G.R. No.

118889 March 23, 1998 To sustain a claim based thereon, the following requisites must concur: (a) damage
suffered by the plaintiff; (b) fault or negligence of the defendant; and, (c) connection of
cause and effect between the fault or negligence of the defendant and the damage
FGU INSURANCE CORPORATION, petitioner,
incurred by the plaintiff.
6

vs.
COURT OF APPEALS, FILCAR TRANSPORT, INC., and FORTUNE INSURANCE
CORPORATION, respondents. We agree with respondent court that petitioner failed to prove the existence of the second
requisite, i.e., fault or negligence of defendant FILCAR, because only the fault or
negligence of Dahl-Jensen was sufficiently established, not that of FILCAR. It should be
noted that the damage caused on the vehicle of Soriano was brought about by the
circumstance that Dahl-Jensen swerved to the right while the vehicle that he was driving
BELLOSILLO, J.: was at the center lane. It is plain that the negligence was solely attributable to Dahl-
Jensen thus making the damage suffered by the other vehicle his personal liability.
Respondent FILCAR did not have any participation therein.
For damages suffered by a third party, may an action based on quasi-delict prosper
against a rent-a-car company and, consequently, its insurer for fault or negligence of the
car lessee in driving the rented vehicle? Article 2180 of the same Code which deals also with quasi-delict provides:

This was a two-car collision at dawn. At around 3 o'clock of 21 April 1987, two (2) vehicles, The obligation imposed by article 2176 is demandable not only for one's
both Mitsubishi Colt Lancers, cruising northward along Epifanio de los Santos Avenue, own acts or omissions, but also for those of persons for whom one is
Mandaluyong City, figured in a traffic accident. The car bearing Plate No. PDG 435 owned responsible.
by Lydia F. Soriano was being driven at the outer lane of the highway by Benjamin
Jacildone, while the other car, with Plate No. PCT 792, owned by respondent FILCAR
The father and, in case of his death or incapacity, the mother, are
Transport, Inc. (FILCAR), and driven by Peter Dahl-Jensen as lessee, was at the center
responsible for the damages caused by the minor children who live in
lane, left of the other vehicle. Upon approaching the corner of Pioneer Street, the car
their company.
owned by FILCAR swerved to the right hitting the left side of the car of Soriano. At that
time Dahl-Jensen, a Danish tourist, did not possess a Philippine driver's license. 1

Guardians are liable for damages caused by the minors or incapacitated

persons who are under their authority and live in their company.
As a consequence, petitioner FGU Insurance Corporation, in view of its insurance contract
with Soriano, paid the latter P25,382.20. By way of subrogation, it sued Dahl-Jensen and
2

respondent FILCAR as well as respondent Fortune Insurance Corporation (FORTUNE) as The owners and managers of an establishment or enterprise are
insurer of FILCAR for quasi-delict before the Regional Trial Court of Makati City. likewise responsible for damages caused by their employees in the
service of the branches in which the latter are employed or on the
occasion of their functions.
Unfortunately, summons was not served on Dahl-Jensen since he was no longer staying at
his given address; in fact, upon motion of petitioner, he was dropped from the complaint.
Employers shall be liable for the damages caused by their employees
and household helpers acting within the scope of their assigned tasks,
On 30 July 1991 the trial court dismissed the case for failure of petitioner to substantiate
even though the former are not engaged in any business or industry.
its claim of subrogation.
3

The State is responsible in like manner when it acts through a special

On 31 January 1995 respondent Court of Appeals affirmed the ruling of the trial court
agent; but not when the damage has been caused by the official to
although based on another ground, i.e., only the fault or negligence of Dahl-Jensen was
whom the task done properly pertains, in which case what is provided in
sufficiently proved but not that of respondent FILCAR. In other words, petitioner failed to
4

article 2176 shall be applicable.

establish its cause of action for sum of money based on quasi-delict.

Lastly, teachers or heads of establishments of arts and trades shall be

In this appeal, petitioner insists that respondents are liable on the strength of the ruling
liable for damages caused by their pupils and students or apprentices,
in MYC-Agro-Industrial Corporation v. Vda. de Caldo that the registered owner of a vehicle
5

so long as they remain in their custody.

is liable for damages suffered by third persons although the vehicle is leased to another.

We find no reversible error committed by respondent court in upholding the dismissal of
petitioner's complaint. The pertinent provision is Art. 2176 of the Civil Code which states:
"Whoever by act or omission causes damage to another, there being fault or negligence,
is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a quasi-delict . . . . "
The responsibility treated of in this article shall cease when the persons
herein mentioned prove that they observed all the diligence of a good
father of a family to prevent damage.
The liability imposed by Art. 2180 arises by virtue of a presumption juris tantum of
negligence on the part of the persons made responsible thereunder, derived from their
failure to exercise due care and vigilance over the acts of subordinates to prevent them
from causing damage. Yet, as correctly observed by respondent court, Art. 2180 is hardly
7

applicable because none of the circumstances mentioned therein obtains in the case
under consideration. Respondent FILCAR being engaged in a rent-a-car business was only
the owner of the car leased to Dahl-Jensen. As such, there was no vinculum juris between
them as employer and employee. Respondent FILCAR cannot in any way be responsible
for the negligent act of Dahl-Jensen, the former not being an employer of the latter.

We now correlate par. 5 of Art. 2180 with Art. 2184 of the same Code which provides: "In
motor vehicle mishap, the owner is solidarily liable with his driver, if the former, who was
in the vehicle, could have by the use of due diligence, prevented the misfortune . . . . If
the owner was not in the motor vehicle, the provisions of article 2180 are applicable."
Obviously, this provision of Art. 2184 is neither applicable because of the absence of
master-driver relationship between respondent FILCAR and Dahl-Jensen. Clearly,
petitioner has no cause of action against respondent FILCAR on the basis of quasi-delict;
logically, its claim against respondent FORTUNE can neither prosper.

Petitioner's insistence on MYC-Agro-Industrial Corporation is rooted in a misapprehension

of our ruling therein. In that case, the negligent and reckless operation of the truck owned
by petitioner corporation caused injuries to several persons and damage to property.
Intending to exculpate itself from liability, the corporation raised the defense that at the
time of the collision it had no more control over the vehicle as it was leased to another;
and, that the driver was not its employee but of the lessee. The trial court was not
persuaded as it found that the true nature of the alleged lease contract was nothing more
than a disguise effected by the corporation to relieve itself of the burdens and
responsibilities of an employer. We upheld this finding and affirmed the declaration of joint
and several liability of the corporation with its driver.

WHEREFORE, the petition is DENIED. The decision of respondent Court of Appeals dated
31 January 1995 sustaining the dismissal of petitioner's complaint by the trial court is
AFFIRMED. Costs against petitioner.

