers of taxis and
similar public conveyance usually do not have sufficient means with which to
pay damages. Why, then, should the plaintiff be required in all cases to go additional remedy, and for the further reason that an independent civil action,
through this roundabout, unnecessary, and probably useless procedure? In not depending on the issues, limitations and results of a criminal prosecution,
construing the laws, courts have endeavored to shorten and facilitate the and entirely directed by the party wronged or his counsel, is more likely to
pathways of right and justice. secure adequate and efficacious redress.

At this juncture, it should be said that the primary and direct responsibility of In view of the foregoing, the judgment of the Court of Appeals should be and
employers and their presumed negligence are principles calculated to protect is hereby affirmed, with costs against the defendant-petitioner.
society. Workmen and employees should be carefully chosen and supervised
in order to avoid injury to the public. It is the masters or employers who Yulo, C.J., Moran, Ozaeta and Paras, JJ., concur.
principally reap the profits resulting from the services of these servants and
employees. It is but right that they should guarantee the latter's careful conduct
G .R . No. 17 2 52 8 February 26, 2008
for the personnel and patrimonial safety of others. As Theilhard has said, "they
should reproach themselves, at least, some for their weakness, others for their
poor selection and all for their negligence." And according to Manresa, "It is JANSSEN PHARMACEUTICA, Petitioner,
much more equitable and just that such responsibility should fall upon the vs
principal or director who could have chosen a careful and prudent employee, BENJAMIN A. SILAYRO, Respondent
and not upon the injured person who could not exercise such selection and
who used such employee because of his confidence in the principal or CHICO-NAZARIO, J.:
director." (Vol. 12, p. 622, 2nd Ed.) Many jurists also base this primary
responsibility of the employer on the principle of representation of the principal
by the agent. Thus, Oyuelos says in the work already cited (Vol. 7, p. 747) that This is a petition for review on certiorari under Rule 45 of the Rules of Court,
before third persons the employer and employee "vienen a ser como una sola assailing the Decision,[1] dated 8 February 2006, promulgated by the Court of
personalidad, por refundicion de la del dependiente en la de quien le emplea Appeals in CA-G.R. SP No. 81983, reversing the Decision[2] dated 7 May 2003
y utiliza." ("become as one personality by the merging of the person of the of the National Labor Relations Commission (NLRC) in NLRC Case No. V-
employee in that of him who employs and utilizes him.") All these observations 000880-99. The Court of Appeals, in its assailed Decision, adjudged the
acquire a peculiar force and significance when it comes to motor accidents, dismissal of respondent Benjamin Silayro by petitioner
and there is need of stressing and accentuating the responsibility of owners of
Jansen Pharmaceutica as illegal for being an excessive and unwarranted
motor vehicles.
penalty. The appellate court determined that the suspension of the respondent
Fourthly, because of the broad sweep of the provisions of both the Penal Code for five months without salary as just penalty.
and the Civil Code on this subject, which has given rise to the overlapping or
concurrence of spheres already discussed, and for lack of understanding of Petitioner is the division of Johnson & Johnson Philippines Inc. engaged in the
the character and efficacy of the action for culpa aquiliana, there has grown up sale and manufacture of pharmaceutical products. In 1989, petitioner
a common practice to seek damages only by virtue of the civil responsibility employed respondent as Territory/Medical Representative. During his
arising from a crime, forgetting that there is another remedy, which is by employment, respondent received from petitioner several awards and citations
invoking articles 1902-1910 of the Civil Code. Although this habitual method is
for the years 1990 to 1997, such as Territory Representative Award, Quota
allowed by our laws, it has nevertheless rendered practically useless and
nugatory the more expeditious and effective remedy based on culpa Buster Award, Sipag Award, Safety Drivers Award, Ring Club Award, and a
aquiliana or culpa extra-contractual. In the present case, we are asked to help Nomination as one of the Ten Outstanding Philippine Salesmen.[3]On the dark
perpetuate this usual course. But we believe it is high time we pointed out to side, however, respondent was also investigated for, and in some cases found
the harm done by such practice and to restore the principle of responsibility for guilty of, several administrative charges.
fault or negligence under articles 1902 et seq. of the Civil Code to its full rigor.
It is high time we caused the stream of quasi-delict or culpa aquiliana to flow
Petitioner alleged that in 1994, respondent was found guilty of granting
on its own natural channel, so that its waters may no longer be diverted into
that of a crime under the Penal Code. This will, it is believed, make for the unauthorized premium/free goods to and unauthorized pull-outs from
better safeguarding of private rights because it re-establishes an ancient and customers.[4] Petitioner failed to attach records to support its allegation and to
explain the nature of and the circumstance surrounding these months. He, likewise, admitted to committing errors in posting the samples that
infractions. Respondent, for his part, admitted to have been guilty of granting he distributed to some doctors during the months of August and September
unauthorized premium/free goods, but vehemently denied violating the rule on, 1998.[12]
or having been charged with, unauthorized pull-outs from customers.[5]
On 20 November 1998, petitioner issued a Notice of Disciplinary Action finding
The respondent was also investigated for dishonesty in connection with the respondent guilty of the following offenses (1) delayed submission of process
Rewards of Learning (ROL) test. The ROL test is a one-page take-home reports, for which he was subjected to a one-day suspension without pay,
examination, with two questions to be answered by an enumeration of the effective 24 November 1998;[13] and (2) cheating in his ROL test, for which he
standards of performance by which territory representatives are rated as well was subjected again to a one-day suspension.[14]
as the sales competencies expected of territory representatives. [6] It was
discovered that respondents answers were written in the handwriting of a co- On the same date, petitioner likewise issued a Notice of Preventive
employee, Joedito Gasendo. Petitioners management then sent respondent a Suspension against respondent for Dishonesty in Accomplishing Other
Memo dated 27 July 1998 requiring an explanation for the incident.[7] Accountable Documents in connection with the discrepancy between the
quantities of sample products in respondents report and the petitioners audit
Soon thereafter, petitioner sent a subsequent Memo dated 20 August 1998 to for the September 1998 cycle. In addition, the Notice directed the respondent
respondent requiring the latter to explain his delay in submitting process to surrender to the petitioner the car, promotional materials, and all other
reports.[8] accountabilities on or before 25 November 1998. It was also stated therein that
since this was respondents third offense for the year, he could be dismissed
On 8 September 1998, respondent submitted a written explanation to the under Section 9.5.5(c) of petitioners Code of Conduct.[15]
petitioner stating that the delay in the submission of reports was caused by the
deaths of his grandmother and his aunt, and the hospitalization of his Before 25 November 1998 or the date given by petitioner for respondent to
mother. He also averred that he had asked his co- surrender all his accountabilities, a Memorandum dated 24 November 1998
employee Joedito Gasendo to write his answers to the ROL test because at was issued to respondent for the following alleged infractions: (1) Failure to
the time when the examination was due, he already needed to leave to see his turn over company vehicles assigned after the receipt of instruction to that
father-in-law, who was suffering from cancer and confined in a hospital in effect from superiors, and (2) Refusing or neglecting to obey Company
Manila.[9] management orders to perform work without justifiable reason.[16]

Respondent was sent a new Memorandum dated 20 October 1998 for his Respondent wrote a letter dated 26 November 1998 addressed to the
delayed submission of process reports due on 14 October 1998.[10] petitioner explaining that he failed to surrender his accountabilities because he
thought that this was tantamount to an admission that the charges against him
Respondent was issued another Memo also dated 20 October 1998 were true and, thus, could result in his termination from the job. [17]
regarding the discrepancies between the number of product samples recorded
in his Daily/Weekly Coverage Report (DCR) and the number of product An administrative investigation of the respondents case was held on 3
samples found in his possession during the 14 October 1998 audit. [11] The December 1998. Respondent was accompanied by union representative
actual number of sample products found in respondents possession exceeded Lyndon Lim. The parties discussed matters concerning the discrepancy in
the number of sample products he reported to petitioner. respondents report and petitioners audit on the number of product samples in
respondents custody in September 1998. They were also able to clarify among
Respondent explained, through a Response Memo dated 24 October themselves respondents failure to return his accountabilities and, as a
1998, that he failed to count the quantity of samples when they were placed in consequence, respondent promised to surrender the same. They further
his custody. Thus, he failed to take note of the excess samples from previous
agreed that another administrative hearing will be set, but no further hearings and other earned benefits for December 1998 like rice allocation, free goods
were held.[18] allocation, etc.; and (e) Damages and attorneys fees.

In line with his promise to surrender his accountabilities, respondent In a Decision dated 31 August 1999, the Labor Arbiter ruled that
wrote a letter, dated 9 December 1998, asking his superiors where he should respondent committed infractions which breached company rules, and which
return his accountabilities.[19] Union representative Dominic Regoro also made were sufficient grounds for dismissal. However, the Labor Arbiter found the
requests, on behalf of respondent, for instructions, to whom petitioners District penalty of dismissal to be too harsh considering the respondents
Supervisor Raymond Bernardo replied via electronic mail on 16 December circumstances and ordered his reinstatement without payment of back
1998. According to Bernardo, he was still in the process of making wages.[26] The dispositive portion of the Decision states that:
arrangements with Ruben Cauton, petitioners National Sales Manager, in
connection with the return of respondents accountabilities. [20] Respondent WHEREFORE, premises considered, judgment is
maintained that he did not receive any instructions from petitioner. rendered ordering respondents firm to reinstate complainant
to his former or equivalent position without backwages.
In a letter dated 28 December 1998, petitioner terminated the services
of respondent.[21] Petitioner found respondent guilty of dishonesty in All other claims are hereby dismissed.[27]
accomplishing the report on the number of product samples in his possession
and failing to return the company vehicle and his other accountabilities in
violation of Sections 9.2.9 and 9.2.4 of the Code of Conduct.[22] Petitioner also On appeal, the NLRC modified the Decision of the Labor Arbiter by
found respondent to be a habitual offender whose previous offenses included: declaring that reinstatement was improper where respondent was dismissed
(1) Granting unauthorized premium/free goods to customer in 1994; (2) for just and authorized causes.[28] In a Decision dated 7 May 2003, it
Unauthorized pull-out of stocks from customer in 1994; (3) Delay in submission pronounced that:
of reports despite oral admonition and written reprimand in 1998; and (4)
Dishonesty in accomplishing other accountable documents or instruments (in WHEREFORE, premises considered, complainants
connection with the ROL test) in 1998. appeal is hereby DISMISSED. The decision of the Labor
Arbiter is hereby AFFIRMED with MODIFICATION deleting
Even after respondents termination from employment, there was still the award of reinstatement.[29]
contact between petitioner and respondent regarding the latters
accountabilities still in his possession.Sometime in early 1999, in a telephone
conversation, respondent informed petitioner that he will return his Respondent filed a Petition for Certiorari under Rule 65 of the Rules
accountabilities only upon demand from the proper governmental agency.[23] A of Court before the Court of Appeals. In reversing the Decision of the NLRC,
demand letter dated 3 February 1999 was sent to respondent by petitioner the appellate court pronounced that the causes were insufficient for the
ordering the return of the company car, promotional materials, samples, a slide dismissal of respondent since respondents acts were not motivated by
projector, product manuals, product monographs, and training binders.[24] dishonesty, but were caused by mere inadvertence.Thus, it concluded that the
offenses committed by respondent merited only a penalty of suspension for
On 14 January 1999, respondent filed a Complaint[25] against five months without pay. The appellate court also noted that petitioner
petitioner and its officers, Rafael Besa, Rueben Cauton, Victor Lapid, and committed some lapses in its compliance with procedural due process. It
Raymond Bernardo before the Sub-Regional Arbitration Branch of the NLRC further took into account the successive deaths and sickness in respondents
in Iloilo City for (a) Unfair Labor Practice; (b) Illegal Dismissal; (c) family.[30] The dispositivepart of the decision reads:
Reimbursement of operating and representation expenses under expense
reports for October and November 1998; (d) Nonpayment of salary, bonuses
WHEREFORE, premises considered, the petition DISREGARD OF HIS SUPERIORS ORDER TO
is GRANTED. Thus, the Decision and Resolution respectively SURRENDER HIS ACCOUNTABILITIES TANTAMOUNT TO
dated 7 May 2003 and 14 October 2003 are hereby SET DISHONESTY, GROSS AND HABITUAL NEGLECT OF
ASIDE.Accordingly, Judgment is hereby rendered: DUTY, WILLFUL DISOBEDIENCE OF COMPANY POLICY,
AND BREACH OF TRUST AND CONFIDENCE REPOSED
a) Declaring petitioners dismissal to be illegal; IN HIM BY THE COMPANY UNDER THE PROVISIONS OF
THE LABOR CODE WAS LEGAL, VALID AND CARRIED
b) Reinstating petitioner to the same or equivalent position OUT WITH DUE PROCESS
without loss of seniority rights and other privileges; III
WHETHER OR NOT THE TOTALITY OF INFRACTIONS
c) Ordering the payment of backwages (inclusive of COMMITTED BY RESPONDENT FURTHER MERITED HIS
allowances and other benefits or their monetary TERMINATION FROM THE COMPANYS EMPLOY
equivalent), computed from the time compensation IV
was withheld up to the time of actual reinstatement; WHETHER OR NOT THE RESPONDENT HAS ANY BASIS
Provided that, from such computed amount of FOR CLAIMING AN AWARD OF REINSTATEMENT AND
backwages, a deduction of five (5) months (sic) salary BACKWAGES.[32]
be made to serve as penalty; and
This petition is without merit.
d) If reinstatement is no longer feasible, ordering
the payment of separation pay comprising of one The main question in this case is whether or not sufficient grounds
month salary per year of service computed from date existed for the dismissal of the respondent. To constitute a valid dismissal from
of employment up to finality of this decision, in employment, two requisites must concur: (1) the dismissal must be for any of
addition to the award of backwages. the causes provided in Article 282 of the Labor Code; and, (2) the employee
must be given an opportunity to be heard and to defend himself.[33]
Let the records of this case be remanded to the
Labor Ariter a quo for the proper computation of the In this case, the Court must re-examine the factual findings of the
foregoing.[31] Court of Appeals, as well as the contrary findings of the NLRC and Labor
Arbiter. While it is a recognized principle that this Court is not a trier of facts
and does not normally embark in the evaluation of evidence adduced during
Hence, this Petition, wherein the following issues were raised: trial, this rule allows for exceptions.[34] One of these exceptions covers
instances when the findings of fact of the trial court, or in this case of the quasi-
I judicial agencies concerned, are conflicting or contradictory with those of the
WHETHER OR NOT THE COURT OF APPEALS GRAVELY Court of Appeals.[35]
ERRED IN REVERSING THE UNIFORM FACTUAL
FINDINGS OF THE NLRC AND THE LABOR ARBITER. In the termination letter dated 28 December 1998, respondent was
II dismissed on the ground that he committed the following offenses: (1)
WHETHER OR NOT RESPONDENTS DISMISSAL FOR HIS dishonesty in accomplishing the report on the number of product samples in
FAILURE TO TRUTHFULLY ACCOMPLISH REPORTS, his possession; and (2) his failure to return the company vehicle and other
DELIBERATE AND REPEATED FAILURE TO SUBMIT accountabilities in violation of Sections 9.2.9 and 9.2.4 of the Code of
REQUIRED REPORTS AND HIS DELIBERATE Conduct. In addition to these offenses, petitioner took into account that the
petitioner committed the following infractions in the past: (1) granting during the audit and, afterwards, honestly admitted to his
unauthorized premium/free goods in 1994; (2) unauthorized pull-outs from negligence. Negligence is defined as the failure to exercise the standard of
customers in 1995; (3) cheating during the ROL exam in 1998; and (4) three care that a reasonably prudent person would have exercised in a similar
infractions of delayed process reports in 1998. situation.[38] To this Court, respondent did not commit any willful violation,
rather he merely failed to exercise the standard care required of a territory
Initially, the Court must determine whether the respondent violated the representative to carefully count the number of product samples delivered to
Code of Conduct with his dishonesty in accomplishing his report on product him in August and September 1998.
samples and/or failure to return the company vehicle and other such
accountabilities. The records of this case negate a finding of such culpability In the Memorandum dated 20 November 1998, petitioner ordered
on the part of the respondent. respondent to return the company vehicle and all other accountabilities by 25
November 1998. Petitioner issued its first notice on 24 November 1998, even
Petitioner failed to present evidence that respondent was guilty of before respondent was obligated to return his accountabilities. Hence,
dishonesty in accomplishing the DCR, wherein he was supposed to indicate respondent could not yet have committed any offense when petitioner issued
the number of product samples in his possession for August and September the first notice. Confused by petitioners arbitrary action, respondent did not
1998. Petitioner merely relied on the fact that the number of product samples return his accountabilities, but immediately explained in a letter dated 26
the respondent reported was incorrect, and the number of product samples November 1998 his reasons for failing to return his accountabilities on 25
later found in his possession exceeded that which he reported. Respondent November 1998 as previously ordered by the petitioner.
admitted that when the product samples had arrived, he failed to check if the
number of product samples indicated in the DCR corresponded to the number During the company hearing held on 3 December 1998, respondent
actually delivered and that he made mistakes in posting the product samples offered to return his accountabilities in accordance with the instructions to be
distributed during the period in question. given by the petitioner. In a letter dated 9 December 1998 addressed to the
petitioner, respondent reiterated his request for instructions on the return of
In termination cases, the burden of proof rests with the employer to his accountabilities. There is no showing that petitioner replied to respondents
show that the dismissal is for just and valid cause. Failure to do so would letter. The letter written by petitioners District Supervisor Raymond Bernardo
necessarily mean that the dismissal was not justified and therefore was to union representative Dominic Regoro sent through electronic mail on 16
illegal.[36] Dishonesty is a serious charge, which the employer must adequately December 1998 still provided no definite instructions to the respondent for the
prove, especially when it is the basis for termination. return of his accountabilities. This is the last communication between the
parties on the matter until petitioner wrongfully dismissed the respondent on
In this case, petitioner had not been able to identify an act of 28 December 1998 for deliberately refusing to surrender his accountabilities,
dishonesty, misappropriation, or any illicit act, which the respondent may have among other grounds. The petitioner does not refer in its pleadings to any
committed in connection with the erroneously reported product samples. While instance after the company hearing was held and before the respondent was
respondent was admittedly negligent in filling out his August and September dismissed wherein it had finally instructed the respondent as to how he may
1998 DCR, his errors alone are insufficient evidence of a dishonest turn over his accountabilities. Per petitioners pleadings, belated demands for
purpose. Since fraud implies willfulness or wrongful intent, the innocent non- the surrender of respondents accountabilities were made in January and
disclosure of or inadvertent errors in declaring facts by the employee to the February 1999,after respondent had already been dismissed. Clearly, the
employer will not constitute a just cause for the dismissal of the employee.[37] In charge against respondent of insubordination to the petitioners instructions for
addition, the subsequent acts of respondent belie a design to misappropriate the surrender of his accountabilities was unfounded since the respondent was
product samples.So as to escape any liability, respondent could have easily still waiting for said instructions when he was dismissed.
just submitted for audit only the number of product samples which he
reported. Instead, respondent brought all the product samples in his custody
Moreover, petitioner failed to observe procedural due process in was robbed of his rights to explain his side, to present his evidence and rebut
connection with the aforementioned charge. Section 2(d) of Rule 1 of The what was presented against him, rights ensured by the proper observance of
Implementing Rules of Book VI states that: procedural due process.
For termination of employment based on just causes as Of all the past offenses that were attributed to the respondent, he
defined in Article 282 of the Labor Code: contests having committed the infraction involving the unauthorized pull-outs
from customers, allegedly made in 1994. Again, the records show that
(i) A written notice served on the employee specifying petitioner did not provide any proof to support said charge. It must be
the ground or grounds for termination, and giving emphasized at this point that the onus probandi to prove the lawfulness of the
said employee reasonable opportunity within dismissal rests with the employer,[39] and in light of petitioners failure to
which to explain his side. discharge the same, the alleged offense cannot be given any credence by this
Court.As for the three remaining violations, it is unquestioned that respondent
(ii) A hearing or conference during which the employee had committed and had already been punished for them.
concerned, with the assistance of counsel if he so
desires is given opportunity to respond to the While a penalty may no longer be imposed on offenses for which
charge, present his evidence, or rebut the respondent has already been punished, these offenses, among other
evidence presented against him. offenses, may still be used as justification for an employees dismissal. Hence,
this Court must now take into consideration all the offenses that respondent
(iii) A written notice of termination served on the committed during his employment and decide whether these infractions, taken
employee, indicating that upon due consideration of together, constitute a valid cause for dismissal.
all the circumstances, grounds have been established
to justify his termination. (Emphases supplied.) Undoubtedly, respondent was negligent in reporting the number of
product samples in his custody for August and September 1998. He also
committed three other offenses in the past. First, he was found guilty of and
From the aforecited provision, it is implicit that these requirements afford the penalized for granting unauthorized free goods in 1994. Secondly, he incurred
employee an opportunity to explain his side, respond to the charge, present delays in submitting his process reports for August, September and October
his or her evidence and rebut the evidence presented against him or her. 1998, for which charge he was punished with one-day suspension. Lastly, he
cheated in an ROL test in July 1998 for which he was punished with another
The superficial compliance with two notices and a hearing in this case one-day suspension.
cannot be considered valid where these notices were issued and the hearing
made before an offense was even committed. The first notice, issued on 24 Respondents offense of granting unauthorized free goods was vaguely
November 1998, was premature since respondent was obliged to return his discussed. Petitioner did not offer any evidence in this connection; it was given
accountabilities only on 25 November 1998. As respondents preventive credence only because of respondents admission of the same. What acts
suspension began on 25 November 1998, he was still performing his duties constituted this offense and the circumstances surrounding it were not
as territory representative the day before, which required the use of the explained. However, the records show that in the same year it was committed,
company car and other company equipment. During the administrative in 1994, petitioner still gave respondent two awards: membership to the Wild
hearing on 3 December 1998, both parties clarified the confusion caused by Boar Society and the Five-Year Service Award.[40] Absent any explanation
the petitioners premature notice and agreed that respondent would surrender which would give this offense substantial weight and importance, it can only
his accountabilities as soon as the petitioner gave its instructions. Since be presumed that petitioner did not consider the offense as sufficiently
petitioners ostensible compliance with the procedural requirements of notice momentous to disqualify respondent from receiving an award or to even just
and hearing took place before an offense was even committed, respondent
issue the respondent a warning that a subsequent offense would result in the Despite the disapproving stance taken by this Court against
termination of his employment. dishonesty, there have been instances when this Court found the ultimate
penalty of dismissal excessive, even for cases which bear the stigma of deceit.
The rest of the infractions imputed to the respondent were committed during
the time he was undergoing serious family problems. His inability to comply In Philippine Long Distance Telephone Company v. National Labor
with the deadlines for his process reports and his lack of care in accounting Relations Commission,[43] an employee intervened in the anomalous
for the product samples in his custody are understandably the result of his connection of four telephone lines. It was, likewise, established in Manila
preoccupation with very serious problems. Added to the pressure brought Electric Company v. National Labor Relations Commission,[44] that the
about by the numerous charges he found himself facing, his errors and employee was involved in the illegal installation of a power line. In both cases,
negligence should be viewed in a more compassionate light. the violations were clearly prejudicial to the economic activity of his
employer. Finally, in National Labor Relations Commission v. Salgarino,[45] a
Petitioners inability to keep up with his deadlines and his carelessness with school teacher tampered with the grades of her students, an act which was
his report on product samples during a difficult time in his life are in no way prejudicial to the schools reputation. Notably, the Court stopped short of
comparable to the transgressions in the cases cited by petitioner involving dismissing these employees for offenses more serious than the present case.
other territory representatives Chua v. National Labor Relations In this case, the ROL test is a take-home examination intended to
Commission[41] and Gustilo v. Wyeth Philippines.[42] In the Chua case, it was check a territory representatives understanding of information already
not a mere case of delay in the submission of reports and the occasional contained in their Sales Career Manual, wherein the examinees are even
mistakes in the DCR, but an established pattern of inattention in the instructed to refer to their manuals. The improper taking of this test, while it
submission and accomplishing of his reports. The employee therein did not puts into question the examinees moral character, does not result in any
even submit some of the DCRs, while other DCRs were belatedly submitted potential loss of property or damage to the reputation of the employer. Nor
in batches covering two to three months.Doctors call cards lacked either the does respondents previous performance show lack of knowledge required in
corresponding dates or the signatures of the doctors concerned. In his sales career. Additionally, the dishonesty practiced by the employee did
the Gustillo case, the employee falsified his application form, a gasoline not involve company property that was placed in his custody. Furthermore, the
receipt, a report of his trade outlet calls, and misused his leaves. Evidently, gravity of this offense is substantially diminished by the fact that petitioner itself
the employee in this case misappropriated company resources by making had thought it unimportant enough to merit only a one-day suspension. The
claims for falsified expenses and making personal calls in lieu of trade outlet respondents ten years of commendable performance cannot be cancelled out
calls. In this case, respondent had not defrauded the petitioner of its property. by a single mistake made during a difficult period of his life, a mistake that did
not pose a potential danger to his employer.
The gravest charge that the respondent faced was cheating in his ROL The special circumstances of this case -- respondents family crises,
test. Although he avers that he formulated the answers himself and that he the duration of his employment, and the quality of his work during the previous
merely allowed his co-employeeJoedito Gasendo to write down his answers years -- must necessarily influence the penalty to be meted out to the
for him, this Court finds this excuse to be very flimsy. The ROL test consists respondent. It would be a cruel disregard of the constitutional guarantee of
of one page and two straightforward questions, which can be answered by security of tenure to impose the penalty of dismissal, without giving due
more or less ten sentences. Respondent could have spared the few minutes consideration to the ill fortune that may befall a normally excellent employee.
it would take to write the examination. If he had lacked the time due to a family
emergency, a request for an extension would have been the more reasonable In National Labor Relations Commission v. Salgarino,[46] special
and honest alternative. consideration was given to the fact that the respondent therein had been in
the employ of the petitioners therein for 10 years and that she was a recipient
of numerous academic excellence awards and recognized by her students
and some of her peers in the profession as a competent teacher. The Court,
in other cases, has repeatedly ruled that in determining the penalty to be
imposed on an erring employee, his or her length of service must be taken into Nonetheless, the infractions committed by the respondent, while
account.[47] In Brew Master International, Inc., v. National Federation of Labor disproportionate to a penalty of dismissal, will not be overlooked. The
Unions,[48] the emotional, psychological, spiritual and physical stress and suspension of five months without pay, imposed by the Court of Appeals,
strain undergone by the employee during a family crisis were regarded as would serve as a sufficient and just punishment for his violations of the
special circumstances which precluded his dismissal from service, despite his companys Code of Conduct.
prolonged absence from work. The Court explains the circumspection it
exercises when faced with the imposition of the extremely severe penalty of IN VIEW OF THE FOREGOING, the instant Petition
dismissal thus: is DISMISSED and the assailed Decision of the Court of Appeals in CA-G.R.
SP No. 81983, promulgated on 8 February 2006, is AFFIRMED. Costs against
The employers prerogative to discipline its employee must be the petitioner.
exercised without abuse of discretion. Its implementation
should be tempered with compassion and SO ORDERED.
understanding. While an employer has the inherent right to
discipline its employees, we have always held that this right M INIT A V . CH IC O - N AZ AR IO
must always be exercised humanely, and the penalty it must As s oc i a te J u s t ic e
impose should be commensurate to the offense involved and
to the degree of its infraction. The employer should bear in W E CO NC UR :
mind that, in the exercise of such right, what is at stake is not CONSUELO YNARES-SANTIAGO
the employees position but her livelihood as well. The law Associate Justice
regards the workers with compassion. Even where a worker Chairperson
has committed an infraction, a penalty less punitive may
suffice, whatever missteps may be committed by labor ought MA. ALICIA AUSTRIA-MARTINEZ ANTONIO EDUARDO B. NACHURA
not to be visited with a consequence so severe. This is not Associate Justice Associate Justice
only the laws concern for workingman. There is, in addition,
his or her family to consider. Unemployment brings untold RUBEN T. REYES
hardships and sorrows upon those dependent on the wage- Associate Justice
earner.[49]

