LAMBERT S. RAMOS, G.R. No.

184905
Petitioner,
- versus - Chico-Nazario,

C.O.L. REALTY CORPORATION,
Respondent. Promulgated:

August 28, 2009
x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

The issue for resolution is whether petitioner can be held solidarily liable with his driver, Rodel Ilustrisimo,
to pay respondent C.O.L. Realty the amount of P51,994.80 as actual damages suffered in a vehicular collision.

The facts, as found by the appellate court, are as follows:

On or about 10:40 oclock in the morning of 8 March 2004, along Katipunan (Avenue),
corner Rajah Matanda (Street), Quezon City, a vehicular accident took place between a Toyota
Altis Sedan bearing Plate Number XDN 210, owned by petitioner C.O.L. Realty Corporation, and
driven by Aquilino Larin (Aquilino), and a Ford Expedition, owned by x x x Lambert Ramos (Ramos)
and driven by Rodel Ilustrisimo (Rodel), with Plate Number LSR 917. A passenger of the sedan, one
Estela Maliwat (Estela) sustained injuries. She was immediately rushed to the hospital for
treatment.

(C.O.L. Realty) averred that its driver, Aquilino, was slowly driving the Toyota Altis car at
a speed of five to ten kilometers per hour along Rajah Matanda Street and has just crossed the
center lane of Katipunan Avenue when (Ramos) Ford Espedition violently rammed against the cars
right rear door and fender. With the force of the impact, the sedan turned 180 degrees towards
the direction where it came from.

Upon investigation, the Office of the City Prosecutor of Quezon City found probable cause
to indict Rodel, the driver of the Ford Expedition, for Reckless Imprudence Resulting in Damage to
Property. In the meantime, petitioner demanded from respondent reimbursement for the
expenses incurred in the repair of its car and the hospitalization of Estela in the aggregate amount
of P103,989.60. The demand fell on deaf ears prompting (C.O.L. Realty) to file a Complaint for
Damages based on quasi-delict before the Metropolitan Trial Court of Metro Manila
(MeTC), Quezon City, docketed as Civil Case No. 33277, and subsequently raffled to Branch 42.

As could well be expected, (Ramos) denied liability for damages insisting that it was the
negligence of Aquilino, (C.O.L. Realtys) driver, which was the proximate cause of the accident.
(Ramos) maintained that the sedan car crossed Katipunan Avenue from Rajah Matanda
Street despite the concrete barriers placed thereon prohibiting vehicles to pass through the
intersection.

Ramos vehicle was moving at high speed in a busy area that was then the subject of an ongoing construction (the Katipunan Avenue-Boni Serrano Avenue underpass).994.L.O. The Counterclaims of the defendant are likewise DISMISSED for lack of sufficient factual and legal basis. Realtys) Motion for Reconsideration met the same fate as it was denied by the RTC in its Order dated 5 June 2007. the Court of Appeals likewise noted that at the time of the collision. Petitioner filed a Motion for Reconsideration but it was denied. Branch 215 is hereby MODIFIED in that respondent Lambert Ramos is held solidarily liable with Rodel Ilustrisimo to pay petitioner C. which rendered the assailed Decision dated 5 September 2006. (C.O. Thus: This is to certify that as per records found and available in this office the crossing of vehicles at Katipunan Avenue from Rajah Matanda Street to Blue Ridge Subdivision.O. Realty appealed to the Court of Appeals which affirmed the view that Aquilino was negligent in crossing Katipunan Avenue from Rajah Matanda Street since. The aforesaid judgment did not sit well with (C. 2008. Rodel.[3] However. the instant petition. He asserted that he exercised the diligence of a good father of a family in the selection and supervision of his driver. thus violating the MMDA rule. [1] C.L. Realty) so that he (sic) appealed the same before the RTC of Quezon City. SO ORDERED.[4] It therefore found the driver Rodel guilty of contributory negligence for driving the Ford Expedition at high speed along a busy intersection.L.L. Realty Corporations claim for exemplary damages. (Ramos) further claimed that he was not in the vehicle when the mishap occurred.L. which raises the following sole issue: . Aquilino crossed Katipunan Avenue through certain portions of the barricade which were broken. affirming the MeTCs Decision. as per Certification of the Metropolitan Manila Development Authority (MMDA) dated November 30. Hence.Nonetheless. attorneys fees and cost of suit are DISMISSED for lack of merit.[2] (Emphasis supplied) Barricades were precisely placed along the intersection of Katipunan Avenue and Rajah Matanda Street in order to prevent motorists from crossing Katipunan Avenue.80 as actual damages. such act is specifically prohibited. raffled to Branch 215. the instant case is DISMISSED for lack of merit. 2004. sending it spinning in a 180-degree turn. Realty Corporation the amount of P51. thus: WHEREFORE. Quezon City has (sic) not allowed since January 2004 up to the present in view of the ongoing road construction at the area. SO ORDERED. as follows: WHEREFORE.O. the Decision dated 5 September 2006 of the Regional Trial Court of Quezon City. Petitioner C. Weighing the respective evidence of the parties. on May 28. the appellate court rendered the assailed Decision. then smashed into the rear door and fender of the passengers side of Aquilinos car. the MeTC rendered the Decision dated 1 March 2006 exculpating (Ramos) from liability. [5] the dispositive portion of which reads.O. Thus.