SO ORDERED.
G.R. No. 122445 November 18, 1997
DR. NINEVETCH CRUZ, petitioner,
vs.
COURT OF APPEALS and LYDIA UMALI, respondents.
FRANCISCO, J.:
Doctors are protected by a special rule of law. They are not guarantors of care. They do
not even warrant a good result. They are not insurers against mishaps or unusual
consequences. Furthermore they are not liable for honest mistakes of judgment . . . 1
The present case against petitioner is in the nature of a medical malpractice suit, which in
simplest terms is the type of claim which a victim has available to him or her to redress a
wrong committed by a medical professional which has caused bodily harm. 2 In this
jurisdiction, however, such claims are most often brought as a civil action for damages under Article
2176 of the Civil Code, 3 and in some instances, as a criminal case under Article 365 of the Revised
Penal Code 4 with which the civil action for damages is impliedly instituted. It is via the latter type of
action that the heirs of the deceased sought redress for the petitioner's alleged imprudence and
negligence in treating the deceased thereby causing her death. The petitioner and one Dr. Lina Ercillo
who was the attending anaesthesiologist during the operation of the deceased were charged with
"reckless imprudence and negligence resulting to (sic) homicide" in an information which reads:
That on or about March 23, 1991, in the City of San Pablo, Republic of
the Philippines and within the jurisdiction of this Honorable Court, the
accused above named, being then the attending anaesthesiologist and
surgeon, respectively, did then and there, in a negligence (sic), careless,
imprudent, and incompetent manner, and failing to supply or store
sufficient provisions and facilities necessary to meet any and all
exigencies apt to arise before, during and/or after a surgical operation
causing by such negligence, carelessness, imprudence, and
incompetence, and causing by such failure, including the lack of
preparation and foresight needed to avert a tragedy, the untimely death
of said Lydia Umali on the day following said surgical operation. 5
Trial ensued after both the petitioner and Dr. Lina Ercillo pleaded not guilty to the above-
mentioned charge. On March 4, 1994, the Municipal Trial Court in Cities (MTCC) of San
Pablo City rendered a decision, the dispositive portion of which is hereunder quoted as
follows:
WHEREFORE, the court finds the accused Dra. Lina Ercillo not guilty of
the offense charged for insufficiency of evidence while her co-accused
Dra. Ninevetch Cruz is hereby held responsible for the death of Lydia
Umali on March 24, 1991, and therefore guilty under Art. 365 of the
Revised Penal Code, and she is hereby sentenced to suffer the penalty
of 2 months and 1 day imprisonment of arresto mayor with costs. 6
The petitioner appealed her conviction to the Regional Trial Court (RTC) which
affirmed in toto the decision of the MTCC 7 prompting the petitioner to file a petition for
review with the Court of Appeals but to no avail. Hence this petition for review
on certiorari assailing the decision promulgated by the Court of Appeals on October 24, 1995
affirming petitioner's conviction with modification that she is further directed to pay the heirs
of Lydia Umali P50,000.00 as indemnity for her death. 8
In substance, the petition brought before this Court raises the issue of whether or
not petitioner's conviction of the crime of reckless imprudence resulting in
homicide, arising from an alleged medical malpractice, is supported by the
evidence on record.
First the antecedent facts.
On March 22, 1991, prosecution witness, Rowena Umali De Ocampo, accompanied her
mother to the Perpetual Help Clinic and General Hospital situated in Balagtas Street, San
Pablo City, Laguna. They arrived at the said hospital at around 4:30 in the afternoon of the
same day. 9 Prior to
March 22, 1991, Lydia was examined by the petitioner who found a "myoma" 10 in her uterus, and
scheduled her for a hysterectomy operation on March 23,
1991. 11 Rowena and her mother slept in the clinic on the evening of March 22, 1991 as the latter was
to be operated on the next day at 1:00 o'clock in the afternoon. 12 According to Rowena, she noticed
that the clinic was untidy and the window and the floor were very dusty prompting her to ask the
attendant for a rag to wipe the window and the floor with. 13 Because of the untidy state of the clinic,
Rowena tried to persuade her mother not to proceed with the operation. 14 The following day, before
her mother was wheeled into the operating room, Rowena asked the petitioner if the operation could
be postponed. The petitioner called Lydia into her office and the two had a conversation. Lydia then
informed Rowena that the petitioner told her that she must be operated on as scheduled. 15
Rowena and her other relatives, namely her husband, her sister and two aunts waited
outside the operating room while Lydia underwent operation. While they were waiting, Dr.
Ercillo went out of the operating room and instructed them to buy tagamet ampules which
Rowena's sister immediately bought. About one hour had passed when Dr. Ercillo came
out again this time to ask them to buy blood for Lydia. They bought type "A" blood from
the St. Gerald Blood Bank and the same was brought by the attendant into the operating
room. After the lapse of a few hours, the petitioner informed them that the operation was
finished. The operating staff then went inside the petitioner's clinic to take their snacks.
Some thirty minutes after, Lydia was brought out of the operating room in a stretcher and
the petitioner asked Rowena and the other relatives to buy additional blood for Lydia.
Unfortunately, they were not able to comply with petitioner's order as there was no more
type "A" blood available in the blood bank. Thereafter, a person arrived to donate blood
which was later transfused to Lydia. Rowena then noticed her mother, who was attached
to an oxygen tank, gasping for breath. Apparently the oxygen supply had run out and
Rowena's husband together with the driver of the accused had to go to the San Pablo
District Hospital to get oxygen. Lydia was given the fresh supply of oxygen as soon as it
arrived. 16 But at around 10:00 o'clock P.M. she went into shock and her blood pressure dropped to
60/50. Lydia's unstable condition necessitated her transfer to the San Pablo District Hospital so she
could be connected to a respirator and further examined. 17 The transfer to the San Pablo District
Hospital was without the prior consent of Rowena nor of the other relatives present who found out
about the intended transfer only when an ambulance arrived to take Lydia to the San Pablo District
Hospital. Rowena and her other relatives then boarded a tricycle and followed the ambulance. 18
Upon Lydia's arrival at the San Pablo District Hospital, she was wheeled into the operating
room and the petitioner and Dr. Ercillo re-operated on her because there was blood oozing
from the abdominal incision. 19 The attending physicians summoned Dr. Bartolome Angeles, head
of the Obstetrics and Gynecology Department of the San Pablo District Hospital. However, when Dr.
Angeles arrived, Lydia was already in shock and possibly dead as her blood pressure was already 0/0.
Dr. Angeles then informed petitioner and Dr. Ercillo that there was nothing he could do to help save the
patient. 20 While the petitioner was closing the abdominal wall, the patient died. 21 Thus, on March 24,
1991, at 3:00 o'clock in the morning, Lydia Umali was pronounced dead. Her death certificate states
"shock" as the immediate cause of death and "Disseminated Intravascular Coagulation (DIC)" as the
antecedent cause. 22
In convicting the petitioner, the MTCC found the following circumstances as sufficient
basis to conclude that she was indeed negligent in the performance of the operation:
. . . , the clinic was untidy, there was lack of provision like blood and
oxygen to prepare for any contingency that might happen during the
operation. The manner and the fact that the patient was brought to the
San Pablo District Hospital for reoperation indicates that there was
something wrong in the manner in which Dra. Cruz conducted the
operation. There was no showing that before the operation, accused
Dra. Cruz had conducted a cardio pulmonary clearance or any typing of
the blood of the patient. It was (sic) said in medical parlance that the
"the abdomen of the person is a temple of surprises" because you do
not know the whole thing the moment it was open (sic) and surgeon
must be prepared for any eventuality thereof. The patient (sic) chart
which is a public document was not presented because it is only there
that we could determine the condition of the patient before the surgery.
The court also noticed in Exh. "F-1" that the sister of the deceased
wished to postpone the operation but the patient was prevailed upon by
Dra. Cruz to proceed with the surgery. The court finds that Lydia Umali
died because of the negligence and carelessness of the surgeon Dra.
Ninevetch Cruz because of loss of blood during the operation of the
deceased for evident unpreparedness and for lack of skill, the reason
why the patient was brought for operation at the San Pablo City District
Hospital. As such, the surgeon should answer for such negligence. With
respect to Dra. Lina Ercillo, the anaesthesiologist, there is no evidence
to indicate that she should be held jointly liable with Dra. Cruz who
actually did the operation. 23
The RTC reiterated the abovementioned findings of the MTCC and upheld the latter's
declaration of "incompetency, negligence and lack of foresight and skill of appellant
(herein petitioner) in handling the subject patient before and after the operation." 24 And
likewise affirming the petitioner's conviction, the Court of Appeals echoed similar observations, thus:
. . . While we may grant that the untidiness and filthiness of the clinic
may not by itself indicate negligence, it nevertheless shows the absence
of due care and supervision over her subordinate employees. Did this
unsanitary condition permeate the operating room? Were the surgical
instruments properly sterilized? Could the conditions in the OR have
contributed to the infection of the patient? Only the petitioner could
answer these, but she opted not to testify. This could only give rise to
the presumption that she has nothing good to testify on her defense.
Anyway, the alleged "unverified statement of the prosecution witness"
remains unchallenged and unrebutted.
Likewise undisputed is the prosecution's version indicating the following
facts: that the accused asked the patient's relatives to buy Tagamet
capsules while the operation was already in progress; that after an hour,
they were also asked to buy type "A" blood for the patient; that after the
surgery, they were again asked to procure more type "A" blood, but
such was not anymore available from the source; that the oxygen given
to the patient was empty; and that the son-in-law of the patient,
together with a driver of the petitioner, had to rush to the San Pablo City
District Hospital to get the much-needed oxygen. All these conclusively
show that the petitioner had not prepared for any unforeseen
circumstances before going into the first surgery, which was not
emergency in nature, but was elective or pre-scheduled; she had no
ready antibiotics, no prepared blood, properly typed and cross-matched,
and no sufficient oxygen supply.
Moreover, there are a lot of questions that keep nagging Us. Was the
patient given any cardio-pulmonary clearance, or at least a clearance by
an internist, which are standard requirements before a patient is
subjected to surgery. Did the petitioner determine as part of the pre-
operative evaluation, the bleeding parameters of the patient, such as
bleeding time and clotting time? There is no showing that these were
done. The petitioner just appears to have been in a hurry to perform the
operation, even as the family wanted a postponement to April 6, 1991.
Obviously, she did not prepare the patient; neither did she get the