ATTESTATION
Respondents violations of petitioners Code of Conduct, even if taken as a
whole, would not fall under the just causes of termination provided under I attest that the conclusions in the above Decision were reached in consultation
Article 282 of the Labor Code.[50] They are mere blunders, which may be before the case was assigned to the writer of the opinion of the Courts Division.
corrected. Petitioner failed to point out even a potential danger that respondent
would misappropriate or improperly dispose of company property placed in his CONSUELO YNARES-SANTIAGO
custody. It had not shown that during his employment, respondent took a Associate Justice
willfully defiant attitude against it. It also failed to show a pattern of negligence Chairperson, Third Division
which would indicate that respondent is incapable of performing his
responsibilities. At any other time during his employment, respondent had CERTIFICATION
shown himself a commendable worker.
Pursuant to Section 13, Article VIII of the Constitution, and the Division All references to the original plaintiffs in the decision and its dispositive
Chairpersons Attestation, it is hereby certified that the conclusions in the above portion are deemed, herein and hereafter, to legally refer to the
Decision were reached in consultation before the case was assigned to the plaintiff-appellee Carlos C. Ejercito.
writer of the opinion of the Courts Division.
Costs against appellant bank.
REYNATO S. PUNO
The dispositive portion of the trial court's2 decision dated July 10, 1991, on the
Chief Justice
other hand, is as follows:

WHEREFORE, premises considered, judgment is hereby rendered in


G.R. No. 115849 January 24, 1996 favor of the plaintiffs and against the defendants as follows:

FIRST PHILIPPINE INTERNATIONAL BANK (Formerly Producers Bank 1. Declaring the existence of a perfected contract to buy and sell over
of the Philippines) and MERCURIO RIVERA, petitioners, the six (6) parcels of land situated at Don Jose, Sta. Rosa, Laguna
vs. with an area of 101 hectares, more or less, covered by and embraced
COURT OF APPEALS, CARLOS EJERCITO, in substitution of in Transfer Certificates of Title Nos. T-106932 to T-106937, inclusive,
DEMETRIO DEMETRIA, and JOSE JANOLO,respondents. of the Land Records of Laguna, between the plaintiffs as buyers and
the defendant Producers Bank for an agreed price of Five and One
DECISION Half Million (P5,500,000.00) Pesos;

PANGANIBAN, J.: 2. Ordering defendant Producers Bank of the Philippines, upon finality
of this decision and receipt from the plaintiffs the amount of P5.5
In the absence of a formal deed of sale, may commitments given by bank Million, to execute in favor of said plaintiffs a deed of absolute sale
officers in an exchange of letters and/or in a meeting with the buyers constitute over the aforementioned six (6) parcels of land, and to immediately
a perfected and enforceable contract of sale over 101 hectares of land in Sta. deliver to the plaintiffs the owner's copies of T.C.T. Nos. T-106932 to
Rosa, Laguna? Does the doctrine of "apparent authority" apply in this case? If T- 106937, inclusive, for purposes of registration of the same deed
so, may the Central Bank-appointed conservator of Producers Bank (now First and transfer of the six (6) titles in the names of the plaintiffs;
Philippine International Bank) repudiate such "apparent authority" after said
contract has been deemed perfected? During the pendency of a suit for 3. Ordering the defendants, jointly and severally, to pay plaintiffs Jose
specific performance, does the filing of a "derivative suit" by the majority A. Janolo and Demetrio Demetria the sums of P200,000.00 each in
shareholders and directors of the distressed bank to prevent the enforcement moral damages;
or implementation of the sale violate the ban against forum-shopping?
4. Ordering the defendants, jointly and severally, to pay plaintiffs the
Simply stated, these are the major questions brought before this Court in the sum of P100,000.00 as exemplary damages ;
instant Petition for review oncertiorari under Rule 45 of the Rules of Court, to
set aside the Decision promulgated January 14, 1994 of the respondent Court 5. Ordering the defendants, jointly and severally, to pay the plaintiffs
of Appeals1 in CA-G.R CV No. 35756 and the Resolution promulgated June the amount of P400,000.00 for and by way of attorney's fees;
14, 1994 denying the motion for reconsideration. The dispositive portion of the
said Decision reads:
6. Ordering the defendants to pay the plaintiffs, jointly and severally,
actual and moderate damages in the amount of P20,000.00;
WHEREFORE, the decision of the lower court is MODIFIED by the
elimination of the damages awarded under paragraphs 3, 4 and 6 of
With costs against the defendants.
its dispositive portion and the reduction of the award in paragraph 5
thereof to P75,000.00, to be assessed against defendant bank. In all
other aspects, said decision is hereby AFFIRMED.
After the parties filed their comment, reply, rejoinder, sur-rejoinder and reply made a formal purchase offer to the bank through a letter dated
to sur-rejoinder, the petition was given due course in a Resolution dated August 30, 1987 (Exh. "B"), as follows:
January 18, 1995. Thence, the parties filed their respective memoranda and
reply memoranda. The First Division transferred this case 30,
August to the Third Division
1987
per resolution dated October 23, 1995. After carefully deliberating on the
aforesaid submissions, the Court assigned the case to the
undersigned ponente for the writing of this Decision. The Producers Bank of the Philippines
Makati, Metro Manila
The Parties
Attn. Mr. Mercurio Q. Rivera
Petitioner First Philippine International Bank (formerly Producers Bank of the Manager, Property Management Dept.
Philippines; petitioner Bank, for brevity) is a banking institution organized and
existing under the laws of the Republic of the Philippines. Petitioner Mercurio Gentleman:
Rivera (petitioner Rivera, for brevity) is of legal age and was, at all times
material to this case, Head-Manager of the Property Management Department I have the honor to submit my formal offer to purchase your properties
of the petitioner Bank. covered by titles listed hereunder located at Sta. Rosa, Laguna, with
a total area of 101 hectares, more or less.
Respondent Carlos Ejercito (respondent Ejercito, for brevity) is of legal age
and is the assignee of original plaintiffs-appellees Demetrio Demetria and Jose TCT NO. AREA
Janolo.
T-106932 113,580 sq. m.
Respondent Court of Appeals is the court which issued the Decision and T-106933 70,899 sq. m.
Resolution sought to be set aside through this petition. T-106934 52,246 sq. m.
T-106935 96,768 sq. m.
The Facts
T-106936 187,114 sq. m.
The facts of this case are summarized in the respondent Court's Decision 3 as T-106937 481,481 sq. m.
follows:
My offer is for PESOS: THREE MILLION FIVE HUNDRED
(1) In the course of its banking operations, the defendant Producer THOUSAND (P3,500,000.00) PESOS, in cash.
Bank of the Philippines acquired six parcels of land with a total area
of 101 hectares located at Don Jose, Sta. Rose, Laguna, and covered Kindly contact me at Telephone Number 921-1344.
by Transfer Certificates of Title Nos. T-106932 to T-106937. The
property used to be owned by BYME Investment and Development
(3) On September 1, 1987, defendant Rivera made on behalf of the
Corporation which had them mortgaged with the bank as collateral for
bank a formal reply by letter which is hereunder quoted (Exh. "C"):
a loan. The original plaintiffs, Demetrio Demetria and Jose O. Janolo,
wanted to purchase the property and thus initiated negotiations for that
purpose. September 1, 1987

(2) In the early part of August 1987 said plaintiffs, upon the suggestion JP M-P GUTIERREZ ENTERPRISES
of BYME investment's legal counsel, Jose Fajardo, met with defendant 142 Charisma St., Doa Andres II
Mercurio Rivera, Manager of the Property Management Department Rosario, Pasig, Metro Manila
of the defendant bank. The meeting was held pursuant to plaintiffs'
plan to buy the property (TSN of Jan. 16, 1990, pp. 7-10). After the Attention: JOSE O. JANOLO
meeting, plaintiff Janolo, following the advice of defendant Rivera,
Dear Sir: Attention: Mr. Mercurio Rivera

Thank you for your letter-offer to buy our six (6) parcels of acquired Re: 101 Hectares of Land
lots at Sta. Rosa, Laguna (formerly owned by Byme Industrial Corp.). in Sta. Rosa, Laguna
Please be informed however that the bank's counter-offer is at P5.5
million for more than 101 hectares on lot basis. Gentlemen:

We shall be very glad to hear your position on the on the matter. Pursuant to our discussion last 28 September 1987, we are pleased
to inform you that we are accepting your offer for us to purchase the
Best regards. property at Sta. Rosa, Laguna, formerly owned by Byme Investment,
for a total price of PESOS: FIVE MILLION FIVE HUNDRED
(4) On September 17, 1987, plaintiff Janolo, responding to Rivera's THOUSAND (P5,500,000.00).
aforequoted reply, wrote (Exh. "D"):
Thank you.

(6) On October 12, 1987, the conservator of the bank (which has been
placed under conservatorship by the Central Bank since 1984) was
Producers Bank replaced by an Acting Conservator in the person of defendant Leonida
Paseo de Roxas T. Encarnacion. On November 4, 1987, defendant Rivera wrote
Makati, Metro Manila plaintiff Demetria the following letter (Exh. "F"):

Attention: Mr. Mercurio Rivera Attention: Atty. Demetrio Demetria

Gentlemen: Dear Sir:

In reply to your letter regarding my proposal to purchase your 101- Your proposal to buy the properties the bank foreclosed from Byme
hectare lot located at Sta. Rosa, Laguna, I would like to amend my investment Corp. located at Sta. Rosa, Laguna is under study yet as
previous offer and I now propose to buy the said lot at P4.250 million of this time by the newly created committee for submission to the
in CASH.. newly designated Acting Conservator of the bank.

Hoping that this proposal meets your satisfaction. For your information.

(5) There was no reply to Janolo's foregoing letter of September 17, (7) What thereafter transpired was a series of demands by the
1987. What took place was a meeting on September 28, 1987 plaintiffs for compliance by the bank with what plaintiff considered as
between the plaintiffs and Luis Co, the Senior Vice-President of a perfected contract of sale, which demands were in one form or
defendant bank. Rivera as well as Fajardo, the BYME lawyer, another refused by the bank. As detailed by the trial court in its
attended the meeting. Two days later, or on September 30, 1987, decision, on November 17, 1987, plaintiffs through a letter to
plaintiff Janolo sent to the bank, through Rivera, the following letter defendant Rivera (Exhibit "G") tendered payment of the amount of
(Exh. "E"): P5.5 million "pursuant to (our) perfected sale agreement." Defendants
refused to receive both the payment and the letter. Instead, the parcels
The Producers Bank of the Philippines of land involved in the transaction were advertised by the bank for sale
Paseo de Roxas, Makati to any interested buyer (Exh, "H" and "H-1"). Plaintiffs demanded the
Metro Manila execution by the bank of the documents on what was considered as a
"perfected agreement." Thus:
Mr. Mercurio Rivera Attn.: Atty. NIDA ENCARNACION
Manager, Producers Bank Central Bank Conservator
Paseo de Roxas, Makati
Metro Manila We are sending you herewith, in - behalf of our client, Mr. JOSE O.
JANOLO, MBTC Check No. 258387 in the amount of P5.5 million as
Dear Mr. Rivera: our agreed purchase price of the 101-hectare lot covered by TCT Nos.
106932, 106933, 106934, 106935, 106936 and 106937 and registered
This is in connection with the offer of our client, Mr. Jose O. Janolo, to under Producers Bank.
purchase your 101-hectare lot located in Sta. Rosa, Laguna, and
which are covered by TCT No. T-106932 to 106937. This is in connection with the perfected agreement consequent from
your offer of P5.5 Million as the purchase price of the said lots. Please
From the documents at hand, it appears that your counter-offer dated inform us of the date of documentation of the sale immediately.
September 1, 1987 of this same lot in the amount of P5.5 million was
accepted by our client thru a letter dated September 30, 1987 and was Kindly acknowledge receipt of our payment.
received by you on October 5, 1987.
(9) The foregoing letter drew no response for more than four months.
In view of the above circumstances, we believe that an agreement has Then, on May 3, 1988, plaintiff, through counsel, made a final demand
been perfected. We were also informed that despite repeated follow- for compliance by the bank with its obligations under the considered
up to consummate the purchase, you now refuse to honor your perfected contract of sale (Exhibit "N"). As recounted by the trial court
commitment. Instead, you have advertised for sale the same lot to (Original Record, p. 656), in a reply letter dated May 12, 1988 (Annex
others. "4" of defendant's answer to amended complaint), the defendants
through Acting Conservator Encarnacion repudiated the authority of
In behalf of our client, therefore, we are making this formal demand defendant Rivera and claimed that his dealings with the plaintiffs,
upon you to consummate and execute the necessary particularly his counter-offer of P5.5 Million are unauthorized or illegal.
actions/documentation within three (3) days from your receipt hereof. On that basis, the defendants justified the refusal of the tenders of
We are ready to remit the agreed amount of P5.5 million at your payment and the non-compliance with the obligations under what the
advice. Otherwise, we shall be constrained to file the necessary court plaintiffs considered to be a perfected contract of sale.
action to protect the interest of our client.
(10) On May 16, 1988, plaintiffs filed a suit for specific performance
We trust that you will be guided accordingly. with damages against the bank, its Manager Rivers and Acting
Conservator Encarnacion. The basis of the suit was that the
(8) Defendant bank, through defendant Rivera, acknowledged receipt transaction had with the bank resulted in a perfected contract of sale,
of the foregoing letter and stated, in its communication of December The defendants took the position that there was no such perfected
sale because the defendant Rivera is not authorized to sell the
2, 1987 (Exh. "I"), that said letter has been "referred . . . to the office
property, and that there was no meeting of the minds as to the price.
of our Conservator for proper disposition" However, no response
came from the Acting Conservator. On December 14, 1987, the
plaintiffs made a second tender of payment (Exh. "L" and "L-1"), this On March 14, 1991, Henry L. Co (the brother of Luis Co), through
time through the Acting Conservator, defendant Encarnacion. counsel Sycip Salazar Hernandez and Gatmaitan, filed a motion to
Plaintiffs' letter reads: intervene in the trial court, alleging that as owner of 80% of the Bank's
outstanding shares of stock, he had a substantial interest in resisting
the complaint. On July 8, 1991, the trial court issued an order denying
PRODUCERS BANK OF
the motion to intervene on the ground that it was filed after trial had
THE PHILIPPINES
Paseo de Roxas, already been concluded. It also denied a motion for reconsideration
Makati, Metro Manila filed thereafter. From the trial court's decision, the Bank, petitioner
Rivera and conservator Encarnacion appealed to the Court of Appeals
which subsequently affirmed with modification the said judgment. The findings and conclusions of the Court of Appeals do not conform
Henry Co did not appeal the denial of his motion for intervention.
to the evidence on record.
In the course of the proceedings in the respondent Court, Carlos Ejercito was
substituted in place of Demetria and Janolo, in view of the assignment of the On the other hand, petitioners prayed for dismissal of the instant suit on the
latters' rights in the matter in litigation to said private respondent. ground8 that:

On July 11, 1992, during the pendency of the proceedings in the Court of I.
Appeals, Henry Co and several other stockholders of the Bank, through
Petitioners have engaged in forum shopping.
counsel Angara Abello Concepcion Regala and Cruz, filed an action
(hereafter, the "Second Case") purportedly a "derivative suit" with the II.
Regional Trial Court of Makati, Branch 134, docketed as Civil Case No. 92-
The factual findings and conclusions of the Court of Appeals are
1606, against Encarnacion, Demetria and Janolo "to declare any perfected
sale of the property as unenforceable and to stop Ejercito from enforcing or supported by the evidence on record and may no longer be
implementing the sale"4 In his answer, Janolo argued that the Second Case
questioned in this case.
was barred by litis pendentia by virtue of the case then pending in the Court of
Appeals. During the pre-trial conference in the Second Case, plaintiffs filed a III.
Motion for Leave of Court to Dismiss the Case Without Prejudice. "Private
The Court of Appeals correctly held that there was a perfected
respondent opposed this motion on the ground, among others, that plaintiff's
act of forum shopping justifies the dismissal of both cases, with contract between Demetria and Janolo (substituted by; respondent
prejudice."5 Private respondent, in his memorandum, averred that this motion
Ejercito) and the bank.
is still pending in the Makati RTC.
IV.
In their Petition6 and Memorandum7, petitioners summarized their position as The Court of Appeals has correctly held that the conservator, apart
follows:
from being estopped from repudiating the agency and the contract,
I. has no authority to revoke the contract of sale.
The Court of Appeals erred in declaring that a contract of sale was
perfected between Ejercito (in substitution of Demetria and Janolo) The Issues
and the bank.
From the foregoing positions of the parties, the issues in this case may be
II. summed up as follows:
The Court of Appeals erred in declaring the existence of an
1) Was there forum-shopping on the part of petitioner Bank?
enforceable contract of sale between the parties.
III. 2) Was there a perfected contract of sale between the parties?
The Court of Appeals erred in declaring that the conservator does
3) Assuming there was, was the said contract enforceable under the
not have the power to overrule or revoke acts of previous statute of frauds?
management.
4) Did the bank conservator have the unilateral power to repudiate the
IV. authority of the bank officers and/or to revoke the said contract?
5) Did the respondent Court commit any reversible error in its findings We rule for private respondent.
of facts?
To begin with, forum-shopping originated as a concept in private international
The First Issue: Was There Forum-Shopping? law.12, where non-resident litigants are given the option to choose the forum
or place wherein to bring their suit for various reasons or excuses, including to
In order to prevent the vexations of multiple petitions and actions, the Supreme secure procedural advantages, to annoy and harass the defendant, to avoid
Court promulgated Revised Circular No. 28-91 requiring that a party "must overcrowded dockets, or to select a more friendly venue. To combat these less
certify under oath . . . [that] (a) he has not (t)heretofore commenced any other than honorable excuses, the principle of forum non conveniens was developed
action or proceeding involving the same issues in the Supreme Court, the whereby a court, in conflicts of law cases, may refuse impositions on its
Court of Appeals, or any other tribunal or agency; (b) to the best of his jurisdiction where it is not the most "convenient" or available forum and the
knowledge, no such action or proceeding is pending" in said courts or parties are not precluded from seeking remedies elsewhere.
agencies. A violation of the said circular entails sanctions that include the
summary dismissal of the multiple petitions or complaints. To be sure, In this light, Black's Law Dictionary 13 says that forum shopping "occurs when
petitioners have included a VERIFICATION/CERTIFICATION in their Petition a party attempts to have his action tried in a particular court or jurisdiction
stating "for the record(,) the pendency of Civil Case No. 92-1606 before the where he feels he will receive the most favorable judgment or verdict." Hence,
Regional Trial Court of Makati, Branch 134, involving a derivative suit filed by according to Words and Phrases14, "a litigant is open to the charge of "forum
stockholders of petitioner Bank against the conservator and other defendants shopping" whenever he chooses a forum with slight connection to factual
but which is the subject of a pending Motion to Dismiss Without Prejudice. 9 circumstances surrounding his suit, and litigants should be encouraged to
attempt to settle their differences without imposing undue expenses and
Private respondent Ejercito vigorously argues that in spite of this verification, vexatious situations on the courts".
petitioners are guilty of actual forum shopping because the instant petition
pending before this Court involves "identical parties or interests represented, In the Philippines, forum shopping has acquired a connotation encompassing
rights asserted and reliefs sought (as that) currently pending before the not only a choice of venues, as it was originally understood in conflicts of laws,
Regional Trial Court, Makati Branch 134 in the Second Case. In fact, the but also to a choice of remedies. As to the first (choice of venues), the Rules
issues in the two cases are so interwined that a judgement or resolution in of Court, for example, allow a plaintiff to commence personal actions "where
either case will constitute res judicata in the other." 10 the defendant or any of the defendants resides or may be found, or where the
plaintiff or any of the plaintiffs resides, at the election of the plaintiff" (Rule 4,
On the other hand, petitioners explain 11 that there is no forum-shopping Sec, 2 [b]). As to remedies, aggrieved parties, for example, are given a choice
because: of pursuing civil liabilities independently of the criminal, arising from the same
set of facts. A passenger of a public utility vehicle involved in a vehicular
accident may sue on culpa contractual, culpa aquiliana or culpa criminal
1) In the earlier or "First Case" from which this proceeding arose, the
Bank was impleaded as a defendant, whereas in the "Second Case" each remedy being available independently of the others although he
cannot recover more than once.
(assuming the Bank is the real party in interest in a derivative suit), it
wasplaintiff;
In either of these situations (choice of venue or choice of remedy), the
litigant actually shops for a forum of his action, This was the original
2) "The derivative suit is not properly a suit for and in behalf of the
concept of the term forum shopping.
corporation under the circumstances";

3) Although the CERTIFICATION/VERIFICATION (supra) signed by Eventually, however, instead of actually making a choice of the forum
of their actions, litigants, through the encouragement of their lawyers,
the Bank president and attached to the Petition identifies the action as
file their actions in all available courts, or invoke all relevant remedies
a "derivative suit," it "does not mean that it is one" and "(t)hat is a legal
simultaneously. This practice had not only resulted to (sic) conflicting
question for the courts to decide";
adjudications among different courts and consequent confusion
enimical (sic) to an orderly administration of justice. It had created
4) Petitioners did not hide the Second Case at they mentioned it in the extreme inconvenience to some of the parties to the action.
said VERIFICATION/CERTIFICATION.
Thus, "forum shopping" had acquired a different concept which is As already observed, there is between the action at bar and RTC Case
unethical professional legal practice. And this necessitated or had No. 86-36563, an identity as regards parties, or interests represented,
given rise to the formulation of rules and canons discouraging or rights asserted and relief sought, as well as basis thereof, to a degree
altogether prohibiting the practice. 15 sufficient to give rise to the ground for dismissal known as auter action
pendant or lis pendens. That same identity puts into operation the
What therefore originally started both in conflicts of laws and in our domestic sanction of twin dismissals just mentioned. The application of this
law as a legitimate device for solving problems has been abused and mis-used sanction will prevent any further delay in the settlement of the
to assure scheming litigants of dubious reliefs. controversy which might ensue from attempts to seek reconsideration
of or to appeal from the Order of the Regional Trial Court in Civil Case
No. 86-36563 promulgated on July 15, 1986, which dismissed the
To avoid or minimize this unethical practice of subverting justice, the Supreme
petition upon grounds which appear persuasive.
Court, as already mentioned, promulgated Circular 28-91. And even before
that, the Court had prescribed it in the Interim Rules and Guidelines issued on
January 11, 1983 and had struck down in several cases 16 the inveterate use Consequently, where a litigant (or one representing the same interest or
of this insidious malpractice. Forum shopping as "the filing of repetitious suits person) sues the same party against whom another action or actions for the
in different courts" has been condemned by Justice Andres R. Narvasa (now alleged violation of the same right and the enforcement of the same relief is/are
Chief Justice) in Minister of Natural Resources, et al., vs. Heirs of Orval still pending, the defense of litis pendencia in one case is bar to the others;
Hughes, et al.,"as a reprehensible manipulation of court processes and and, a final judgment in one would constitute res judicata and thus would cause
proceedings . . ." 17 when does forum shopping take place? the dismissal of the rest. In either case, forum shopping could be cited by the
other party as a ground to ask for summary dismissal of the two 20 (or more)
There is forum-shopping whenever, as a result of an adverse opinion complaints or petitions, and for imposition of the other sanctions, which are
direct contempt of court, criminal prosecution, and disciplinary action against
in one forum, a party seeks a favorable opinion (other than by appeal
or certiorari) in another. The principle applies not only with respect to the erring lawyer.
suits filed in the courts but also in connection with litigations
commenced in the courts while an administrative proceeding is Applying the foregoing principles in the case before us and comparing it with
pending, as in this case, in order to defeat administrative processes the Second Case, it is obvious that there exist identity of parties or interests
and in anticipation of an unfavorable administrative ruling and a represented, identity of rights or causes and identity of reliefs sought.
favorable court ruling. This is specially so, as in this case, where the
court in which the second suit was brought, has no jurisdiction.18 Very simply stated, the original complaint in the court a quo which gave rise to
the instant petition was filed by the buyer (herein private respondent and his
The test for determining whether a party violated the rule against forum predecessors-in-interest) against the seller (herein petitioners) to enforce the
shopping has been laid dawn in the 1986 case of Buan vs. Lopez 19, also by alleged perfected sale of real estate. On the other hand, the complaint 21 in the
Chief Justice Narvasa, and that is, forum shopping exists where the elements Second Case seeks to declare such purported sale involving the same real
of litis pendentia are present or where a final judgment in one case will amount property "as unenforceable as against the Bank", which is the petitioner herein.
to res judicata in the other, as follows: In other words, in the Second Case, the majority stockholders, in
representation of the Bank, are seeking to accomplish what the Bank itself
failed to do in the original case in the trial court. In brief, the objective or the
There thus exists between the action before this Court and RTC Case
relief being sought, though worded differently, is the same, namely, to enable
No. 86-36563 identity of parties, or at least such parties as represent
the petitioner Bank to escape from the obligation to sell the property to
the same interests in both actions, as well as identity of rights asserted
respondent. In Danville Maritime, Inc. vs. Commission on Audit. 22, this Court
and relief prayed for, the relief being founded on the same facts, and
the identity on the two preceding particulars is such that any judgment ruled that the filing by a party of two apparently different actions, but with
the same objective,constituted forum shopping:
rendered in the other action, will, regardless of which party is
successful, amount to res adjudicata in the action under consideration:
all the requisites, in fine, of auter action pendant. In the attempt to make the two actions appear to be different, petitioner
impleaded different respondents therein PNOC in the case before
xxx xxx xxx the lower court and the COA in the case before this Court and sought
what seems to be different reliefs. Petitioner asks this Court to set
aside the questioned letter-directive of the COA dated October 10, Firstly, they are not suing in their personal capacities, for they have no direct
1988 and to direct said body to approve the Memorandum of personal interest in the matter in controversy. They are not principally or even
Agreement entered into by and between the PNOC and petitioner, subsidiarily liable; much less are they direct parties in the assailed contract of
while in the complaint before the lower court petitioner seeks to enjoin sale; and
the PNOC from conducting a rebidding and from selling to other
parties the vessel "T/T Andres Bonifacio", and for an extension of time Secondly, the allegations of the complaint in the Second Case show that the
for it to comply with the paragraph 1 of the memorandum of agreement stockholders are bringing a "derivative suit". In the caption itself, petitioners
and damages. One can see that although the relief prayed for in the claim to have brought suit "for and in behalf of the Producers Bank of the
two (2) actions are ostensibly different, the ultimate objective in both Philippines" 24. Indeed, this is the very essence of a derivative suit:
actions is the same, that is, approval of the sale of vessel in favor of
petitioner and to overturn the letter-directive of the COA of October 10,
An individual stockholder is permitted to institute a derivative suit on
1988 disapproving the sale. (emphasis supplied).
behalf of the corporation wherein he holdsstock in order to protect or
vindicate corporate rights, whenever the officials of the corporation
In an earlier case 23 but with the same logic and vigor, we held: refuse to sue, or are the ones to be sued or hold the control of the
corporation. In such actions, the suing stockholder is regarded as a
In other words, the filing amended by the petitioners of the instant nominal party, with the corporation as the real party in interest.
special civil action for certiorari and prohibition in this Court despite (Gamboa v. Victoriano, 90 SCRA 40, 47 [1979]; emphasis supplied).
the pendency of their action in the Makati Regional Trial Court, is a
species of forum-shopping. Both actions unquestionably involve the In the face of the damaging admissions taken from the complaint in the Second
same transactions, the same essential facts and circumstances. The Case, petitioners, quite strangely, sought to deny that the Second Case was a
petitioners' claim of absence of identity simply because the PCGG had derivative suit, reasoning that it was brought, not by the minority shareholders,
not been impleaded in the RTC suit, and the suit did not involve certain but by Henry Co et al., who not only own, hold or control over 80% of the
acts which transpired after its commencement, is specious. In the RTC outstanding capital stock, but also constitute the majority in the Board of
action, as in the action before this Court, the validity of the contract to Directors of petitioner Bank. That being so, then they really represent the Bank.
purchase and sell of September 1, 1986, i.e., whether or not it had So, whether they sued "derivatively" or directly, there is undeniably an identity
been efficaciously rescinded, and the propriety of implementing the of interests/entity represented.
same (by paying the pledgee banks the amount of their loans,
obtaining the release of the pledged shares, etc.) were the basic
Petitioner also tried to seek refuge in the corporate fiction that the personality
issues. So, too, the relief was the same: the prevention of such Of the Bank is separate and distinct from its shareholders. But the rulings of
implementation and/or the restoration of the status quo ante. When
this Court are consistent: "When the fiction is urged as a means of perpetrating
the acts sought to be restrained took place anyway despite the
a fraud or an illegal act or as a vehicle for the evasion of an existing obligation,
issuance by the Trial Court of a temporary restraining order, the RTC
the circumvention of statutes, the achievement or perfection of a monopoly or
suit did not become functus oficio. It remained an effective vehicle for
generally the perpetration of knavery or crime, the veil with which the law
obtention of relief; and petitioners' remedy in the premises was plain
covers and isolates the corporation from the members or stockholders who
and patent: the filing of an and supplemental pleading in the RTC suit, compose it will be lifted to allow for its consideration merely as an aggregation
so as to include the PCGG as defendant and seek nullification of the of individuals." 25
acts sought to be enjoined but nonetheless done. The remedy was
certainly not the institution of another action in another forum based
on essentially the same facts, The adoption of this latter recourse In addition to the many cases 26 where the corporate fiction has been
renders the petitioners amenable to disciplinary action and both their disregarded, we now add the instant case, and declare herewith that the
actions, in this Court as well as in the Court a quo, dismissible. corporate veil cannot be used to shield an otherwise blatant violation of the
prohibition against forum-shopping. Shareholders, whether suing as the
majority in direct actions or as the minority in a derivative suit, cannot be
In the instant case before us, there is also identity of parties, or at least, of
allowed to trifle with court processes, particularly where, as in this case, the
interests represented. Although the plaintiffs in the Second Case (Henry L. Co.
corporation itself has not been remiss in vigorously prosecuting or defending
et al.) are not name parties in the First Case, they represent the same interest
corporate causes and in using and applying remedies available to it. To rule
and entity, namely, petitioner Bank, because:
otherwise would be to encourage corporate litigants to use their shareholders The foregoing conclusion finding the existence of forum-shopping
as fronts to circumvent the stringent rules against forum shopping. notwithstanding, the only sanction possible now is the dismissal of both cases
with prejudice, as the other sanctions cannot be imposed because petitioners'
Finally, petitioner Bank argued that there cannot be any forum shopping, even present counsel entered their appearance only during the proceedings in this
assuming arguendo that there is identity of parties, causes of action and reliefs Court, and the Petition's VERIFICATION/CERTIFICATION contained
sought, "because it (the Bank) was the defendant in the (first) case while it was sufficient allegations as to the pendency of the Second Case to show good
the plaintiff in the other (Second Case)",citing as authority Victronics faith in observing Circular 28-91. The Lawyers who filed the Second Case are
Computers, Inc., vs. Regional Trial Court, Branch 63, Makati, etc. et not before us; thus the rudiments of due process prevent us from motu
al., 27 where Court held: propio imposing disciplinary measures against them in this Decision. However,
petitioners themselves (and particularly Henry Co, et al.) as litigants are
admonished to strictly follow the rules against forum-shopping and not to trifle
The rule has not been extended to a defendant who, for reasons
with court proceedings and processes They are warned that a repetition of the
known only to him, commences a new action against the plaintiff
instead of filing a responsive pleading in the other case setting same will be dealt with more severely.
forth therein, as causes of action, specific denials, special and
affirmative defenses or even counterclaims, Thus, Velhagen's and Having said that, let it be emphasized that this petition should be dismissed
King's motion to dismiss Civil Case No. 91-2069 by no means negates not merely because of forum-shopping but also because of the substantive
the charge of forum-shopping as such did not exist in the first place. issues raised, as will be discussed shortly.
(emphasis supplied)
The Second Issue: Was The Contract Perfected?
Petitioner pointed out that since it was merely the defendant in the original
case, it could not have chosen the forum in said case. The respondent Court correctly treated the question of whether or not there
was, on the basis of the facts established, a perfected contract of sale as the
Respondent, on the other hand, replied that there is a difference in factual ultimate issue. Holding that a valid contract has been established, respondent
setting between Victronics and the present suit. In the former, as underscored Court stated:
in the above-quoted Court ruling, the defendants did not file anyresponsive
pleading in the first case. In other words, they did not make any denial or raise There is no dispute that the object of the transaction is that property
any defense or counter-claim therein In the case before us however, owned by the defendant bank as acquired assets consisting of six (6)
petitioners filed a responsive pleading to the complaint as a result of which, parcels of land specifically identified under Transfer Certificates of
the issues were joined. Title Nos. T-106932 to T-106937. It is likewise beyond cavil that the
bank intended to sell the property. As testified to by the Bank's Deputy
Indeed, by praying for affirmative reliefs and interposing counterclaims in Conservator, Jose Entereso, the bank was looking for buyers of the
their responsive pleadings, the petitioners became plaintiffs themselves in the property. It is definite that the plaintiffs wanted to purchase the
original case, giving unto themselves the very remedies they repeated in the property and it was precisely for this purpose that they met with
Second Case. defendant Rivera, Manager of the Property Management Department
of the defendant bank, in early August 1987. The procedure in the sale
of acquired assets as well as the nature and scope of the authority of
Ultimately, what is truly important to consider in determining whether forum-
Rivera on the matter is clearly delineated in the testimony of Rivera
shopping exists or not is the vexation caused the courts and parties-litigant by
himself, which testimony was relied upon by both the bank and by
a party who asks different courts and/or administrative agencies to rule on the
same or related causes and/or to grant the same or substantially the same Rivera in their appeal briefs. Thus (TSN of July 30, 1990. pp. 19-20):
reliefs, in the process creating the possibility of conflicting decisions being
rendered by the different fora upon the same issue. In this case, this is exactly A: The procedure runs this way: Acquired assets was turned
the problem: a decision recognizing the perfection and directing the over to me and then I published it in the form of an inter-office
enforcement of the contract of sale will directly conflict with a possible decision memorandum distributed to all branches that these are
in the Second Case barring the parties front enforcing or implementing the said acquired assets for sale. I was instructed to advertise acquired
sale. Indeed, a final decision in one would constitute res judicata in the other 28. assets for sale so on that basis, I have to entertain offer; to
accept offer, formal offer and upon having been offered, I "Parenthetically, the Committee referred to was the Past Due
present it to the Committee. I provide the Committee with Committee of which Luis Co was the Head, with Jose Entereso as one
necessary information about the property such as original of the members.
loan of the borrower, bid price during the foreclosure, total
claim of the bank, the appraised value at the time the property What transpired after the meeting of early August 1987 are consistent
is being offered for sale and then the information which are with the authority and the duties of Rivera and the bank's internal
relative to the evaluation of the bank to buy which the procedure in the matter of the sale of bank's assets. As advised by
Committee considers and it is the Committee that evaluate as Rivera, the plaintiffs made a formal offer by a letter dated August 20,
against the exposure of the bank and it is also the Committee 1987 stating that they would buy at the price of P3.5 Million in cash.
that submit to the Conservator for final approval and once The letter was for the attention of Mercurio Rivera who was tasked to
approved, we have to execute the deed of sale and it is the convey and accept such offers. Considering an aspect of the official
Conservator that sign the deed of sale, sir. duty of Rivera as some sort of intermediary between the plaintiffs-
buyers with their proposed buying price on one hand, and the bank
The plaintiffs, therefore, at that meeting of August 1987 regarding their Committee, the Conservator and ultimately the bank itself with the set
purpose of buying the property, dealt with and talked to the right price on the other, and considering further the discussion of price at
person. Necessarily, the agenda was the price of the property, and the meeting of August resulting in a formal offer of P3.5 Million in cash,
plaintiffs were dealing with the bank official authorized to entertain there can be no other logical conclusion than that when, on September
offers, to accept offers and to present the offer to the Committee 1, 1987, Rivera informed plaintiffs by letter that "the bank's counter-
before which the said official is authorized to discuss information offer is at P5.5 Million for more than 101 hectares on lot basis," such
relative to price determination. Necessarily, too, it being inherent in his counter-offer price had been determined by the Past Due Committee
authority, Rivera is the officer from whom official information regarding and approved by the Conservator after Rivera had duly presented
the price, as determined by the Committee and approved by the plaintiffs' offer for discussion by the Committee of such matters as
Conservator, can be had. And Rivera confirmed his authority when he original loan of borrower, bid price during foreclosure, total claim of the
talked with the plaintiff in August 1987. The testimony of plaintiff bank, and market value. Tersely put, under the established facts, the
Demetria is clear on this point (TSN of May 31,1990, pp. 27-28): price of P5.5 Million was, as clearly worded in Rivera's letter (Exh.
"E"), the official and definitive price at which the bank was selling the
Q: When you went to the Producers Bank and talked with Mr. property.
Mercurio Rivera, did you ask him point-blank his authority to
sell any property? There were averments by defendants below, as well as before this
Court, that the P5.5 Million price was not discussed by the Committee
A: No, sir. Not point blank although it came from him, (W)hen and that price. As correctly characterized by the trial court, this is not
I asked him how long it would take because he was saying credible. The testimonies of Luis Co and Jose Entereso on this point
that the matter of pricing will be passed upon by the are at best equivocal and considering the gratuitous and self-serving
committee. And when I asked him how long it will take for the character of these declarations, the bank's submission on this point
committee to decide and he said the committee meets every does not inspire belief. Both Co ad Entereso, as members of the Past
week. If I am not mistaken Wednesday and in about two Due Committee of the bank, claim that the offer of the plaintiff was
week's (sic) time, in effect what he was saying he was not the never discussed by the Committee. In the same vein, both Co and
one who was to decide. But he would refer it to the committee Entereso openly admit that they seldom attend the meetings of the
and he would relay the decision of the committee to me. Committee. It is important to note that negotiations on the price had
started in early August and the plaintiffs had already offered an
Q Please answer the question. amount as purchase price, having been made to understand by
Rivera, the official in charge of the negotiation, that the price will be
submitted for approval by the bank and that the bank's decision will be
A He did not say that he had the authority (.) But he said relayed to plaintiffs. From the facts, the official bank price. At any rate,
he would refer the matter to the committee and he would relay the bank placed its official, Rivera, in a position of authority to accept
the decision to me and he did just like that. offers to buy and negotiate the sale by having the offer officially acted
upon by the bank. The bank cannot turn around and later say, as it The authority of a corporate officer in dealing with third persons may be actual
now does, that what Rivera states as the bank's action on the matter or apparent. The doctrine of "apparent authority", with special reference to
is not in fact so. It is a familiar doctrine, the doctrine of ostensible banks, was laid out in Prudential Bank vs. Court of Appeals31, where it was
authority, that if a corporation knowingly permits one of its officers, or held that:
any other agent, to do acts within the scope of an apparent authority,
and thus holds him out to the public as possessing power to do those Conformably, we have declared in countless decisions that the
acts, the corporation will, as against any one who has in good faith principal is liable for obligations contracted by the agent. The agent's
dealt with the corporation through such agent, he estopped from apparent representation yields to the principal's true representation
denying his authority (Francisco v. GSIS, 7 SCRA 577, 583-584; PNB and the contract is considered as entered into between the principal
v. Court of Appeals, 94 SCRA 357, 369-370; Prudential Bank v. Court and the third person (citing National Food Authority vs. Intermediate
of Appeals, G.R. No. 103957, June 14, 1993). 29 Appellate Court, 184 SCRA 166).