Realty) claimed. This finds support in Article 2185 of the Civil Code Unless there is proof to the contrary. his negligence is established by the fact that he violated a traffic regulation. Realtys) negligence which resulted in the vehicular mishap. there ought to be no question on (C. This prohibition stands even if.[6] Thus. What is clear to Us is that Aquilino recklessly ignored these barricades and drove through it. He had no regard to (sic) the safety of other vehicles on the road. (Aquilinos) sedan made a 180-degree turn as (Ramos) Ford Expedition careened and smashed into its rear door and fender.O. this created a presumption of negligence on the part of his employer. Rodel should have known that driving his vehicle at a high speed in a major thoroughfare which was then subject of an on-going construction was a perilous act. There is no doubt in the appellate courts mind that Aquilinos violation of the MMDA prohibition against crossing Katipunan Avenue from Rajah Matanda Street was theproximate cause of the accident. The barricades were placed thereon to caution drivers not to pass through the intersecting roads.Quezon City has (sic) not allowed since January 2004 up to the present in view of the ongoing road construction at the area. Having thus settled the contributory negligence of Rodel. it even conceded that petitioner was guilty of mere contributory negligence. as (C. On this score. the Court of Appeals acknowledged that: The Certification dated 30 November 2004 of the Metropolitan Manila Development Authority (MMDA) evidently disproved (C. was not to be blamed for the accident TO WHOM IT MAY CONCERN: This is to certify that as per records found and available in this office the crossing of vehicles at Katipunan Avenue from Rajah Matanda Street to Blue Ridge Subdivision.O. This certification is issued upon request of the interested parties for whatever legal purpose it may serve. (C. Realtys) barefaced assertion that its driver. (Ramos). Aquilino.L.O. Realty) admitted that there were barricades along the intersection of Katipunan Avenue and Rajah Matanda Street. it also declared Ramos liable vicariously for Rodels contributory negligence in driving the Ford Expedition at high speed along a busy intersection. We resolve to GRANT the petition. he was violating any traffic regulation. Accordingly. AND THE EVIDENCE TO SUPPORT AND JUSTIFY THE SAME IS INSUFFICIENT. Because of the impact of the collision.O.L. We cannot exculpate Rodel from liability. the appellate court made the following pronouncement: As a professional driver. Without doubt. THE COURT OF APPEALS DECISION IS CONTRARY TO LAW AND JURISPRUDENCE. it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap. the barriers were broken at that point creating a small gap through which any vehicle could pass. in its Comment to the instant petition. For the employer to avoid the solidary liability .[7] However.L. Respondent does not dispute this.L.

As culled from the foregoing. he or she exercises the care and diligence of a good father of a family. an employer must rebut the presumption by presenting adequate and convincing proof that in the selection and supervision of his employee. that . [8] Petitioner disagrees.O. The crossing of respondents vehicle in a prohibited intersection unquestionably produced the injury. It has been clearly established in this case. in his right mind. xxxx 22. A certain Ramon Gomez. As correctly concluded by the RTC. Certainly. Were it not for the obvious negligence of respondents driver in crossing the intersection that was prohibited. It becomes apparent therefore that the only time a plaintiff. respondent was the sole proximate cause of the accident. however. On the other hand. the petitioners driver could not be expected to slacken his speed while travelling along said intersection since nobody. (Ramos) did not bother to refute (C. that they complied with everything that was incumbent on them.L. As the employer of Rodel. can recover damages is if its negligence was only contributory. barren of significant weight. (Ramos) supposedly tested Rodels driving skills before accepting him for the job. then respondent alone should suffer the consequences of the accident and the damages it incurred. Realtys) stance that his driver was texting with his cellphone while running at a high speed and that the latter did not slow down albeit he knew that Katipunan Avenue was then undergoing repairs and that the road was barricaded with barriers. arguing that since Aquilinos willful disregard of the MMDA prohibition was the sole proximate cause of the accident. In the supervision of employees. the accident would not have happened. (Ramos) failed to do. and without which the accident would not have occurred. safety record. He argues: 20. for a tort committed by his employee. testified that a background investigation would have to be made before an applicant is recommended to the parishioners for employment. (Ramos) evidence which consisted mainly of testimonial evidence remained unsubstantiated and are thus. Assuming. that respondents negligence was not merely contributory. So too. experience and service records. monitor their implementation and impose disciplinary measures for the breach thereof. including documentary evidence. and driving history. he has not been involved in any road accident. These. employers are required to examine them as to their qualifications. (Ramos) feebly attempts to escape vicarious liability by averring that Rodel was highly recommended when he applied for the position of family driver by the Social Service Committee of his parish. He failed to present convincing proof that he went to the extent of verifying Rodels qualifications. Respondents vehicle should not have been in that position since crossing the said intersection was prohibited. and such contributory negligence was the proximate cause of the accident. would do the same. petitioners driver had the right to be where he was at the time of the mishap. however. in the selection of prospective employees. Employers must submit concrete proof. and except for the mishap in 2004. but the sole proximate cause of the accident. Rodel has been his driver since 2001. a member of the churchs livelihood program. the employer must formulate standard operating procedures. Regrettably. (Ramos) is solidarily liable for the quasi-delict committed by the former. The presumption juris tantum that there was negligence in the selection of driver remains unrebutted. There is nothing on the records which would support (Ramos) bare allegation of Rodels 10-year unblemished driving record. the respondent herein.