family's consent to the operation. Moreover, she did not prepare a
medical chart with instructions for the patient's care. If she did all these,
proof thereof should have been offered. But there is none. Indeed, these
are overwhelming evidence of recklessness and imprudence. 25
This Court, however, holds differently and finds the foregoing circumstances insufficient to
sustain a judgment of conviction against the petitioner for the crime of reckless
imprudence resulting in homicide. The elements of reckless imprudence are: (1) that the
offender does or fails to do an act; (2) that the doing or the failure to do that act is
voluntary; (3) that it be without malice; (4) that material damage results from the reckless
imprudence; and (5) that there is inexcusable lack of precaution on the part of the
offender, taking into consideration his employment or occupation, degree of intelligence,
physical condition, and other circumstances regarding persons, time and place.
Whether or not a physician has committed an "inexcusable lack of precaution" in the
treatment of his patient is to be determined according to the standard of care observed by
other members of the profession in good standing under similar circumstances bearing in
mind the advanced state of the profession at the time of treatment or the present state of
medical science. 26 In the recent case of Leonila Garcia-Rueda v. Wilfred L. Pascasio, et al., 27 this
Court stated that in accepting a case, a doctor in effect represents that, having the needed training
and skill possessed by physicians and surgeons practicing in the same field, he will employ such
training, care and skill in the treatment of his patients. He therefore has a duty to use at least the same
level of care that any other reasonably competent doctor would use to treat a condition under the
same circumstances. It is in this aspect of medical malpractice that expert testimony is essential to
establish not only the standard of care of the profession but also that the physician's conduct in the
treatment and care falls below such standard. 28 Further, inasmuch as the causes of the injuries
involved in malpractice actions are determinable only in the light of scientific knowledge, it has been
recognized that expert testimony is usually necessary to support the conclusion as to causation. 29
Immediately apparent from a review of the records of this case is the absence of any
expert testimony on the matter of the standard of care employed by other physicians of
good standing in the conduct of similar operations. The prosecution's expert witnesses in
the persons of Dr. Floresto Arizala and Dr. Nieto Salvador, Jr. of the National Bureau of
Investigation (NBI) only testified as to the possible cause of death but did not venture to
illuminate the court on the matter of the standard of care that petitioner should have
exercised.
All three courts below bewail the inadequacy of the facilities of the clinic and its Q. You mentioned about your Autopsy Report which
untidiness; the lack of provisions such as blood, oxygen, and certain medicines; the failure has been marked as Exh. "A-1-b". There appears here
to subject the patient to a cardio-pulmonary test prior to the operation; the omission of a signature above the typewritten name Floresto
any form of blood typing before transfusion; and even the subsequent transfer of Lydia to Arizala, Jr., whose signature is that?
the San Pablo Hospital and the reoperation performed on her by the petitioner. But while it
may be true that the circumstances pointed out by the courts below seemed beyond cavil A. That is my signature, sir.
to constitute reckless imprudence on the part of the surgeon, this conclusion is still best
arrived at not through the educated surmises nor conjectures of laymen, including judges,
but by the unquestionable knowledge of expert witnesses. For whether a physician or Q. Do you affirm the truth of all the contents of Exh.
surgeon has exercised the requisite degree of skill and care in the treatment of his patient "A-1-b"?
is, in the generality of cases, a matter of expert opinion. 30 The deference of courts to the
expert opinion of qualified physicians stems from its realization that the latter possess unusual A. Only as to the autopsy report no. 91-09, the time
technical skills which laymen in most instances are incapable of intelligently evaluating. 31 Expert
and place and everything after the post mortem
testimony should have been offered to prove that the circumstances cited by the courts below are
constitutive of conduct falling below the standard of care employed by other physicians in good findings, sir.
standing when performing the same operation. It must be remembered that when the qualifications of
a physician are admitted, as in the instant case, there is an inevitable presumption that in proper cases
Q. You mentioned on your "Post Mortem Findings"
he takes the necessary precaution and employs the best of his knowledge and skill in attending to his
clients, unless the contrary is sufficiently established. 32 This presumption is rebuttable by expert
about surgical incision, 14:0 cm., infraumbilical area,
opinion which is so sadly lacking in the case at bench. anterior abdominal area, midline, will you please
explain that in your own language?

Even granting arguendo that the inadequacy of the facilities and untidiness of the clinic;
the lack of provisions; the failure to conduct pre-operation tests on the patient; and the A. There was incision wound (sic) the area just below
subsequent transfer of Lydia to the San Pablo Hospital and the reoperation performed on the navel, sir.
her by the petitioner do indicate, even without expert testimony, that petitioner was
recklessly imprudent in the exercise of her duties as a surgeon, no cogent proof exists Q. And the last paragraph of the postmortem findings
that any of these circumstances caused petitioner's death. Thus, the absence of the fourth which I read: Uterus, pear-shaped and pale measuring
element of reckless imprudence: that the injury to the person or property was a 7.5 x 5.5 x 5.0 cm. with some surface nodulation of
consequence of the reckless imprudence. the fundic area posteriorly. Cut-section shows diffusely
pale myometrium with areas of streak induration. The
In litigations involving medical negligence, the plaintiff has the burden of establishing ovaries and adnexal structures are missing with the
appellant's negligence and for a reasonable conclusion of negligence, there must be proof raw surfaces patched with clotted blood. Surgical
of breach of duty on the part of the surgeon as well as a causal connection of such breach sutures were noted on the operative site.
and the resulting death of his patient. 33 In Chan Lugay v. St. Luke's Hospital, Inc., 34 where the
attending physician was absolved of liability for the death of the complainant's wife and newborn baby, Intestines and mesenteries are pale with blood clots
this Court held that:
noted between the mesentric folds.

In order that there may be a recovery for an injury, however, it must be

Hemoperitoneum: 300 s.s.,
shown that the "injury for which recovery is sought must be the
right paracolic gutter,
legitimate consequence of the wrong done; the connection between the
50 c.c., left paracolic gutter
negligence and the injury must be a direct and natural sequence of
200 c.c., mesentric area,
events, unbroken by intervening efficient causes." In other words, the
100 c.c., right pelvic gutter
negligence must be the proximate cause of the injury. For, "negligence,
stomach empty.
no matter in what it consists, cannot create a right of action unless it is
the proximate cause of the injury complained of ." And "the proximate
cause of an injury is that cause, which, in natural and continuous Other visceral organs, pale.,
sequence, unbroken by any efficient intervening cause, produces the
injury, and without which the result would not have will you please explain that on (sic) your own language or in
occurred." 35 (Emphasis supplied.) ordinary. . . . . . . . . . . .

Dr. Arizala who conducted an autopsy on the body of the deceased summarized his A. There was a uterus which was not attached to the
findings as follows: adnexal structures namely ovaries which were not
present and also sign of previous surgical operation
Atty. Cachero: and there were (sic) clotted blood, sir.
 Q. How about the ovaries and adnexal structures?
A. They are missing, sir.
Q. You mean to say there are no ovaries?
A. During that time there are no ovaries, sir.
Q. And there were likewise sign of surgical sutures?
A. Yes, sir.
Q. How about the intestines and mesenteries are
place (sic) with blood clots noted between the
mesenteric folds, will you please explain on (sic) this?
A. In the peritoneal cavity, they are mostly perritonial
blood . . . . . . . .
Q. And what could have caused this blood?
A. Well, ordinarily blood is found inside the blood
vessel. Blood were (sic) outside as a result of the
injuries which destroyed the integrity of the vessel
allowing blood to sip (sic) out, sir.
Q. By the nature of the postmortem findings indicated
in Exh. A-1-B, can you tell the court the cause of
death?
A. Yes, sir. The cause of death is: Gross findings are
compatible with hemorrhagic shock.
Q. Can you tell the us what could have caused this
hemorrhagic shock?
A. Well hemorrhagic shock is the result of blood loss.
Q. What could have the effect of that loss of blood?
A. Unattended hemorrhage, sir. 36
(Emphasis supplied.)
The foregoing was corroborated by Dr. Nieto Salvador:
Q. And were you able to determine the cause of death
by virtue of the examination of the specimen
submitted by Dr. Arizala?
A. Without knowledge of the autopsy findings it would
be difficult for me to determine the cause of death, sir.
Q. Have you also examined the post mortem of Dr.
Arizala?
A. Yes, sir, and by virtue of the autopsy report in
connection with your pathology report.
Q. What could have caused the death of the victim?
A. This pathologic examination are (sic) compatible
with the person who died, sir.
Q. Will you explain to us the meaning of hemorrhagic
compatible?
A. It means that a person died of blood loss. Meaning
a person died of non-replacement of blood and so the
victim before she died there was shock of diminish of
blood of the circulation. She died most probably
before the actual complete blood loss, sir.
Court: Is it possible doctor that the loss of the blood
was due on (sic) operation?
A. Based on my pathologist finding, sir.
Q. What could have caused this loss of blood?
A. Many, sir. A patient who have undergone
surgery. Another may be a blood vessel may be cut
while on operation and this cause (sic) bleeding, or
may be set in the course of operation, or may be (sic)
he died after the operation. Of course there are other
cause (sic).
Atty. Cachero:
Q. Especially so doctor when there was no blood
replacement?
A. Yes, sir. 37
(Emphasis supplied.)
The testimonies of both doctors establish hemorrhage or hemorrhagic shock as the cause
of death. However, as likewise testified to by the expert witnesses in open court,
hemorrhage or hemorrhagic shock during surgery may be caused by several different
factors. Thus, Dr. Salvador's elaboration on the matter:
 Atty. Pascual: A. In general sir, if there was an operations (sic) and it
is possible that the ligature in the suture was (sic)
become (sic) loose, it is (sic) becomes loose if proven..
Q. Doctor, among the causes of hemorrhage that you
mentioned you said that it could be at the moment of
operation when one losses (sic) control of the xxx xxx xxx
presence, is that correct? During the operation there is
lost (sic) of control of the cut vessel? Q. If the person who performed an autopsy does not
find any untight (sic) clot (sic) blood vessel or any
A. Yes, sir. suture that become (sic) loose the cause of the
bleeding could not be attributed to the fault of the
subject?
Q. Or there is a failure to ligate a vessel of
considerable size?
A. Definitely, sir. 39
(Emphasis supplied.)