Article 1318 of the Civil Code enumerates the requisites of a valid and A bank is liable for wrongful acts of its officers done in the
perfected contract as follows: "(1) Consent of the contracting parties; (2) interests of the bank or in the course of dealings of the officers
Object certain which is the subject matter of the contract; (3) Cause of the in their representative capacity but not for acts outside the
obligation which is established." scape of their authority (9 C.J.S., p. 417). A bank holding out
its officers and agents as worthy of confidence will not be
There is no dispute on requisite no. 2. The object of the questioned contract permitted to profit by the frauds they may thus be enabled to
consists of the six (6) parcels of land in Sta. Rosa, Laguna with an aggregate perpetrate in the apparent scope of their employment; nor will
area of about 101 hectares, more or less, and covered by Transfer Certificates it be permitted to shirk its responsibility for such frauds even
of Title Nos. T-106932 to T-106937. There is, however, a dispute on the first though no benefit may accrue to the bank therefrom (10 Am
and third requisites. Jur 2d, p. 114). Accordingly, a banking corporation is liable to
innocent third persons where the representation is made in
Petitioners allege that "there is no counter-offer made by the Bank, and any the course of its business by an agent acting within the
supposed counter-offer which Rivera (or Co) may have made is unauthorized. general scope of his authority even though, in the particular
Since there was no counter-offer by the Bank, there was nothing for Ejercito case, the agent is secretly abusing his authority and
(in substitution of Demetria and Janolo) to accept." 30 They disputed the factual attempting to perpetrate a fraud upon his principal or some
basis of the respondent Court's findings that there was an offer made by Janolo other person, for his own ultimate benefit (McIntosh v. Dakota
for P3.5 million, to which the Bank counter-offered P5.5 million. We have Trust Co., 52 ND 752, 204 NW 818, 40 ALR 1021).
perused the evidence but cannot find fault with the said Court's findings of fact.
Verily, in a petition under Rule 45 such as this, errors of fact if there be any Application of these principles is especially necessary because banks
- are, as a rule, not reviewable. The mere fact that respondent Court (and the have a fiduciary relationship with the public and their stability depends
trial court as well) chose to believe the evidence presented by respondent on the confidence of the people in their honesty and efficiency. Such
more than that presented by petitioners is not by itself a reversible error. In faith will be eroded where banks do not exercise strict care in the
fact, such findings merit serious consideration by this Court, particularly where, selection and supervision of its employees, resulting in prejudice to
as in this case, said courts carefully and meticulously discussed their findings. their depositors.
This is basic.
From the evidence found by respondent Court, it is obvious that petitioner
Be that as it may, and in addition to the foregoing disquisitions by the Court of Rivera has apparent or implied authority to act for the Bank in the matter of
Appeals, let us review the question of Rivera's authority to act and petitioner's selling its acquired assets. This evidence includes the following:
allegations that the P5.5 million counter-offer was extinguished by the P4.25
million revised offer of Janolo. Here, there are questions of law which could be (a) The petition itself in par. II-i (p. 3) states that Rivera was "at all
drawn from the factual findings of the respondent Court. They also delve into times material to this case, Manager of the Property Management
the contractual elements of consent and cause. Department of the Bank". By his own admission, Rivera was already
the person in charge of the Bank's acquired assets (TSN, August 6, respondent cannot be charged with knowledge. In any event, since the issue
1990, pp. 8-9); is apparent authority, the existence of which is borne out by the respondent
Court's findings, the evidence of actual authority is immaterial insofar as the
(b) As observed by respondent Court, the land was definitely being liability of a corporation is concerned 33.
sold by the Bank. And during the initial meeting between the buyers
and Rivera, the latter suggested that the buyers' offer should be no Petitioners also argued that since Demetria and Janolo were experienced
less than P3.3 million (TSN, April 26, 1990, pp. 16-17); lawyers and their "law firm" had once acted for the Bank in three criminal
cases, they should be charged with actual knowledge of Rivera's limited
(c) Rivera received the buyers' letter dated August 30, 1987 offering authority. But the Court of Appeals in its Decision (p. 12) had already made a
P3.5 million (TSN, 30 July 1990, p.11); factual finding that the buyers had no notice of Rivera's actual authority prior
to the sale. In fact, the Bank has not shown that they acted as its counsel in
respect to any acquired assets; on the other hand, respondent has proven that
(d) Rivera signed the letter dated September 1, 1987 offering to sell
the property for P5.5 million (TSN, July 30, p. 11); Demetria and Janolo merely associated with a loose aggrupation of lawyers
(not a professional partnership), one of whose members (Atty. Susana Parker)
acted in said criminal cases.
(e) Rivera received the letter dated September 17, 1987 containing
the buyers' proposal to buy the property for P4.25 million (TSN, July
Petitioners also alleged that Demetria's and Janolo's P4.25 million counter-
30, 1990, p. 12);
offer in the letter dated September 17, 1987 extinguished the Bank's offer of
P5.5 million 34 .They disputed the respondent Court's finding that "there was a
(f) Rivera, in a telephone conversation, confirmed that the P5.5 million meeting of minds when on 30 September 1987 Demetria and Janolo through
was the final price of the Bank (TSN, January 16, 1990, p. 18); Annex "L" (letter dated September 30, 1987) "accepted" Rivera's counter offer
of P5.5 million under Annex "J" (letter dated September 17, 1987)", citing the
(g) Rivera arranged the meeting between the buyers and Luis Co on late Justice Paras35, Art. 1319 of the Civil Code 36 and related Supreme Court
September 28, 1994, during which the Bank's offer of P5.5 million was rulings starting with Beaumont vs. Prieto 37.
confirmed by Rivera (TSN, April 26, 1990, pp. 34-35). At said meeting,
Co, a major shareholder and officer of the Bank, confirmed Rivera's However, the above-cited authorities and precedents cannot apply in the
statement as to the finality of the Bank's counter-offer of P5.5 million instant case because, as found by the respondent Court which reviewed the
(TSN, January 16, 1990, p. 21; TSN, April 26, 1990, p. 35); testimonies on this point, what was "accepted" by Janolo in his letter dated
September 30, 1987 was the Bank's offer of P5.5 million as confirmed and
(h) In its newspaper advertisements and announcements, the Bank reiterated to Demetria and Atty. Jose Fajardo by Rivera and Co during their
referred to Rivera as the officer acting for the Bank in relation to parties meeting on September 28, 1987. Note that the said letter of September 30,
interested in buying assets owned/acquired by the Bank. In fact, 1987 begins with"(p)ursuant to our discussion last 28 September 1987 . . .
Rivera was the officer mentioned in the Bank's advertisements offering
for sale the property in question (cf. Exhs. "S" and "S-1"). Petitioners insist that the respondent Court should have believed the
testimonies of Rivera and Co that the September 28, 1987 meeting "was
In the very recent case of Limketkai Sons Milling, Inc. vs. Court of Appeals, meant to have the offerors improve on their position of P5.5.
et. al.32, the Court, through Justice Jose A. R. Melo, affirmed the doctrine of million."38However, both the trial court and the Court of Appeals found
apparent authority as it held that the apparent authority of the officer of the petitioners' testimonial evidence "not credible", and we find no basis for
Bank of P.I. in charge of acquired assets is borne out by similar circumstances changing this finding of fact.
surrounding his dealings with buyers.
Indeed, we see no reason to disturb the lower courts' (both the RTC and the
To be sure, petitioners attempted to repudiate Rivera's apparent authority CA) common finding that private respondents' evidence is more in keeping
through documents and testimony which seek to establish with truth and logic that during the meeting on September 28, 1987, Luis
Rivera's actual authority. These pieces of evidence, however, are inherently Co and Rivera "confirmed that the P5.5 million price has been passed upon by
weak as they consist of Rivera's self-serving testimony and various inter-office the Committee and could no longer be lowered (TSN of April 27, 1990, pp. 34-
memoranda that purport to show his limited actual authority, of which private
35)"39. Hence, assuming arguendo that the counter-offer of P4.25 million already in the record and as appreciated by the lower courts, the inevitable
extinguished the offer of P5.5 million, Luis Co's reiteration of the said P5.5 conclusion is simply that there was a perfected contract of sale.
million price during the September 28, 1987 meeting revived the said offer.
And by virtue of the September 30, 1987 letter accepting thisrevived offer, The Third Issue: Is the Contract Enforceable?
there was a meeting of the minds, as the acceptance in said letter was
absolute and unqualified.
The petition alleged42:

We note that the Bank's repudiation, through Conservator Encarnacion, of Even assuming that Luis Co or Rivera did relay a verbal offer to sell at
Rivera's authority and action, particularly the latter's counter-offer of P5.5
P5.5 million during the meeting of 28 September 1987, and it was this
million, as being "unauthorized and illegal" came only on May 12, 1988 or more
verbal offer that Demetria and Janolo accepted with their letter of 30
than seven (7) months after Janolo' acceptance. Such delay, and the absence
September 1987, the contract produced thereby would be
of any circumstance which might have justifiably prevented the Bank from
unenforceable by action there being no note, memorandum or
acting earlier, clearly characterizes the repudiation as nothing more than a last- writing subscribed by the Bank to evidence such contract. (Please see
minute attempt on the Bank's part to get out of a binding contractual obligation. article 1403[2], Civil Code.)

Taken together, the factual findings of the respondent Court point to an implied
Upon the other hand, the respondent Court in its Decision (p, 14) stated:
admission on the part of the petitioners that the written offer made on
September 1, 1987 was carried through during the meeting of September 28,
1987. This is the conclusion consistent with human experience, truth and good . . . Of course, the bank's letter of September 1, 1987 on the official
faith. price and the plaintiffs' acceptance of the price on September 30,
1987, are not, in themselves, formal contracts of sale. They are
however clear embodiments of the fact that a contract of sale was
It also bears noting that this issue of extinguishment of the Bank's offer of P5.5
perfected between the parties, such contract being binding in
million was raised for the first time on appeal and should thus be disregarded. whatever form it may have been entered into (case citations omitted).
Stated simply, the banks' letter of September 1, 1987, taken together
This Court in several decisions has repeatedly adhered to the principle with plaintiffs' letter dated September 30, 1987, constitute in law a
that points of law, theories, issues of fact and arguments not sufficient memorandum of a perfected contract of sale.
adequately brought to the attention of the trial court need not be, and
ordinarily will not be, considered by a reviewing court, as they cannot The respondent Court could have added that the written communications
be raised for the first time on appeal (Santos vs. IAC, No. 74243,
commenced not only from September 1, 1987 but from Janolo's August 20,
November 14, 1986, 145 SCRA 592).40
1987 letter. We agree that, taken together, these letters constitute sufficient
memoranda since they include the names of the parties, the terms and
. . . It is settled jurisprudence that an issue which was neither averred conditions of the contract, the price and a description of the property as the
in the complaint nor raised during the trial in the court below cannot object of the contract.
be raised for the first time on appeal as it would be offensive to the
basic rules of fair play, justice and due process (Dihiansan vs. CA, 153 But let it be assumed arguendo that the counter-offer during the meeting on
SCRA 713 [1987]; Anchuelo vs. IAC, 147 SCRA 434 [1987]; Dulos
September 28, 1987 did constitute a "new" offer which was accepted by Janolo
Realty & Development Corp. vs. CA, 157 SCRA 425 [1988]; Ramos
on September 30, 1987. Still, the statute of frauds will not apply by reason of
vs. IAC, 175 SCRA 70 [1989]; Gevero vs. IAC, G.R. 77029, August the failure of petitioners to object to oral testimony proving petitioner Bank's
30, 1990).41 counter-offer of P5.5 million. Hence, petitioners by such utter failure to
object are deemed to have waived any defects of the contract under the
Since the issue was not raised in the pleadings as an affirmative defense, statute of frauds, pursuant to Article 1405 of the Civil Code:
private respondent was not given an opportunity in the trial court to controvert
the same through opposing evidence. Indeed, this is a matter of due process. Art. 1405. Contracts infringing the Statute of Frauds, referred to in No.
But we passed upon the issue anyway, if only to avoid deciding the case on 2 of article 1403, are ratified by the failure to object to the presentation
purely procedural grounds, and we repeat that, on the basis of the evidence
of oral evidence to prove the same, or by the acceptance of benefits Q What transpired during that meeting between you and Mr. Luis Co
under them. of the defendant Bank?

As private respondent pointed out in his Memorandum, oral testimony on the A We went straight to the point because he being a busy person, I told
reaffirmation of the counter-offer of P5.5 million is a plenty and the silence him if the amount of P5.5 million could still be reduced and he said
of petitioners all throughout the presentation makes the evidence binding on that was already passed upon by the committee. What the bank
them thus; expects which was contrary to what Mr. Rivera stated. And he told me
that is the final offer of the bank P5.5 million and we should indicate
A Yes, sir, I think it was September 28, 1987 and I was again present our position as soon as possible.
because Atty. Demetria told me to accompany him we were able to
meet Luis Co at the Bank. Q What was your response to the answer of Mr. Luis Co?

xxx xxx xxx A I said that we are going to give him our answer in a few days and he
said that was it. Atty. Fajardo and I and Mr. Mercurio [Rivera] was with
Q Now, what transpired during this meeting with Luis Co of the us at the time at his office.
Producers Bank?
Q For the record, your Honor please, will you tell this Court who was
A Atty. Demetria asked Mr. Luis Co whether the price could be with Mr. Co in his Office in Producers Bank Building during this
reduced, sir. meeting?

Q What price? A Mr. Co himself, Mr. Rivera, Atty. Fajardo and I.

A The 5.5 million pesos and Mr. Luis Co said that the amount cited by Q By Mr. Co you are referring to?
Mr. Mercurio Rivera is the final price and that is the price they intends
(sic) to have, sir. A Mr. Luis Co.

Q What do you mean?. Q After this meeting with Mr. Luis Co, did you and your partner accede
on (sic) the counter offer by the bank?
A That is the amount they want, sir.
A Yes, sir, we did.? Two days thereafter we sent our acceptance to
Q What is the reaction of the plaintiff Demetria to Luis Co's statement the bank which offer we accepted, the offer of the bank which is P5.5
(sic) that the defendant Rivera's counter-offer of 5.5 million was the million.
defendant's bank (sic) final offer?
[Direct testimony of Atty. Demetria, TSN, 26 April 1990, at pp. 34-36.]
A He said in a day or two, he will make final acceptance, sir.
Q According to Atty. Demetrio Demetria, the amount of P5.5 million
Q What is the response of Mr. Luis Co?. was reached by the Committee and it is not within his power to reduce
this amount. What can you say to that statement that the amount of
A He said he will wait for the position of Atty. Demetria, sir. P5.5 million was reached by the Committee?