the immediate and proximate cause of the injury being the defendants lack of due care. the latters negligence is imputed to his superior and will defeat the superiors action against the third person. Moreover. in natural and continuous sequence. Thus. and without which the result would not have occurred. have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom. viz: Article 2179. If the master is injured by the negligence of a third person and by the concurring contributory negligence of his own servant or agent. petitioners driver was indeed guilty of any contributory negligence. no accident would have happened. produces the injury. assuming of course that the contributory negligence was the proximate cause of the injury of which complaint is made. As the sole proximate cause of the accident was respondents own driver. if respondents driver did not cross the prohibited intersection. it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap. under such circumstances that the person responsible for the first event should. he was violating any traffic regulation.[9] On the other hand. he cannot recover damages. It is obvious then that petitioners driver was not guilty of any negligence that would make petitioner vicariously liable for damages. the proximate legal cause is that acting first and producing the injury. 23. And more comprehensively. . respondent in its Comment merely reiterated the appellate courts findings and pronouncements. unbroken by any efficient intervening cause. Article 2185. all constituting a natural and continuous chain of events. This specific untoward event is exactly what the MMDA prohibition was intended for.[11] If Aquilino heeded the MMDA prohibition against crossing Katipunan Avenue from Rajah Matanda. that when the plaintiffs own negligence was the immediate and proximate cause of his injury. which. as an ordinary prudent and intelligent person. and thus precludes any recovery for any damages suffered by respondent from the accident. No imputation of any lack of care on Ilustrisimos could thus be concluded. But if his negligence was only contributory. such was not the proximate cause of the accident considering that again. the plaintiff may recover damages. respondent cannot claim damages from petitioner.[10] Applying the foregoing principles of law to the instant case. but the courts shall mitigate the damages to be awarded. When the plaintiffs own negligence was the immediate and proximate cause of his injury. each having a close causal connection with its immediate predecessor. Aquilinos act of crossing Katipunan Avenue via Rajah Matanda constitutes negligence because it was prohibited by law. the accident would not have happened. Proximate cause is defined as that cause. It was manifest error for the Court of Appeals to have overlooked the principle embodied in Article 2179 of the Civil Code. and insisted on his vicarious liability as Rodels employer under Article 2184 of the Civil Code. Aquilino had reasonable ground to expect that the accident would be a natural and probable result if he crossed Katipunan Avenue since such crossing is considered dangerous on account of the busy nature of the thoroughfare and the ongoing construction of the Katipunan-Boni Avenue underpass. Articles 2179 and 2185 of the Civil Code on quasi-delicts apply in this case. a prudent and intelligent person who resides within the vicinity where the accident occurred. it was the proximate cause of the accident. he cannot recover damages. either immediately or by setting other events in motion. conceding that petitioner is guilty of mere contributory negligence. the final event in the chain immediately effecting the injury as a natural and probable result of the cause which first acted. Unless there is proof to the contrary.

unlike three other cars which had been saved because they were parked near the entrance of the garage. Cipriano Enterprises. CV No. was specified. He further averred that private respondents car was ready for release as early as afternoon of April 30. 2008 are hereby REVERSED and SET ASIDE. it could not eliminate respondents liability for Aquilinos negligence which is the proximate result of the accident. brought a 1990 model Kia Pride Peoples car to petitioners shop for rustproofing.[3] which showed the date it was received for rustproofing as well its condition at the time.S. as it took only six hours to complete the process of rustproofing.155. THE COURT OF APPEALS and MACLIN ELECTRONICS. however. demanding reimbursement for the value of the Kia Pride. J.00 in attorneys fees.00. The car had been purchased the year before from the Integrated Auto Sales. he claimed he had installed fire-fighting devices and that the fire was an accident entirely independent of his will and devoid of any negligence on his part. October 30. 107968. The Decision of the Court of Appeals dated May 28. Private respondent alleged that its vehicle was lost due to the negligence and imprudence of the petitioner. there was simply not enough time to get it out of the building. respondents. 2006 dismissing for lack of merit respondents complaint for damages is hereby REINSTATED. we find it unnecessary to delve into the issue of Rodels contributory negligence. According to the petitioner. Petitioner claimed that despite efforts to save the vehicle. the petition is GRANTED.R.D. under the style Motobilkote. private respondent Maclin Electronics. private respondent sent a letter to petitioner. which petitioner also owned. 1572 and to insure it as required in the rules implementing the Decree. allegedly to protect it from theft. 1991 and was ready for release later that afternoon. In other words. 123581. adjoining his Mobilkote rustproofing shop. The Decision of the Regional Trial Court of Quezon City.. the car was brought to his shop at 10 oclock in the morning of April 30. The car had been kept inside the building. citing petitioners failure to register his business with the Department of Trade and Industry under P. WHEREFORE. which is engaged in the rustproofing of vehicles. The vehicle was received in the shop under Job Order No.R. In reply.155. CIPRIANO ENTERPRISES. Petitioner explained that rustproofing involved spraying asphalt-like materials underneath motor vehicle so that rust will not corrode its body and that the materials and chemicals used for this purpose are not . On April 30. CIPRIANO and/or E. petitioner denied liability on the ground that the fire was a fortuitous event. 2008 in CA-G. an assertion of contributory negligence in this case would benefit only the petitioner.R. 1996] ELIAS S. 1174 of the Civil Code and denied liability for the loss which he alleged was due to a fortuitous event. ordering the petitioner to pay P252. through an employee. INC. it will have the effect of mitigating the award of damages in his favor. Inc. In the afternoon of May 1. The fire destroyed both the shop and the restaurant. 1991. He later testified that he employed an electrician who regularly inspected the lighting in his restaurant and rustproofing shop.S. Inc..00 to private respondent for the loss of the latters vehicle while undergoing rustproofing and P10. 36045 which affirmed in toto the decision of Branch 58[2] of the Quezon City Regional Trial Court. Neither the time of acceptance nor the hour of release. In addition.: This is a petition for review of the decision[1] of the Court of Appeals in CA-G. DECISION MENDOZA. since it cannot overcome or defeat Aquilinos recklessness which is the immediate and proximate cause of the accident. SP No. Cipriano is the owner of E. 1991. including private respondents Kia Pride. SO ORDERED. This prompted private respondent to bring this suit for the value of its vehicle and for damages against petitioner.[5] In his Answer. petitioner. [4] On May 8 1991. Hence. No. fire broke out at the Lambat restaurant. The facts of the case are as follows: Petitioner Elias S. for P252. No. 1991. Rodels contributory negligence has relevance only in the event that Ramos seeks to recover from respondent whatever damages or injuries he may have suffered as a result. 99614 and its Resolution of October 13. Branch 215 dated September 5. vs. SECOND DIVISION [G. petitioner invoked Art. and that it was private respondents delay in claiming it that was the cause of the loss.000.