A. Yes, sir.
According to both doctors, the possible causes of hemorrhage during an operation are: (1)
the failure of the surgeon to tie or suture a cut blood vessel; (2) allowing a cut blood
Q. Or even if the vessel were ligated the knot may
vessel to get out of control; (3) the subsequent loosening of the tie or suture applied to a
have slipped later on?
cut blood vessel; and (4) and a clotting defect known as DIC. It is significant to state at
this juncture that the autopsy conducted by Dr. Arizala on the body of Lydia did not reveal
A. Yes, sir. any untied or unsutured cut blood vessel nor was there any indication that the tie or
suture of a cut blood vessel had become loose thereby causing the hemorrhage. 40 Hence
Q. And you also mentioned that it may be possible the following pertinent portion of Dr. Arizala's testimony:
also to some clotting defect, is that correct?
Q: Doctor, in examining these structures did you know
A. May be (sic). 38
(Emphasis supplied). whether these were sutured ligature or plain ligature

Defense witness, Dr. Bu C. Castro also gave the following expert opinion: A: Ligature, sir.

Q. Doctor even a patient after an operations (sic) Q: We will explain that later on. Did you recall if the
would suffer hemorrage what would be the possible cut structures were tied by first suturing it and then
causes of such hemorrage (sic)? tying a knot or the tie was merely placed around the
cut structure and tied?

A. Among those would be what we call Intravascular

Coagulation and this is the reason for the bleeding, A: I cannot recall, sir.
sir, which cannot be prevented by anyone, it will
happen to anyone, anytime and to any persons (sic), Q: As a matter of fact, you cannot recall because you
sir. did not even bothered (sic) to examine, is that
correct?
COURT:
A: Well, I bothered enough to know that they were
What do you think of the cause of the bleeding, the sutured, sir.
cutting or the operations done in the body?
Q: So, therefore, Doctor, you would not know whether
A. Not related to this one, the bleeding here is not any of the cut structures were not sutured or tied
related to any cutting or operation that I (sic) have neither were you able to determine whether any loose
done. suture was found in the peritoneal cavity?

Q. Aside from the DIC what could another causes (sic) A: I could not recall any loose sutured (sic), sir. 41

that could be the cause for the hemorrhage or

bleeding in a patient by an operations (sic)?
On the other hand, the findings of all three doctors do not preclude the probability that
DIC caused the hemorrhage and consequently, Lydia's death. DIC which is a clotting
defect creates a serious bleeding tendency and when massive DIC occurs as a
complication of surgery leaving raw surface, major hemorrhage occurs. 42And as testified to
by defense witness, Dr. Bu C. Castro, hemorrhage due to DIC "cannot be prevented, it will happen to
anyone,
anytime." 43 He testified further:
Q. Now, under that circumstance one of the possibility
as you mentioned in (sic) DIC?
A. Yes, sir.
Q. And you mentioned that this cannot be prevented?
A. Yes, sir.
Q. Can you even predict if it really happen (sic)?
A. Possible, sir.
Q. Are there any specific findings of autopsy that will
tell you whether this patient suffered among such
things as DIC?
A. Well, I did reserve because of the condition of the
patient.
Q. Now, Doctor you said that you went through the
record of the deceased Lydia Umali looking for the
chart, the operated (sic) records, the post mortem
findings on the histophanic (sic) examination based on
your examination of record, doctor, can you more or
less says (sic) what part are (sic) concerned could
have been the caused (sic) of death of this Lydia
Umali?
A. As far as the medical record is concern (sic) the
caused (sic) of death is dessimulated (sic) Intra
Vascular Coagulation or the DIC which resulted to
hemorrhage or bleedings, sir.
Q. Doctor based on your findings then there is
knowing (sic) the doctor would say whether the doctor
her (sic) has been (sic) fault?
ATTY. MALVEDA:
We will moved (sic) to strike out the (sic) based on
finding they just read the chart as well as the other
record.
ATTY. PASCUAL:
Precisely based on this examination.
ATTY. MALVEDA:
Not finding, there was no finding made.
COURT:
He is only reading the record.
ATTY. PASCUAL:
Yes, sir.
A. No, sir, there is no fault on the part of the surgeon,
sir. 44
This Court has no recourse but to rely on the expert testimonies rendered by both
prosecution and defense witnesses that substantiate rather than contradict petitioner's
allegation that the cause of Lydia's death was DIC which, as attested to by an expert
witness, cannot be attributed to the petitioner's fault or negligence. The probability that
Lydia's death was caused by DIC was unrebutted during trial and has engendered in the
mind of this Court a reasonable doubt as to the petitioner's guilt. Thus, her acquittal of the
crime of reckless imprudence resulting in homicide. While we condole with the family of
Lydia Umali, our hands are bound by the dictates of justice and fair dealing which hold
inviolable the right of an accused to be presumed innocent until proven guilty beyond
reasonable doubt. Nevertheless, this Court finds the petitioner civilly liable for the death
of Lydia Umali, for while a conviction of a crime requires proof beyond reasonable doubt,
only a preponderance of evidence is required to establish civil liability. 45
The petitioner is a doctor in whose hands a patient puts his life and limb. For insufficiency
of evidence this Court was not able to render a sentence of conviction but it is not blind to
the reckless and imprudent manner in which the petitioner carried out her duties. A
precious life has been lost and the circumstances leading thereto exacerbated the grief of
those left behind. The heirs of the deceased continue to feel the loss of their mother up to
the present time 46 and this Court is aware that no amount of compassion and commiseration nor
words of bereavement can suffice to assuage the sorrow felt for the loss of a loved one. Certainly, the
award of moral and exemplary damages in favor of the heirs of Lydia Umali are proper in the instant
case.
WHEREFORE, premises considered, petitioner DR. NINEVETCH CRUZ is hereby ACQUITTED
of the crime of reckless imprudence resulting in homicide but is ordered to pay the heirs
of the deceased Lydia Umali the amount of FIFTY THOUSAND PESOS (P50,000.00) as civil
liability, ONE HUNDRED THOUSAND PESOS (P100,000.00) as moral damages, and FIFTY
THOUSAND PESOS (P50,000.00) as exemplary damages.
Let a copy of this decision be furnished to the Professional Regulation Commission (PRC)
for appropriate action.
SO ORDERED.
G.R. No. 164601 September 27, 2006
SPOUSES ERLINDA BATAL AND FRANK BATAL, petitioners,
vs.
SPOUSES LUZ SAN PEDRO AND KENICHIRO TOMINAGA, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
questioning the Decision1 dated September 29, 2003 promulgated by the Court of Appeals
(CA) in CA-G.R. CV No. 71758, which affirmed the Decision dated May 31, 2004 of the
Regional Trial Court, Branch 7, Malolos, Bulacan (RTC); and the CA Resolution 2 dated July
19, 2004.
This case originated from an action for damages filed with the RTC by Spouses Luz San
Pedro and Kenichiro Tominaga (respondents) against Spouses Erlinda Batal and Frank
Batal (petitioners) for failure to exercise due care and diligence by the latter in the
preparation of a survey which formed the basis for the construction of a perimeter fence
that was later discovered to have encroached on a right of way.
The facts of the case, as found by the RTC and summarized by the CA, are as follows:
The spouses Luz San Pedro (Luz) and Kenichiro Tominaga (Kenichiro) are the
owners of a parcel of land, on which their house was erected, described as Lot
1509-C-3 with an area of 700 square meters situated in Barangay Malis,
Guiguinto, Bulacan. Said property was acquired by them from one Guillermo
Narciso as evidenced by a "Bilihan ng Bahagi ng Lupa" dated March 18, 1992.
The spouses Luz and Kenichiro then contracted the services of Frank Batal
(Frank) who represented himself as a surveyor to conduct a survey of their lot for
the sum of P6,500.00. As Luz and Kenichiro wanted to enclose their property,
they again procured the services of Frank for an additional fee of P1,500.00 in
order to determine the exact boundaries of the same by which they will base the
construction of their perimeter fence.
Consequently, Frank placed concrete monuments marked P.S. on all corners of
the lot which were used as guides by Luz and Kenichiro in erecting a concrete
fence measuring about eight (8) feet in height and cost them P250,000.00 to
build.
Sometime in 1996, a complaint was lodged against Luz and Kenichiro before the
barangay on the ground that the northern portion of their fence allegedly
encroached upon a designated right-of-way known as Lot 1509-D. Upon
verification with another surveyor, Luz and Kenichiro found that their wall indeed
overlapped the adjoining lot. They also discovered that it was not Frank but his
wife Erlinda Batal (Erlinda), who is a licensed geodetic engineer.
During their confrontations before the barangay, Frank admitted that he made a
mistake and offered to share in the expenses for the demolition and
reconstruction of the questioned portion of Luz and Kenichiro's fence. He
however failed to deliver on his word, thus the filing of the instant suit.
In their defense, the defendants-spouses Frank and Erlinda Batal submitted that
Frank never represented himself to be a licensed geodetic engineer. It was
Erlinda who supervised her husband's work [and t]hat the house and lot of
plaintiffs, Luz and Kenichiro, were already fenced even before they were
contracted to do a resurvey of the same and the laying out of the concrete
monuments. The spouses Frank and Erlinda also refuted the spouses Luz's and
Kenichiro's allegation of negligence and averred that the subject complaint was
instituted to harass them.3
On May 31, 2001, the RTC rendered its Decision, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against
defendants, as follows:
1. Ordering the defendants [petitioners] to pay to plaintiffs [respondents] the
sum of P6,500.00 as refund for their professional fees by reason of the erroneous
relocation survey of the property in question;
2. Ordering the defendants to pay to plaintiffs the sum of Three Hundred
Thousand Pesos (P300,000.00) as actual damages;
3. Ordering the defendants to pay to plaintiffs the sum of P50,000.00 as
attorney's fees; and
4. Ordering the defendants to pay to plaintiffs the costs of this suit.
SO ORDERED.4
Regarding the issue whether the petitioners failed to exercise due care and diligence in
the conduct of the resurvey which eventually caused damage to the respondents, the RTC
held:
As against the bare and self-serving denials of the [petitioners], the testimony of
[respondent] Luz San Pedro that she constructed the encroaching perimeter
fence in question using as guide the cyclone concrete monuments marked P.S.
that were installed by [petitioner] Frank Batal and his survey team, is more
credible. As testified to by [respondent] Luz San Pedro, she proceeded with the
construction of the perimeter fence in question upon assurance given by
[petitioner] Frank Batal that she could already do so as there were already
concrete monuments placed on the boundaries of her property x x x.
xxxx
It does not matter that the location plan dated May 3, 1992 (Exhibit "B") was
later approved by the DENR, as it is quite apparent that the mistake committed
by [petitioner] Frank Batal pertains to the wrong locations of the concrete
monuments that he placed on the subject property and which were used or relied
upon by the [respondents] in putting up the fence in question. Such mistake or
 negligence happened because quite obviously the installation of said concrete
monuments was without the needed supervision of [respondent] Erlinda Batal,
the one truly qualified to supervise the same. x x x x
x x x x5
The RTC found that indeed the perimeter fence constructed by the respondents
encroached on the right-of-way in question; that the preponderance of evidence supports
the finding that the encroachment was caused by the negligence of the petitioners; that,
in particular, respondents constructed the fence based on the concrete cyclone
monuments that were installed by petitioner Frank Batal and after he gave his assurance
that they can proceed accordingly; that the negligence in the installation of the
monuments was due to the fact that petitioner Erlinda Batal, the one truly qualified, did
not provide the needed supervision over the work; and, lastly, that the testimonies of the
petitioners on the whole were not credible.
The petitioners appealed to the CA. On September 29, 2003, the CA rendered its Decision
affirming the RTC decision in its entirety.6
In concurring with the findings of the RTC, the CA in addition held that the petitioners
cannot claim that the error of the construction of the fence was due to the unilateral act of
respondents in building the same without their consent, 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 northern portion of the fence had to be demolished and
rebuilt in order to correct the error.
Hence, the instant Petition assigning the following errors:
I.
The Court of Appeals erred in ruling for the Respondents and basing its decision
[o]n the following jurisprudence:
(a) "[A] party, having performed affirmative acts upon which another person
based his subsequent actions, cannot thereafter refute his acts or renege on the
effects of the same, to the prejudice of the latter. (Pureza vs. Court of Appeals,
290 SCRA 110)"; and
(b) "Findings of fact made by the trial court [are] entitled to great weight and
respect. (Lopez vs. Court of Appeals, 322 SCRA 686).
II.
The Court of Appeals erred in ruling in favor of Respondents by premising its
Decision on [a] misapprehension of facts amounting to grave abuse of
discretion . . . which is also a ground for a Petition for Review.7
The petition must fail.
The petitioners insist that there had been no error in their resurvey, but rather, the error
occurred in respondents' fencing; that the proximate cause of the damage had been
respondents' own negligence such that the fencing was done unilaterally and solely by
them without the prior approval and supervision of the petitioners. And to justify their
case, the petitioners argue that the courts a quo misapprehended the facts. Accordingly,
they ask this Court to review findings of fact.
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 is the rule that factual
findings of the trial court and the CA are entitled to great 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 stress that the findings of fact of the CA are conclusive on
the parties and carry even more weight when these coincide with the factual findings of
the trial court,11 as in this case.
The Court will not weigh the evidence all over again unless there is a showing that the
findings of the lower court are totally devoid of support or are clearly 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 that the damage caused to the
respondents was due to petitioners' negligence is sufficiently supported by the evidence
on record. For these reasons, the petitioner's contentions bear no import.
Culpa, or negligence, may be understood in two different senses: either as culpa
aquiliana, which is the wrongful or negligent act or omission which creates a vinculum
juris and gives rise to an obligation between two persons not formally bound by any other
obligation, or as culpa contractual, which is the fault or negligence incident in the
performance of an obligation which already existed, and which increases the liability from
such already existing obligation.13 Culpa aquiliana is governed by Article 2176 of the Civil
Code and the immediately following Articles; while culpa contractual is governed by
Articles 1170 to 1174 of the same Code.14
Articles 1170 and 1173 provide:
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 the omission of that
diligence which is required by the nature of the obligation and corresponds with
the circumstances of the persons, of the time and of the place. When negligence
shows bad faith, the provisions of articles 1171 and 2202, paragraph 2, shall
apply.
If the law or contract does not state the diligence which is to be observed in the
performance, that which is expected of a good father of a family shall be
required.
In the present case, it is clear that the petitioners, in carrying out their contractual
obligations, failed to exercise the requisite diligence in the placement of the markings for
the concrete perimeter fence that was later constructed. The placement of the markings
had been done solely by 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
geodetic engineer and who is, therefore, the one qualified to do the work. Petitioner Frank
Batal's installation of the concrete cyclone monuments had been done without the
adequate supervision of his wife, Erlinda. As a result, the placement of the monuments did
not accurately reflect the dimensions of the lot. The respondents, upon assurance given
by petitioner Frank Batal that they could proceed with the construction of the perimeter
fence by relying on the purported accuracy of the placement of the monuments, erected
their fence which turned out to encroach on an adjacent easement. Because of the
encroachment, the respondents had to demolish and reconstruct the fence and, thus,
suffered damages.
The Court affirms and adopts the findings of the CA, to wit:
Records show that the services of the [petitioners] Frank and Erlinda were
initially contracted to segregate Luz and Kenichiro's property from its adjoining
lots. When the [respondent] spouses Luz and Kenichiro planned to fence the
segregated lot, they again commissioned [petitioners] Frank and Erlinda to
conduct a resurvey in order to determine the precise boundaries of their property
upon which they will base the construction of their fence. It was also shown that
in the course of the resurvey, Frank caused the installation of monuments of title
on the four (4) corners of Luz and Kenichiro's property and that he instructed
them to just follow the same in building their fence.
[Petitioners] Frank and Erlinda cannot thus validly claim that the error in the
construction of the northern portion of the fence was due to the spouses Luz and
Kenichiro's act of building the same without their consent. This is considering
that the former led the latter to believe the purported accuracy of the resurvey
and exactness of the lot's boundaries based on the monuments of title which
they installed.
It has been ruled that "[A] party, having performed affirmative acts upon which
another person based his subsequent actions, cannot thereafter 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)
The foregoing clearly supports the findings of the RTC that the spouses Batal
committed a mistake in the conduct of their business that led to the
encroachment of plaintiffs-appellees' fence on the adjoining alley-lot. As a result,
the northern portion ha[d] to be torn down and rebuilt in order to correct the
error in its original construction. The defendants-appellants cannot be excused
from the effects of their actions in the survey of plaintiffs-appellees' lot.
We therefore concur with the findings of the RTC holding defendants-appellants
liable for damages in the case at bar. "Findings of fact made by the trial court is
entitled to great weight and respect." (Lopez v. Court of Appeals, 322 SCRA 686)15
Being guilty of a breach of their contract, petitioners are liable for damages suffered by
the respondents in accordance with Articles 1170 and 2201 of the Civil Code, 16 which
state:
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. 2201. In contracts and quasi-contracts, the damages for which the obligor
who acted in good faith is liable shall be those that are the natural and probable
consequences of the breach of the obligation, and which the parties have
foreseen or could have reasonably foreseen at the time the obligation was
constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the non-
performance of the obligation.
Thus, the Court agrees with the CA's affirmance of the findings of the RTC on the matter of
damages, to wit:
Going now to the claims for damages, Engr. Arnold Martin testified on his
computation and estimate (Exhibits "G" and "G-1) that the total cost for the
demolition and reconstruction of the perimeter fence in question would be in the
total amount of P428,163.90, and this was not at all disputed by the defendants,
whose counsel waived cross-examination. This estimate is practically double the
amount of the cost of constructing said fence as testified to by plaintiff Luz San
Pedro as she was told that it is much costlier to demolish and reconstruct a fence
than to simply erect one because of the added expense involved in tearing it
down and hauling its debris. On the other hand, said plaintiff stated that the iron
decorative grills of the fence, which is re-usable, cost her P50,000.00, and it is
only proper to deduct said amount from the total cost of reconstructing the fence
in question. At the same time, some figures in the said estimate appear to be
quite excessive, such as the estimated cost for demolition which was quoted
at P25,000.00 in addition to the amount of excavation 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 for the demolition and reconstruction of the fence in
question would be reasonable considering that the original cost for its
construction was only about P200,000.00, and considering further that its iron
grills are re-usable.
The plaintiffs are likewise entitled to recover attorney's fees considering that
they were compelled by the defendants to resort to court action in order to
protect their rights and interest, as defendants, particularly defendant Frank
Batal, failed and refused repeatedly to even attend the confrontation of
conciliation meetings arranged between him and the plaintiffs by
the barangay authorities concerned, and to honor his promise to help in
shouldering the cost of reconstructing the fence in question.
On the other hand, there is no legal or factual bases for the claim of the plaintiffs
for moral or exemplary damages as there was no showing at all that defendants
acted with malice or in bad faith.
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 awarded. (R & B Surety Insurance Co. v. Intermediate Court of
Appeals, 129 SCRA 736; Guita v. Court of Appeals, 139 SCRA 576).17
WHEREFORE, the instant petition is DENIED and the assailed Decision and Resolution of
the Court of Appeals are AFFIRMED.
Costs against petitioners.

SO ORDERED.
G.R. No. 179337 April 30, 2008
JOSEPH SALUDAGA, petitioner,
vs.
FAR EASTERN UNIVERSITY and EDILBERTO C. DE JESUS in his capacity as
President of FEU, respondents.
DECISION
YNARES-SANTIAGO, J.:
This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the June
29, 2007 Decision2 of the Court of Appeals in CA-G.R. CV No. 87050, nullifying and setting
aside the November 10, 2004 Decision3 of the Regional Trial Court of Manila, Branch 2, in
Civil Case No. 98-89483 and dismissing the complaint filed by petitioner; as well as its
August 23, 2007 Resolution4 denying the Motion for Reconsideration.5
The antecedent facts are as follows:
Petitioner Joseph Saludaga was a sophomore law student of respondent Far Eastern
University (FEU) when he was shot by Alejandro Rosete (Rosete), one of the security
guards on duty at the school premises on August 18, 1996. Petitioner was rushed to FEU-
Dr. Nicanor Reyes Medical Foundation (FEU-NRMF) due to the wound he
sustained.6 Meanwhile, Rosete was brought to the police station where he explained that
the shooting was accidental. He was eventually released considering that no formal
complaint was filed against him.
Petitioner thereafter filed a complaint for damages against respondents on the ground
that they breached their obligation to provide students with a safe and secure
environment and an atmosphere conducive to learning. Respondents, in turn, filed a Third-
Party Complaint7 against Galaxy Development and Management Corporation (Galaxy), the
agency contracted by respondent FEU to provide security services within its premises and
Mariano D. Imperial (Imperial), Galaxy's President, to indemnify them for whatever would
be adjudged in favor of petitioner, if any; and to pay attorney's fees and cost of the suit.
On the other hand, Galaxy and Imperial filed a Fourth-Party Complaint against AFP
General Insurance.8
On November 10, 2004, the trial court rendered a decision in favor of petitioner, the
dispositive portion of which reads:
WHEREFORE, from the foregoing, judgment is hereby rendered ordering:
1. FEU and Edilberto de Jesus, in his capacity as president of FEU to pay
jointly and severally Joseph Saludaga the amount of P35,298.25 for
actual damages with 12% interest per annum from the filing of the
complaint until fully paid; moral damages of P300,000.00, exemplary
damages of P500,000.00, attorney's fees of P100,000.00 and cost of the
suit;
2. Galaxy Management and Development Corp. and its president, Col.
Mariano Imperial to indemnify jointly and severally 3rd party plaintiffs
(FEU and Edilberto de Jesus in his capacity as President of FEU) for the
above-mentioned amounts;
3. And the 4th party complaint is dismissed for lack of cause of action.
No pronouncement as to costs.
SO ORDERED.9
Respondents appealed to the Court of Appeals which rendered the assailed Decision, the
decretal portion of which provides, viz:
WHEREFORE, the appeal is hereby GRANTED. The Decision dated November 10,
2004 is hereby REVERSED and SET ASIDE. The complaint filed by Joseph
Saludaga against appellant Far Eastern University and its President in Civil Case
No. 98-89483 is DISMISSED.
SO ORDERED.10
Petitioner filed a Motion for Reconsideration which was denied; hence, the instant petition
based on the following grounds:
THE COURT OF APPEALS SERIOUSLY ERRED IN MANNER CONTRARY TO LAW AND
JURISPRUDENCE IN RULING THAT:
5.1. THE SHOOTING INCIDENT IS A FORTUITOUS EVENT;
5.2. RESPONDENTS ARE NOT LIABLE FOR DAMAGES FOR THE INJURY RESULTING
FROM A GUNSHOT WOUND SUFFERED BY THE PETITIONER FROM THE HANDS OF
NO LESS THAN THEIR OWN SECURITY GUARD IN VIOLATION OF THEIR BUILT-IN
CONTRACTUAL OBLIGATION TO PETITIONER, BEING THEIR LAW STUDENT AT THAT
TIME, TO PROVIDE HIM WITH A SAFE AND SECURE EDUCATIONAL ENVIRONMENT;
5.3. SECURITY GAURD, ALEJANDRO ROSETE, WHO SHOT PETITIONER WHILE HE
WAS WALKING ON HIS WAY TO THE LAW LIBRARY OF RESPONDENT FEU IS NOT
THEIR EMPLOYEE BY VIRTUE OF THE CONTRACT FOR SECURITY SERVICES
BETWEEN GALAXY AND FEU NOTWITHSTANDING THE FACT THAT PETITIONER,
NOT BEING A PARTY TO IT, IS NOT BOUND BY THE SAME UNDER THE PRINCIPLE
OF RELATIVITY OF CONTRACTS; and
5.4. RESPONDENT EXERCISED DUE DILIGENCE IN SELECTING GALAXY AS THE
AGENCY WHICH WOULD PROVIDE SECURITY SERVICES WITHIN THE PREMISES OF
RESPONDENT FEU.11
Petitioner is suing respondents for damages based on the alleged breach of student-
school contract for a safe learning environment. The pertinent portions of petitioner's
Complaint read:
6.0. At the time of plaintiff's confinement, the defendants or any of their
representative did not bother to visit and inquire about his condition. This abject
indifference on the part of the defendants continued even after plaintiff was
 discharged from the hospital when not even a word of consolation was heard
from them. Plaintiff waited for more than one (1) year for the defendants to
perform their moral obligation but the wait was fruitless. This indifference and
total lack of concern of defendants served to exacerbate plaintiff's miserable
condition.
xxxx
11.0. Defendants are responsible for ensuring the safety of its students while the
latter are within the University premises. And that should anything untoward
happens to any of its students while they are within the University's premises
shall be the responsibility of the defendants. In this case, defendants, despite
being legally and morally bound, miserably failed to protect plaintiff from injury
and thereafter, to mitigate and compensate plaintiff for said injury;
12.0. When plaintiff enrolled with defendant FEU, a contract was entered into
between them. Under this contract, defendants are supposed to ensure that
adequate steps are taken to provide an atmosphere conducive to study and
ensure the safety of the plaintiff while inside defendant FEU's premises. In the
instant case, the latter breached this contract when defendant allowed harm to
befall upon the plaintiff when he was shot at by, of all people, their security
guard who was tasked to maintain peace inside the campus.12
In Philippine School of Business Administration v. Court of Appeals,13 we held that:
When an academic institution accepts students for enrollment, there is
established a contract between them, resulting in bilateral obligations which both
parties are bound to comply with. For its part, the school undertakes to provide
the student with an education that would presumably suffice to equip him with
the necessary tools and skills to pursue higher education or a profession. On the
other hand, the student covenants to abide by the school's academic
requirements and observe its rules and regulations.
Institutions of learning must also meet the implicit or "built-in" obligation of
providing their students with an atmosphere that promotes or assists in attaining
its primary undertaking of imparting knowledge. Certainly, no student can absorb
the intricacies of physics or higher mathematics or explore the realm of the arts
and other sciences when bullets are flying or grenades exploding in the air or
where there looms around the school premises a constant threat to life and limb.
Necessarily, the school must ensure that adequate steps are taken to maintain
peace and order within the campus premises and to prevent the breakdown
thereof.14
It is undisputed that petitioner was enrolled as a sophomore law student in respondent
FEU. As such, there was created a contractual obligation between the two parties. On
petitioner's part, he was obliged to comply with the rules and regulations of the school.
On the other hand, respondent FEU, as a learning institution is mandated to impart
knowledge and equip its students with the necessary skills to pursue higher education or
a profession. At the same time, it is obliged to ensure and take adequate steps to
maintain peace and order within the campus.
It is settled that in culpa contractual, the mere proof of the existence of the contract and
the failure of its compliance justify, prima facie, a corresponding right of relief. 15 In the
instant case, we find that, when petitioner was shot inside the campus by no less the
security guard who was hired to maintain peace and secure the premises, there is a prima
facie showing that respondents failed to comply with its obligation to provide a safe and
secure environment to its students.
In order to avoid liability, however, respondents aver that the shooting incident was a
fortuitous event because they could not have reasonably foreseen nor avoided the
accident caused by Rosete as he was not their employee; 16 and that they complied with
their obligation to ensure a safe learning environment for their students by having
exercised due diligence in selecting the security services of Galaxy.
After a thorough review of the records, we find that respondents failed to discharge the
burden of proving that they exercised due diligence in providing a safe learning
environment for their students. They failed to prove that they ensured that the guards
assigned in the campus met the requirements stipulated in the Security Service
Agreement. Indeed, certain documents about Galaxy were presented during trial;
however, no evidence as to the qualifications of Rosete as a security guard for the
university was offered.
Respondents also failed to show that they undertook steps to ascertain and confirm that
the security guards assigned to them actually possess the qualifications required in the
Security Service Agreement. It was not proven that they examined the clearances,
psychiatric test results, 201 files, and other vital documents enumerated in its contract
with Galaxy. Total reliance on the security agency about these matters or failure to check
the papers stating the qualifications of the guards is negligence on the part of
respondents. A learning institution should not be allowed to completely relinquish or
abdicate security matters in its premises to the security agency it hired. To do so would
result to contracting away its inherent obligation to ensure a safe learning environment
for its students.
Consequently, respondents' defense of force majeure must fail. In order for force
majeure to be considered, respondents must show that no negligence or misconduct was
committed that may have occasioned the loss. An act of God cannot be invoked to protect
a person who has failed to take steps to forestall the possible adverse consequences of
such a loss. One's negligence may have concurred with an act of God in producing
damage and injury to another; nonetheless, showing that the immediate or proximate
cause of the damage or injury was a fortuitous event would not exempt one from liability.
When the effect is found to be partly the result of a person's participation - whether by
active intervention, neglect or failure to act - the whole occurrence is humanized and
removed from the rules applicable to acts of God. 17
Article 1170 of the Civil Code provides that those who are negligent in the performance of
their obligations are liable for damages. Accordingly, for breach of contract due to
negligence in providing a safe learning environment, respondent FEU is liable to petitioner
for damages. It is essential in the award of damages that the claimant must have
satisfactorily proven during the trial the existence of the factual basis of the damages and
its causal connection to defendant's acts.18
In the instant case, it was established that petitioner spent P35,298.25 for his
hospitalization and other medical expenses.19 While the trial court correctly imposed
interest on said amount, however, the case at bar involves an obligation arising from a
contract and not a loan or forbearance of money. As such, the proper rate of legal interest
is six percent (6%) per annum of the amount demanded. Such interest shall continue to
run from the filing of the complaint until the finality of this Decision.20 After this Decision
becomes final and executory, the applicable rate shall be twelve percent (12%) per
annum until its satisfaction.
The other expenses being claimed by petitioner, such as transportation expenses and
those incurred in hiring a personal assistant while recuperating were however not duly
supported by receipts.21 In the absence thereof, no actual damages may be awarded.
Nonetheless, temperate damages under Art. 2224 of the Civil Code may be recovered
where it has been shown that the claimant suffered some pecuniary loss but the amount
thereof cannot be proved with certainty. Hence, the amount of P20,000.00 as temperate
damages is awarded to petitioner.
As regards the award of moral damages, there is no hard and fast rule in the
determination of what would be a fair amount of moral damages since each case must be
governed by its own peculiar circumstances.22 The testimony of petitioner about his
physical suffering, mental anguish, fright, serious anxiety, and moral shock resulting from
the shooting incident23 justify the award of moral damages. However, moral damages are
in the category of an award designed to compensate the claimant for actual injury
suffered and not to impose a penalty on the wrongdoer. The award is not meant to enrich
the complainant at the expense of the defendant, but to enable the injured party to obtain
means, diversion, or amusements that will serve to obviate the moral suffering he has
undergone. It is aimed at the restoration, within the limits of the possible, of the spiritual
status quo ante, and should be proportionate to the suffering inflicted. Trial courts must
then guard against the award of exorbitant damages; they should exercise balanced
restrained and measured objectivity to avoid suspicion that it was due to passion,
prejudice, or corruption on the part of the trial court. 24 We deem it just and reasonable
under the circumstances to award petitioner moral damages in the amount of
P100,000.00.
Likewise, attorney's fees and litigation expenses in the amount of P50,000.00 as part of
damages is reasonable in view of Article 2208 of the Civil Code.25 However, the award of
exemplary damages is deleted considering the absence of proof that respondents acted in
a wanton, fraudulent, reckless, oppressive, or malevolent manner.
We note that the trial court held respondent De Jesus solidarily liable with respondent FEU.
In Powton Conglomerate, Inc. v. Agcolicol,26 we held that:
[A] corporation is invested by law with a personality separate and distinct from
those of the persons composing it, such that, save for certain exceptions,
corporate officers who entered into contracts in behalf of the corporation cannot
be held personally liable for the liabilities of the latter. Personal liability of a
corporate director, trustee or officer along (although not necessarily) with the
corporation may so validly attach, as a rule, only when - (1) he assents to a
patently unlawful act of the corporation, or when he is guilty of bad faith or gross
negligence in directing its affairs, or when there is a conflict of interest resulting
in damages to the corporation, its stockholders or other persons; (2) he consents
to the issuance of watered down stocks or who, having knowledge thereof, does
not forthwith file with the corporate secretary his written objection thereto; (3) he
agrees to hold himself personally and solidarily liable with the corporation; or (4)
he is made by a specific provision of law personally answerable for his corporate
action.27
None of the foregoing exceptions was established in the instant case; hence, respondent
De Jesus should not be held solidarily liable with respondent FEU.
Incidentally, although the main cause of action in the instant case is the breach of the
school-student contract, petitioner, in the alternative, also holds respondents vicariously
liable under Article 2180 of the Civil Code, which provides:
Art. 2180. The obligation imposed by Article 2176 is demandable not only for
one's own acts or omissions, but also for those of persons for whom one is
responsible.
xxxx
Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even though
the former are not engaged in any business or industry.
xxxx
The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family
to prevent damage.
We agree with the findings of the Court of Appeals that respondents cannot be held liable
for damages under Art. 2180 of the Civil Code because respondents are not the employers
of Rosete. The latter was employed by Galaxy. The instructions issued by respondents'
Security Consultant to Galaxy and its security guards are ordinarily no more than requests
commonly envisaged in the contract for services entered into by a principal and a security
agency. They cannot be construed as the element of control as to treat respondents as the
employers of Rosete.28
As held in Mercury Drug Corporation v. Libunao:29
In Soliman, Jr. v. Tuazon,30 we held that where the security agency recruits, hires
and assigns the works of its watchmen or security guards to a client, the
employer of such guards or watchmen is such agency, and not the client, since
the latter has no hand in selecting the security guards. Thus, the duty to observe
the diligence of a good father of a family cannot be demanded from the said
client:
[I]t is settled in our jurisdiction that where the security agency, as
here, recruits, hires and assigns the work of its watchmen or security
guards, the agency is the employer of such guards or watchmen.
Liability for illegal or harmful acts committed by the security guards
attaches to the employer agency, and not to the clients or customers of
such agency. As a general rule, a client or customer of a security agency
has no hand in selecting who among the pool of security guards or
watchmen employed by the agency shall be assigned to it; the duty to
observe the diligence of a good father of a family in the selection of the
guards cannot, in the ordinary course of events, be demanded from the
client whose premises or property are protected by the security guards.
 xxxx a. respondent Far Eastern University (FEU) is ORDERED to pay petitioner actual damages
in the amount of P35,298.25, plus 6% interest per annum from the filing of the complaint
until the finality of this Decision. After this decision becomes final and executory, the
The fact that a client company may give instructions or directions to the security
applicable rate shall be twelve percent (12%) per annum until its satisfaction;
guards assigned to it, does not, by itself, render the client responsible as an
employer of the security guards concerned and liable for their wrongful acts or
omissions.31 b. respondent FEU is also ORDERED to pay petitioner temperate damages in the amount
of P20,000.00; moral damages in the amount of P100,000.00; and attorney's fees and
litigation expenses in the amount of P50,000.00;
We now come to respondents' Third Party Claim against Galaxy. In Firestone Tire and
Rubber Company of the Philippines v. Tempengko,32 we held that:
c. the award of exemplary damages is DELETED.
The third-party complaint is, therefore, a procedural device whereby a 'third
party' who is neither a party nor privy to the act or deed complained of by the The Complaint against respondent Edilberto C. De Jesus is DISMISSED. The counterclaims
plaintiff, may be brought into the case with leave of court, by the defendant, who of respondents are likewise DISMISSED.
acts as third-party plaintiff to enforce against such third-party defendant a right
for contribution, indemnity, subrogation or any other relief, in respect of the Galaxy Development and Management Corporation (Galaxy) and its president, Mariano D.
plaintiff's claim. The third-party complaint is actually independent of and Imperial are ORDERED to jointly and severally pay respondent FEU damages equivalent
separate and distinct from the plaintiff's complaint. Were it not for this provision to the above-mentioned amounts awarded to petitioner.
of the Rules of Court, it would have to be filed independently and separately from
the original complaint by the defendant against the third-party. But the Rules
permit defendant to bring in a third-party defendant or so to speak, to litigate his SO ORDERED.
separate cause of action in respect of plaintiff's claim against a third-party in the
original and principal case with the object of avoiding circuitry of action and
unnecessary proliferation of law suits and of disposing expeditiously in one
litigation the entire subject matter arising from one particular set of facts. 33

Respondents and Galaxy were able to litigate their respective claims and defenses in the
course of the trial of petitioner's complaint. Evidence duly supports the findings of the trial
court that Galaxy is negligent not only in the selection of its employees but also in their
supervision. Indeed, no administrative sanction was imposed against Rosete despite the
shooting incident; moreover, he was even allowed to go on leave of absence which led
eventually to his disappearance.34 Galaxy also failed to monitor petitioner's condition or
extend the necessary assistance, other than the P5,000.00 initially given to petitioner.
Galaxy and Imperial failed to make good their pledge to reimburse petitioner's medical
expenses.

For these acts of negligence and for having supplied respondent FEU with an unqualified
security guard, which resulted to the latter's breach of obligation to petitioner, it is proper
to hold Galaxy liable to respondent FEU for such damages equivalent to the above-
mentioned amounts awarded to petitioner.

Unlike respondent De Jesus, we deem Imperial to be solidarily liable with Galaxy for being
grossly negligent in directing the affairs of the security agency. It was Imperial who
assured petitioner that his medical expenses will be shouldered by Galaxy but said
representations were not fulfilled because they presumed that petitioner and his family
were no longer interested in filing a formal complaint against them. 35

WHEREFORE, the petition is GRANTED. The June 29, 2007 Decision of the Court of
Appeals in CA-G.R. CV No. 87050 nullifying the Decision of the trial court and dismissing
the complaint as well as the August 23, 2007 Resolution denying the Motion for
Reconsideration are REVERSED and SET ASIDE. The Decision of the Regional Trial Court
of Manila, Branch 2, in Civil Case No. 98-89483 finding respondent FEU liable for damages
for breach of its obligation to provide students with a safe and secure learning
atmosphere, is AFFIRMED with the following MODIFICATIONS:
G.R. No. 188288 January 16, 2012
SPOUSES FERNANDO and LOURDES VILORIA, Petitioners,
vs.
CONTINENTAL AIRLINES, INC.,
DECISION
REYES, J.:
This is a petition for review under Rule 45 of the Rules of Court from the January 30, 2009
Decision1 of the Special Thirteenth Division of the Court of Appeals (CA) in CA-G.R. CV No.
88586 entitled "Spouses Fernando and Lourdes Viloria v. Continental Airlines, Inc.," the
dispositive portion of which states:
WHEREFORE, the Decision of the Regional Trial Court, Branch 74, dated 03 April 2006,
awarding US$800.00 or its peso equivalent at the time of payment, plus legal rate of
interest from 21 July 1997 until fully paid, [P]100,000.00 as moral damages, [P]50,000.00
as exemplary damages, [P]40,000.00 as attorneys fees and costs of suit to plaintiffs-
appellees is hereby REVERSED and SET ASIDE.
Defendant-appellants counterclaim is DENIED.
Costs against plaintiffs-appellees.
SO ORDERED.2
On April 3, 2006, the Regional Trial Court of Antipolo City, Branch 74 (RTC) rendered a
Decision, giving due course to the complaint for sum of money and damages filed by
petitioners Fernando Viloria (Fernando) and Lourdes Viloria (Lourdes), collectively called
Spouses Viloria, against respondent Continental Airlines, Inc. (CAI). As culled from the
records, below are the facts giving rise to such complaint.
On or about July 21, 1997 and while in the United States, Fernando purchased for himself
and his wife, Lourdes, two (2) round trip airline tickets from San Diego, California to
Newark, New Jersey on board Continental Airlines. Fernando purchased the tickets at
US$400.00 each from a travel agency called "Holiday Travel" and was attended to by a
certain Margaret Mager (Mager). According to Spouses Viloria, Fernando agreed to buy the
said tickets after Mager informed them that there were no available seats at Amtrak, an
intercity passenger train service provider in the United States. Per the tickets, Spouses
Viloria were scheduled to leave for Newark on August 13, 1997 and return to San Diego on
August 21, 1997.
Subsequently, Fernando requested Mager to reschedule their flight to Newark to an earlier
date or August 6, 1997. Mager informed him that flights to Newark via Continental Airlines
were already fully booked and offered the alternative of a round trip flight via Frontier Air.
Since flying with Frontier Air called for a higher fare of US$526.00 per passenger and
would mean traveling by night, Fernando opted to request for a refund. Mager, however,
denied his request as the subject tickets are non-refundable and the only option that
Continental Airlines can offer is the re-issuance of new tickets within one (1) year from the
date the subject tickets were issued. Fernando decided to reserve two (2) seats with
Frontier Air.
As he was having second thoughts on traveling via Frontier Air, Fernando went to the
Greyhound Station where he saw an Amtrak station nearby. Fernando made inquiries and
was told that there are seats available and he can travel on Amtrak anytime and any day
he pleased. Fernando then purchased two (2) tickets for Washington, D.C.
From Amtrak, Fernando went to Holiday Travel and confronted Mager with the Amtrak
tickets, telling her that she had misled them into buying the Continental Airlines tickets by
misrepresenting that Amtrak was already fully booked. Fernando reiterated his demand
for a refund but Mager was firm in her position that the subject tickets are non-refundable.
Upon returning to the Philippines, Fernando sent a letter to CAI on February 11, 1998,
demanding a refund and alleging that Mager had deluded them into purchasing the
subject tickets.3
In a letter dated February 24, 1998, Continental Micronesia informed Fernando that his
complaint had been referred to the Customer Refund Services of Continental Airlines at
Houston, Texas.4
In a letter dated March 24, 1998, Continental Micronesia denied Fernandos request for a
refund and advised him that he may take the subject tickets to any Continental ticketing
location for the re-issuance of new tickets within two (2) years from the date they were
issued. Continental Micronesia informed Fernando that the subject tickets may be used as
a form of payment for the purchase of another Continental ticket, albeit with a re-issuance
fee.5
On June 17, 1999, Fernando went to Continentals ticketing office at Ayala Avenue, Makati
City to have the subject tickets replaced by a single round trip ticket to Los Angeles,
California under his name. Therein, Fernando was informed that Lourdes ticket was non-
transferable, thus, cannot be used for the purchase of a ticket in his favor. He was also
informed that a round trip ticket to Los Angeles was US$1,867.40 so he would have to pay
what will not be covered by the value of his San Diego to Newark round trip ticket.
In a letter dated June 21, 1999, Fernando demanded for the refund of the subject tickets
as he no longer wished to have them replaced. In addition to the dubious circumstances
under which the subject tickets were issued, Fernando claimed that CAIs act of charging
him with US$1,867.40 for a round trip ticket to Los Angeles, which other airlines priced at
US$856.00, and refusal to allow him to use Lourdes ticket, breached its undertaking
under its March 24, 1998 letter.6
On September 8, 2000, Spouses Viloria filed a complaint against CAI, praying that CAI be
ordered to refund the money they used in the purchase of the subject tickets with legal
interest from July 21, 1997 and to pay P1,000,000.00 as moral damages, P500,000.00 as
exemplary damages and P250,000.00 as attorneys fees.7
CAI interposed the following defenses: (a) Spouses Viloria have no right to ask for a refund
as the subject tickets are non-refundable; (b) Fernando cannot insist on using the ticket in
Lourdes name for the purchase of a round trip ticket to Los Angeles since the same is
non-transferable; (c) as Mager is not a CAI employee, CAI is not liable for any of her acts;
(d) CAI, its employees and agents did not act in bad faith as to entitle Spouses Viloria to
moral and exemplary damages and attorneys fees. CAI also invoked the following clause
printed on the subject tickets:
3. To the extent not in conflict with the foregoing carriage and other services performed
by each carrier are subject to: (i) provisions contained in this ticket, (ii) applicable tariffs,
(iii) carriers conditions of carriage and related regulations which are made part hereof
(and are available on application at the offices of carrier), except in transportation
between a place in the United States or Canada and any place outside thereof to which
tariffs in force in those countries apply.8
According to CAI, one of the conditions attached to their contract of carriage is the non-
transferability and non-refundability of the subject tickets.
The RTCs Ruling
Following a full-blown trial, the RTC rendered its April 3, 2006 Decision, holding that
Spouses Viloria are entitled to a refund in view of Magers misrepresentation in obtaining
their consent in the purchase of the subject tickets. 9The relevant portion of the April 3,
2006 Decision states:
Continental Airlines agent Ms. Mager was in bad faith when she was less candid and
diligent in presenting to plaintiffs spouses their booking options. Plaintiff Fernando clearly
wanted to travel via AMTRAK, but defendants agent misled him into purchasing
Continental Airlines tickets instead on the fraudulent misrepresentation that Amtrak was
fully booked. In fact, defendant Airline did not specifically denied (sic) this allegation.
Plainly, plaintiffs spouses, particularly plaintiff Fernando, were tricked into buying
Continental Airline tickets on Ms. Magers misleading misrepresentations. Continental
Airlines agent Ms. Mager further relied on and exploited plaintiff Fernandos need and told
him that they must book a flight immediately or risk not being able to travel at all on the
couples preferred date. Unfortunately, plaintiffs spouses fell prey to the airlines and its
agents unethical tactics for baiting trusting customers." 10
Citing Articles 1868 and 1869 of the Civil Code, the RTC ruled that Mager is CAIs agent,
hence, bound by her bad faith and misrepresentation. As far as the RTC is concerned,
there is no issue as to whether Mager was CAIs agent in view of CAIs implied recognition
of her status as such in its March 24, 1998 letter.
The act of a travel agent or agency being involved here, the following are the pertinent
New Civil Code provisions on agency:
Art. 1868. By the contract of agency a person binds himself to render some service or to
do something in representation or on behalf of another, with the consent or authority of
the latter.
Art. 1869. Agency may be express, or implied from the acts of the principal, from his
silence or lack of action, or his failure to repudiate the agency, knowing that another
person is acting on his behalf without authority.
Agency may be oral, unless the law requires a specific form.
As its very name implies, a travel agency binds itself to render some service or to do
something in representation or on behalf of another, with the consent or authority of the
latter. This court takes judicial notice of the common services rendered by travel agencies
that represent themselves as such, specifically the reservation and booking of local and
foreign tours as well as the issuance of airline tickets for a commission or fee.
The services rendered by Ms. Mager of Holiday Travel agency to the plaintiff spouses on
July 21, 1997 were no different from those offered in any other travel agency. Defendant
airline impliedly if not expressly acknowledged its principal-agent relationship with Ms.
Mager by its offer in the letter dated March 24, 1998 an obvious attempt to assuage
plaintiffs spouses hurt feelings.11
Furthermore, the RTC ruled that CAI acted in bad faith in reneging on its undertaking to
replace the subject tickets within two (2) years from their date of issue when it charged
Fernando with the amount of US$1,867.40 for a round trip ticket to Los Angeles and when
it refused to allow Fernando to use Lourdes ticket. Specifically:
Tickets may be reissued for up to two years from the original date of issue. When
defendant airline still charged plaintiffs spouses US$1,867.40 or more than double the
then going rate of US$856.00 for the unused tickets when the same were presented
within two (2) years from date of issue, defendant airline exhibited callous treatment of
passengers.12
The Appellate Courts Ruling
On appeal, the CA reversed the RTCs April 3, 2006 Decision, holding that CAI cannot be
held liable for Magers act in the absence of any proof that a principal-agent relationship
existed between CAI and Holiday Travel. According to the CA, Spouses Viloria, who have
the burden of proof to establish the fact of agency, failed to present evidence
demonstrating that Holiday Travel is CAIs agent. Furthermore, contrary to Spouses
Vilorias claim, the contractual relationship between Holiday Travel and CAI is not an
agency but that of a sale.
Plaintiffs-appellees assert that Mager was a sub-agent of Holiday Travel who was in turn a
ticketing agent of Holiday Travel who was in turn a ticketing agent of Continental Airlines.
Proceeding from this premise, they contend that Continental Airlines should be held liable
for the acts of Mager. The trial court held the same view.
We do not agree. By the contract of agency, a person binds him/herself to render some
service or to do something in representation or on behalf of another, with the consent or
authority of the latter. The elements of agency are: (1) consent, express or implied, of the
parties to establish the relationship; (2) the object is the execution of a juridical act in
relation to a third person; (3) the agent acts as a representative and not for him/herself;
and (4) the agent acts within the scope of his/her authority. As the basis of agency is
representation, there must be, on the part of the principal, an actual intention to appoint,
an intention naturally inferable from the principals words or actions. In the same manner,
there must be an intention on the part of the agent to accept the appointment and act
upon it. Absent such mutual intent, there is generally no agency. It is likewise a settled
rule that persons dealing with an assumed agent are bound at their peril, if they would
hold the principal liable, to ascertain not only the fact of agency but also the nature and
extent of authority, and in case either is controverted, the burden of proof is upon them to
establish it. Agency is never presumed, neither is it created by the mere use of the word
in a trade or business name. We have perused the evidence and documents so far
presented. We find nothing except bare allegations of plaintiffs-appellees that
Mager/Holiday Travel was acting in behalf of Continental Airlines. From all sides of legal
prism, the transaction in issue was simply a contract of sale, wherein Holiday Travel buys
airline tickets from Continental Airlines and then, through its employees, Mager included,
sells it at a premium to clients.13
The CA also ruled that refund is not available to Spouses Viloria as the word "non-
refundable" was clearly printed on the face of the subject tickets, which constitute their
contract with CAI. Therefore, the grant of their prayer for a refund would violate the
proscription against impairment of contracts.
Finally, the CA held that CAI did not act in bad faith when they charged Spouses Viloria
with the higher amount of US$1,867.40 for a round trip ticket to Los Angeles. According to
the CA, there is no compulsion for CAI to charge the lower amount of US$856.00, which
Spouses Viloria claim to be the fee charged by other airlines. The matter of fixing the
prices for its services is CAIs prerogative, which Spouses Viloria cannot intervene. In
particular:
It is within the respective rights of persons owning and/or operating business entities to
peg the premium of the services and items which they provide at a price which they deem
fit, no matter how expensive or exhorbitant said price may seem vis--vis those of the
competing companies. The Spouses Viloria may not intervene with the business judgment
of Continental Airlines.14
The Petitioners Case
In this Petition, this Court is being asked to review the findings and conclusions of the CA,
as the latters reversal of the RTCs April 3, 2006 Decision allegedly lacks factual and legal
bases. Spouses Viloria claim that CAI acted in bad faith when it required them to pay a
higher amount for a round trip ticket to Los Angeles considering CAIs undertaking to re-
issue new tickets to them within the period stated in their March 24, 1998 letter. CAI
likewise acted in bad faith when it disallowed Fernando to use Lourdes ticket to purchase
a round trip to Los Angeles given that there is nothing in Lourdes ticket indicating that it
is non-transferable. As a common carrier, it is CAIs duty to inform its passengers of the
terms and conditions of their contract and passengers cannot be bound by such terms
and conditions which they are not made aware of. Also, the subject contract of carriage is
a contract of adhesion; therefore, any ambiguities should be construed against CAI.
Notably, the petitioners are no longer questioning the validity of the subject contracts and
limited its claim for a refund on CAIs alleged breach of its undertaking in its March 24,
1998 letter.
The Respondents Case
In its Comment, CAI claimed that Spouses Vilorias allegation of bad faith is negated by its
willingness to issue new tickets to them and to credit the value of the subject tickets
against the value of the new ticket Fernando requested. CAI argued that Spouses Vilorias
sole basis to claim that the price at which CAI was willing to issue the new tickets is
unconscionable is a piece of hearsay evidence an advertisement appearing on a
newspaper stating that airfares from Manila to Los Angeles or San Francisco cost
US$818.00.15 Also, the advertisement pertains to airfares in September 2000 and not to
airfares prevailing in June 1999, the time when Fernando asked CAI to apply the value of
the subject tickets for the purchase of a new one.16 CAI likewise argued that it did not
undertake to protect Spouses Viloria from any changes or fluctuations in the prices of
airline tickets and its only obligation was to apply the value of the subject tickets to the
purchase of the newly issued tickets.
With respect to Spouses Vilorias claim that they are not aware of CAIs restrictions on the
subject tickets and that the terms and conditions that are printed on them are ambiguous,
CAI denies any ambiguity and alleged that its representative informed Fernando that the
subject tickets are non-transferable when he applied for the issuance of a new ticket. On
the other hand, the word "non-refundable" clearly appears on the face of the subject
tickets.
CAI also denies that it is bound by the acts of Holiday Travel and Mager and that no
principal-agency relationship exists between them. As an independent contractor, Holiday
Travel was without capacity to bind CAI.
Issues
To determine the propriety of disturbing the CAs January 30, 2009 Decision and whether
Spouses Viloria have the right to the reliefs they prayed for, this Court deems it necessary
to resolve the following issues:
a. Does a principal-agent relationship exist between CAI and Holiday Travel?
b. Assuming that an agency relationship exists between CAI and Holiday Travel, is
CAI bound by the acts of Holiday Travels agents and employees such as Mager?
c. Assuming that CAI is bound by the acts of Holiday Travels agents and
employees, can the representation of Mager as to unavailability of seats at
Amtrak be considered fraudulent as to vitiate the consent of Spouse Viloria in the
purchase of the subject tickets?
d. Is CAI justified in insisting that the subject tickets are non-transferable and
non-refundable?
e. Is CAI justified in pegging a different price for the round trip ticket to Los
Angeles requested by Fernando?
f. Alternatively, did CAI act in bad faith or renege its obligation to Spouses Viloria
to apply the value of the subject tickets in the purchase of new ones when it
refused to allow Fernando to use Lourdes ticket and in charging a higher price
for a round trip ticket to Los Angeles?
This Courts Ruling
I. A principal-agent relationship exists between CAI and Holiday Travel.
With respect to the first issue, which is a question of fact that would require this Court to
review and re-examine the evidence presented by the parties below, this Court takes
exception to the general rule that the CAs findings of fact are conclusive upon Us and our
jurisdiction is limited to the review of questions of law. It is well-settled to the point of
being axiomatic that this Court is authorized to resolve questions of fact if confronted with
contrasting factual findings of the trial court and appellate court and if the findings of the
CA are contradicted by the evidence on record. 17
According to the CA, agency is never presumed and that he who alleges that it exists has
the burden of proof. Spouses Viloria, on whose shoulders such burden rests, presented
evidence that fell short of indubitably demonstrating the existence of such agency.
We disagree. The CA failed to consider undisputed facts, discrediting CAIs denial that
Holiday Travel is one of its agents. Furthermore, in erroneously characterizing the
contractual relationship between CAI and Holiday Travel as a contract of sale, the CA
failed to apply the fundamental civil law principles governing agency and differentiating it
from sale.
In Rallos v. Felix Go Chan & Sons Realty Corporation, this Court explained the nature of
18
an agency and spelled out the essential elements thereof:
Out of the above given principles, sprung the creation and acceptance of the relationship
of agency whereby one party, called the principal (mandante), authorizes another, called
the agent (mandatario), to act for and in his behalf in transactions with third persons. The
essential elements of agency are: (1) there is consent, express or implied of the parties to
establish the relationship; (2) the object is the execution of a juridical act in relation to a
third person; (3) the agent acts as a representative and not for himself, and (4) the agent
acts within the scope of his authority.1avvphi1
Agency is basically personal, representative, and derivative in nature. The authority of the
agent to act emanates from the powers granted to him by his principal; his act is the act
of the principal if done within the scope of the authority. Qui facit per alium facit se. "He
who acts through another acts himself." 19
Contrary to the findings of the CA, all the elements of an agency exist in this case. The
first and second elements are present as CAI does not deny that it concluded an
agreement with Holiday Travel, whereby Holiday Travel would enter into contracts of
carriage with third persons on CAIs behalf. The third element is also present as it is
undisputed that Holiday Travel merely acted in a representative capacity and it is CAI and
not Holiday Travel who is bound by the contracts of carriage entered into by Holiday Travel
on its behalf. The fourth element is also present considering that CAI has not made any
allegation that Holiday Travel exceeded the authority that was granted to it. In fact, CAI
consistently maintains the validity of the contracts of carriage that Holiday Travel
executed with Spouses Viloria and that Mager was not guilty of any fraudulent
misrepresentation. That CAI admits the authority of Holiday Travel to enter into contracts
of carriage on its behalf is easily discernible from its February 24, 1998 and March 24,
1998 letters, where it impliedly recognized the validity of the contracts entered into by
Holiday Travel with Spouses Viloria. When Fernando informed CAI that it was Holiday
Travel who issued to them the subject tickets, CAI did not deny that Holiday Travel is its
authorized agent.
Prior to Spouses Vilorias filing of a complaint against it, CAI never refuted that it gave
Holiday Travel the power and authority to conclude contracts of carriage on its behalf. As
clearly extant from the records, CAI recognized the validity of the contracts of carriage
that Holiday Travel entered into with Spouses Viloria and considered itself bound with
Spouses Viloria by the terms and conditions thereof; and this constitutes an unequivocal
testament to Holiday Travels authority to act as its agent. This Court cannot therefore
allow CAI to take an altogether different position and deny that Holiday Travel is its agent
without condoning or giving imprimatur to whatever damage or prejudice that may result
from such denial or retraction to Spouses Viloria, who relied on good faith on CAIs acts in
recognition of Holiday Travels authority. Estoppel is primarily based on the doctrine of
good faith and the avoidance of harm that will befall an innocent party due to its injurious
reliance, the failure to apply it in this case would result in gross travesty of
justice.20 Estoppel bars CAI from making such denial.
As categorically provided under Article 1869 of the Civil Code, "[a]gency may be express,
or implied from the acts of the principal, from his silence or lack of action, or his failure to
repudiate the agency, knowing that another person is acting on his behalf without
authority."
Considering that the fundamental hallmarks of an agency are present, this Court finds it
rather peculiar that the CA had branded the contractual relationship between CAI and
Holiday Travel as one of sale. The distinctions between a sale and an agency are not
difficult to discern and this Court, as early as 1970, had already formulated the guidelines
that would aid in differentiating the two (2) contracts. In Commissioner of Internal
Revenue v. Constantino,21 this Court extrapolated that the primordial differentiating
consideration between the two (2) contracts is the transfer of ownership or title over the
property subject of the contract. In an agency, the principal retains ownership and control
over the property and the agent merely acts on the principals behalf and under his
instructions in furtherance of the objectives for which the agency was established. On the
other hand, the contract is clearly a sale if the parties intended that the delivery of the
property will effect a relinquishment of title, control and ownership in such a way that the
recipient may do with the property as he pleases.
Since the company retained ownership of the goods, even as it delivered possession unto
the dealer for resale to customers, the price and terms of which were subject to the
company's control, the relationship between the company and the dealer is one of
agency, tested under the following criterion:
"The difficulty in distinguishing between contracts of sale and the creation of an agency to
sell has led to the establishment of rules by the application of which this difficulty may be
solved. The decisions say the transfer of title or agreement to transfer it for a price paid or
promised is the essence of sale. If such transfer puts the transferee in the attitude or
position of an owner and makes him liable to the transferor as a debtor for the agreed
price, and not merely as an agent who must account for the proceeds of a resale, the
transaction is a sale; while the essence of an agency to sell is the delivery to an agent,
not as his property, but as the property of the principal, who remains the owner and has
the right to control sales, fix the price, and terms, demand and receive the proceeds less
the agent's commission upon sales made. 1 Mechem on Sales, Sec. 43; 1 Mechem on
Agency, Sec. 48; Williston on Sales, 1; Tiedeman on Sales, 1." (Salisbury v. Brooks, 94 SE
117, 118-119)22
As to how the CA have arrived at the conclusion that the contract between CAI and
Holiday Travel is a sale is certainly confounding, considering that CAI is the one bound by
the contracts of carriage embodied by the tickets being sold by Holiday Travel on its
behalf. It is undisputed that CAI and not Holiday Travel who is the party to the contracts of
carriage executed by Holiday Travel with third persons who desire to travel via Continental
Airlines, and this conclusively indicates the existence of a principal-agent relationship.
That the principal is bound by all the obligations contracted by the agent within the scope
of the authority granted to him is clearly provided under Article 1910 of the Civil Code and
this constitutes the very notion of agency.
II. In actions based on quasi-delict, a principal can only be held liable for the
tort committed by its agents employees if it has been established by
preponderance of evidence that the principal was also at fault or negligent or
that the principal exercise control and supervision over them.
Considering that Holiday Travel is CAIs agent, does it necessarily follow that CAI is liable
for the fault or negligence of Holiday Travels employees? Citing China Air Lines, Ltd. v.
Court of Appeals, et al.,23 CAI argues that it cannot be held liable for the actions of the
employee of its ticketing agent in the absence of an employer-employee relationship.
An examination of this Courts pronouncements in China Air Lines will reveal that an
airline company is not completely exonerated from any liability for the tort committed by
its agents employees. A prior determination of the nature of the passengers cause of
action is necessary. If the passengers cause of action against the airline company is
premised on culpa aquiliana or quasi-delict for a tort committed by the employee of the
airline companys agent, there must be an independent showing that the airline company
was at fault or negligent or has contributed to the negligence or tortuous conduct
committed by the employee of its agent. The mere fact that the employee of the airline
companys agent has committed a tort is not sufficient to hold the airline company liable.
There is no vinculum juris between the airline company and its agents employees and the
contractual relationship between the airline company and its agent does not operate to
create a juridical tie between the airline company and its agents employees. Article 2180
of the Civil Code does not make the principal vicariously liable for the tort committed by
its agents employees and the principal-agency relationship per se does not make the
principal a party to such tort; hence, the need to prove the principals own fault or
negligence.
On the other hand, if the passengers cause of action for damages against the airline
company is based on contractual breach or culpa contractual, it is not necessary that
there be evidence of the airline companys fault or negligence. As this Court previously
stated in China Air Lines and reiterated in Air France vs. Gillego,24 "in an action based on a
breach of contract of carriage, the aggrieved party does not have to prove that the
common carrier was at fault or was negligent. All that he has to prove is the existence of
the contract and the fact of its non-performance by the carrier."
Spouses Vilorias cause of action on the basis of Magers alleged fraudulent
misrepresentation is clearly one of tort or quasi-delict, there being no pre-existing
contractual relationship between them. Therefore, it was incumbent upon Spouses Viloria
to prove that CAI was equally at fault.
However, the records are devoid of any evidence by which CAIs alleged liability can be
substantiated. Apart from their claim that CAI must be held liable for Magers supposed
fraud because Holiday Travel is CAIs agent, Spouses Viloria did not present evidence that
CAI was a party or had contributed to Magers complained act either by instructing or
authorizing Holiday Travel and Mager to issue the said misrepresentation.
It may seem unjust at first glance that CAI would consider Spouses Viloria bound by the
terms and conditions of the subject contracts, which Mager entered into with them on
CAIs behalf, in order to deny Spouses Vilorias request for a refund or Fernandos use of
Lourdes ticket for the re-issuance of a new one, and simultaneously claim that they are
not bound by Magers supposed misrepresentation for purposes of avoiding Spouses
Vilorias claim for damages and maintaining the validity of the subject contracts. It may
likewise be argued that CAI cannot deny liability as it benefited from Magers acts, which
were performed in compliance with Holiday Travels obligations as CAIs agent.
However, a persons vicarious liability is anchored on his possession of control, whether
absolute or limited, on the tortfeasor. Without such control, there is nothing which could
justify extending the liability to a person other than the one who committed the tort. As
this Court explained in Cangco v. Manila Railroad Co.:25
With respect to extra-contractual obligation arising from negligence, whether of
act or omission, it is competent for the legislature to elect and our Legislature has so
elected to limit such liability to cases in which the person upon whom such an
obligation is imposed is morally culpable or, on the contrary, for reasons of public
policy, to extend that liability, without regard to the lack of moral culpability, so
as to include responsibility for the negligence of those persons whose acts or
omissions are imputable, by a legal fiction, to others who are in a position to
exercise an absolute or limited control over them. The legislature which adopted
our Civil Code has elected to limit extra-contractual liability with certain well-defined
exceptions to cases in which moral culpability can be directly imputed to the persons to
be charged. This moral responsibility may consist in having failed to exercise due care in
one's own acts, or in having failed to exercise due care in the selection and control of
one's agent or servants, or in the control of persons who, by reasons of their status,
occupy a position of dependency with respect to the person made liable for their
conduct.26 (emphasis supplied)
It is incumbent upon Spouses Viloria to prove that CAI exercised control or supervision
over Mager by preponderant evidence. The existence of control or supervision cannot be
presumed and CAI is under no obligation to prove its denial or nugatory assertion.
Citing Belen v. Belen,27 this Court ruled in Jayme v. Apostol,28 that:
In Belen v. Belen, this Court ruled that it was enough for defendant to deny an alleged
employment relationship. The defendant is under no obligation to prove the negative
averment. This Court said:
"It is an old and well-settled rule of the courts that the burden of proving the action is
upon the plaintiff, and that if he fails satisfactorily to show the facts upon which he bases
his claim, the defendant is under no obligation to prove his exceptions. This [rule] is in
harmony with the provisions of Section 297 of the Code of Civil Procedure holding that
each party must prove his own affirmative allegations, etc." 29 (citations omitted)
Therefore, without a modicum of evidence that CAI exercised control over Holiday Travels
employees or that CAI was equally at fault, no liability can be imposed on CAI for Magers
supposed misrepresentation.
III. Even on the assumption that CAI may be held liable for the acts of Mager,
still, Spouses Viloria are not entitled to a refund. Magers statement cannot be
considered a causal fraud that would justify the annulment of the subject
contracts that would oblige CAI to indemnify Spouses Viloria and return the
money they paid for the subject tickets.
Article 1390, in relation to Article 1391 of the Civil Code, provides that if the consent of
the contracting parties was obtained through fraud, the contract is considered voidable
and may be annulled within four (4) years from the time of the discovery of the fraud.
Once a contract is annulled, the parties are obliged under Article 1398 of the same Code
to restore to each other the things subject matter of the contract, including their fruits and
interest.
On the basis of the foregoing and given the allegation of Spouses Viloria that Fernandos
consent to the subject contracts was supposedly secured by Mager through fraudulent
means, it is plainly apparent that their demand for a refund is tantamount to seeking for
an annulment of the subject contracts on the ground of vitiated consent.
Whether the subject contracts are annullable, this Court is required to determine whether
Magers alleged misrepresentation constitutes causal fraud. Similar to the dispute on the
existence of an agency, whether fraud attended the execution of a contract is factual in
nature and this Court, as discussed above, may scrutinize the records if the findings of the
CA are contrary to those of the RTC.
This Court finds the only proof of Magers alleged fraud, which is Fernandos testimony
that an Amtrak had assured him of the perennial availability of seats at Amtrak, to be
wanting. As CAI correctly pointed out and as Fernando admitted, it was possible that
during the intervening period of three (3) weeks from the time Fernando purchased the
subject tickets to the time he talked to said Amtrak employee, other passengers may have
cancelled their bookings and reservations with Amtrak, making it possible for Amtrak to
accommodate them. Indeed, the existence of fraud cannot be proved by mere
speculations and conjectures. Fraud is never lightly inferred; it is good faith that is. Under
the Rules of Court, it is presumed that "a person is innocent of crime or wrong" and that
"private transactions have been fair and regular." 35 Spouses Viloria failed to overcome this
presumption.
IV. Assuming the contrary, Spouses Viloria are nevertheless deemed to have
ratified the subject contracts.

Even assuming that Magers representation is causal fraud, the subject contracts have
Under Article 1338 of the Civil Code, there is fraud when, through insidious words or
been impliedly ratified when Spouses Viloria decided to exercise their right to use the
machinations of one of the contracting parties, the other is induced to enter into a
subject tickets for the purchase of new ones. Under Article 1392 of the Civil Code,
contract which, without them, he would not have agreed to. In order that fraud may vitiate
"ratification extinguishes the action to annul a voidable contract."
consent, it must be the causal (dolo causante), not merely the incidental (dolo incidente),
inducement to the making of the contract.30 In Samson v. Court of Appeals,31 causal fraud
was defined as "a deception employed by one party prior to or simultaneous to the Ratification of a voidable contract is defined under Article 1393 of the Civil Code as
contract in order to secure the consent of the other." 32 follows:

Also, fraud must be serious and its existence must be established by clear and convincing
evidence. As ruled by this Court in Sierra v. Hon. Court of Appeals, et al.,33 mere
preponderance of evidence is not adequate:
Fraud must also be discounted, for according to the Civil Code:
Art. 1338. There is fraud when, through insidious words or machinations of one of the
contracting parties, the other is induced to enter into a contract which without them, he
would not have agreed to.
Art. 1344. In order that fraud may make a contract voidable, it should be serious and
should not have been employed by both contracting parties.
Art. 1393. Ratification may be effected expressly or tacitly. It is understood that there is a
tacit ratification if, with knowledge of the reason which renders the contract voidable and
such reason having ceased, the person who has a right to invoke it should execute an act
which necessarily implies an intention to waive his right.
Implied ratification may take diverse forms, such as by silence or acquiescence; by acts
showing approval or adoption of the contract; or by acceptance and retention of benefits
flowing therefrom.36
Simultaneous with their demand for a refund on the ground of Fernandos vitiated
consent, Spouses Viloria likewise asked for a refund based on CAIs supposed bad faith in
reneging on its undertaking to replace the subject tickets with a round trip ticket from
Manila to Los Angeles.

To quote Tolentino again, the "misrepresentation constituting the fraud must be

In doing so, Spouses Viloria are actually asking for a rescission of the subject contracts
established by full, clear, and convincing evidence, and not merely by a preponderance
based on contractual breach. Resolution, the action referred to in Article 1191, is based on
thereof. The deceit must be serious. The fraud is serious when it is sufficient to impress, or
the defendants breach of faith, a violation of the reciprocity between the parties 37 and
to lead an ordinarily prudent person into error; that which cannot deceive a prudent
in Solar Harvest, Inc. v. Davao Corrugated Carton Corporation,38 this Court ruled that a
person cannot be a ground for nullity. The circumstances of each case should be
claim for a reimbursement in view of the other partys failure to comply with his
considered, taking into account the personal conditions of the victim." 34
obligations under the contract is one for rescission or resolution.

After meticulously poring over the records, this Court finds that the fraud alleged by
However, annulment under Article 1390 of the Civil Code and rescission under Article
Spouses Viloria has not been satisfactorily established as causal in nature to warrant the
1191 are two (2) inconsistent remedies. In resolution, all the elements to make the
annulment of the subject contracts. In fact, Spouses Viloria failed to prove by clear and
contract valid are present; in annulment, one of the essential elements to a formation of a
convincing evidence that Magers statement was fraudulent. Specifically, Spouses Viloria
contract, which is consent, is absent. In resolution, the defect is in the consummation
failed to prove that (a) there were indeed available seats at Amtrak for a trip to New
stage of the contract when the parties are in the process of performing their respective
Jersey on August 13, 1997 at the time they spoke with Mager on July 21, 1997; (b) Mager
obligations; in annulment, the defect is already present at the time of the negotiation and
knew about this; and (c) that she purposely informed them otherwise.
perfection stages of the contract. Accordingly, by pursuing the remedy of rescission under
Article 1191, the Vilorias had impliedly admitted the validity of the subject contracts,
forfeiting their right to demand their annulment. A party cannot rely on the contract and
claim rights or obligations under it and at the same time impugn its existence or validity.
Indeed, litigants are enjoined from taking inconsistent positions. 39
V. Contracts cannot be rescinded for a slight or casual breach.
CAI cannot insist on the non-transferability of the subject tickets.
Considering that the subject contracts are not annullable on the ground of vitiated
consent, the next question is: "Do Spouses Viloria have the right to rescind the contract
on the ground of CAIs supposed breach of its undertaking to issue new tickets upon
surrender of the subject tickets?"
Article 1191, as presently worded, states:
The power to rescind obligations is implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him.
The injured party may choose between the fulfilment and the rescission of the obligation,
with the payment of damages in either case. He may also seek rescission, even after he
has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the
fixing of a period.
This is understood to be without prejudice to the rights of third persons who have acquired
the thing, in accordance with articles 1385 and 1388 and the Mortgage Law.
According to Spouses Viloria, CAI acted in bad faith and breached the subject contracts
when it refused to apply the value of Lourdes ticket for Fernandos purchase of a round
trip ticket to Los Angeles and in requiring him to pay an amount higher than the price
fixed by other airline companies.
In its March 24, 1998 letter, CAI stated that "non-refundable tickets may be used as a
form of payment toward the purchase of another Continental ticket for $75.00, per ticket,
reissue fee ($50.00, per ticket, for tickets purchased prior to October 30, 1997)."
Clearly, there is nothing in the above-quoted section of CAIs letter from which the
restriction on the non-transferability of the subject tickets can be inferred. In fact, the
words used by CAI in its letter supports the position of Spouses Viloria, that each of them
can use the ticket under their name for the purchase of new tickets whether for
themselves or for some other person.
Moreover, as CAI admitted, it was only when Fernando had expressed his interest to use
the subject tickets for the purchase of a round trip ticket between Manila and Los Angeles
that he was informed that he cannot use the ticket in Lourdes name as payment.
Contrary to CAIs claim, that the subject tickets are non-transferable cannot be implied
from a plain reading of the provision printed on the subject tickets stating that "[t]o the
extent not in conflict with the foregoing carriage and other services performed by each
carrier are subject to: (a) provisions contained in this ticket, x x x (iii) carriers conditions
of carriage and related regulations which are made part hereof (and are available on
application at the offices of carrier) x x x." As a common carrier whose business is imbued
with public interest, the exercise of extraordinary diligence requires CAI to inform Spouses
Viloria, or all of its passengers for that matter, of all the terms and conditions governing
their contract of carriage. CAI is proscribed from taking advantage of any ambiguity in the
contract of carriage to impute knowledge on its passengers of and demand compliance
with a certain condition or undertaking that is not clearly stipulated. Since the prohibition
on transferability is not written on the face of the subject tickets and CAI failed to inform
Spouses Viloria thereof, CAI cannot refuse to apply the value of Lourdes ticket as
payment for Fernandos purchase of a new ticket.
CAIs refusal to accept Lourdes ticket for the purchase of a new ticket for
Fernando is only a casual breach.
Nonetheless, the right to rescind a contract for non-performance of its stipulations is not
absolute. The general rule is that rescission of a contract will not be permitted for a slight
or casual breach, but only for such substantial and fundamental violations as would defeat
the very object of the parties in making the agreement.40 Whether a breach is substantial
is largely determined by the attendant circumstances. 41
While CAIs refusal to allow Fernando to use the value of Lourdes ticket as payment for
the purchase of a new ticket is unjustified as the non-transferability of the subject tickets
was not clearly stipulated, it cannot, however be considered substantial. The endorsability
of the subject tickets is not an essential part of the underlying contracts and CAIs failure
to comply is not essential to its fulfillment of its undertaking to issue new tickets upon
Spouses Vilorias surrender of the subject tickets. This Court takes note of CAIs
willingness to perform its principal obligation and this is to apply the price of the ticket in
Fernandos name to the price of the round trip ticket between Manila and Los Angeles. CAI
was likewise willing to accept the ticket in Lourdes name as full or partial payment as the
case may be for the purchase of any ticket, albeit under her name and for her exclusive
use. In other words, CAIs willingness to comply with its undertaking under its March 24,
1998 cannot be doubted, albeit tainted with its erroneous insistence that Lourdes ticket is
non-transferable.
Moreover, Spouses Vilorias demand for rescission cannot prosper as CAI cannot be solely
faulted for the fact that their agreement failed to consummate and no new ticket was
issued to Fernando. Spouses Viloria have no right to insist that a single round trip ticket
between Manila and Los Angeles should be priced at around $856.00 and refuse to pay
the difference between the price of the subject tickets and the amount fixed by CAI. The
petitioners failed to allege, much less prove, that CAI had obliged itself to issue to them
tickets for any flight anywhere in the world upon their surrender of the subject tickets. In
its March 24, 1998 letter, it was clearly stated that "[n]on-refundable tickets may be used
as a form of payment toward the purchase of another Continental ticket" 42 and there is
nothing in it suggesting that CAI had obliged itself to protect Spouses Viloria from any
fluctuation in the prices of tickets or that the surrender of the subject tickets will be
considered as full payment for any ticket that the petitioners intend to buy regardless of
actual price and destination. The CA was correct in holding that it is CAIs right and
exclusive prerogative to fix the prices for its services and it may not be compelled to
observe and maintain the prices of other airline companies. 43
The conflict as to the endorsability of the subject tickets is an altogether different matter,
which does not preclude CAI from fixing the price of a round trip ticket between Manila
and Los Angeles in an amount it deems proper and which does not provide Spouses Viloria
an excuse not to pay such price, albeit subject to a reduction coming from the value of the
subject tickets. It cannot be denied that Spouses Viloria had the concomitant obligation to
pay whatever is not covered by the value of the subject tickets whether or not the subject
tickets are transferable or not.1avvphi1
There is also no showing that Spouses Viloria were discriminated against in bad faith by
being charged with a higher rate. The only evidence the petitioners presented to prove
that the price of a round trip ticket between Manila and Los Angeles at that time was only
$856.00 is a newspaper advertisement for another airline company, which is inadmissible
for being "hearsay evidence, twice removed." Newspaper clippings are hearsay if they
were offered for the purpose of proving the truth of the matter alleged. As ruled in Feria v.
Court of Appeals,:44
[N]ewspaper articles amount to "hearsay evidence, twice removed" and are therefore not
only inadmissible but without any probative value at all whether objected to or not, unless
offered for a purpose other than proving the truth of the matter asserted. In this case, the
news article is admissible only as evidence that such publication does exist with the tenor
of the news therein stated.45 (citations omitted)
The records of this case demonstrate that both parties were equally in default; hence,
none of them can seek judicial redress for the cancellation or resolution of the subject
contracts and they are therefore bound to their respective obligations thereunder. As the
1st sentence of Article 1192 provides:
Art. 1192. In case both parties have committed a breach of the obligation, the
liability of the first infractor shall be equitably tempered by the courts. If it
cannot be determined which of the parties first violated the contract, the same shall be
deemed extinguished, and each shall bear his own damages. (emphasis supplied)
Therefore, CAIs liability for damages for its refusal to accept Lourdes ticket for the
purchase of Fernandos round trip ticket is offset by Spouses Vilorias liability for their
refusal to pay the amount, which is not covered by the subject tickets. Moreover, the
contract between them remains, hence, CAI is duty bound to issue new tickets for a
destination chosen by Spouses Viloria upon their surrender of the subject tickets and
Spouses Viloria are obliged to pay whatever amount is not covered by the value of the
subject tickets.
This Court made a similar ruling in Central Bank of the Philippines v. Court of
Appeals.46 Thus:
Since both parties were in default in the performance of their respective reciprocal
obligations, that is, Island Savings Bank failed to comply with its obligation to furnish the
entire loan and Sulpicio M. Tolentino failed to comply with his obligation to pay
his P17,000.00 debt within 3 years as stipulated, they are both liable for damages.
Article 1192 of the Civil Code provides that in case both parties have committed a breach
of their reciprocal obligations, the liability of the first infractor shall be equitably tempered
by the courts. WE rule that the liability of Island Savings Bank for damages in not
furnishing the entire loan is offset by the liability of Sulpicio M. Tolentino for damages, in
the form of penalties and surcharges, for not paying his overdue P17,000.00 debt. x x x.47
Another consideration that militates against the propriety of holding CAI liable for moral
damages is the absence of a showing that the latter acted fraudulently and in bad faith.
Article 2220 of the Civil Code requires evidence of bad faith and fraud and moral damages
are generally not recoverable in culpa contractual except when bad faith had been
proven.48 The award of exemplary damages is likewise not warranted. Apart from the
requirement that the defendant acted in a wanton, oppressive and malevolent manner,
the claimant must prove his entitlement to moral damages.49
WHEREFORE, premises considered, the instant Petition is DENIED.
SO ORDERED.