A It was not discussed by the Committee but it was discussed initially


[Direct testimony of Atty. Jose Fajardo, TSN, January 16, 1990, at pp. 18-21.]
by Luis Co and the group of Atty. Demetrio Demetria and Atty. Pajardo
(sic) in that September 28, 1987 meeting, sir.
[Direct testimony of Mercurio Rivera, TSN, 30 July 1990, pp. May
14-15.]
12, 1988

The Fourth Issue: May the Conservator Revoke Atty. Noe C. Zarate
the Perfected and Enforceable Contract. Zarate Carandang Perlas & Ass.
Suite 323 Rufino Building
It is not disputed that the petitioner Bank was under a conservator placed by Ayala Avenue, Makati, Metro-Manila
the Central Bank of the Philippines during the time that the negotiation and
perfection of the contract of sale took place. Petitioners energetically Dear Atty. Zarate:
contended that the conservator has the power to revoke or overrule actions of
the management or the board of directors of a bank, under Section 28-A of
Republic Act No. 265 (otherwise known as the Central Bank Act) as follows: This pertains to your letter dated May 5, 1988 on behalf of Attys.
Janolo and Demetria regarding the six (6) parcels of land located at
Sta. Rosa, Laguna.
Whenever, on the basis of a report submitted by the appropriate
supervising or examining department, the Monetary Board finds that
a bank or a non-bank financial intermediary performing quasi-banking We deny that Producers Bank has ever made a legal counter-offer to
functions is in a state of continuing inability or unwillingness to any of your clients nor perfected a "contract to sell and buy" with any
maintain a state of liquidity deemed adequate to protect the interest of of them for the following reasons.
depositors and creditors, the Monetary Board may appoint a
conservator to take charge of the assets, liabilities, and the In the "Inter-Office Memorandum" dated April 25, 1986 addressed to
management of that institution, collect all monies and debts due said and approved by former Acting Conservator Mr. Andres I. Rustia,
institution and exercise all powers necessary to preserve the assets Producers Bank Senior Manager Perfecto M. Pascua detailed the
of the institution, reorganize the management thereof, and restore its functions of Property Management Department (PMD) staff and
viability. He shall have the power to overrule or revoke the actions of officers (Annex A.), you will immediately read that Manager Mr.
the previous management and board of directors of the bank or non- Mercurio Rivera or any of his subordinates has no authority, power or
bank financial intermediary performing quasi-banking functions, any right to make any alleged counter-offer. In short, your lawyer-clients
provision of law to the contrary notwithstanding, and such other did not deal with the authorized officers of the bank.
powers as the Monetary Board shall deem necessary.
Moreover, under Sec. 23 and 36 of the Corporation Code of the
In the first place, this issue of the Conservator's alleged authority to revoke or Philippines (Bates Pambansa Blg. 68.) and Sec. 28-A of the Central
repudiate the perfected contract of sale was raised for the first time in this Bank Act (Rep. Act No. 265, as amended), only the Board of
Petition as this was not litigated in the trial court or Court of Appeals. As Directors/Conservator may authorize the sale of any property of the
already stated earlier, issues not raised and/or ventilated in the trial court, let corportion/bank..
alone in the Court of Appeals, "cannot be raised for the first time on appeal as
it would be offensive to the basic rules of fair play, justice and due process." 43 Our records do not show that Mr. Rivera was authorized by the old
board or by any of the bank conservators (starting January, 1984) to
In the second place, there is absolutely no evidence that the Conservator, at sell the aforesaid property to any of your clients. Apparently, what took
the time the contract was perfected, actually repudiated or overruled said place were just preliminary discussions/consultations between him
contract of sale. The Bank's acting conservator at the time, Rodolfo Romey, and your clients, which everyone knows cannot bind the Bank's Board
never objected to the sale of the property to Demetria and Janolo. What or Conservator.
petitioners are really referring to is the letter of Conservator Encarnacion, who
took over from Romey after the sale was perfected on September 30, 1987 We are, therefore, constrained to refuse any tender of payment by
(Annex V, petition) which unilaterally repudiated not the contract but the your clients, as the same is patently violative of corporate and banking
authority of Rivera to make a binding offer and which unarguably came laws. We believe that this is more than sufficient legal justification for
months after the perfection of the contract. Said letter dated May 12, 1988 is refusing said alleged tender.
reproduced hereunder:
Rest assured that we have nothing personal against your clients. All . . . The rule regarding questions of fact being raised with this Court in
our acts are official, legal and in accordance with law. We also have a petition for certiorari under Rule 45 of the Revised Rules of Court
no personal interest in any of the properties of the Bank. has been stated in Remalante vs. Tibe, G.R. No. 59514, February 25,
1988, 158 SCRA 138, thus:
Please be advised accordingly.
The rule in this jurisdiction is that only questions of law may be raised
Very truly yours, in a petition for certiorari under Rule 45 of the Revised Rules of Court.
"The jurisdiction of the Supreme Court in cases brought to it from the
Court of Appeals is limited to reviewing and revising the errors of law
(Sgd.) Leonida T. Encarnacion
imputed to it, its findings of the fact being conclusive " [Chan vs. Court
LEONIDA T. EDCARNACION
of Appeals, G.R. No. L-27488, June 30, 1970, 33 SCRA 737,
Acting Conservator
reiterating a long line of decisions]. This Court has emphatically
declared that "it is not the function of the Supreme Court to analyze or
In the third place, while admittedly, the Central Bank law gives vast and far- weigh such evidence all over again, its jurisdiction being limited to
reaching powers to the conservator of a bank, it must be pointed out that such reviewing errors of law that might have been committed by the lower
powers must be related to the "(preservation of) the assets of the bank, (the court" (Tiongco v. De la Merced, G. R. No. L-24426, July 25, 1974, 58
reorganization of) the management thereof and (the restoration of) its viability." SCRA 89; Corona vs. Court of Appeals, G.R. No. L-62482, April 28,
Such powers, enormous and extensive as they are, cannot extend to the post- 1983, 121 SCRA 865; Baniqued vs. Court of Appeals, G. R. No. L-
facto repudiation of perfected transactions, otherwise they would infringe 47531, February 20, 1984, 127 SCRA 596). "Barring, therefore, a
against the non-impairment clause of the Constitution 44. If the legislature itself showing that the findings complained of are totally devoid of support
cannot revoke an existing valid contract, how can it delegate such non-existent in the record, or that they are so glaringly erroneous as to constitute
powers to the conservator under Section 28-A of said law? serious abuse of discretion, such findings must stand, for this Court is
not expected or required to examine or contrast the oral and
Obviously, therefore, Section 28-A merely gives the conservator power to documentary evidence submitted by the parties" [Santa Ana, Jr. vs.
revoke contracts that are, under existing law, deemed to be defective i.e., Hernandez, G. R. No. L-16394, December 17, 1966, 18 SCRA 973]
void, voidable, unenforceable or rescissible. Hence, the conservator merely [at pp. 144-145.]
takes the place of a bank's board of directors. What the said board cannot do
such as repudiating a contract validly entered into under the doctrine of Likewise, in Bernardo vs. Court of Appeals 46, we held:
implied authority the conservator cannot do either. Ineluctably, his power is
not unilateral and he cannot simply repudiate valid obligations of the Bank. His
The resolution of this petition invites us to closely scrutinize the facts
authority would be only to bring court actions to assail such contracts as he
of the case, relating to the sufficiency of evidence and the credibility
has already done so in the instant case. A contrary understanding of the law
of witnesses presented. This Court so held that it is not the function of
would simply not be permitted by the Constitution. Neither by common sense.
the Supreme Court to analyze or weigh such evidence all over again.
To rule otherwise would be to enable a failing bank to become solvent, at the
expense of third parties, by simply getting the conservator to unilaterally The Supreme Court's jurisdiction is limited to reviewing errors of law
revoke all previous dealings which had one way or another or come to be that may have been committed by the lower court. The Supreme Court
is not a trier of facts. . . .
considered unfavorable to the Bank, yielding nothing to perfected contractual
rights nor vested interests of the third parties who had dealt with the Bank.
As held in the recent case of Chua Tiong Tay vs. Court of Appeals and
The Fifth Issue: Were There Reversible Errors of Facts? Goldrock Construction and Development Corp. 47:

The Court has consistently held that the factual findings of the trial
Basic is the doctrine that in petitions for review under Rule 45 of the Rules of
court, as well as the Court of Appeals, are final and conclusive and
Court, findings of fact by the Court of Appeals are not reviewable by the
Supreme Court. In Andres vs. Manufacturers Hanover & Trust Corporation, 45, may not be reviewed on appeal. Among the exceptional
we held: circumstances where a reassessment of facts found by the lower
courts is allowed are when the conclusion is a finding grounded
entirely on speculation, surmises or conjectures; when the inference . . . The argument deserves scant consideration. As pointed out by
made is manifestly absurd, mistaken or impossible; when there is plaintiff, during the meeting of September 28, 1987 between the
grave abuse of discretion in the appreciation of facts; when the plaintiffs, Rivera and Luis Co, the senior vice-president of the bank,
judgment is premised on a misapprehension of facts; when the where the topic was the possible lowering of the price, the bank official
findings went beyond the issues of the case and the same are contrary refused it and confirmed that the P5.5 Million price had been passed
to the admissions of both appellant and appellee. After a careful study upon by the Committee and could no longer be lowered (TSN of April
of the case at bench, we find none of the above grounds present to 27, 1990, pp. 34-35) (p. 15, CA Decision).
justify the re-evaluation of the findings of fact made by the courts
below. The respondent Court did not believe the evidence of the petitioners on this
point, characterizing it as "not credible" and "at best equivocal and considering
In the same vein, the ruling of this Court in the recent case of South Sea Surety the gratuitous and self-serving character of these declarations, the bank's
and Insurance Company Inc. vs.Hon. Court of Appeals, et al. 48 is equally submissions on this point do not inspire belief."
applicable to the present case:
To become credible and unequivocal, petitioners should have presented then
We see no valid reason to discard the factual conclusions of the Conservator Rodolfo Romey to testify on their behalf, as he would have been
appellate court, . . . (I)t is not the function of this Court to assess and in the best position to establish their thesis. Under the rules on evidence 51,
evaluate all over again the evidence, testimonial and documentary, such suppression gives rise to the presumption that his testimony would have
adduced by the parties, particularly where, such as here, the findings been adverse, if produced.
of both the trial court and the appellate court on the matter coincide.
(emphasis supplied) The second point was squarely raised in the Court of Appeals, but petitioners'
evidence was deemed insufficient by both the trial court and the respondent
Petitioners, however, assailed the respondent Court's Decision as "fraught Court, and instead, it was respondent's submissions that were believed and
with findings and conclusions which were not only contrary to the evidence on became bases of the conclusions arrived at.
record but have no bases at all," specifically the findings that (1) the "Bank's
counter-offer price of P5.5 million had been determined by the past due In fine, it is quite evident that the legal conclusions arrived at from the findings
committee and approved by conservator Romey, after Rivera presented the of fact by the lower courts are valid and correct. But the petitioners are now
same for discussion" and (2) "the meeting with Co was not to scale down the asking this Court to disturb these findings to fit the conclusion they are
price and start negotiations anew, but a meeting on the already determined espousing, This we cannot do.
price of P5.5 million" Hence, citing Philippine National Bank vs. Court of
Appeals 49, petitioners are asking us to review and reverse such factual
To be sure, there are settled exceptions where the Supreme Court may
findings.
disregard findings of fact by the Court of Appeals 52. We have studied both the
records and the CA Decision and we find no such exceptions in this case. On
The first point was clearly passed upon by the Court of Appeals 50, thus: the contrary, the findings of the said Court are supported by a preponderance
of competent and credible evidence. The inferences and conclusions are
There can be no other logical conclusion than that when, on seasonably based on evidence duly identified in the Decision. Indeed, the
September 1, 1987, Rivera informed plaintiffs by letter that "the bank's appellate court patiently traversed and dissected the issues presented before
counter-offer is at P5.5 Million for more than 101 hectares on lot basis, it, lending credibility and dependability to its findings. The best that can be said
"such counter-offer price had been determined by the Past Due in favor of petitioners on this point is that the factual findings of respondent
Committee and approved by the Conservator after Rivera had duly Court did not correspond to petitioners' claims, but were closer to the evidence
presented plaintiffs' offer for discussion by the Committee . . . Tersely as presented in the trial court by private respondent. But this alone is no reason
put, under the established fact, the price of P5.5 Million was, as clearly to reverse or ignore such factual findings, particularly where, as in this case,
worded in Rivera's letter (Exh. "E"), the official and definitive price at the trial court and the appellate court were in common agreement thereon.
which the bank was selling the property. (p. 11, CA Decision) Indeed, conclusions of fact of a trial judge as affirmed by the Court of
Appeals are conclusive upon this Court, absent any serious abuse or
xxx xxx xxx evident lack of basis or capriciousness of any kind, because the trial court is
in a better position to observe the demeanor of the witnesses and their WHEREFORE, finding no reversible error in the questioned Decision and
courtroom manner as well as to examine the real evidence presented. Resolution, the Court hereby DENIES the petition. The assailed Decision is
AFFIRMED. Moreover, petitioner Bank is REPRIMANDED for engaging in
Epilogue. forum-shopping and WARNED that a repetition of the same or similar acts will
be dealt with more severely. Costs against petitioners.
In summary, there are two procedural issues involved forum-shopping and the
raising of issues for the first time on appeal [viz., the extinguishment of the SO ORDERED.
Bank's offer of P5.5 million and the conservator's powers to repudiate
contracts entered into by the Bank's officers] which per se could justify the Narvasa, C.J., Davide Jr., Melo and Francisco, JJ., concur.
dismissal of the present case. We did not limit ourselves thereto, but delved
as well into the substantive issues the perfection of the contract of sale and G.R. No. 164601 September 27, 2006
its enforceability, which required the determination of questions of fact. While
the Supreme Court is not a trier of facts and as a rule we are not required to SPOUSES ERLINDA BATAL AND FRANK BATAL, Petitioners,
look into the factual bases of respondent Court's decisions and resolutions, we vs
did so just the same, if only to find out whether there is reason to disturb any
SPOUSES LUZ SAN PEDRO AND KENICHIRO TOMINAGA, Respondents.
of its factual findings, for we are only too aware of the depth, magnitude and
vigor by which the parties through their respective eloquent counsel, argued
their positions before this Court. DECISION

AUSTRIA-MARTINEZ, J.:
We are not unmindful of the tenacious plea that the petitioner Bank is operating
abnormally under a government-appointed conservator and "there is need to Before the Court is a Petition for Review on Certiorari under Rule 45 of the
rehabilitate the Bank in order to get it back on its feet . . . as many people Rules of Court questioning the Decision[1] dated September 29, 2003
depend on (it) for investments, deposits and well as employment. As of June promulgated by the Court of Appeals (CA) in CA-G.R. CV No. 71758, which
1987, the Bank's overdraft with the Central Bank had already reached P1.023 affirmed the Decision dated May 31, 2004 of the Regional Trial Court, Branch
billion . . . and there were (other) offers to buy the subject properties for a 7, Malolos, Bulacan (RTC); and the CA Resolution[2] dated July 19, 2004.
substantial amount of money." 53
This case originated from an action for damages filed with the RTC by Spouses
While we do not deny our sympathy for this distressed bank, at the same time, Luz San Pedro and Kenichiro Tominaga (respondents) against Spouses
the Court cannot emotionally close its eyes to overriding considerations of Erlinda Batal and Frank Batal (petitioners) for failure to exercise due care and
substantive and procedural law, like respect for perfected contracts, non- diligence by the latter in the preparation of a survey which formed the basis for
impairment of obligations and sanctions against forum-shopping, which must the construction of a perimeter fence that was later discovered to have
be upheld under the rule of law and blind justice. encroached on a right of way.

This Court cannot just gloss over private respondent's submission that, while The facts of the case, as found by the RTC and summarized
the subject properties may currently command a much higher price, it is by the CA, are as follows:
equally true that at the time of the transaction in 1987, the price agreed upon
of P5.5 million was reasonable, considering that the Bank acquired these The spouses Luz San Pedro (Luz) and Kenichiro Tominaga
properties at a foreclosure sale for no more than P3.5 million 54. That the Bank (Kenichiro) are the owners of a parcel of land, on which their
procrastinated and refused to honor its commitment to sell cannot now be used house was erected, described asLot 1509-C-3 with an area of
by it to promote its own advantage, to enable it to escape its binding obligation 700 square meters situated in Barangay Malis, Guiguinto,
and to reap the benefits of the increase in land values. To rule in favor of the Bulacan. Said property was acquired by them from one
Bank simply because the property in question has algebraically accelerated in Guillermo Narciso as evidenced by a Bilihan ng Bahagi ng
price during the long period of litigation is to reward lawlessness and delays in Lupa dated March 18, 1992.
the fulfillment of binding contracts. Certainly, the Court cannot stamp its
imprimatur on such outrageous proposition.
The spouses Luz and Kenichiro then contracted the services WHEREFORE, judgment is hereby rendered in favor of plaintiffs and
of Frank Batal (Frank) who represented himself as a surveyor against defendants, as follows:
to conduct a survey of their lot for the sum of P6,500.00. As
Luz and Kenichiro wanted to enclose their property, they 1. Ordering the defendants [petitioners] to pay to plaintiffs
again procured the services of Frank for an additional fee of [respondents] the sum of P6,500.00 as refund for their
P1,500.00 in order to determine the exact boundaries of the professional fees by reason of the erroneous relocation survey of
same by which they will base the construction of their the property in question;
perimeter fence. 2. Ordering the defendants to pay to plaintiffs the sum of Three
Consequently, Frank placed concrete monuments marked Hundred Thousand Pesos (P300,000.00) as actual damages;
P.S. on all corners of the lot which were used as guides by 3. Ordering the defendants to pay to plaintiffs the sum of
Luz and Kenichiro in erecting a concrete fence measuring P50,000.00 as attorneys fees; and
about eight (8) feet in height and cost them P250,000.00 to
build. 4. Ordering the defendants to pay to plaintiffs the costs of this suit.

Sometime in 1996, a complaint was lodged against Luz and SO ORDERED.[4]