and that the law applicable to the case is P. Cruz and Co. he could not be made to assume the risk of loss due to fire. 1262.000. In F.00.inflammable. New Civil Code). No.. the purpose of which is to protect customers who entrust their properties to service and repair enterprises.[9] we held the owner of a furniture shop liable for the destruction of the plaintiffs house in a fire which started in his establishment in view of his failure to comply with an ordinance which required the construction of a . Inc. (2) and (5). he must bear the cost of loss of his customers.. reckless. Except in cases expressly specified by the law. and he shall be responsible for damages. The same rule applies when the nature of the obligation requires the assumption of risk. No. if so. The contention is without merit. We hold that both questions must be answered in the affirmative.[7] The Court of Appeals also affirmed the award of attorneys fees. On appeal. correctly ordered by the court a quo to pay appellee reasonable attorneys fees as it had unjustly and unreasonably refused to satisfy the latters plainly valid. the court ordered petitioner to pay private respondent P252. Therefore. just. 1174.D. private respondent argued that petitioner was liable for the loss of the car even if it was caused by a fortuitous event.F. the obligor is liable even for fortuitous events. no person shall be responsible for those events which could not be foreseen. petitioner was required to insure his property as well as those of his customers. whether his failure to do so constituted negligence.[6] even as it ruled that the business of rustproffing is definitely covered by P. 1572. and demandable claim. Court of Appeals. were inevitable. without the necessary accreditation and license from the Department of Trade and Industry. because he was not covered by P. Therefore. Since petitioner did not register his business and insure it. When by law or stipulation.00 with interest at 6% per annum from the filing of the case and attorneys fees in the amount of P10. Petitioner contends that the fire which destroyed private respondents car was a fortuitous event for which he cannot be held responsible. It was.D. The appellate court stated: Defendant-appellant was operating the business of rustproofing of cars and other motor vehicles illegally at the time of the fire in question. the basis therefor could be inferred from the finding that petitioner unjustly refused to pay private respondents valid and demandable claim. No. The trial court sustained the private respondents contention that the failure of defendant to comply with P. or when it is otherwise declared by stipulation. The Court of Appeals held that by virtue of the provisions of P.D. We have already held that violation of a statutory duty is negligence per se.[8] Hence. though foreseen. or which. 1572 and its implementing rules and regulations which require fire insurance coverage prior to accreditation. compelling said appellee to file this action to protect its interest (Art. The issue in this case is whether petitioner was required to insure his business and the vehicles received by him in the course of his business and. this appeal.155. pars. owners of service and repair enterprises assume the risk of loss of their customers property.e. it must bear the consequences of such illegal operation.D. An obligation which consists in the delivery of a determinate thing shall be extinguished if it should be lost or destroyed without the fault of the debtor. and illegal operation of appellants business resulted in appellees lack of protection from the fire that gutted appellants shop and which completely burned its car while in appellants possession for rustproofing. Said the appellate court: Such wanton. ruling that although the lower court did not expressly and specifically state the reason for the award.D. As already noted. 1572 is in effect a manifest act of negligence which renders defendant [petitioner herein] liable for the loss of the car even if the same was caused by fire. therefore. 2208. No. he cites the following provisions of the Civil Code: ART. 1572. On the other hand. No. v. It contended that the nature of petitioners business required him to assume the risk because under P. the loss of the thing does not extinguish the obligation. i. or when the nature of the obligation requires the assumption of risk. and before he has incurred in delay. 1572. In support of his argument. ART. No. He also claimed that he was not required to register his business with the Department of Trade and Industry. and it is for this reason that it did not carry at least a fire insurance coverage to protect the vehicles entrusted to it by its customers. rendering him liable for loss due to the risk required to be insured against. including the risk of losses or injuries to the vehicles of its customers brought by unforeseen or fortuitous events like the fire that gutted its shop and completely burned appellees car while said vehicle was in its possession. the decision was affirmed. Yet appellant adamantly and stubbornly refused to pay appellee the value of its lost car. The Court of Appeals ruled that the provisions of the Civil Code relied upon by the petitioner are not applicable to this case.D. 1572.

and Torres. that the Court of Appeals erred in sustaining the award of attorneys fees by the lower court.[15] must be fully justified in the decision.D. Jr. concur.2. SO ORDERED. 1992.[11] Petitioner's negligence is the source of his obligation. the decision. Rule III of this Rules and Regulations. 8 . Copy of Bond referred to under Section 7. service or maintenance together with a copy of the official receipt covering the full payment of premium. 1.3. 32 requires covered enterprises to secure insurance coverage. airconditioners. it was error for the Court of Appeals to sustain such award. non-compliance with the ordinance was not only an act negligence. refrigerators. It is now settled that the reasons or grounds for an award of attorneys fees must be set forth in the decision of the court. like that of petitioners to register with the Department of Trade and Industry. List of certified engineers/accredited technicians mechanics with their personal data. Copy of Insurance Policy of the shop covering the property entrusted by its customer for repair. of the Court of Appeals is AFFIRMED. heavy equipment. Puno. 1572. Certificate issued by the Securities and Exchange Commission and Articles of Incorporation or Partnership in case of corporation or partnership. engines. While the fire in this case may be considered a fortuitous event. 1. since it was petitioners negligence in not insuring against the risk which was the proximate cause of the loss. JJ.firewall. flood and loss should cover exclusively the machines. pilferage. There is thus a statutory duty imposed on petitioner and it is for his failure to comply with this duty that he was guilty of negligence rendering him liable for damages to private respondent. fire. It can not simply be inserted as an item of recoverable damages in the judgment of the court. The reason for this is that it is not sound policy to penalize the right to litigate. Written service warranty in the form prescribed by the Bureau. 1. Rule III of this Order provides in pertinent parts:[12] 1.. WHEREFORE.[10] we stated that where the very injury which was intended to be prevented by the ordinance has happened.REQUIREMENTS FOR ACCREDITATION 1) Enterprises applying for original accreditation shall submit the following: 1.4. Such other additional documents which the Director may require from time to time. electrical. . with the modification that the award of attorneys fees is DELETED..5. He is not being held liable for breach of his contractual obligation due to negligence but for his negligence in not complying with a duty imposed on him by law.[13] this circumstance cannot exempt petitioner from liability for loss. 1. medical and dental equipment. office machines and data processing equipment.[14] They cannot be left to inference as the appellate court held in this case. It is therefore immaterial that the loss occasioned to private respondent was due to a fortuitous event.7. electronics. the existence of a contract between petitioner and private respondent does not bar a finding of negligence under the principles of quasi-delict. other consumer mechanical and industrial equipment stored for repair and/or service in the premises of the applicant. dated November 18. As condition for such registration or accreditation. Ministry Order No. P. Indeed. being an exception to this policy and limited to the grounds enumerated in the law. however. No. Thus. Regalado (Chairman). List of machineries/equipment/tools in useful condition. Fernandez. Romero. 1 requires service and repair enterprises for motor vehicles. 1. In Teague v.INSURANCE POLICY The insurance policy for the following risks like theft.1. 1. but also the proximate cause of the death. as we recently held in Fabre v. motor vehicles. We think.6. An award of attorneys fees. Since in this case there is no justification for the award of attorneys fees in the decision of the trial court. Court of Appeals.