Kenichiro before the barangay on the ground that the northern
Regarding the issue whether the petitioners failed to exercise due care and
portion of their fence allegedly encroached upon a designated
diligence in the conduct of the resurvey which eventually caused damage to
right-of-way known as Lot 1509-D. Upon verification with
the respondents, the RTC held:
another surveyor, Luz and Kenichiro found that their wall
indeed overlapped the adjoining lot. They also discovered that As against the bare and self-serving denials of the
it was not Frank but his wife Erlinda Batal (Erlinda), who is a [petitioners], the testimony of [respondent] Luz San Pedro that
licensed geodetic engineer. she constructed the encroaching perimeter fence in question
using as guide the cyclone concrete monuments marked P.S.
During their confrontations before the barangay, Frank
that were installed by [petitioner] Frank Batal and his survey
admitted that he made a mistake and offered to share in the
team, is more credible. As testified to by [respondent] Luz San
expenses for the demolition and reconstruction of the
Pedro, she proceeded with the construction of the perimeter
questioned portion of Luz and Kenichiros fence. He however
fence in question upon assurance given by [petitioner] Frank
failed to deliver on his word, thus the filing of the instant suit.
Batal that she could already do so as there were already
In their defense, the defendants-spouses Frank and Erlinda concrete monuments placed on the boundaries of her
Batal submitted that Frank never represented himself to be a property x x x.
licensed geodetic engineer. It was Erlinda who supervised her
xxxx
husbands work [and t]hat the house and lot of plaintiffs, Luz
and Kenichiro, were already fenced even before they were It does not matter that the location plan dated May 3, 1992
contracted to do a resurvey of the same and the laying out of (Exhibit B) was later approved by the DENR, as it is quite
the concrete monuments. The spouses Frank and Erlinda apparent that the mistake committed by [petitioner] Frank
also refuted the spouses Luzs and Kenichiros allegation of Batal pertains to the wrong locations of the concrete
negligence and averred that the subject complaint was monuments that he placed on the subject property and which
instituted to harass them.[3] were used or relied upon by the [respondents] in putting up
the fence in question. Such mistake or negligence happened
On May 31, 2001, the RTC rendered its Decision, the dispositive portion of
because quite obviously the installation of said concrete
which reads:
monuments was without the needed supervision of
[respondent] Erlinda Batal, the one truly qualified to supervise The Court of Appeals erred in ruling in favor of Respondents by premising its
the same. x x x x Decision on [a] misapprehension of facts amounting to grave abuse of
discretion . . . which is also a ground for a Petition for Review.[7]
x x x x[5]
The petition must fail.
The RTC found that indeed the perimeter fence constructed by the
respondents encroached on the right-of-way in question; that the The petitioners insist that there had been no error in their resurvey, but rather,
preponderance of evidence supports the finding that the encroachment was the error occurred in respondents fencing; that the proximate cause of the
caused by the negligence of the petitioners; that, in particular, respondents damage had been respondents own negligence such that the fencing was
constructed the fence based on the concrete cyclone monuments that were done unilaterally and solely by them without the prior approval and supervision
installed by petitioner Frank Batal and after he gave his assurance that they of the petitioners. And to justify their case, the petitioners argue that the courts
can proceed accordingly; that the negligence in the installation of the a quo misapprehended the facts. Accordingly, they ask this Court to review
monuments was due to the fact that petitioner Erlinda Batal, the one truly findings of fact.
qualified, did not provide the needed supervision over the work; and, lastly,
that the testimonies of the petitioners on the whole were not credible. A review of the factual findings of the CA and the RTC are matters not
ordinarily reviewable in a petition for review on certiorari.[8] Well-established
The petitioners appealed to the CA. On September 29, 2003, the CA rendered is the rule that factual findings of the trial court and the CA are entitled to great
its Decision affirming the RTC decision in its entirety.[6] weight and respect[9] and will not be disturbed on appeal save in exceptional
circumstances,[10] none of which obtains in the present case. This Court must
In concurring with the findings of the RTC, the CA in addition held that the stress that the findings of fact of the CA are conclusive on the parties and carry
petitioners cannot claim that the error of the construction of the fence was due even more weight when these coincide with the factual findings of the trial
to the unilateral act of respondents in building the same without their consent, court,[11] as in this case.
since the former gave their word that the arrangement of the monuments of
title accurately reflected the boundaries of the lot; and that, as a result, the The Court will not weigh the evidence all over again unless there is a showing
northern portion of the fence had to be demolished and rebuilt in order to that the findings of the lower court are totally devoid of support or are clearly
correct the error. erroneous so as to constitute serious abuse of discretion.[12] The petitioners
failed to demonstrate this point. On the contrary, the finding of the courts a quo
Hence, the instant Petition assigning the following errors: that the damage caused to the respondents was due to petitioners negligence
I. is sufficiently supported by the evidence on record. For these reasons, the
petitioner's contentions bear no import.
The Court of Appeals erred in ruling for the Respondents and basing its
decision [o]n the following jurisprudence: Culpa, or negligence, may be understood in two different senses: either as
culpa aquiliana, which is the wrongful or negligent act or omission which
(a) [A] party, having performed affirmative acts upon which creates a vinculum juris and gives rise to an obligation between two persons
another person based his subsequent actions, cannot not formally bound by any other obligation, or as culpa contractual, which is
thereafter refute his acts or renege on the effects of the the fault or negligence incident in the performance of an obligation which
same, to the prejudice of the latter. (Pureza vs. Court of already existed, and which increases the liability from such already existing
Appeals, 290 SCRA 110); and obligation.[13] Culpa aquiliana is governed by Article 2176 of the Civil Code
and the immediately following Articles; while culpa contractual is governed by
(b) Findings of fact made by the trial court [are] entitled to
Articles 1170 to 1174 of the same Code.[14]
great weight and respect. (Lopez vs. Court of Appeals, 322
SCRA 686). Articles 1170 and 1173 provide:
II. ART. 1170. Those who in the performance of their obligations
are guilty of fraud, negligence, or delay, and those who in any
manner contravene the tenor thereof, are liable for damages.
ART. 1173. The fault or negligence of the obligor consists in purported accuracy of the resurvey and exactness of the lots
the omission of that diligence which is required by the nature boundaries based on the monuments of title which they installed.
of the obligation and corresponds with the circumstances of the
persons, of the time and of the place. When negligence shows It has been ruled that [A] party, having performed affirmative acts upon
bad faith, the provisions of articles 1171 and 2202, paragraph which another person based his subsequent actions, cannot thereafter
2, shall apply. refute his acts or renege on the effects of the same, to the prejudice of
the latter. (Pureza v. Court of Appeals, 290 SCRA 110)
If the law or contract does not state the diligence which is to be observed in
the performance, that which is expected of a good father of a family shall be The foregoing clearly supports the findings of the RTC that the spouses
required. Batal committed a mistake in the conduct of their business that led to
the encroachment of plaintiffs-appellees fence on the adjoining alley-
In the present case, it is clear that the petitioners, in carrying out their lot. As a result, the northern portion ha[d] to be torn down and rebuilt in
contractual obligations, failed to exercise the requisite diligence in the order to correct the error in its original construction. The defendants-
placement of the markings for the concrete perimeter fence that was later appellants cannot be excused from the effects of their actions in the
constructed. The placement of the markings had been done solely by survey of plaintiffs-appellees lot.
petitioner Frank Batal who is not a geodetic engineer. It was later discovered
that it was not he but his wife, petitioner Erlinda Batal, who is the licensed We therefore concur with the findings of the RTC holding defendants-
geodetic engineer and who is, therefore, the one qualified to do the work. appellants liable for damages in the case at bar. Findings of fact made
Petitioner Frank Batals installation of the concrete cyclone monuments had by the trial court is entitled to great weight and respect. (Lopez v. Court
been done without the adequate supervision of his wife, Erlinda. As a result, of Appeals, 322 SCRA 686)[15]
the placement of the monuments did not accurately reflect the dimensions of Being guilty of a breach of their contract, petitioners are liable for damages
the lot. The respondents, upon assurance given by petitioner Frank Batal that suffered by the respondents in accordance with Articles 1170 and 2201 of the
they could proceed with the construction of the perimeter fence by relying on Civil Code,[16] which state:
the purported accuracy of the placement of the monuments, erected their
fence which turned out to encroach on an adjacent easement. Because of the Art. 1170. Those who in the performance of their obligations
encroachment, the respondents had to demolish and reconstruct the fence are guilty of fraud, negligence, or delay and those who in any
and, thus, suffered damages. manner contravene the tenor thereof are liable for damages

The Court affirms and adopts the findings of the CA, to wit: Art. 2201. In contracts and quasi-contracts, the damages for
which the obligor who acted in good faith is liable shall be those
Records show that the services of the [petitioners] Frank and Erlinda that are the natural and probable consequences of the breach
were initially contracted to segregate Luz and Kenichiros property from of the obligation, and which the parties have foreseen or could
its adjoining lots.When the [respondent] spouses Luz and Kenichiro have reasonably foreseen at the time the obligation was
planned to fence the segregated lot, they again commissioned constituted.
[petitioners] Frank and Erlinda to conduct a resurvey in order to
determine the precise boundaries of their property upon which they will In case of fraud, bad faith, malice or wanton attitude, the obligor
base the construction of their fence. It was also shown that in the shall be responsible for all damages which may be reasonably
course of the resurvey, Frank caused the installation of monuments of attributed to the non-performance of the obligation.
title on the four (4) corners of Luz and Kenichiros property and that he
Thus, the Court agrees with the CAs affirmance of the findings
instructed them to just follow the same in building their fence.
of the RTC on the matter of damages, to wit:
[Petitioners] Frank and Erlinda cannot thus validly claim that the error
Going now to the claims for damages, Engr. Arnold Martin
in the construction of the northern portion of the fence was due to the
testified on his computation and estimate (Exhibits G and G-1)
spouses Luz and Kenichiros act of building the same without their
that the total cost for the demolition and reconstruction of the
consent. This is considering that the former led the latter to believe the
perimeter fence in question would be in the total amount of Costs against petitioners.
P428,163.90, and this was not at all disputed by the
defendants, whose counsel waived cross-examination. This SO ORDERED.
estimate is practically double the amount of the cost of MA. ALICIA AUSTRIA-MARTINEZ
constructing said fence as testified to by plaintiff Luz San Pedro Associate Justice
as she was told that it is much costlier to demolish and WE CONCUR:
reconstruct a fence than to simply erect one because of the
added expense involved in tearing it down and hauling its ARTEMIO V. PANGANIBAN
debris. On the other hand, said plaintiff stated that the iron Chief Justice
decorative grills of the fence, which is re-usable, cost her Chairperson
P50,000.00, and it is only proper to deduct said amount from
CONSUELO YNARES-SANTIAGO
the total cost of reconstructing the fence in question. At the
Associate Justice
same time, some figures in the said estimate appear to be quite
excessive, such as the estimated cost for demolition which was
ROMEO J. CALLEJO,
quoted at P25,000.00 in addition to the amount of excavation
SR. Associate Justice
priced at P30,000.00 and the cost of hauling of scrap materials
at P10,000.00. The court believes that the sum of P300,000.00 MINITA V. CHICO-NAZARIO
for the demolition and reconstruction of the fence in question Associate Justice
would be reasonable considering that the original cost for its
construction was only about P200,000.00, and considering CERTIFICATION
further that its iron grills are re-usable.
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that
The plaintiffs are likewise entitled to recover attorneys fees the conclusions in the above Decision were reached in consultation before the
considering that they were compelled by the defendants to case was assigned to the writer of the opinion of the Courts Division.
resort to court action in order to protect their rights and interest,
as defendants, particularly defendant Frank Batal, failed and ARTEMIO V. PANGANIBAN
refused repeatedly to even attend the confrontation of Chief Justice
conciliation meetings arranged between him and the plaintiffs
by the barangay authorities concerned, and to honor his G.R. No. L-21438 September 28, 1966
promise to help in shouldering the cost of reconstructing the
fence in question. AIR FRANCE, petitioner,
vs.
On the other hand, there is no legal or factual bases for the RAFAEL CARRASCOSO and the HONORABLE COURT OF
claim of the plaintiffs for moral or exemplary damages as there APPEALS, respondents.
was no showing at all that defendants acted with malice or in
bad faith. Lichauco, Picazo and Agcaoili for petitioner.
Bengzon Villegas and Zarraga for respondent R. Carrascoso.
In a long line of cases, we have consistently ruled that in the absence of a
wrongful act or omission or of fraud or bad faith, moral damages cannot be
SANCHEZ, J.:
awarded. (R & B Surety Insurance Co. v. Intermediate Court of Appeals, 129
SCRA 736; Guita v. Court of Appeals, 139 SCRA 576).[17]
The Court of First Instance of Manila 1 sentenced petitioner to pay respondent
WHEREFORE, the instant petition is DENIED and the assailed Decision and Rafael Carrascoso P25,000.00 by way of moral damages; P10,000.00 as
Resolution of the Court of Appeals are AFFIRMED. exemplary damages; P393.20 representing the difference in fare between first
class and tourist class for the portion of the trip Bangkok-Rome, these various
amounts with interest at the legal rate, from the date of the filing of the "Every decision of the Court of Appeals shall contain complete findings of fact
complaint until paid; plus P3,000.00 for attorneys' fees; and the costs of suit. on all issues properly raised before it". 7

On appeal,2 the Court of Appeals slightly reduced the amount of refund on A decision with absolutely nothing to support it is a nullity. It is open to direct
Carrascoso's plane ticket from P393.20 to P383.10, and voted to affirm the attack. 8 The law, however, solely insists that a decision state the "essential
appealed decision "in all other respects", with costs against petitioner. ultimate facts" upon which the court's conclusion is drawn. 9 A court of justice
is not hidebound to write in its decision every bit and piece of
The case is now before us for review on certiorari. evidence 10 presented by one party and the other upon the issues raised.
Neither is it to be burdened with the obligation "to specify in the sentence the
facts"which a party "considered as proved". 11 This is but a part of the mental
The facts declared by the Court of Appeals as " fully supported by the evidence
process from which the Court draws the essential ultimate facts. A decision is
of record", are:
not to be so clogged with details such that prolixity, if not confusion, may result.
So long as the decision of the Court of Appeals contains the necessary facts
Plaintiff, a civil engineer, was a member of a group of 48 Filipino to warrant its conclusions, it is no error for said court to withhold therefrom "any
pilgrims that left Manila for Lourdes on March 30, 1958. specific finding of facts with respect to the evidence for the defense". Because
as this Court well observed, "There is no law that so requires". 12 Indeed, "the
On March 28, 1958, the defendant, Air France, through its authorized mere failure to specify (in the decision) the contentions of the appellant and
agent, Philippine Air Lines, Inc., issued to plaintiff a "first class" round the reasons for refusing to believe them is not sufficient to hold the same
trip airplane ticket from Manila to Rome. From Manila to Bangkok, contrary to the requirements of the provisions of law and the Constitution". It
plaintiff travelled in "first class", but at Bangkok, the Manager of the is in this setting that in Manigque, it was held that the mere fact that the findings
defendant airline forced plaintiff to vacate the "first class" seat that he "were based entirely on the evidence for the prosecution without taking into
was occupying because, in the words of the witness Ernesto G. consideration or even mentioning the appellant's side in the controversy as
Cuento, there was a "white man", who, the Manager alleged, had a shown by his own testimony", would not vitiate the judgment. 13 If the court did
"better right" to the seat. When asked to vacate his "first class" seat, not recite in the decision the testimony of each witness for, or each item of
the plaintiff, as was to be expected, refused, and told defendant's evidence presented by, the defeated party, it does not mean that the court has
Manager that his seat would be taken over his dead body; a overlooked such testimony or such item of evidence. 14 At any rate, the legal
commotion ensued, and, according to said Ernesto G. Cuento, "many presumptions are that official duty has been regularly performed, and that all
of the Filipino passengers got nervous in the tourist class; when they the matters within an issue in a case were laid before the court and passed
found out that Mr. Carrascoso was having a hot discussion with the upon by it. 15
white man [manager], they came all across to Mr. Carrascoso and
pacified Mr. Carrascoso to give his seat to the white man" (Transcript, Findings of fact, which the Court of Appeals is required to make, maybe
p. 12, Hearing of May 26, 1959); and plaintiff reluctantly gave his "first defined as "the written statement of the ultimate facts as found by the court ...
class" seat in the plane.3 and essential to support the decision and judgment rendered thereon". 16They
consist of the court's "conclusions" with respect to the determinative facts in
1. The trust of the relief petitioner now seeks is that we review "all the issue". 17 A question of law, upon the other hand, has been declared as "one
findings" 4 of respondent Court of Appeals. Petitioner charges that respondent which does not call for an examination of the probative value of the evidence
court failed to make complete findings of fact on all the issues properly laid presented by the parties." 18
before it. We are asked to consider facts favorable to petitioner, and then, to
overturn the appellate court's decision. 2. By statute, "only questions of law may be raised" in an appeal by certiorari
from a judgment of the Court of Appeals. 19 That judgment is conclusive as to
Coming into focus is the constitutional mandate that "No decision shall be the facts. It is not appropriately the business of this Court to alter the facts or
rendered by any court of record without expressing therein clearly and to review the questions of fact. 20
distinctly the facts and the law on which it is based". 5 This is echoed in the
statutory demand that a judgment determining the merits of the case shall state With these guideposts, we now face the problem of whether the findings of fact
"clearly and distinctly the facts and the law on which it is based"; 6 and that of the Court of Appeals support its judgment.
3. Was Carrascoso entitled to the first class seat he claims? Q. Confirmed for first class?

It is conceded in all quarters that on March 28, 1958 he paid to and received A. Yes, "first class". (Transcript, p. 169)
from petitioner a first class ticket. But petitioner asserts that said ticket did not
represent the true and complete intent and agreement of the parties; that said xxx xxx xxx
respondent knew that he did not have confirmed reservations for first class on
any specific flight, although he had tourist class protection; that, accordingly, Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and
the issuance of a first class ticket was no guarantee that he would have a first Rafael Altonaga that although plaintiff paid for, and was issued a "first class"
class ride, but that such would depend upon the availability of first class seats.
airplane ticket, the ticket was subject to confirmation in Hongkong. The court
cannot give credit to the testimony of said witnesses. Oral evidence cannot
These are matters which petitioner has thoroughly presented and discussed prevail over written evidence, and plaintiff's Exhibits "A", "A-l", "B", "B-l", "C"
in its brief before the Court of Appeals under its third assignment of error, which and "C-1" belie the testimony of said witnesses, and clearly show that the
reads: "The trial court erred in finding that plaintiff had confirmed reservations plaintiff was issued, and paid for, a first class ticket without any reservation
for, and a right to, first class seats on the "definite" segments of his journey, whatever.
particularly that from Saigon to Beirut". 21
Furthermore, as hereinabove shown, defendant's own witness Rafael
And, the Court of Appeals disposed of this contention thus: Altonaga testified that the reservation for a "first class" accommodation for the
plaintiff was confirmed. The court cannot believe that after such confirmation
Defendant seems to capitalize on the argument that the issuance of a defendant had a verbal understanding with plaintiff that the "first class" ticket
first-class ticket was no guarantee that the passenger to whom the issued to him by defendant would be subject to confirmation in Hongkong. 23
same had been issued, would be accommodated in the first-class
compartment, for as in the case of plaintiff he had yet to make We have heretofore adverted to the fact that except for a slight difference of a
arrangements upon arrival at every station for the necessary first-class few pesos in the amount refunded on Carrascoso's ticket, the decision of the
reservation. We are not impressed by such a reasoning. We cannot Court of First Instance was affirmed by the Court of Appeals in all other
understand how a reputable firm like defendant airplane company respects. We hold the view that such a judgment of affirmance has merged
could have the indiscretion to give out tickets it never meant to honor the judgment of the lower court. 24Implicit in that affirmance is a determination
at all. It received the corresponding amount in payment of first-class by the Court of Appeals that the proceeding in the Court of First Instance was
tickets and yet it allowed the passenger to be at the mercy of its free from prejudicial error and "all questions raised by the assignments of error
employees. It is more in keeping with the ordinary course of business and all questions that might have been raised are to be regarded as finally
that the company should know whether or riot the tickets it issues are adjudicated against the appellant". So also, the judgment affirmed "must be
to be honored or not.22 regarded as free from all error". 25 We reached this policy construction because
nothing in the decision of the Court of Appeals on this point would suggest that
Not that the Court of Appeals is alone. The trial court similarly disposed of its findings of fact are in any way at war with those of the trial court. Nor was
petitioner's contention, thus: said affirmance by the Court of Appeals upon a ground or grounds different
from those which were made the basis of the conclusions of the trial court. 26
On the fact that plaintiff paid for, and was issued a "First class" ticket, there
can be no question. Apart from his testimony, see plaintiff's Exhibits "A", "A- If, as petitioner underscores, a first-class-ticket holder is not entitled to a first
1", "B", "B-1," "B-2", "C" and "C-1", and defendant's own witness, Rafael class seat, notwithstanding the fact that seat availability in specific flights is
Altonaga, confirmed plaintiff's testimony and testified as follows: therein confirmed, then an air passenger is placed in the hollow of the hands
of an airline. What security then can a passenger have? It will always be an
Q. In these tickets there are marks "O.K." From what you know, what easy matter for an airline aided by its employees, to strike out the very
does this OK mean? stipulations in the ticket, and say that there was a verbal agreement to the
contrary. What if the passenger had a schedule to fulfill? We have long learned
A. That the space is confirmed. that, as a rule, a written document speaks a uniform language; that spoken
word could be notoriously unreliable. If only to achieve stability in the relations
between passenger and air carrier, adherence to the ticket so issued is 6. That consequently, the plaintiff, desiring no repetition of the
desirable. Such is the case here. The lower courts refused to believe the oral inconvenience and embarrassments brought by defendant's breach of
evidence intended to defeat the covenants in the ticket. contract was forced to take a Pan American World Airways plane on
his return trip from Madrid to Manila.32
The foregoing are the considerations which point to the conclusion that there
are facts upon which the Court of Appeals predicated the finding that xxx xxx xxx
respondent Carrascoso had a first class ticket and was entitled to a first class
seat at Bangkok, which is a stopover in the Saigon to Beirut leg of the 2. That likewise, as a result of defendant's failure to furnish First Class
flight. 27 We perceive no "welter of distortions by the Court of Appeals of accommodations aforesaid, plaintiff suffered inconveniences,
petitioner's statement of its position", as charged by petitioner. 28 Nor do we embarrassments, and humiliations, thereby causing plaintiff mental anguish,
subscribe to petitioner's accusation that respondent Carrascoso serious anxiety, wounded feelings, social humiliation, and the like injury,
"surreptitiously took a first class seat to provoke an issue". 29 And this because, resulting in moral damages in the amount of P30,000.00. 33
as petitioner states, Carrascoso went to see the Manager at his office in
Bangkok "to confirm my seat and because from Saigon I was told again to see xxx xxx xxx
the Manager". 30 Why, then, was he allowed to take a first class seat in the
plane at Bangkok, if he had no seat? Or, if another had a better right to the
seat? The foregoing, in our opinion, substantially aver: First, That there was a
contract to furnish plaintiff a first class passage covering, amongst others, the
Bangkok-Teheran leg; Second, That said contract was breached when
4. Petitioner assails respondent court's award of moral damages. Petitioner's petitioner failed to furnish first class transportation at Bangkok; and Third, that
trenchant claim is that Carrascoso's action is planted upon breach of contract;
there was bad faith when petitioner's employee compelled Carrascoso to leave
that to authorize an award for moral damages there must be an averment of his first class accommodation berth "after he was already, seated" and to take
fraud or bad faith;31 and that the decision of the Court of Appeals fails to make
a seat in the tourist class, by reason of which he suffered inconvenience,
a finding of bad faith. The pivotal allegations in the complaint bearing on this
embarrassments and humiliations, thereby causing him mental anguish,
issue are: serious anxiety, wounded feelings and social humiliation, resulting in moral
damages. It is true that there is no specific mention of the term bad faith in the
3. That ... plaintiff entered into a contract of air carriage with the complaint. But, the inference of bad faith is there, it may be drawn from the
Philippine Air Lines for a valuable consideration, the latter acting as facts and circumstances set forth therein. 34 The contract was averred to
general agents for and in behalf of the defendant, under which said establish the relation between the parties. But the stress of the action is put on
contract, plaintiff was entitled to, as defendant agreed to furnish wrongful expulsion.
plaintiff, First Class passage on defendant's plane during the entire
duration of plaintiff's tour of Europe with Hongkong as starting point
Quite apart from the foregoing is that (a) right the start of the trial, respondent's
up to and until plaintiff's return trip to Manila, ... .
counsel placed petitioner on guard on what Carrascoso intended to prove:
That while sitting in the plane in Bangkok, Carrascoso was oustedby
4. That, during the first two legs of the trip from Hongkong to Saigon petitioner's manager who gave his seat to a white man; 35 and (b) evidence of
and from Saigon to Bangkok, defendant furnished to the plaintiff First bad faith in the fulfillment of the contract was presented without objection on
Class accommodation but only after protestations, arguments and/or the part of the petitioner. It is, therefore, unnecessary to inquire as to whether
insistence were made by the plaintiff with defendant's employees. or not there is sufficient averment in the complaint to justify an award for moral
damages. Deficiency in the complaint, if any, was cured by the evidence. An
5. That finally, defendant failed to provide First Class passage, but amendment thereof to conform to the evidence is not even required. 36 On the
instead furnished plaintiff only TouristClass accommodations from question of bad faith, the Court of Appeals declared:
Bangkok to Teheran and/or Casablanca, ... the plaintiff has
been compelledby defendant's employees to leave the First Class That the plaintiff was forced out of his seat in the first class
accommodation berths at Bangkok after he was already seated. compartment of the plane belonging to the defendant Air France while
at Bangkok, and was transferred to the tourist class not only without
his consent but against his will, has been sufficiently established by
plaintiff in his testimony before the court, corroborated by the Why did the, using the words of witness Ernesto G. Cuento,
corresponding entry made by the purser of the plane in his notebook "white man" have a "better right" to the seat occupied by Mr.
which notation reads as follows: Carrascoso? The record is silent. The defendant airline did
not prove "any better", nay, any right on the part of the "white
"First-class passenger was forced to go to the tourist class man" to the "First class" seat that the plaintiff was occupying
against his will, and that the captain refused to intervene", and for which he paid and was issued a corresponding "first
class" ticket.
and by the testimony of an eye-witness, Ernesto G. Cuento, who was
a co-passenger. The captain of the plane who was asked by the If there was a justified reason for the action of the defendant's
manager of defendant company at Bangkok to intervene even refused Manager in Bangkok, the defendant could have easily proven
to do so. It is noteworthy that no one on behalf of defendant ever it by having taken the testimony of the said Manager by
contradicted or denied this evidence for the plaintiff. It could have been deposition, but defendant did not do so; the presumption is
easy for defendant to present its manager at Bangkok to testify at the that evidence willfully suppressed would be adverse if
trial of the case, or yet to secure his disposition; but defendant did produced [Sec. 69, par (e), Rules of Court]; and, under the
neither. 37 circumstances, the Court is constrained to find, as it does find,
that the Manager of the defendant airline in Bangkok not
merely asked but threatened the plaintiff to throw him out of
The Court of appeals further stated
the plane if he did not give up his "first class" seat because
the said Manager wanted to accommodate, using the words
Neither is there evidence as to whether or not a prior reservation was of the witness Ernesto G. Cuento, the "white man".38
made by the white man. Hence, if the employees of the defendant at
Bangkok sold a first-class ticket to him when all the seats had already
It is really correct to say that the Court of Appeals in the quoted portion
been taken, surely the plaintiff should not have been picked out as the
first transcribed did not use the term "bad faith". But can it be doubted
one to suffer the consequences and to be subjected to the humiliation
and indignity of being ejected from his seat in the presence of others. that the recital of facts therein points to bad faith? The manager not
only prevented Carrascoso from enjoying his right to a first class seat;
Instead of explaining to the white man the improvidence committed by
worse, he imposed his arbitrary will; he forcibly ejected him from his
defendant's employees, the manager adopted the more drastic step
seat, made him suffer the humiliation of having to go to the tourist
of ousting the plaintiff who was then safely ensconsced in his rightful
class compartment - just to give way to another passenger whose right
seat. We are strengthened in our belief that this probably was what
happened there, by the testimony of defendant's witness Rafael thereto has not been established. Certainly, this is bad faith. Unless,
Altonaga who, when asked to explain the meaning of the letters "O.K." of course, bad faith has assumed a meaning different from what is
understood in law. For, "bad faith" contemplates a "state of mind
appearing on the tickets of plaintiff, said "that the space is confirmed
affirmatively operating with furtive design or with some motive of self-
for first class. Likewise, Zenaida Faustino, another witness for
interest or will or for ulterior purpose." 39
defendant, who was the chief of the Reservation Office of defendant,
testified as follows:
And if the foregoing were not yet sufficient, there is the express finding
of bad faith in the judgment of the Court of First Instance, thus:
"Q How does the person in the ticket-issuing office know what
reservation the passenger has arranged with you?
The evidence shows that the defendant violated its contract
A They call us up by phone and ask for the confirmation." of transportation with plaintiff in bad faith, with the aggravating
(t.s.n., p. 247, June 19, 1959) circumstances that defendant's Manager in Bangkok went to
the extent of threatening the plaintiff in the presence of many
passengers to have him thrown out of the airplane to give the
In this connection, we quote with approval what the trial Judge has "first class" seat that he was occupying to, again using the
said on this point: words of the witness Ernesto G. Cuento, a "white man" whom
he (defendant's Manager) wished to accommodate, and the
defendant has not proven that this "white man" had any "better
right" to occupy the "first class" seat that the plaintiff was Court of South Carolina there held the carrier liable for the mental suffering of
occupying, duly paid for, and for which the corresponding "first said passenger.1awphl.nt
class" ticket was issued by the defendant to him.40
Petitioner's contract with Carrascoso is one attended with public duty. The
5. The responsibility of an employer for the tortious act of its employees need stress of Carrascoso's action as we have said, is placed upon his wrongful
not be essayed. It is well settled in law. 41 For the willful malevolent act of expulsion. This is a violation of public duty by the petitioner air carrier a case
petitioner's manager, petitioner, his employer, must answer. Article 21 of the of quasi-delict. Damages are proper.
Civil Code says:
7. Petitioner draws our attention to respondent Carrascoso's testimony, thus--
ART. 21. Any person who willfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall Q You mentioned about an attendant. Who is that attendant and
compensate the latter for the damage. purser?

In parallel circumstances, we applied the foregoing legal precept; and, we held A When we left already that was already in the trip I could not
that upon the provisions of Article 2219 (10), Civil Code, moral damages are help it. So one of the flight attendants approached me and requested
recoverable. 42 from me my ticket and I said, What for? and she said, "We will note
that you transferred to the tourist class". I said, "Nothing of that kind.
6. A contract to transport passengers is quite different in kind and degree from That is tantamount to accepting my transfer." And I also said, "You are
any other contractual relation. 43And this, because of the relation which an air- not going to note anything there because I am protesting to this
carrier sustains with the public. Its business is mainly with the travelling public. transfer".
It invites people to avail of the comforts and advantages it offers. The contract
of air carriage, therefore, generates a relation attended with a public duty. Q Was she able to note it?
Neglect or malfeasance of the carrier's employees, naturally, could give
ground for an action for damages.
A No, because I did not give my ticket.

Passengers do not contract merely for transportation. They have a right to be


Q About that purser?
treated by the carrier's employees with kindness, respect, courtesy and due
consideration. They are entitled to be protected against personal misconduct,
injurious language, indignities and abuses from such employees. So it is, that A Well, the seats there are so close that you feel uncomfortable and
any rule or discourteous conduct on the part of employees towards a you don't have enough leg room, I stood up and I went to the pantry
passenger gives the latter an action for damages against the carrier. 44 that was next to me and the purser was there. He told me, "I have
recorded the incident in my notebook." He read it and translated it to
me because it was recorded in French "First class passenger
Thus, "Where a steamship company 45 had accepted a passenger's check, it
was forced to go to the tourist class against his will, and that the
was a breach of contract and a tort, giving a right of action for its agent in the
captain refused to intervene."
presence of third persons to falsely notify her that the check was worthless
and demand payment under threat of ejection, though the language used was
not insulting and she was not ejected." 46 And this, because, although the Mr. VALTE
relation of passenger and carrier is "contractual both in origin and nature"
nevertheless "the act that breaks the contract may be also a tort". 47 And in I move to strike out the last part of the testimony of the witness
another case, "Where a passenger on a railroad train, when the conductor because the best evidence would be the notes. Your Honor.
came to collect his fare tendered him the cash fare to a point where the train
was scheduled not to stop, and told him that as soon as the train reached such COURT
point he would pay the cash fare from that point to destination, there was
nothing in the conduct of the passenger which justified the conductor in using I will allow that as part of his testimony. 49
insulting language to him, as by calling him a lunatic," 48 and the Supreme
Petitioner charges that the finding of the Court of Appeals that the purser made give our imprimatur thereto. Because, the facts and circumstances point to the
an entry in his notebook reading "First class passenger was forced to go to the reasonableness thereof.57
tourist class against his will, and that the captain refused to intervene" is
predicated upon evidence [Carrascoso's testimony above] which is On balance, we say that the judgment of the Court of Appeals does not suffer
incompetent. We do not think so. The subject of inquiry is not the entry, but from reversible error. We accordingly vote to affirm the same. Costs against
the ouster incident. Testimony on the entry does not come within the petitioner. So ordered.
proscription of the best evidence rule. Such testimony is admissible. 49a
Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal, Zaldivar
Besides, from a reading of the transcript just quoted, when the dialogue and Castro, JJ., concur.
happened, the impact of the startling occurrence was still fresh and continued Bengzon, J.P., J., took no part.
to be felt. The excitement had not as yet died down. Statements then, in this
environment, are admissible as part of the res gestae. 50 For, they grow "out
G.R. No. 150157 January 25, 2007
of the nervous excitement and mental and physical condition of the
declarant". 51 The utterance of the purser regarding his entry in the notebook
was spontaneous, and related to the circumstances of the ouster incident. Its MAURICIO MANLICLIC and PHILIPPINE RABBIT BUS LINES,
trustworthiness has been guaranteed. 52 It thus escapes the operation of the INC., Petitioners,
hearsay rule. It forms part of the res gestae. vs.
MODESTO CALAUNAN, Respondent.
At all events, the entry was made outside the Philippines. And, by an employee
of petitioner. It would have been an easy matter for petitioner to have DECISION
contradicted Carrascoso's testimony. If it were really true that no such entry
was made, the deposition of the purser could have cleared up the matter. CHICO-NAZARIO, J.:

We, therefore, hold that the transcribed testimony of Carrascoso is admissible Assailed before Us is the decision1 of the Court of Appeals in CA-G.R. CV No.
in evidence. 55909 which affirmed in toto the decision2 of the Regional Trial Court (RTC) of
Dagupan City, Branch 42, in Civil Case No. D-10086, finding petitioners
8. Exemplary damages are well awarded. The Civil Code gives the court ample Mauricio Manliclic and Philippine Rabbit Bus Lines, Inc. (PRBLI) solidarily
power to grant exemplary damages in contracts and quasi- contracts. The liable to pay damages and attorneys fees to respondent Modesto Calaunan.
only condition is that defendant should have "acted in a wanton, fraudulent,
reckless, oppressive, or malevolent manner." 53 The manner of ejectment of The factual antecedents are as follows:
respondent Carrascoso from his first class seat fits into this legal precept. And
this, in addition to moral damages.54 The vehicles involved in this case are: (1) Philippine Rabbit Bus No. 353 with
plate number CVD-478, owned by petitioner PRBLI and driven by petitioner
9. The right to attorney's fees is fully established. The grant of exemplary Mauricio Manliclic; and (2) owner-type jeep with plate number PER-290,
damages justifies a similar judgment for attorneys' fees. The least that can be owned by respondent Modesto Calaunan and driven by Marcelo Mendoza.
said is that the courts below felt that it is but just and equitable that attorneys'
fees be given. 55 We do not intend to break faith with the tradition that discretion At around 6:00 to 7:00 oclock in the morning of 12 July 1988, respondent
well exercised as it was here should not be disturbed. Calaunan, together with Marcelo Mendoza, was on his way to Manila from
Pangasinan on board his owner-type jeep. The Philippine Rabbit Bus was
10. Questioned as excessive are the amounts decreed by both the trial court likewise bound for Manila from Concepcion, Tarlac. At approximately
and the Court of Appeals, thus: P25,000.00 as moral damages; P10,000.00, Kilometer 40 of the North Luzon Expressway in Barangay Lalangan, Plaridel,
by way of exemplary damages, and P3,000.00 as attorneys' fees. The task of Bulacan, the two vehicles collided. The front right side of the Philippine Rabbit
fixing these amounts is primarily with the trial court. 56 The Court of Appeals Bus hit the rear left side of the jeep causing the latter to move to the shoulder
did not interfere with the same. The dictates of good sense suggest that we on the right and then fall on a ditch with water resulting to further extensive
damage. The bus veered to the left and stopped 7 to 8 meters from point of Amman, Jordan, to work. Rosalia Mendoza testified that her husband, Marcelo
collision. Mendoza, left their residence to look for a job. She narrated that she thought
her husband went to his hometown in Panique, Tarlac, when he did not return
Respondent suffered minor injuries while his driver was unhurt. He was first after one month. She went to her husbands hometown to look for him but she
brought for treatment to the Manila Central University Hospital in Kalookan City was informed that he did not go there.1awphil.net
by Oscar Buan, the conductor of the Philippine Rabbit Bus, and was later
transferred to the Veterans Memorial Medical Center. The trial court subpoenaed the Clerk of Court of Branch 8, RTC, Malolos,
Bulacan, the court where Criminal Case No. 684-M-89 was tried, to bring the
By reason of such collision, a criminal case was filed before the RTC of TSNs of the testimonies of respondent Calaunan, 5 Marcelo Mendoza6 and
Malolos, Bulacan, charging petitioner Manliclic with Reckless Imprudence Fernando Ramos7 in said case, together with other documentary evidence
Resulting in Damage to Property with Physical Injuries, docketed as Crim. marked therein. Instead of the Branch Clerk of Court, it was Enrique Santos
Case No. 684-M-89. Subsequently on 2 December 1991, respondent filed a Guevara, Court Interpreter, who appeared before the court and identified the
complaint for damages against petitioners Manliclic and PRBLI before the RTC TSNs of the three afore-named witnesses and other pertinent documents he
of Dagupan City, docketed as Civil Case No. D-10086. The criminal case was had brought.8 Counsel for respondent wanted to mark other TSNs and
tried ahead of the civil case. Among those who testified in the criminal case documents from the said criminal case to be adopted in the instant case, but
were respondent Calaunan, Marcelo Mendoza and Fernando Ramos. since the same were not brought to the trial court, counsel for petitioners
compromised that said TSNs and documents could be offered by counsel for
respondent as rebuttal evidence.
In the civil case (now before this Court), the parties admitted the following:

For the defendants, petitioner Manliclic and bus conductor Oscar Buan
1. The parties agreed on the capacity of the parties to sue and be sued
testified. The TSN9 of the testimony of Donato Ganiban, investigator of the
as well as the venue and the identities of the vehicles involved;
PRBLI, in Criminal Case No. 684-M-89 was marked and allowed to be adopted
in the civil case on the ground that he was already dead.
2. The identity of the drivers and the fact that they are duly licensed;
Respondent further marked, among other documents, as rebuttal evidence,
3. The date and place of the vehicular collision; the TSNs10 of the testimonies of Donato Ganiban, Oscar Buan and petitioner
Manliclic in Criminal Case No. 684-M-89.
4. The extent of the injuries suffered by plaintiff Modesto Calaunan
and the existence of the medical certificate; The disagreement arises from the question: Who is to be held liable for the
collision?
5. That both vehicles were going towards the south; the private jeep
being ahead of the bus; Respondent insists it was petitioner Manliclic who should be liable while the
latter is resolute in saying it was the former who caused the smash up.
6. That the weather was fair and the road was well paved and straight,
although there was a ditch on the right side where the jeep fell into.3 The versions of the parties are summarized by the trial court as follows:

When the civil case was heard, counsel for respondent prayed that the The parties differed only on the manner the collision between the two (2)
transcripts of stenographic notes (TSNs)4of the testimonies of respondent vehicles took place. According to the plaintiff and his driver, the jeep was
Calaunan, Marcelo Mendoza and Fernando Ramos in the criminal case be cruising at the speed of 60 to 70 kilometers per hour on the slow lane of the
received in evidence in the civil case in as much as these witnesses are not expressway when the Philippine Rabbit Bus overtook the jeep and in the
available to testify in the civil case. process of overtaking the jeep, the Philippine Rabbit Bus hit the rear of the
jeep on the left side. At the time the Philippine Rabbit Bus hit the jeep, it was
Francisco Tuliao testified that his brother-in-law, respondent Calaunan, left for about to overtake the jeep. In other words, the Philippine Rabbit Bus was still
abroad sometime in November, 1989 and has not returned since then. Rogelio at the back of the jeep when the jeep was hit. Fernando Ramos corroborated
Ramos took the stand and said that his brother, Fernando Ramos, left for the testimony of the plaintiff and Marcelo Mendoza. He said that he was on
another jeep following the Philippine Rabbit Bus and the jeep of plaintiff when Petitioners are now before us by way of petition for review
the incident took place. He said, the jeep of the plaintiff overtook them and the assailing the decision of the Court of Appeals. They assign as
said jeep of the plaintiff was followed by the Philippine Rabbit Bus which was errors the following:
running very fast. The bus also overtook the jeep in which he was riding. After
that, he heard a loud sound. He saw the jeep of the plaintiff swerved to the I
right on a grassy portion of the road. The Philippine Rabbit Bus stopped and THE COURT OF APPEALS ERRED ON A QUESTION OF
they overtook the Philippine Rabbit Bus so that it could not moved (sic), LAW IN AFFIRMING THE TRIAL COURTS QUESTIONABLE
meaning they stopped in front of the Philippine Rabbit Bus. He testified that ADMISSION IN EVIDENCE OF THE TSNs AND OTHER
the jeep of plaintiff swerved to the right because it was bumped by the DOCUMENTS PRESENTED IN THE CRIMINAL CASE.
Philippine Rabbit bus from behind. II
THE COURT OF APPEALS ERRED ON A QUESTION OF
Both Mauricio Manliclic and his driver, Oscar Buan admitted that the Philippine LAW IN AFFIRMING THE TRIAL COURTS RELIANCE ON
Rabbit Bus bumped the jeep in question. However, they explained that when THE VERSION OF THE RESPONDENT ON HOW THE
the Philippine Rabbit bus was about to go to the left lane to overtake the jeep, ACCIDENT SUPPOSEDLY OCCURRED.
the latter jeep swerved to the left because it was to overtake another jeep in III
front of it. Such was their testimony before the RTC in Malolos in the criminal THE COURT OF APPEALS ERRED ON A QUESTION OF
case and before this Court in the instant case. [Thus, which of the two versions LAW IN AFFIRMING THE TRIAL COURTS UNFAIR
of the manner how the collision took place was correct, would be determinative DISREGARD OF HEREIN PETITIONER PRBLs DEFENSE
of who between the two drivers was negligent in the operation of their OF EXERCISE OF DUE DILIGENCE IN THE SELECTION
respective vehicles.]11 AND SUPERVISION OF ITS EMPLOYEES.
IV
Petitioner PRBLI maintained that it observed and exercised the diligence of a THE COURT OF APPEALS ERRED ON A QUESTION OF
good father of a family in the selection and supervision of its employee, LAW IN AFFIRMING THE TRIAL COURTS QUESTIONABLE
specifically petitioner Manliclic. AWARD OF DAMAGES AND ATTORNEYS FEE.