a woman deposited the check in her and her husbands dollar account..J. JR. PHILIPPINE NATIONAL BANK. CV No. hence. J. Petitioners. Factual Antecedents . Chairperson. BERSAMIN. PNB questions why it was declared blameworthy together with its depositors.R. hateth folly and negligence. x--------------------------------x SPOUSES CHEAH CHEE CHONG G. For its part. 2012 x-------------------------------------------------------------------x DECISION DEL CASTILLO. April 25.versus . 63948 which declared both parties equally negligent and. PHILIPPINE NATIONAL BANK.Wingates Maxim. These consolidated[1] Petitions for Review on Certiorari filed by the Philippine National Bank (PNB)[2] and by the spouses Cheah Chee Chong and Ofelia Camacho Cheah (spouses Cheah)[3] both assail the August 22. and VILLARAMA. Respondents. No. it was discovered that all along.. LEONARDO-DE CASTRO.R. while the spouses Cheah plead that they be declared entirely faultless. In doing a friend a favor to help the latters friend collect the proceeds of a foreign check. C. for the amount wrongfully paid the latter. 170892 and OFELIA CAMACHO CHEAH. and therefore. spouses Cheah. The local bank accepted the check for collection and immediately credited the proceeds thereof to said spouses account even before the lapse of the clearing period. 2005 Resolution[5]of the Court of Appeals (CA) in CA-G. . Present: CORONA. she and her bank had dealt with a rubber check. No. 2005 Decision[4] and December 21.R. Promulgated: Respondent. And just when the money had been withdrawn and distributed among different beneficiaries. JJ. 170865 VERSUS SPOUSES CHEAH CHEE CHONG and OFELIA CAMACHO CHEAH. G. to the horror of the woman whose intention to accommodate a friends friend backfired. DEL CASTILLO. should equally suffer the resulting loss.: Law favoreth diligence.

1992.000.[11] Adelina was able to withdraw the remaining amount the next day after having been authorized by Ofelia. Chee Chong in the end signed a PNB drafted[19] letter[20] which states that the spouses Cheah are offering their condominium units as collaterals for the amount withdrawn. 1992. Ofelia immediately contacted Filipina to get the money back. from the spouses Cheah. PNB then sent it for clearing through its correspondent bank.000. Said agencys Anti-Fraud and Action Division was later able to apprehend some of the beneficiaries of the proceeds of the check and recover from them $20. 1992 a SWIFT[13] message from Philadelphia National Bank dated November 13. Because Adelina does not have a dollar account in which to deposit the check. On November 4.[7] Assured that the deposit and subsequent clearance of the check is a normal transaction.80 and $893. PNB Buendia Branch.46.166. USA. Garin discussed with them the process of clearing the subject check and they were told that it normally takes 15 days. Under this setup.000. PNB Head Office sent Philadelphia National Bank a SWIFT message informing the latter that SWIFT message with TRN 46506218 has been relayed to PNBs various divisions/departments but was returned to PNB Head Office as it seemed misrouted.[12] Filipina received all the proceeds. Informed about the bounced check and upon demand by PNB Buendia Branch to return the money withdrawn. asked the spouses Cheah to help him and the other bank officers as they were in danger of losing their jobs because of the incident. the PNB Head Office could not ascertain to which branch/office it should forward the same for proper action. from Philadelphia National Bank to which the November 13.00. PNB received a credit advice[8] from Philadelphia National Bank that the proceeds of the subject check had been temporarily credited to PNBs account as of November 6. PNB Head Office thus requested for Philadelphia National Banks advice on said SWIFT messages proper disposition. Philadelphia National Bank. Ofelia that day personally withdrew $180.[22] froze their peso and dollar deposits in the amounts of P275. the Cable Division of PNB Head Office in Escolta. PNB Buendia Branch learned about the bounced check when it received on November 20. 94-71022. 1992 with Transaction Reference Number (TRN) 46506218.00. But the latter told her that all the money had already been given to several people who asked for the checks encashment. PNB demanded payment of around P8. Filipina Tuazon (Filipina).37 to the account of the spouses Cheah. with a face amount of $300. spouses Cheah then sought the help of the National Bureau of Investigation. Eventually.[21] the same did not materialize. They met with Perfecto Mendiola of the Loans Department who referred them to PNB Division Chief Alberto Garin (Garin). Eduardo Rosales against Bank of America Alhambra Branch in California.248. In their effort to recover the money. approached her to ask if she could have Filipinas check cleared and encashed for a service fee of 2. Erwin Asperilla (Asperilla). Manila received on November 16. Ofelia and Adelina went to PNB Buendia Branch. 265-705612-2 with PNB Buendia Branch. The check is Bank of America Check No. That same day. 1992 SWIFT message was attached. informing PNB of the return of the subject check for insufficient funds. 190[6] under the account of Alejandria Pineda and Eduardo Rosales and drawn by Atty. Subsequently.[10] Acting on Adelinas instruction to withdraw the credited amount. In said complaint.[16] followed by a letter[17] on November 24.[15] After a few days.[23] and filed a complaint[24] against them for Sum of Money with Branch 50 of the Regional Trial Court (RTC) of Manila. 1992 a debit advice.[18] Meanwhile. the spouses Cheah have been constantly meeting with the bank officials to discuss matters regarding the incident and the recovery of the value of the check while the cases against the alleged perpetrators remain pending. Garin called up Ofelia to inform her that the check had already been cleared. Ofelia deposited Filipinas check. Chee Chong signed the letter after the Vice President and Manager of PNB Buendia Branch. docketed as Civil Case No. In the meantime.[9] The following day. she asked Ofelia if she could accommodate Filipinas request since she has a joint dollar savings account with her Malaysian husband Cheah Chee Chong (Chee Chong) under Account No. credited $299. PNB sent a demand letter to spouses Cheah for the return of the amount of the check.5%. payable to cash. 1992.220. 1992. Criminal charges were then filed against these suspect beneficiaries. Five days later. plus interests[25] and attorneys fees. after deducting the bank charges. .[14] However.202. Asperilla likewise assured the spouses Cheah that the letter was a mere formality and that the mortgage will be disregarded once PNB receives its claim for indemnity from Philadelphia National Bank. Ofelia Cheah (Ofelia) and her friend Adelina Guarin (Adelina) were having a conversation in the latters office when Adelinas friend. Ofelia agreed.44. Although some of the officers of PNB were amenable to the proposal. the amount withdrawn would be treated as a loan account with deferred interest while the spouses try to recover the money from those who defrauded them. Apparently.00. On November 16. PNB Head Office ascertained that the SWIFT message was intended for PNB Buendia Branch.

On the other . as well as attorneys fees. PNB General Circular No.[26] Because of this.[29] It likewise applied the principle of solutio indebiti under the Civil Code.accommodated parties) who are privy to the defendants. in violation of its bank practice as mandated by its own bank circular. and payment of moral and exemplary damages. to the rights of the defendants (accommodating parties) to go against the group of Adelina Guarin. 2005 Decision. Ruling of the Court of Appeals While the CA recognized the spouses Cheah as victims of a scam who nevertheless have to suffer the consequences of Ofelias lack of care and prudence in immediately trusting a stranger.. 190 were withdrawn or the prevailing Central Bank Rate at the time the amount is to be reimbursed by the defendants to plaintiff or whatever is lower. While the court found that the proximate cause of the wrongful payment of the check was PNBs negligence in not observing the 15-day guarantee period rule. As their main defense. it ruled that spouses Cheah still cannot escape liability to reimburse PNB the value of the check as an accommodation party pursuant to Section 29 of the Negotiable Instruments Law. i. the complaint of PNB cannot be dismissed because the Cheah spouses were negligent and Ms. Atty. This is without prejudice however. Cheah Chee Chong and Ms. 52-101/88. the spouses Cheah claimed that the proximate cause of PNBs injury was its own negligence of paying a US dollar denominated check without waiting for the 15-day clearing period. of US$298. etc. Because Ofelia trusted a friends friend whom she did not know and considering the amount of the check made payable to cash.00 representing the amount they had so far spent in recovering the value of the check. Ruling of the Regional Trial Court The RTC ruled in PNBs favor. No pronouncement as to costs. they prayed for the return of their frozen deposits. the RTC held that each party must suffer the consequences of their own acts and thus left both parties as they are. It ruled in its August 22. it is but right and just that both parties should equally suffer and shoulder the loss.[30] viz: As both parties were equally negligent. the RTC opined that Ofelia showed lack of vigilance in her dealings. Unwilling to accept the judgment. The dispositive portion of its Decision[27] dated May 20. the spouses Cheah appealed to the CA. SO ORDERED.25 or its peso equivalent based on Central Bank Exchange Rate prevailing at the time the proceeds of the BA Check No. As earlier stated. (Beneficiaries. spouses Cheah averred that PNB is barred from claiming what it had lost. As counterclaim. Ofelia Camacho Cheah. They further averred that it is unjust for them to pay back the amount disbursed as they never really benefited therefrom.e. the appellate court did not hold PNB scot-free. No other award of damages for non[e] has been proven. ordering the latter to pay jointly and severally the herein plaintiffs bank the amount: 1. Eduardo Rosales. With regard to the award of other forms of damages. Cheah took an active part in the deposit of the check and the withdrawal of the subject amounts. The scam would not have been possible without the negligence of both parties. judgment is hereby rendered in favor of the plaintiff Philippine National Bank [and] against defendants Mr. Filipina Tuazon. premises considered. 1999 reads: WHEREFORE. the recoupment of P400.. She should have exercised due care by investigating the negotiability of the check and the identity of the drawer.950.000.[28] The RTC held that spouses Cheah were guilty of contributory negligence.

while PNB highlights Ofelias fault in accommodating a strangers check and depositing it to the bank. As declared by Josephine Estella. the CA ratiocinated that PNB Buendia Branchs non-receipt of the SWIFT message from Philadelphia National Bank within the 15-day clearing period is not an acceptable excuse. what happened was that PNB Buendia Branch. 52/101/88. and as provided in its own General Circular No. the Administrative Service Officer who was the banks Remittance Examiner. both parties should be made equally responsible for the resulting loss.[34] Here. the scam. 2005. the CA held that PNB had the last clear opportunity to avoid the impending loss of the money and yet. PNB is hereby ordered to credit to the peso and dollar accounts of the Cheah spouses the amount due to them. Accordingly. unbroken by any efficient intervening cause. 1992. a week before the lapse of the standard 15-day clearing period. It is worthy of notice that the 15-day clearing period alluded to is construed as 15 banking days. PNB cannot claim from spouses Cheah even if the latter are accommodation parties under the law as the banks own negligence is the proximate cause of the damage it sustained. is hereby REVERSED and SET ASIDE and another one entered DECLARING both parties equally negligent and should suffer and shoulder the loss. Our Ruling The petitions for review lack merit. Hence. 1999 Decision of the Regional Trial Court. in natural and continuous sequence. the 15thbanking day from the date of said deposit should fall on November 25. the question that needs to be asked is: If the event did not happen. To the CA. and benefited from. it glaringly exhibited its negligence in allowing the withdrawal of funds without exhausting the 15-day clearing period which has always been a standard banking practice as testified to by PNBs own officers. upon calling up Ofelia that the check had been cleared. Proximate cause is that cause. hand. Thus. what was unusual in the processing of the check was that the lapse of 15 banking days was not observed. 94-71022.[35] Even PNBs agreement with Philadelphia National Bank[36] regarding the rules on the collection of the proceeds of US dollar checks refers to business/ banking days. Hence. allowed the proceeds thereof to be withdrawn on November 17 and 18. However. WHEREFORE. in Civil Case No. it remains mum in its release of the proceeds thereof without exhausting the 15-day clearing period. the Cheah spouses cannot entirely bear the loss because PNB allowed her to withdraw without waiting for the clearance of the check. an act which contravened established banking rules and practice. x x x To determine the proximate cause of a controversy. we affirm the ruling of the CA. the May 20. which. 1992. SO ORDERED. Branch 5. 1992. Hence. PNBs act of releasing the proceeds of the check prior to the lapse of the 15-day clearing period was the proximate cause of the loss. Nevertheless.Applying the last clear chance doctrine. it also found Ofelia guilty of contributory negligence. would the injury have resulted? If the answer is no. Ofelia deposited the subject check on November 4.[31] In so ruling. Manila. then the event is the proximate cause. . these Petitions for Review on Certiorari. produces the injury and without which the result would not have occurred. Both parties filed their respective Motions for Reconsideration[32] but same were denied in a Resolution[33] dated December 21. The remedy of the parties is to go after those who perpetrated.

contributing as a legal cause to the harm he has suffered. are. and it was unduly delivered through mistake. PNB obliges the spouses Cheah to return the withdrawn money under the principle of solutio indebiti. The highest degree of diligence is expected.[39] PNB miserably failed to do its duty of exercising extraordinary diligence and reasonable business prudence. If something is received when there is no right to demand it. and the law thus holds it to a high standard of conduct. No recovery is due if the mistake done is one of gross negligence. (a) that he who paid was not under obligation to do so.[41] A bank is expected to be an expert in banking procedures and it has the necessary means to ascertain whether a check. Incidentally. She should have first verified the regularity of such hasty clearance considering that if something goes wrong with the transaction.000. because had PNB Buendia Branch waited for the expiration of the clearing period and had never released during that time the proceeds of the check. the gross negligence of PNB. Considering that Filipina was not personally known to her and the amount of the foreign check to be encashed was $300. This Court already held that the payment of the amounts of checks without previously clearing them with the drawee bank especially so where the drawee bank is a foreign bank and the amounts involved were large is contrary to normal or ordinary banking practice. However. being primarily engaged in banking. the collecting bank can only assume at its own risk x x x that the check would be cleared and paid out. which falls below the standard to which he is required to conform for his own protection. The delay in the receipt by PNB Buendia Branch of the November 13. Tan. and (b) that the payment was made by reason of an essential mistake of fact. It bears stressing that the diligence required of banks is more than that of a Roman pater familias or a good father of a family. in Associated Bank v. 2154. it is she and her husband who would be put at risk and not the accommodated party. holds itself out to the public as the expert on this field. Thus. acting or omitting to act in a situation where there is duty to act. we said that [b]efore the check shall have been cleared for deposit. The fact that the check was cleared after only eight banking days from the time it was deposited or contrary to what Garin told her that clearing takes 15 days should have already put Ofelia on guard. [T]he indispensable requisites of the juridical relation known as solutio indebiti. local or foreign. 1992 SWIFT message notifying it of the dishonor of the subject check is of no moment.[38] wherein the bank allowed the withdrawal of the value of a check prior to its clearing. Another circumstance which should have goaded Ofelia to be more circumspect in her dealings was when a bank officer called her up to inform that the Bank of America check has already been cleared way earlier than the 15-day clearing period. as earlier discussed.00. failed to exercise under the circumstances. suffice it to say that the law imposes on the collecting bank the duty to scrutinize diligently the checks deposited with it for the purpose of determining their genuineness and regularity.[37] Also. which is laid down in Article 2154 of the Civil Code:[42] Art. Clearly. not inadvertently but wilfully and intentionally with a conscious indifference to consequences in so far as other persons may be affected. The disregard of its own banking policy amounts to gross negligence. we are one . Ofelia failed to observe caution in giving her full trust in accommodating a complete stranger and this led her and her husband to be swindled. which the law defines as negligence characterized by the want of even slight care. Ofelia chose to ignore the same and instead actively participated in immediately withdrawing the proceeds of the check.[44] The CA found Ofelias credulousness blameworthy. In the first place. Indeed. however.[43] In the case at bench. a higher degree of care is expected of Ofelia which she. The spouses Cheah are guilty of contributory negligence and are bound to share the loss with the bank Contributory negligence is conduct on the part of the injured party. PNBs disregard of its preventive and protective measure against the possibility of being victimized by bad checks had brought upon itself the injury of losing a significant amount of money. We agree.[40] With regard to collection or encashment of checks. PNB cannot recover the proceeds of the check under the principle it invokes. it would have already been duly notified of its dishonor. is sufficiently funded. which must be something excusable and which requires the exercise of prudence. The collecting bank. the obligation to return it arises. can never be equated with a mere mistake of fact.

the passenger of the sedan was injured. Due to the impact of the vehicular mishap. she should have shunned any participation in that palpably shady transaction. unbroken by any efficient intervening cause. 2005 Decision and December 21. CV No. 170865 and in G. prohibiting the crossing is the place where the accident happened. 184905 August 28. No. CASE DIGEST Ramos vs. which. Being the ones in privity with PNB. in natural and continuous sequence. the spouses Cheah are therefore the persons who should return to PNB the money released to them. Issue: Whether or not Ramos may be held liable since the proximate cause of the accident is his employee's negligence.R. There is no doubt that Aquilino’s violation of the MMDA prohibition against crossing Katipunan Avenue from Rajah Matanda Street was the proximate causeof the accident. have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom.R. 2009 Facts: Petitioner Ramos is the employer of Rodel Ilustrisimo. SO ORDERED.with the CA in ruling that Ofelias prior consultation with PNB officers is not enough to totally absolve her of any liability. either immediately or by setting other events in motion. No. If Aquilino heeded the MMDA prohibition against crossing Katipunan Avenue from Rajah Matanda. i. wherein it bumped with a Corrolla Altis driven by Aquilino Larin and owned by Respondent COL Realty. Aquilino violated an MMDA order.R.R. the accident would not have happened. The two must both bear the consequences of their mistakes. COL Realty Corporation. In any case. This specific untoward event is exactly what the MMDA . A case was filed against Ramos making him solidarily liable with his driver. under such circumstances that the person responsible for the first event should. All told. Proximate Cause G. produces the injury. As PNBs client. the final event in the chain immediately effecting the injury as a natural and probable result of the cause which first acted. Proximate cause is defined as that cause. In the first place. Ruling: No. 63948 are hereby AFFIRMED in toto. Ramos in his opposition argued that he cannot be held solidarily liable since it is Aquilnio's negligence that is the proximate cause of the accident. 170892 are both DENIED. 2005 Resolution of the Court of Appeals in CA-G. While Rodel was driving the Ford Expedition of petitioner an accident ensued. each having a close causal connection with its immediate predecessor. the proximate legal cause is that acting first and producing the injury. No. as an ordinary prudent and intelligent person. the Petitions for Review on Certiorari in G. Ofelia was the one who dealt with PNB and negotiated the check such that its value was credited in her and her husbands account. the complaint against the spouses Cheah could not be dismissed. the Court concurs with the findings of the CA that PNB and the spouses Cheah are equally negligent and should therefore equally suffer the loss. all constituting a natural and continuous chain of events. WHEREFORE. And more comprehensively. He further argued that when the accident happened. premises considered.e. The assailed August 22. and without which the result would not have occurred.

1991 and was ready for release later that afternoon. that when the plaintiff’s own negligence was the immediate and proximate cause of his injury. the existence of a contract between petitioner and private respondent does not bar a finding of negligence under the principles of quasi-delict.D. MENDOZA. It contended that the nature of petitioner’s business required him to assume the risk because under P. . On April 30. The job order showed the date it was received for rustproofing as well its condition at the time. it will have the effect of mitigating the award of damages in his favor.. which petitioner also owned.: FACTS: E. is engaged in the rustproofing of vehicles. In reply. Neither the time of acceptance nor the hour of release. prompting private respondent to bring this suit for the value of its vehicle and for damages. adjoining his Mobilkote rustproofing shop. As to the alleged Rodel's contributory negligence.D. petitioner denied liability on the ground that the fire was a fortuitous event (Art.respondents. vs. he must bear the cost of loss of his customers. Since petitioner did not register his business and insure it. 1572. fire broke out at the Lambat restaurant. Aquilino had reasonable ground to expect that the accident would be a natural and probable result if he crossed Katipunan Avenue since such crossing is considered dangerous on account of the busy nature of the thoroughfare and the ongoing construction of the Katipunan-Boni Avenue underpass. demanding reimbursement for the value of the Kia Pride. Rodel’s contributory negligence has relevance only in the event that Ramos seeks to recover from respondent whatever damages or injuries he may have suffered as a result. 1174 and 1262.” and that rustproffing is “definitely covered” by P. CIPRIANO ENTERPRISES. RTC ruled in favor of MACLIN stating that the “failure of defendant to comply with P. including private respondent’s car.the court finds it unnecessary to delve into it. a prudent and intelligent person who resides within the vicinity where the accident occurred. under the style Motobilkote. Inc. CA affirmed the RTC’s decision. According to the petitioner. We stated that where the very injury which was intended to be prevented by the ordinance has happened. petitioner was required to insure his property as well as those of his customers. J. 1572 is in effect a manifest act of negligence which renders defendant [petitioner herein] liable for the loss of the car even if the same was caused by fire. as it took only six hours to complete the process of rustproofing In the afternoon of May 1. It is therefore immaterial that the loss occasioned to private respondent was due to a fortuitous event. October 30. Cipriano Enterprises. On May 8 1991.this circumstance cannot exempt petitioner from liability for loss. 1572. Petitioner’s negligence is the source of his obligation. 1991.prohibition was intended for. 107968.D. 1991. While the fire in this case may be considered a fortuitous event. brought a 1990 model Kia Pride People’s car to petitioner’s shop for rustproofing. NCC). [G. the car was brought to his shop at 10 o’clock in the morning of April 30. petitioner. 1996] ELIAS S. was specified. No. No. CIPRIANO and/or E. private respondent Maclin Electronics. The fire destroyed both the shop and the restaurant. through an employee.S. No. THE COURT OF APPEALS and MACLIN ELECTRONICS. ISSUE: Whether petitioner’s failure to abide by PD 1572 constitutes negligence HELD: We have already held that violation of a statutory duty is negligence per se. owned by petitioner Cipriano. No. It was manifest error for the Court of Appeals to have overlooked the principle embodied in Article 2179 of the Civil Code. Thus. since it cannot overcome or defeat Aquilino’s recklessness which is the immediate and proximate cause of the accident.. non-compliance with the ordinance was not only an act negligence but also the proximate cause. since it was petitioner’s negligence in not insuring against the risk which was the proximate cause of the loss. he cannot recover damages.S.R. MACLIN sent a letter to petitioner. however. Private respondent argued that petitioner was liable for the loss of the car even if it was caused by a fortuitous event. INC. There is thus a statutory duty imposed on petitioner and it is for his failure to comply with this duty that he was guilty of negligence rendering him liable for damages to private respondent. He is not being held liable for breach of his contractual obligation due to negligence but for his negligence in not complying with a duty imposed on him by law. Indeed.