On 22 July 1996, the trial court rendered its decision in favor of respondent With the passing away of respondent Calaunan during the pendency of this
Calaunan and against petitioners Manliclic and PRBLI. The dispositive portion appeal with this Court, we granted the Motion for the Substitution of
of its decision reads: Respondent filed by his wife, Mrs. Precila Zarate Vda. De Calaunan, and
children, Virgilio Calaunan, Carmelita Honeycomb, Evelyn Calaunan, Marko
WHEREFORE, judgment is rendered in favor of the plaintiff and against the Calaunan and Liwayway Calaunan.15
defendants ordering the said defendants to pay plaintiff jointly and solidarily
the amount of P40,838.00 as actual damages for the towing as well as the In their Reply to respondents Comment, petitioners informed this Court of a
repair and the materials used for the repair of the jeep in Decision16 of the Court of Appeals acquitting petitioner Manliclic of the
question; P100,000.00 as moral damages and another P100,000.00 as charge17 of Reckless Imprudence Resulting in Damage to Property with
exemplary damages and P15,000.00 as attorneys fees, including appearance Physical Injuries attaching thereto a photocopy thereof.
fees of the lawyer. In addition, the defendants are also to pay costs. 12
On the first assigned error, petitioners argue that the TSNs containing the
Petitioners appealed the decision via Notice of Appeal to the Court of testimonies of respondent Calaunan,18Marcelo Mendoza19 and Fernando
Appeals.13 Ramos20 should not be admitted in evidence for failure of respondent to comply
with the requisites of Section 47, Rule 130 of the Rules of Court.
In a decision dated 28 September 2001, the Court of Appeals, finding no
reversible error in the decision of the trial court, affirmed it in all respects.14 For Section 47, Rule 13021 to apply, the following requisites must be satisfied:
(a) the witness is dead or unable to testify; (b) his testimony or deposition was
given in a former case or proceeding, judicial or administrative, between the
same parties or those representing the same interests; (c) the former case
involved the same subject as that in the present case, although on different We do not subscribe to petitioner PRBLIs argument that it will be denied due
causes of action; (d) the issue testified to by the witness in the former trial is process when the TSNs of the testimonies of Calaunan, Marcelo Mendoza and
the same issue involved in the present case; and (e) the adverse party had an Fernando Ramos in the criminal case are to be admitted in the civil case. It is
opportunity to cross-examine the witness in the former case.22 too late for petitioner PRBLI to raise denial of due process in relation to Section
47, Rule 130 of the Rules of Court, as a ground for objecting to the admissibility
Admittedly, respondent failed to show the concurrence of all the requisites set of the TSNs. For failure to object at the proper time, it waived its right to object
forth by the Rules for a testimony given in a former case or proceeding to be that the TSNs did not comply with Section 47.
admissible as an exception to the hearsay rule. Petitioner PRBLI, not being a
party in Criminal Case No. 684-M-89, had no opportunity to cross-examine the In Mangio v. Court of Appeals,27 this Court, through Associate Justice Reynato
three witnesses in said case. The criminal case was filed exclusively against S. Puno,28 admitted in evidence a TSN of the testimony of a witness in another
petitioner Manliclic, petitioner PRBLIs employee. The cases dealing with the case despite therein petitioners assertion that he would be denied due
subsidiary liability of employers uniformly declare that, strictly speaking, they process. In admitting the TSN, the Court ruled that the raising of denial of due
are not parties to the criminal cases instituted against their employees. 23 process in relation to Section 47, Rule 130 of the Rules of Court, as a ground
for objecting to the admissibility of the TSN was belatedly done. In so doing,
Notwithstanding the fact that petitioner PRBLI was not a party in said criminal therein petitioner waived his right to object based on said ground.
case, the testimonies of the three witnesses are still admissible on the ground
that petitioner PRBLI failed to object on their admissibility. Petitioners contend that the documents in the criminal case should not have
been admitted in the instant civil case because Section 47 of Rule 130 refers
It is elementary that an objection shall be made at the time when an alleged only to "testimony or deposition." We find such contention to be untenable.
inadmissible document is offered in evidence; otherwise, the objection shall be Though said section speaks only of testimony and deposition, it does not mean
treated as waived, since the right to object is merely a privilege which the party that documents from a former case or proceeding cannot be admitted. Said
may waive. Thus, a failure to except to the evidence because it does not documents can be admitted they being part of the testimonies of witnesses
conform to the statute is a waiver of the provisions of the law. Even assuming that have been admitted. Accordingly, they shall be given the same weight as
ex gratia argumenti that these documents are inadmissible for being hearsay, that to which the testimony may be entitled.29
but on account of failure to object thereto, the same may be admitted and
considered as sufficient to prove the facts therein asserted.24 Hearsay On the second assigned error, petitioners contend that the version of petitioner
evidence alone may be insufficient to establish a fact in a suit but, when no Manliclic as to how the accident occurred is more credible than respondents
objection is made thereto, it is, like any other evidence, to be considered and version. They anchor their contention on the fact that petitioner Manliclic was
given the importance it deserves.25 acquitted by the Court of Appeals of the charge of Reckless Imprudence
Resulting in Damage to Property with Physical Injuries.
In the case at bar, petitioner PRBLI did not object to the TSNs containing the
testimonies of respondent Calaunan, Marcelo Mendoza and Fernando Ramos To be resolved by the Court is the effect of petitioner Manliclics acquittal in
in the criminal case when the same were offered in evidence in the trial court. the civil case.
In fact, the TSNs of the testimonies of Calaunan and Mendoza were admitted
by both petitioners.26Moreover, petitioner PRBLI even offered in evidence the From the complaint, it can be gathered that the civil case for damages was
TSN containing the testimony of Donato Ganiban in the criminal case. If one arising from, or based on, quasi-delict.30 Petitioner Manliclic was sued for
petitioner PRBLI argues that the TSNs of the testimonies of plaintiffs his negligence or reckless imprudence in causing the collision, while petitioner
witnesses in the criminal case should not be admitted in the instant case, why PRBLI was sued for its failure to exercise the diligence of a good father in the
then did it offer the TSN of the testimony of Ganiban which was given in the selection and supervision of its employees, particularly petitioner Manliclic.
criminal case? It appears that petitioner PRBLI wants to have its cake and eat The allegations read:
it too. It cannot argue that the TSNs of the testimonies of the witnesses of the
adverse party in the criminal case should not be admitted and at the same time
"4. That sometime on July 12, 1988 at around 6:20 A.M. plaintiff was
insist that the TSN of the testimony of the witness for the accused be admitted
on board the above-described motor vehicle travelling at a moderate
in its favor. To disallow admission in evidence of the TSNs of the testimonies
speed along the North Luzon Expressway heading South towards
of Calaunan, Marcelo Mendoza and Fernando Ramos in the criminal case and
to admit the TSN of the testimony of Ganiban would be unfair.
Manila together with MARCELO MENDOZA, who was then driving the "the proximate cause of the accident was his having driven the bus at a great
same; speed while closely following the jeep"; x x x

"5. That approximately at kilometer 40 of the North Luzon Express We do not agree.
Way, the above-described motor vehicle was suddenly bumped from
behind by a Philippine Rabbit Bus with Body No. 353 and with plate The swerving of Calaunans jeep when it tried to overtake the vehicle in front
No. CVD 478 then being driven by one Mauricio Manliclic of San Jose, of it was beyond the control of accused-appellant.
Concepcion, Tarlac, who was then travelling recklessly at a very fast
speed and had apparently lost control of his vehicle;
xxxx

"6. That as a result of the impact of the collision the above-described


Absent evidence of negligence, therefore, accused-appellant cannot be held
motor vehicle was forced off the North Luzon Express Way towards liable for Reckless Imprudence Resulting in Damage to Property with Physical
the rightside where it fell on its drivers side on a ditch, and that as a Injuries as defined in Article 365 of the Revised Penal Code. 32
consequence, the above-described motor vehicle which maybe
valued at EIGHTY THOUSAND PESOS (P80,000) was rendered a
total wreck as shown by pictures to be presented during the pre-trial From the foregoing declaration of the Court of Appeals, it appears that
and trial of this case; petitioner Manliclic was acquitted not on reasonable doubt, but on the ground
that he is not the author of the act complained of which is based on Section
2(b) of Rule 111 of the Rules of Criminal Procedure which reads:
"7. That also as a result of said incident, plaintiff sustained bodily
injuries which compounded plaintiffs frail physical condition and
required his hospitalization from July 12, 1988 up to and until July 22, (b) Extinction of the penal action does not carry with it extinction of the civil,
1988, copy of the medical certificate is hereto attached as Annex "A" unless the extinction proceeds from a declaration in a final judgment that the
and made an integral part hereof; fact from which the civil might arise did not exist.

"8. That the vehicular collision resulting in the total wreckage of the In spite of said ruling, petitioner Manliclic can still be held liable for the mishap.
above-described motor vehicle as well as bodily (sic) sustained by The afore-quoted section applies only to a civil action arising from crime or ex
plaintiff, was solely due to the reckless imprudence of the defendant delicto and not to a civil action arising from quasi-delict or culpa aquiliana. The
driver Mauricio Manliclic who drove his Philippine Rabbit Bus No. 353 extinction of civil liability referred to in Par. (e) of Section 3, Rule 111 [now
at a fast speed without due regard or observance of existing traffic Section 2 (b) of Rule 111], refers exclusively to civil liability founded on Article
rules and regulations; 100 of the Revised Penal Code, whereas the civil liability for the same act
considered as a quasi-delict only and not as a crime is not extinguished even
by a declaration in the criminal case that the criminal act charged has not
"9. That defendant Philippine Rabbit Bus Line Corporation failed to happened or has not been committed by the accused.33
exercise the diligence of a good father of (sic) family in the selection
and supervision of its drivers; x x x"31
A quasi-delict or culpa aquiliana is a separate legal institution under the Civil
Code with a substantivity all its own, and individuality that is entirely apart and
Can Manliclic still be held liable for the collision and be found negligent
independent from a delict or crime a distinction exists between the civil
notwithstanding the declaration of the Court of Appeals that there was an liability arising from a crime and the responsibility for quasi-delicts or culpa
absence of negligence on his part? extra-contractual. The same negligence causing damages may produce civil
liability arising from a crime under the Penal Code, or create an action for
In exonerating petitioner Manliclic in the criminal case, the Court of Appeals quasi-delicts or culpa extra-contractual under the Civil Code.34 It is now settled
said: that acquittal of the accused, even if based on a finding that he is not guilty,
does not carry with it the extinction of the civil liability based on quasi delict. 35
To the following findings of the court a quo, to wit: that accused-appellant was
negligent "when the bus he was driving bumped the jeep from behind"; that In other words, if an accused is acquitted based on reasonable doubt on his
guilt, his civil liability arising from the crime may be proved by preponderance
of evidence only. However, if an accused is acquitted on the basis that he was petitioner Manliclic who was negligent in driving the PRBLI bus which was the
not the author of the act or omission complained of (or that there is declaration cause of the collision. In giving credence to the version of the respondent, the
in a final judgment that the fact from which the civil might arise did not exist), trial court has this say:
said acquittal closes the door to civil liability based on the crime or ex delicto.
In this second instance, there being no crime or delict to speak of, civil liability x x x Thus, which of the two versions of the manner how the collision took
based thereon or ex delicto is not possible. In this case, a civil action, if any, place was correct, would be determinative of who between the two drivers was
may be instituted on grounds other than the delict complained of. negligent in the operation of their respective vehicle.

As regards civil liability arising from quasi-delict or culpa aquiliana, same will In this regard, it should be noted that in the statement of Mauricio Manliclic
not be extinguished by an acquittal, whether it be on ground of reasonable (Exh. 15) given to the Philippine Rabbit Investigator CV Cabading no mention
doubt or that accused was not the author of the act or omission complained of was made by him about the fact that the driver of the jeep was overtaking
(or that there is declaration in a final judgment that the fact from which the civil another jeep when the collision took place. The allegation that another jeep
liability might arise did not exist). The responsibility arising from fault or was being overtaken by the jeep of Calaunan was testified to by him only in
negligence in a quasi-delict is entirely separate and distinct from the civil Crim. Case No. 684-M-89 before the Regional Trial Court in Malolos, Bulacan
liability arising from negligence under the Penal Code.36 An acquittal or and before this Court. Evidently, it was a product of an afterthought on the part
conviction in the criminal case is entirely irrelevant in the civil case 37 based on of Mauricio Manliclic so that he could explain why he should not be held
quasi-delict or culpa aquiliana. responsible for the incident. His attempt to veer away from the truth was also
apparent when it would be considered that in his statement given to the
Petitioners ask us to give credence to their version of how the collision Philippine Rabbit Investigator CV Cabading (Exh. 15), he alleged that the
occurred and to disregard that of respondents. Petitioners insist that while the Philippine Rabbit Bus bumped the jeep of Calaunan while the Philippine Rabbit
PRBLI bus was in the process of overtaking respondents jeep, the latter, Bus was behind the said jeep. In his testimony before the Regional Trial Court
without warning, suddenly swerved to the left (fast) lane in order to overtake in Malolos, Bulacan as well as in this Court, he alleged that the Philippine
another jeep ahead of it, thus causing the collision. Rabbit Bus was already on the left side of the jeep when the collision took
place. For this inconsistency between his statement and testimony, his
As a general rule, questions of fact may not be raised in a petition for review. explanation regarding the manner of how the collision between the jeep and
The factual findings of the trial court, especially when affirmed by the appellate the bus took place should be taken with caution. It might be true that in the
court, are binding and conclusive on the Supreme Court.38 Not being a trier of statement of Oscar Buan given to the Philippine Rabbit Investigator CV
facts, this Court will not allow a review thereof unless: Cabading, it was mentioned by the former that the jeep of plaintiff was in the
act of overtaking another jeep when the collision between the latter jeep and
(1) the conclusion is a finding grounded entirely on speculation, surmise and the Philippine Rabbit Bus took place. But the fact, however, that his statement
was given on July 15, 1988, one day after Mauricio Manliclic gave his
conjecture; (2) the inference made is manifestly mistaken; (3) there is grave
statement should not escape attention. The one-day difference between the
abuse of discretion; (4) the judgment is based on a misapprehension of facts;
giving of the two statements would be significant enough to entertain the
(5) the findings of fact are conflicting; (6) the Court of Appeals went beyond
possibility of Oscar Buan having received legal advise before giving his
the issues of the case and its findings are contrary to the admissions of both
appellant and appellees; (7) the findings of fact of the Court of Appeals are statement. Apart from that, as between his statement and the statement of
contrary to those of the trial court; (8) said findings of fact are conclusions Manliclic himself, the statement of the latter should prevail. Besides, in his
Affidavit of March 10, 1989, (Exh. 14), the unreliability of the statement of
without citation of specific evidence on which they are based; (9) the facts set
Oscar Buan (Exh. 13) given to CV Cabading rear its "ugly head" when he did
forth in the petition as well as in the petitioner's main and reply briefs are not
not mention in said affidavit that the jeep of Calaunan was trying to overtake
disputed by the respondents; and (10) the findings of fact of the Court of
another jeep when the collision between the jeep in question and the Philippine
Appeals are premised on the supposed absence of evidence and contradicted
by the evidence on record.39 Rabbit bus took place.

xxxx
After going over the evidence on record, we do not find any of the exceptions
that would warrant our departure from the general rule. We fully agree in the
finding of the trial court, as affirmed by the Court of Appeals, that it was If one would believe the testimony of the defendant, Mauricio Manliclic, and
his conductor, Oscar Buan, that the Philippine Rabbit Bus was already
somewhat parallel to the jeep when the collision took place, the point of employees and the imposition of necessary disciplinary measures upon
collision on the jeep should have been somewhat on the left side thereof rather employees in case of breach or as may be warranted to ensure the
than on its rear. Furthermore, the jeep should have fallen on the road itself performance of acts indispensable to the business of and beneficial to their
rather than having been forced off the road. Useless, likewise to emphasize employer. To this, we add that actual implementation and monitoring of
that the Philippine Rabbit was running very fast as testified to by Ramos which consistent compliance with said rules should be the constant concern of the
was not controverted by the defendants.40 employer, acting through dependable supervisors who should regularly report
on their supervisory functions.
Having ruled that it was petitioner Manliclics negligence that caused the
smash up, there arises the juris tantum presumption that the employer is In order that the defense of due diligence in the selection and supervision of
negligent, rebuttable only by proof of observance of the diligence of a good employees may be deemed sufficient and plausible, it is not enough to emptily
father of a family.41 Under Article 218042 of the New Civil Code, when an injury invoke the existence of said company guidelines and policies on hiring and
is caused by the negligence of the employee, there instantly arises a supervision. As the negligence of the employee gives rise to the presumption
presumption of law that there was negligence on the part of the master or of negligence on the part of the employer, the latter has the burden of proving
employer either in the selection of the servant or employee, or in supervision that it has been diligent not only in the selection of employees but also in the
over him after selection or both. The liability of the employer under Article 2180 actual supervision of their work. The mere allegation of the existence of hiring
is direct and immediate; it is not conditioned upon prior recourse against the procedures and supervisory policies, without anything more, is decidedly not
negligent employee and a prior showing of the insolvency of such employee. sufficient to overcome such presumption.
Therefore, it is incumbent upon the private respondents to prove that they
exercised the diligence of a good father of a family in the selection and We emphatically reiterate our holding, as a warning to all employers, that "the
supervision of their employee.43 formulation of various company policies on safety without showing that they
were being complied with is not sufficient to exempt petitioner from liability
In the case at bar, petitioner PRBLI maintains that it had shown that it arising from negligence of its employees. It is incumbent upon petitioner to
exercised the required diligence in the selection and supervision of its show that in recruiting and employing the erring driver the recruitment
employees, particularly petitioner Manliclic. In the matter of selection, it procedures and company policies on efficiency and safety were followed." x x
showed the screening process that petitioner Manliclic underwent before he x.
became a regular driver. As to the exercise of due diligence in the supervision
of its employees, it argues that presence of ready investigators (Ganiban and The trial court found that petitioner PRBLI exercised the diligence of a good
Cabading) is sufficient proof that it exercised the required due diligence in the father of a family in the selection but not in the supervision of its employees. It
supervision of its employees. expounded as follows:

In the selection of prospective employees, employers are required to examine From the evidence of the defendants, it seems that the Philippine Rabbit Bus
them as to their qualifications, experience and service records. In the Lines has a very good procedure of recruiting its driver as well as in the
supervision of employees, the employer must formulate standard operating maintenance of its vehicles. There is no evidence though that it is as good in
procedures, monitor their implementation and impose disciplinary measures the supervision of its personnel. There has been no iota of evidence introduced
for the breach thereof. To fend off vicarious liability, employers must submit by it that there are rules promulgated by the bus company regarding the safe
concrete proof, including documentary evidence, that they complied with operation of its vehicle and in the way its driver should manage and operate
everything that was incumbent on them.44 the vehicles assigned to them. There is no showing that somebody in the bus
company has been employed to oversee how its driver should behave while
In Metro Manila Transit Corporation v. Court of Appeals,45 it was explained operating their vehicles without courting incidents similar to the herein case. In
that: regard to supervision, it is not difficult to observe that the Philippine Rabbit Bus
Lines, Inc. has been negligent as an employer and it should be made
Due diligence in the supervision of employees on the other hand, includes the responsible for the acts of its employees, particularly the driver involved in this
formulation of suitable rules and regulations for the guidance of employees case.
and the issuance of proper instructions intended for the protection of the public
and persons with whom the employer has relations through his or its
We agree. The presence of ready investigators after the occurrence of the MA. ALICIA AUSTRIA-MARTINEZ ROMEO J. CALLEJO, SR.
accident is not enough to exempt petitioner PRBLI from liability arising from Associate Justice Asscociate Justice
the negligence of petitioner Manliclic. Same does not comply with the
guidelines set forth in the cases above-mentioned. The presence of the
investigators after the accident is not enough supervision. Regular supervision ATTESTATION
of employees, that is, prior to any accident, should have been shown and
established. This, petitioner failed to do. The lack of supervision can further be I attest that the conclusions in the above Decision were reached in consultation
seen by the fact that there is only one set of manual containing the rules and before the case was assigned to the writer of the opinion of the Courts
regulations for all the drivers of PRBLI. 46 How then can all the drivers of Division.
petitioner PRBLI know and be continually informed of the rules and regulations
when only one manual is being lent to all the drivers? CONSUELO YNARES-SANTIAGO
Associate Justice
For failure to adduce proof that it exercised the diligence of a good father of a Chairperson, Third Division
family in the selection and supervision of its employees, petitioner PRBLI is
held solidarily responsible for the damages caused by petitioner Manliclics CERTIFICATION
negligence.
Pursuant to Section 13, Article VIII of the Constitution, and the Division
We now go to the award of damages. The trial court correctly awarded the Chairpersons Attestation, it is hereby certified that the conclusions in the
amount of P40,838.00 as actual damages representing the amount paid by above Decision were reached in consultation before the case was assigned to
respondent for the towing and repair of his jeep.47 As regards the awards for the writer of the opinion of the Courts Division.
moral and exemplary damages, same, under the circumstances, must be
modified. The P100,000.00 awarded by the trial court as moral damages must REYNATO S. PUNO
be reduced to P50,000.00.48 Exemplary damages are imposed by way of Chief Justice
example or correction for the public good.49 The amount awarded by the trial
court must, likewise, be lowered to P50,000.00.50 The award of P15,000.00 for
attorneys fees and expenses of litigation is in order and authorized by law. 51

WHEREFORE, premises considered, the instant petition for review is


DENIED. The decision of the Court of Appeals in CA-G.R. CV No. 55909 is
AFFIRMED with the MODIFICATION that (1) the award of moral damages
shall be reduced to P50,000.00; and (2) the award of exemplary damages shall
be lowered to P50,000.00. Costs against petitioners.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson