SECOND DIVISION On May 3, 2007, petitioner filed against Mekeni and/or its President, Prudencio S.
Garcia,
[G.R. No. 192105. December 9, 2013.]
ANTONIO LOCSIN
II, petitioner, vs. MEKENI FOOD CORPORATION, respondent.
DECISION
DEL CASTILLO, J p:
In the absence of specific terms and conditions governing a car plan agreement between
the employer and employee, the former may not retain the installment payments made by the latter
on the car plan and treat them as rents for the use of the service vehicle, in the event that the
employee ceases his employment and is unable to complete the installment payments on the vehicle.
The underlying reason is that the service vehicle was precisely used in the former's business; any
personal benefit obtained by the employee from its use is merely incidental.
This Petition for Review on Certiorari 1 assails the January 27, 2010 Decision 2 of the
Court of Appeals (CA) in CA-G.R. SP No. 109550, as well as its April 23, 2010 Resolution 3 denying
Petitioner's Motion for Partial Reconsideration. 4
Factual Antecedents
In February 2004, respondent Mekeni Food Corporation (Mekeni) — a Philippine
company engaged in food manufacturing and meat processing — offered petitioner Antonio Locsin II
the position of Regional Sales Manager to oversee Mekeni's National Capital Region
Supermarket/Food Service and South Luzon operations. In addition to a compensation and benefit
package, Mekeni offered petitioner a car plan, under which one-half of the cost of the vehicle is to be
paid by the company and the other half to be deducted from petitioner's salary. Mekeni's offer was
contained in an Offer Sheet 5 which was presented to petitioner. EHCcIT
Petitioner began his stint as Mekeni Regional Sales Manager on March 17, 2004. To be
able to effectively cover his appointed sales territory, Mekeni furnished petitioner with a used Honda
Civic car valued at P280,000.00, which used to be the service vehicle of petitioner's immediate
supervisor. Petitioner paid for his 50% share through salary deductions of P5,000.00 each month.
Subsequently, Locsin resigned effective February 25, 2006. By then, a total of
P112,500.00 had been deducted from his monthly salary and applied as part of the employee's share
in the car plan. Mekeni supposedly put in an equivalent amount as its share under the car plan. In his
resignation letter, petitioner made an offer to purchase his service vehicle by paying the outstanding
balance thereon. The parties negotiated, but could not agree on the terms of the proposed purchase.
Petitioner thus returned the vehicle to Mekeni on May 2, 2006.
Petitioner made personal and written follow-ups regarding his unpaid salaries,
commissions, benefits, and offer to purchase his service vehicle. Mekeni replied that the company
car plan benefit applied only to employees who have been with the company for five years; for this
reason, the balance that petitioner should pay on his service vehicle stood at P116,380.00 if he opts
to purchase the same.
a Complaint 6 for the recovery of monetary claims consisting of unpaid salaries, commissions,
sick/vacation leave benefits, and recovery of monthly salary deductions which were earmarked for
his cost-sharing in the car plan. The case was docketed in the National Labor Relations Commission
(NLRC), National Capital Region (NCR), Quezon City as NLRC NCR CASE NO. 00-05-04139-07.
On October 30, 2007, Labor Arbiter Cresencio G. Ramos rendered a
Decision, 7 decreeing as follows:
WHEREFORE, in the light of the foregoing premises, judgment is
hereby rendered directing respondents to turn-over to complainant . . . the
subject vehicle upon the said complainant's payment to them of the sum of
P100,435.84.
SO ORDERED. 8
Ruling of the National Labor Relations Commission
On appeal, 9 the Labor Arbiter's Decision was reversed in a February 27, 2009
Decision 10 of the NLRC, thus:
WHEREFORE, premises considered, the appeal is hereby
Granted. The assailed Decision dated October 30, 2007 is hereby
REVERSED and SET ASIDE and a new one entered ordering respondent-
appellee Mekeni Food Corporation to pay complainant-appellee the
following:
1. Unpaid Salary in the amount of P12,511.45; TaCDAH
2. Unpaid sick leave/vacation leave pay in the amount of
P14,789.15;
3. Unpaid commission in the amount of P9,780.00; and
4. Reimbursement of complainant's payment under the car plan
agreement in the amount of P112,500.00; and
5. The equivalent share of the company as part of the
complainant's benefit under the car plan 50/50 sharing amounting to
P112,500.00.
Respondent-Appellee Mekeni Food Corporation is hereby
authorized to deduct the sum of P4,736.50 representing complainant-
appellant's cash advance from his total monetary award.
All other claims are dismissed for lack of merit.
SO ORDERED. 11
The NLRC held that petitioner's amortization payments on his service vehicle amounting
to P112,500.00 should be reimbursed; if not, unjust enrichment would result, as the vehicle remained
in the possession and ownership of Mekeni. In addition, the employer's share in the monthly car plan
payments should likewise be awarded to petitioner because it forms part of the latter's benefits under
the car plan. It held further that Mekeni's claim that the company car plan benefit applied only to
employees who have been with the company for five years has not been substantiated by its
evidence, in which case the car plan agreement should be construed in petitioner's favor.
Mekeni moved to reconsider, but in an April 30, 2009 Resolution, 12 the NLRC sustained
its original findings.
Ruling of the Court of Appeals
Mekeni filed a Petition for Certiorari 13 with the CA assailing the NLRC's February 27,
2009 Decision, saying that the NLRC committed grave abuse of discretion in holding it liable to
petitioner as it had no jurisdiction to resolve petitioner's claims, which are civil in nature. AIcECS
On January 27, 2010, the CA issued the assailed Decision, decreeing as follows:
WHEREFORE, the petition for certiorari is GRANTED.
The Decision of the National Labor Relations Commission dated 27
February 2009, in NLRC NCR Case No. 00-05-04139-07, and
its Resolution dated 30 April 2009 denying reconsideration thereof,
are MODIFIED in that the reimbursement of Locsin's payment under the car
plan in the amount of P112,500.00, and the payment to him of Mekeni's 50%
share in the amount of P112,500.00 are DELETED. The rest of the decision
is AFFIRMED.
SO ORDERED. 14
In arriving at the above conclusion, the CA held that the NLRC possessed jurisdiction over
petitioner's claims, including the amounts he paid under the car plan, since his Complaint
against Mekeni is one for the payment of salaries and employee benefits. With regard to the car plan
arrangement, the CA applied the ruling inElisco Tool Manufacturing Corporation v. Court of
Appeals, 15 where it was held that —
First. Petitioner does not deny that private respondent Rolando
Lantan acquired the vehicle in question under a car plan for executives of
the Elizalde group of companies. Under a typical car plan, the company
advances the purchase price of a car to be paid back by the employee
through monthly deductions from his salary. The company retains ownership
of the motor vehicle until it shall have been fully paid for. However, retention
of registration of the car in the company's name is only a form of a lien on
the vehicle in the event that the employee would abscond before he has fully
paid for it, There are also stipulations in car plan agreements to the effect
that should the employment of the employee concerned be terminated
before all installments are fully paid, the vehicle will be taken by the employer
and all installments paid shall be considered rentals per
agreement. 16 cSITDa
In the absence of evidence as to the stipulations of the car plan arrangement
between Mekeni and petitioner, the CA treated petitioner's monthly contributions in the total amount
of P112,500.00 as rentals for the use of his service vehicle for the duration of his employment
with Mekeni. The appellate court applied Articles 1484-1486 of the Civil Code, 17 and added that the
installments paid by petitioner should not be returned to him inasmuch as the amounts are not
unconscionable. It made the following pronouncement:
Having used the car in question for the duration of his
employment, it is but fair that all of Locsin's payments be considered as
rentals therefor which may be forfeited by Mekeni. Therefore, Mekeni has no
obligation to return these payments to Locsin. Conversely, Mekeni has no
right to demand the payment of the balance of the purchase price from
Locsin since the latter has already surrendered possession of the vehicle. 18
Moreover, the CA held that petitioner cannot recover Mekeni's corresponding share in the
purchase price of the service vehicle, as this would constitute unjust enrichment on the part of
petitioner at Mekeni's expense.
The CA affirmed the NLRC judgment in all other respects. Petitioner filed his Motion for
Partial Reconsideration, 19 but the CA denied the same in its April 23, 2010 Resolution.
Thus, petitioner filed the instant Petition; Mekeni, on the other hand, took no further action.
Issue
Petitioner raises the following solitary issue:
WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS
ERRED IN NOT CONSIDERING THE CAR PLAN PRIVILEGE AS PART
OF THE COMPENSATION PACKAGE OFFERED TO PETITIONER AT
THE INCEPTION OF HIS EMPLOYMENT AND INSTEAD LIKENED IT
TO A CAR LOAN ON INSTALLMENT, IN SPITE OF THE ABSENCE OF
EVIDENCE ON RECORD. 20 HTASIa
Petitioner's Arguments
In his Petition and Reply, 21 petitioner mainly argues that the CA erred in treating his
monthly contributions to the car plan, totaling P112,500.00, as rentals for the use of his service vehicle
during his employment; the car plan which he availed of was a benefit and it formed part of the
package of economic benefits granted to him when he was hired as Regional Sales Manager.
Petitioner submits that this is shown by the Offer Sheet which was shown to him and which became
the basis for his decision to accept the offer and work for Mekeni.
Petitioner adds that the absence of documentary or other evidence showing the terms and
conditions of the Mekeni company car plan cannot justify a reliance onMekeni's self-serving claims
that the full terms thereof applied only to employees who have been with the company for at least
five years; in the absence of evidence, doubts should be resolved in his favor pursuant to the policy
of the law that affords protection to labor, as well as the principle that all doubts should be construed
to its benefit.
Finally, petitioner submits that the ruling in the Elisco Tool case cannot apply to his case
because the car plan subject of the said case involved a car loan, which his car plan benefit was not;
it was part of his compensation package, and the vehicle was an important component of his work
which required constant and uninterrupted mobility. Petitioner claims that the car plan was in fact
more beneficial to Mekeni than to him; besides, he did not choose to avail of it, as it was simply
imposed upon him. He concludes that it is only just that his payments should be refunded and
returned to him.
Petitioner thus prays for the reversal of the assailed CA Decision and Resolution, and that
the Court reinstate the NLRC's February 27, 2009 Decision.
 Respondent's Arguments
In its Comment, 22 Mekeni argues that the Petition does not raise questions of law, but
merely of fact, which thus requires the Court to review anew issues already passed upon by the CA
— an unauthorized exercise given that the Supreme Court is not a trier of facts, nor is it its function
to analyze or weigh the evidence of the parties all over again. 23 It adds that the issue regarding the
car plan and the conclusions of the CA drawn from the evidence on record are questions of fact.
Mekeni asserts further that the service vehicle was merely a loan which had to be paid
through the monthly salary deductions. If it is not allowed to recover on the loan, this would constitute
unjust enrichment on the part of petitioner.
Our Ruling
The Petition is partially granted. ECaITc
To begin with, the Court notes that Mekeni did not file a similar petition questioning the CA
Decision; thus, it is deemed to have accepted what was decreed. The only issue that must be resolved
in this Petition, then, is whether petitioner is entitled to a refund of all the amounts applied to the cost
of the service vehicle under the car plan.
When the conclusions of the CA are grounded entirely on speculation, surmises and
conjectures, or when the inferences made by it are manifestly mistaken or absurd, its findings are
subject to review by this Court. 24
From the evidence on record, it is seen that the Mekeni car plan offered to petitioner was
subject to no other term or condition than that Mekeni shall cover one-half of its value, and petitioner
shall in turn pay the other half through deductions from his monthly salary. Mekeni has not shown, by
documentary evidence or otherwise, that there are other terms and conditions governing its car plan
agreement with petitioner. There is no evidence to suggest that if petitioner failed to completely cover
one-half of the cost of the vehicle, then all the deductions from his salary going to the cost of the
vehicle will be treated as rentals for his use thereof while working with Mekeni, and shall not be
refunded. Indeed, there is no such stipulation or arrangement between them. Thus, the CA's reliance
on Elisco Tool is without basis, and its conclusions arrived at in the questioned decision are manifestly
mistaken. To repeat what was said in Elisco Tool —
First. Petitioner does not deny that private respondent Rolando
Lantan acquired the vehicle in question under a car plan for executives of
the Elizalde group of companies. Under a typical car plan, the company
advances the purchase price of a car to be paid back by the employee
through monthly deductions from his salary. The company retains ownership
of the motor vehicle until it shall have been fully paid for. However, retention
of registration of the car in the company's name is only a form of a lien on
the vehicle in the event that the employee would abscond before he has fully
paid for it. There are also stipulations in car plan agreements to the
effect that should the employment of the employee concerned be
terminated before all installments are fully paid, the vehicle will be
taken by the employer and all installments paid shall be considered
rentals per agreement. 25 (Emphasis supplied)
It was made clear in the above pronouncement that installments made on the car plan may be
treated as rentals only when there is an express stipulation in the car plan agreement to such
effect. It was therefore patent error for the appellate court to assume that, even in the absence
of express stipulation, petitioner's payments on the car plan may be considered as rentals which
need not be returned.
Indeed, the Court cannot allow that payments made on the car plan should be forfeited
by Mekeni and treated simply as rentals for petitioner's use of the company service vehicle. Nor may
they be retained by it as purported loan payments, as it would have this Court believe. In the first
place, there is precisely no stipulation to such effect in their agreement. Secondly, it may not be said
that the car plan arrangement between the parties was a benefit that the petitioner enjoyed; on the
contrary, it was an absolute necessity in Mekeni's business operations, which benefited it to the fullest
extent: without the service vehicle, petitioner would have been unable to rapidly cover the vast sales
territory assigned to him, and sales or marketing of Mekeni's products could not have been booked
or made fast enough to move Mekeni's inventory. Poor sales, inability to market Mekeni's products,
a high rate of product spoilage resulting from stagnant inventory, and poor monitoring of the sales
territory are the necessary consequences of lack of mobility. Without a service vehicle, petitioner
would have been placed at the mercy of inefficient and unreliable public transportation; his official
schedule would have been dependent on the arrival and departure times of buses or jeeps, not to
mention the availability of seats in them. Clearly, without a service vehicle, Mekeni's business could
only prosper at a snail's pace, if not completely paralyzed. Its cost of doing business would be higher
as well. The Court expressed just such a view in the past. Thus —
In the case at bar, the disallowance of the subject car
plan benefits would hamper the officials in the performance of their
functions to promote and develop trade which requires mobility in the
performance of official business. Indeed, the car plan benefits are
supportive of the implementation of the objectives and mission of the
agency relative to the nature of its operation and responsive to the
exigencies of the service. 26 (Emphasis supplied)
Any benefit or privilege enjoyed by petitioner from using the service vehicle was merely
incidental and insignificant, because for the most part the vehicle was under Mekeni's control and
supervision. Free and complete disposal is given to the petitioner only after the vehicle's cost is
covered or paid in full. Until then, the vehicle remains at the beck and call of Mekeni. Given the vast
territory petitioner had to cover to be able to perform his work effectively and generate business for
his employer, the service vehicle was an absolute necessity, or else Mekeni's business would suffer
adversely. Thus, it is clear that while petitioner was paying for half of the vehicle's value, Mekeni was
reaping the full benefits from the use thereof.
In light of the foregoing, it is unfair to deny petitioner a refund of all his contributions to the
car plan. Under Article 22 of the Civil Code, "[e]very person who through an act of performance by
another, or any other means, acquires or comes into possession of something at the expense of the
latter without just or legal ground, shall return the same to him." Article 2142 27 of the same Code
likewise clarifies that there are certain lawful, voluntary and unilateral acts which give rise to the
juridical relation of quasi-contract, to the end that no one shall be unjustly enriched or benefited at
the expense of another. In the absence of specific terms and conditions governing the car plan
arrangement between the petitioner and Mekeni, a quasi-contractual relation was created between
them. Consequently, Mekeni may not enrich itself by charging petitioner for the use of its vehicle
which is otherwise absolutely necessary to the full and effective promotion of its business. It may not,
under the claim that petitioner's payments constitute rents for the use of the company vehicle, refuse
to refund what petitioner had paid, for the reasons that the car plan did not carry such a condition;
the subject vehicle is an old car that is substantially, if not fully, depreciated; the car plan arrangement
benefited Mekeni for the most part; and any personal benefit obtained by petitioner from using the
vehicle was merely incidental.
 Conversely, petitioner cannot recover the monetary value of Mekeni's counterpart
contribution to the cost of the vehicle; that is not property or money that belongs to him, nor was it
intended to be given to him in lieu of the car plan. In other words, Mekeni's share of the vehicle's cost
was not part of petitioner's compensation package. To start with, the vehicle is an asset that belonged
to Mekeni. Just as Mekeni is unjustly enriched by failing to refund petitioner's payments, so should
petitioner not be awarded the value of Mekeni's counterpart contribution to the car plan, as this would
unjustly enrich him at Mekeni's expense. CcHDaA
There is unjust enrichment "when a person unjustly retains a
benefit to the loss of another, or when a person retains money or property of
another against the fundamental principles of justice, equity and good
conscience." The principle of unjust enrichment requires two conditions: (1)
that a person is benefited without a valid basis or justification, and (2) that
such benefit is derived at the expense of another.
The main objective of the principle against unjust enrichment is to
prevent one from enriching himself at the expense of another without just
cause or consideration. . . . 28
WHEREFORE, the Petition is GRANTED IN PART. The assailed January 27, 2010
Decision and April 23, 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 109550
are MODIFIED, in that respondent Mekeni Food Corporation is hereby ordered
to REFUND petitioner Antonio Locsin II's payments under the car plan agreement in the total amount
of P112,500.00.
Thus, except for the counterpart or equivalent share of Mekeni Food Corporation in the
car plan agreement amounting to P112,500.00, which is DELETED, the February 27, 2009 Decision
of the National Labor Relations Commission is affirmed in all respects.
SO ORDERED.
||| (Locsin II v. Mekeni Food Corp., G.R. No. 192105, [December 9, 2013], 722 PHIL 886-902)
THIRD DIVISION
[G.R. No. 97995. January 21, 1993.]
PHILIPPINE NATIONAL BANK, petitioner, vs. COURT OF APPEALS
AND B.P. MATA AND CO., INC., respondents.
Roland A. Niedo for petitioner.
Benjamin C. Santos Law Office for respondent.
SYLLABUS
1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; TRUSTS; EXPRESS TRUST DISTINGUISHED
FROM IMPLIED TRUST. — Trusts are either express or implied. While express trusts are created by
the intention of the trustor or of the parties, implied trusts come into being by operation of law. Implied
trusts are those which, without being expressed, are deducible from the nature of the transaction as
matters of the intent or which are superinduced on the transaction by operation of law as matters of
equity, independently of the particular intention of the parties.
2. ID.; ID.; ID.; KINDS OF IMPLIED TRUSTS; RESULTING TRUST DISTINGUISHED FROM
CONSTRUCTIVE TRUST. — Implied trusts are subdivided into resulting and constructive trusts. A
resulting trust is a trust raised by implication of law and presumed always to have been contemplated
by the parties, the intention of which is found in the nature of the transaction, but not expressed in
the deed or instrument of conveyance. Examples of resulting trusts are found in Articles 1448 to 1455
of theCivil Code.On the other hand, a constructive trust is one not created by words either expressly
or impliedly, but by construction of equity in order to satisfy the demands of justice. An example of a
constructive trust is Article 1456 quoted above.
3. ID.; ID.; ID.; ID.; CONSTRUCTIVE TRUST UNDER ARTICLE 1456 OF THE NEW CIVIL
CODE NOT A TRUST IN THE TECHNICAL SENSE; REASON THEREFOR; CASE AT BAR. — A
deeper analysis of Article 1456 reveals that it is not a trust in the technical sense for in a typical trust,
confidence is reposed in one person who is named a trustee for the benefit of another who is called
the cestui que trust, respecting property which is held by the trustee for the benefit of the cestui que
trust. A constructive trust, unlike an express trust, does not emanate from, or generate a fiduciary
relation. While in an express trust, a beneficiary and a trustee are linked by confidential or fiduciary
relations, in a constructive trust, there is neither a promise nor any fiduciary relation to speak of and
the so-called trustee neither accepts any trust nor intends holding the property for the beneficiary. In
the case at bar, Mata, in receiving the US$14,000 in its account through IBAA, had no intent of holding
the same for a supposed beneficiary or cestui que trust, namely PNB. But under Article 1456, the law
construes a trust, namely a constructive trust, for the benefit of the person from whom the property
comes, in this case PNB, for reasons of justice and equity.
4. ID.; ID.; ID.; ID.; MISTAKE GIVING RISE TO CONSTRUCTIVE TRUST MAY BE COMMITTED
EITHER BY GRANTOR OR GRANTEE. — We agree with petitioner's stand that under Article 1456,
the law does not make any distinction since mutual mistake is a possibility on either side — on the
side of either the grantor or the grantee. Thus, it was error to conclude that in a constructive trust,
only the person obtaining the property commits a mistake. This is because it is also possible that a
grantor, like PNB in the case at hand, may commit the mistake.
5. ID.; ID.; ID.; ID.; RESULTING OR CONSTRUCTIVE TRUST MAY BE BARRED BY
PRESCRIPTION AND ALSO BY LACHES; LACHES DISTINGUISHED FROM PRESCRIPTION;
CASE AT BAR. — Proceeding now to the issue of whether or not petitioner may still claim the
US$14,000 it erroneously paid private respondent under a constructive trust, we rule in the negative.
Although we are aware that only seven (7) years lapsed after petitioner erroneously credited private
respondent with the said amount and that under Article 1144, petitioner is well within the prescriptive
period for the enforcement of a constructive or implied trust, we rule that petitioner's claim cannot
prosper since it is already barred by laches. It is a well-settled rule now that an action to enforce an
implied trust, whether resulting or constructive, may be barred not only by prescription but also by
laches. While prescription is concerned with the fact of delay, laches deals with the effect of
unreasonable delay. It is amazing that it took petitioner almost seven years before it discovered that
it had erroneously paid private respondent. Petitioner would attribute its mistake to the heavy volume
of international transactions handled by the Cable and Remittance Division of the International
Department of PNB. Such specious reasoning is not persuasive. It is unbelievable for a bank, and a
government bank at that, which regularly publishes its balanced financial statements annually or more
frequently, by the quarter, to notice its error only seven years later. As a universal bank with worldwide
operations, PNB cannot afford to commit such costly mistakes. Moreover, as between parties where
negligence is imputable to one and not to the other, the former must perforce bear the consequences
of its neglect. Hence, petitioner should bear the cost of its own negligence.
6. ID.; QUASI-CONTRACTS; QUASI-CONTRACTUAL RELATIONS MAY BE FORCED UPON
PARTIES WHOSE CONSENT THERETO IS PRESUMED, TO AVOID CASE OF UNJUST
ENRICHMENT; SOLUTION INDEBITI; REQUISITES; CASE AT BAR. — the Civil Code does not
confine itself exclusively to the quasi-contracts enumerated from Articles 2144 to 2175 but is open to
the possibility that, absent a pre-existing relationship, there being neither crime nor quasi-delict, a
quasi-contractual relation may be forced upon the parties to avoid a case of unjust enrichment. There
being no express consent, in the sense of a meeting of minds between the parties, there is no contract
to speak of. However, in view of the peculiar circumstances or factual environment, consent is
presume to the end that a recipient of benefits or favors resulting from lawful, voluntary and unilateral
acts of another may not be unjustly enriched at the expense of another. Undoubtedly, the instant case
fulfills the indispensable requisites ofsolutio indebiti as defined in Article 2154: that something (in this
case money) has been received when there was no right to demand it and (2) the same was unduly
delivered through mistake. There is a presumption that there was a mistake in the payment "if
something which had never been due or had already been paid was delivered; but he from whom the
return is claimed may prove that the delivery was made out of liberality or for any other just cause."
In the case at bar, a payment in the corrected amount of US$1,400 through Cashier's Check No.
269522 had already been made by PNB for the account of Mata on February 25, 1975. Strangely,
however, fourteen days later, PNB effected another payment through Cashier's Check No. 270271
in the amount of US$14,000, this time purporting to be another transmittal of reimbursement from
Star Kist, private respondent's foreign principal.
7. ID.; AMERICAN JURISPRUDENCE ON CONSTRUCTIVE TRUST AND QUASI-CONTRACTS. —
Under American Law, a court of equity does not consider a constructive trustee for all purposes as
though he were in reality a trustee; although it will force him to return the property, it will not impose
upon him the numerous fiduciary obligations ordinarily demanded from a trustee of an express trust.
It must be borne in mind that in an express trust, the trustee has active duties of management while
in a constructive trust, the duty is merely to surrender the property. Still applying American case law,
quasi-contractual obligations give rise to a personal liability ordinarily enforceable by an action at law,
while constructive trusts are enforceable by a proceeding in equity to compel the defendant to
surrender specific property. To be sure, the distinction is more procedural than substantive. Further
reflection on these concepts reveals that a constructive "trust" is as much a misnomer as a "quasi-
contract," so far removed are they from trusts and contracts proper, respectively. In the case of a
constructive trust, as in the case of quasi-contract, a relationship is "forced" by operation of law upon
the parties, not because of any intention on their part but in order to prevent unjust enrichment, thus
giving rise to certain obligations not within the contemplation of the parties. Although we are not quite
in accord with the opinion that "the trusts known to American and English equity jurisprudence are
derived from the fidei commissa of the Roman Law," it is safe to state that their roots are firmly
grounded on such Civil Law principles as expressed in the Latin maxim, "Nemo cum alterius
detrimento locupletari potest," particularly the concept of constructive trust.
DECISION
ROMERO, J p:
Rarely is this Court confronted with a case calling for the delineation in broad strokes of the
distinctions between such closely allied concepts as the quasi-contract called "solutio indebiti" under
the venerable Spanish Civil Code and the species of implied trust denominated "constructive trusts,"
commonly regarded as of Anglo-American origin. Such a case is the one presented to us now which
has highlighted more of the affinity and less of the dissimilarity between the two concepts as to lead
the legal scholar into the error of interchanging the two. Presented below are the factual
circumstances that brought into juxtaposition the twin institutions of the Civil Law quasi-contract and
the Anglo-American trust.
Private Respondent B. P. Mata & Co. Inc. (Mata), is a private corporation engaged in providing goods
and services to shipping companies. Since 1966, it has acted as a manning or crewing agent for
several foreign firms, one of which is Star Kist Foods, Inc., USA (Star Kist). As part of their
agreement, Mata makes advances for the crew's medical expenses, National Seaman's Board fees,
Seaman's Welfare fund, and standby fees and for the crew's basic personal needs.
Subsequently, Mata sends monthly billings to its foreign principal Star Kist, which in turn
reimburses Mata by sending a telegraphic transfer through banks for credit to the latter's account.
Against this background, on February 21, 1975, Security Pacific National Bank (SEPAC) of Los
Angeles which had an agency arrangement with Philippine National Bank (PNB), transmitted a cable
message to the International Department of PNB to pay the amount of US$14,000 to Mata by
crediting the latter's account with the Insular Bank of Asia and America (IBAA), per order of Star Kist.
Upon receipt of this cabled message on February 24, 1975, PNB's International Department noticed
an error and sent a service message to SEPAC Bank. The latter replied with instructions that the
amount of US$14,000 should only be for US$1,400. cdll
On the basis of the cable message dated February 24, 1975, Cashier's Check No. 269522 in the
amount of US$1,400 (P9,772.96) representing reimbursement from Star Kist, was issued by the Star
Kist for the account of Mata on February 25, 1975 through the Insular Bank of Asia and America
(IBAA).
However, fourteen days after or on March 11, 1975, PNB effected another payment through Cashier's
Check No. 270271 in the amount of US$14,000 (P97,878.60) purporting to be another transmittal of
reimbursement from Star Kist, private respondent's foreign principal.
Six years later, or more specifically, on May 13, 1981, PNB requested Mata for refund of US$14,000
(P97,878.60) after it discovered its error in effecting the second payment. Cdpr
On February 4, 1982, PNB filed a civil case for collection and refund of US$14,000
against Mata arguing that based on a constructive trust under Article 1456 of the Civil Code,it has a
right to recover the said amount it erroneously credited to respondent Mata. 1
After trial, the Regional Trial Court of Manila rendered judgment dismissing the complaint ruling that
the instant case falls squarely under Article 2154 on solutio indebitiand not under Article 1456 on
constructive trust. The lower court rules out constructive trust, applying strictly the technical definition
of a trust as "a right of property, real or personal, held by one party for the benefit of another; that
there is a fiduciary relation between a trustee and a cestui que trust as regards certain property, real,
personal, money or choses in action." 2
In affirming the lower court, the appellate court added in its opinion that under Article 2154 on solutio
indebiti, the person who makes the payment is the one who commits the mistake vis-a-vis the
recipient who is unaware of such a mistake. 3 Consequently, recipient is duty bound to return the
amount paid by mistake. But the appellate court concluded that petitioner's demand for the return of
US$14,000 cannot prosper because its cause of action had already prescribed under Article 1145,
paragraph 2 of the Civil Code which states:
"The following actions must be commenced within six years:
xxx xxx xxx
(2) Upon a quasi-contract."
 This is because petitioner's complaint was filed only on February 4, 1982, almost seven years
after March 11, 1975 when petitioner mistakenly made payment to private respondent.
Hence, the instant petition for certiorari proceeding seeking to annul the decision of the appellate
court on the basis that Mata's obligation to return US$14,000 is governed, in the alternative, by either
Article 1456 on constructive trust or Article 2154 of the Civil Code on quasi-contract. 4
Article 1456 of the Civil Code provides:
"If property is acquired through mistake or fraud, the person obtaining it is,
by force of law, considered a trustee of an implied trust for the benefit of the
person from whom the property comes."
On the other hand, Article 2154 states:
"If something is received when there is no right to demand it, and it was
unduly delivered through mistake, the obligation to return it arises."
Petitioner naturally opts for an interpretation under constructive trust as its action filed on February 4,
1982 can still prosper, as it is well within the prescriptive period of ten (10) years as provided by
Article 1144, paragraph 2 of the Civil Code.5
If it is to be construed as a case of payment by mistake or solutio indebiti, then the prescriptive period
for quasi-contracts of six years applies, as provided by Article 1145. As pointed out by the appellate
court, petitioner's cause of action thereunder shall have prescribed, having been brought almost
seven years after the cause of action accrued. However, even assuming that the instant case
constitutes a constructive trust and prescription has not set in, the present action has already been
barred by laches. cdphil
To recall, trusts are either express or implied. While express trusts are created by the intention of the
trustor or of the parties, implied trusts come into being by operation of law. 6 Implied trusts are those
which, without being expressed, are deducible from the nature of the transaction as matters of the
intent or which are superinduced on the transaction by operation of law as matters of equity,
independently of the particular intention of the parties. 7
In turn, implied trusts are subdivided into resulting and constructive trusts. 8 A resulting trust is a trust
raised by implication of law and presumed always to have been contemplated by the parties, the
intention of which is found in the nature of the transaction, but not expressed in the deed or instrument
of conveyance. 9 Examples of resulting trusts are found in Articles 1448 to 1455 of the Civil
Code.10 On the other hand, a constructive trust is one not created by words either expressly or
impliedly, but by construction of equity in order to satisfy the demands of justice. An example of a
constructive trust is Article 1456 quoted above. 11
A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense 12 for in a typical
trust, confidence is reposed in one person who is named a trustee for the benefit of another who is
called the cestui que trust, respecting property which is held by the trustee for the benefit of the cestui
que trust. 13 A constructive trust, unlike an express trust, does not emanate from, or generate a
fiduciary relation. While in an express trust, a beneficiary and a trustee are linked by confidential or
fiduciary relations, in a constructive trust, there is neither a promise nor any fiduciary relation to speak
of and the so-called trustee neither accepts any trust nor intends holding the property for the
beneficiary. 14
In the case at bar, Mata, in receiving the US$14,000 in its account through IBAA, had no intent of
holding the same for a supposed beneficiary or cestui que trust, namelyPNB. But under Article 1456,
the law construes a trust, namely a constructive trust, for the benefit of the person from whom the
property comes, in this case PNB, for reasons of justice and equity.
At this juncture, a historical note on the codal provisions on trust and quasi-contracts is in order.
Originally, under the Spanish Civil Code, there were only two kinds of quasi contracts: negotiorum
gestio and solutio indebiti. But the Code Commission, mindful of the position of the eminent Spanish
jurist, Manresa, that "the number of quasi contracts may be indefinite," added Section 3 entitled "Other
Quasi-Contracts." 15
Moreover, even as Article 2142 of the Civil Code defines a quasi-contract, the succeeding article
provides that: "The provisions for quasi-contracts in this Chapter do not exclude other quasi-contracts
which may come within the purview of the preceding article." 16
Indubitably, the Civil Code does not confine itself exclusively to the quasi-contracts enumerated from
Articles 2144 to 2175 but is open to the possibility that, absent a pre-existing relationship, there being
neither crime nor quasi-delict, a quasi-contractual relation may be forced upon the parties to avoid a
case of unjust enrichment. 17There being no express consent, in the sense of a meeting of minds
between the parties, there is no contract to speak of. However, in view of the peculiar circumstances
or factual environment, consent is presume to the end that a recipient of benefits or favors resulting
from lawful, voluntary and unilateral acts of another may not be unjustly enriched at the expense of
another. LexLib
Undoubtedly, the instant case fulfills the indispensable requisites of solutio indebiti as defined in
Article 2154: that something (in this case money) has been received when there was no right to
demand it and (2) the same was unduly delivered through mistake. There is a presumption that there
was a mistake in the payment "if something which had never been due or had already been paid was
delivered; but he from whom the return is claimed may prove that the delivery was made out of
liberality or for any other just cause." 18
In the case at bar, a payment in the corrected amount of US$1,400 through Cashier's Check No.
269522 had already been made by PNB for the account of Mata on February 25, 1975. Strangely,
however, fourteen days later, PNB effected another payment through Cashier's Check No. 270271
in the amount of US$14,000, this time purporting to be another transmittal of reimbursement from
Star Kist, private respondent's foreign principal.
While the principle of undue enrichment or solutio indebiti, is not new, having been incorporated in
the subject on quasi-contracts in Title XVI of Book IV of the Spanish Civil Code entitled "Obligations
incurred without contract," 19 the chapter on Trusts is fairly recent, having been introduced by the
Code Commission in 1949. Although the concept of trusts is nowhere to be found in the Spanish Civil
Code, the framers of our present Civil Code incorporated implied trusts, which includes constructive
trusts, on top of quasi-contracts, both of which embody the principle of equity above strict legalism. 20
In analyzing the law on trusts, it would be instructive to refer to Anglo-American jurisprudence on the
subject. Under American Law, a court of equity does not consider a constructive trustee for all
purposes as though he were in reality a trustee; although it will force him to return the property, it will
not impose upon him the numerous fiduciary obligations ordinarily demanded from a trustee of an
express trust. 21 It must be borne in mind that in an express trust, the trustee has active duties of
management while in a constructive trust, the duty is merely to surrender the property.
Still applying American case law, quasi-contractual obligations give rise to a personal liability
ordinarily enforceable by an action at law, while constructive trusts are enforceable by a proceeding
in equity to compel the defendant to surrender specific property. To be sure, the distinction is more
procedural than substantive. 22
Further reflection on these concepts reveals that a constructive "trust" is as much a misnomer as a
"quasi-contract," so far removed are they from trusts and contracts proper, respectively. In the case
of a constructive trust, as in the case of quasi-contract, a relationship is "forced" by operation of law
upon the parties, not because of any intention on their part but in order to prevent unjust enrichment,
thus giving rise to certain obligations not within the contemplation of the parties. 23
Although we are not quite in accord with the opinion that "the trusts known to American and English
equity jurisprudence are derived from the fidei commissa of the Roman Law," 24 it is safe to state
that their roots are firmly grounded on such Civil Law principles as expressed in the Latin maxim,
"Nemo cum alterius detrimento locupletari potest," 25 particularly the concept of constructive trust.
Returning to the instant case, while petitioner may indeed opt to avail of an action to enforce a
constructive trust or the quasi-contract of solutio indebiti, it has been deprived of a choice, for
prescription has effectively blocked quasi-contract as an alternative, leaving only constructive trust
as the feasible option.
Petitioner argues that the lower and appellate courts cannot indulge in semantics by holding that in
Article 1456 the recipient commits the mistake while in Article 2154, the recipient commits on
mistake. 26 On the other hand, private respondent, invoking the appellate court's reasoning, would
impress upon us that under Article 1456, there can be no mutual mistake. Consequently, private
respondent contends that the case at bar is one of solutio indebiti and not a constructive trust. cdrep
We agree with petitioner's stand that under Article 1456, the law does not make any distinction since
mutual mistake is a possibility on either side — on the side of either the grantor or the
grantee. 27 Thus, it was error to conclude that in a constructive trust, only the person obtaining the
property commits a mistake. This is because it is also possible that a grantor, like PNB in the case at
hand, may commit the mistake.
Proceeding now to the issue of whether or not petitioner may still claim the US$14,000 it erroneously
paid private respondent under a constructive trust, we rule in the negative. Although we are aware
that only seven (7) years lapsed after petitioner erroneously credited private respondent with the said
amount and that under Article 1144, petitioner is well within the prescriptive period for the enforcement
of a constructive or implied trust, we rule that petitioner's claim cannot prosper since it is already
barred by laches. It is a well-settled rule now that an action to enforce an implied trust, whether
resulting or constructive, may be barred not only by prescription but also by laches. 28
While prescription is concerned with the fact of delay, laches deals with the effect of unreasonable
delay. 29 It is amazing that it took petitioner almost seven years before it discovered that it had
erroneously paid private respondent. Petitioner would attribute its mistake to the heavy volume of
international transactions handled by the Cable and Remittance Division of the International
Department of PNB. Such specious reasoning is not persuasive. It is unbelievable for a bank, and a
government bank at that, which regularly publishes its balanced financial statements annually or more
frequently, by the quarter, to notice its error only seven years later. As a universal bank with worldwide
operations, PNB cannot afford to commit such costly mistakes. Moreover, as between parties where
negligence is imputable to one and not to the other, the former must perforce bear the consequences
of its neglect. Hence, petitioner should bear the cost of its own negligence.
WHEREFORE, the decision of the Court of Appeals dismissing petitioner's claim against private
respondent is AFFIRMED.
Costs against petitioner.
SO ORDERED.
Bidin, Davide, Jr. and Melo, JJ ., concur.
Gutierrez, Jr., J ., in the result.
||| (Philippine National Bank v. Court of Appeals, G.R. No. 97995, [January 21, 1993], 291 PHIL
356-369)
THIRD DIVISION
[G.R. No. 173227. January 20, 2009.]
SEBASTIAN SIGA-AN, petitioner, vs. ALICIA VILLANUEVA, respondent.
DECISION
CHICO-NAZARIO, J p:
Before Us is a Petition 1 for Review on Certiorari under Rule 45 of the Rules of
Court seeking to set aside the Decision, 2 dated 16 December 2005, and Resolution, 3 dated
19 June 2006 of the Court of Appeals in CA-G.R. CV No. 71814, which affirmed in toto the
Decision, 4 dated 26 January 2001, of the Las Piñas City Regional Trial Court, Branch 255, in
Civil Case No. LP-98-0068.
The facts gathered from the records are as follows:
On 30 March 1998, respondent Alicia Villanueva filed a complaint 5 for sum of money
against petitioner Sebastian Siga-an before the Las Piñas City Regional Trial Court (RTC),
Branch 255, docketed as Civil Case No. LP-98-0068. Respondent alleged that she was a
businesswoman engaged in supplying office materials and equipments to the Philippine Navy
Office (PNO) located at Fort Bonifacio, Taguig City, while petitioner was a military officer and
comptroller of the PNO from 1991 to 1996.
Respondent claimed that sometime in 1992, petitioner approached her inside the
PNO and offered to loan her the amount of P540,000.00. Since she needed capital for her
business transactions with the PNO, she accepted petitioner's proposal. The loan agreement
was not reduced in writing. Also, there was no stipulation as to the payment of interest for the
loan. 6 IaDTES
On 31 August 1993, respondent issued a check worth P500,000.00 to petitioner as
partial payment of the loan. On 31 October 1993, she issued another check in the amount of
P200,000.00 to petitioner as payment of the remaining balance of the loan. Petitioner told her
that since she paid a total amount of P700,000.00 for the P540,000.00 worth of loan, the excess
amount of P160,000.00 would be applied as interest for the loan. Not satisfied with the amount
applied as interest, petitioner pestered her to pay additional interest. Petitioner threatened to
block or disapprove her transactions with the PNO if she would not comply with his demand. As
all her transactions with the PNO were subject to the approval of petitioner as comptroller of the
PNO, and fearing that petitioner might block or unduly influence the payment of her vouchers in
the PNO, she conceded. Thus, she paid additional amounts in cash and checks as interests for
the loan. She asked petitioner for receipt for the payments but petitioner told her that it was not
necessary as there was mutual trust and confidence between them. According to her
computation, the total amount she paid to petitioner for the loan and interest accumulated to
P1,200,000.00. 7
Thereafter, respondent consulted a lawyer regarding the propriety of paying interest
on the loan despite absence of agreement to that effect. Her lawyer told her that petitioner could
not validly collect interest on the loan because there was no agreement between her and
petitioner regarding payment of interest. Since she paid petitioner a total amount of
P1,200,000.00 for the P540,000.00 worth of loan, and upon being advised by her lawyer that
she made overpayment to petitioner, she sent a demand letter to petitioner asking for the return
of the excess amount of P660,000.00. Petitioner, despite receipt of the demand letter, ignored
her claim for reimbursement. 8
Respondent prayed that the RTC render judgment ordering petitioner to pay
respondent (1) P660,000.00 plus legal interest from the time of demand; (2) P300,000.00 as
moral damages; (3) P50,000.00 as exemplary damages; and (4) an amount equivalent to 25%
of P660,000.00 as attorney's fees. 9
In his answer 10 to the complaint, petitioner denied that he offered a loan to
respondent. He averred that in 1992, respondent approached and asked him if he could grant
her a loan, as she needed money to finance her business venture with the PNO. At first, he was
reluctant to deal with respondent, because the latter had a spotty record as a supplier of the
PNO. However, since respondent was an acquaintance of his officemate, he agreed to grant
her a loan. Respondent paid the loan in full. 11 jur2005
Subsequently, respondent again asked him to give her a loan. As respondent had
been able to pay the previous loan in full, he agreed to grant her another loan. Later, respondent
requested him to restructure the payment of the loan because she could not give full payment
on the due date. He acceded to her request. Thereafter, respondent pleaded for another
restructuring of the payment of the loan. This time he rejected her plea. Thus, respondent
proposed to execute a promissory note wherein she would acknowledge her obligation to him,
inclusive of interest, and that she would issue several postdated checks to guarantee the
payment of her obligation. Upon his approval of respondent's request for restructuring of the
loan, respondent executed a promissory note dated 12 September 1994 wherein she admitted
having borrowed an amount of P1,240,000.00, inclusive of interest, from petitioner and that she
would pay said amount in March 1995. Respondent also issued to him six postdated checks
amounting to P1,240,000.00 as guarantee of compliance with her obligation. Subsequently, he
presented the six checks for encashment but only one check was honored. He demanded that
respondent settle her obligation, but the latter failed to do so. Hence, he filed criminal cases for
Violation of the Bouncing Checks Law (Batas Pambansa Blg. 22) against respondent. The
cases were assigned to the Metropolitan Trial Court of Makati City, Branch 65 (MeTC). 12
Petitioner insisted that there was no overpayment because respondent admitted in
the latter's promissory note that her monetary obligation as of 12 September 1994 amounted to
P1,240,000.00 inclusive of interests. He argued that respondent was already estopped from
complaining that she should not have paid any interest, because she was given several times
to settle her obligation but failed to do so. He maintained that to rule in favor of respondent is
tantamount to concluding that the loan was given interest-free. Based on the foregoing
averments, he asked the RTC to dismiss respondent's complaint.
After trial, the RTC rendered a Decision on 26 January 2001 holding that respondent
made an overpayment of her loan obligation to petitioner and that the latter should refund the
excess amount to the former. It ratiocinated that respondent's obligation was only to pay the
loaned amount of P540,000.00, and that the alleged interests due should not be included in the
computation of respondent's total monetary debt because there was no agreement between
them regarding payment of interest. It concluded that since respondent made an excess
payment to petitioner in the amount of P660,000.00 through mistake, petitioner should return
the said amount to respondent pursuant to the principle of solutio indebiti. 13 HEIcDT
The RTC also ruled that petitioner should pay moral damages for the sleepless nights
and wounded feelings experienced by respondent. Further, petitioner should pay exemplary
damages by way of example or correction for the public good, plus attorney's fees and costs of
suit.
The dispositive portion of the RTC Decision reads:
WHEREFORE, in view of the foregoing evidence and in the light
of the provisions of law and jurisprudence on the matter, judgment is hereby
rendered in favor of the plaintiff and against the defendant as follows:
(1) Ordering defendant to pay plaintiff the amount of P660,000.00
plus legal interest of 12% per annum computed from 3 March 1998 until the
amount is paid in full;
(2) Ordering defendant to pay plaintiff the amount of P300,000.00
as moral damages;
(3) Ordering defendant to pay plaintiff the amount of P50,000.00
as exemplary damages; CcAESI
(4) Ordering defendant to pay plaintiff the amount equivalent to
25% of P660,000.00 as attorney's fees; and
(5) Ordering defendant to pay the costs of suit. 14
Petitioner appealed to the Court of Appeals. On 16 December 2005, the appellate
court promulgated its Decision affirming in toto the RTC Decision, thus:
WHEREFORE, the foregoing considered, the instant appeal is
hereby DENIED and the assailed decision [is] AFFIRMED in toto. 15
Petitioner filed a motion for reconsideration of the appellate court's decision but this
was denied. 16 Hence, petitioner lodged the instant petition before us assigning the following
errors:
I.
THE RTC AND THE COURT OF APPEALS ERRED IN RULING THAT NO
INTEREST WAS DUE TO PETITIONER; aHcDEC
II.
THE RTC AND THE COURT OF APPEALS ERRED IN APPLYING THE
PRINCIPLE OF SOLUTIO INDEBITI. 17
Interest is a compensation fixed by the parties for the use or forbearance of money.
This is referred to as monetary interest. Interest may also be imposed by law or by courts as
penalty or indemnity for damages. This is called compensatory interest. 18 The right to interest
arises only by virtue of a contract or by virtue of damages for delay or failure to pay the principal
loan on which interest is demanded. 19
Article 1956 of the Civil Code, which refers to monetary interest, 20 specifically
mandates that no interest shall be due unless it has been expressly stipulated in writing. As can
be gleaned from the foregoing provision, payment of monetary interest is allowed only if: (1)
there was an express stipulation for the payment of interest; and (2) the agreement for the
payment of interest was reduced in writing. The concurrence of the two conditions is required
for the payment of monetary interest. Thus, we have held that collection of interest without any
stipulation therefor in writing is prohibited by law. 21
It appears that petitioner and respondent did not agree on the payment of interest for
the loan. Neither was there convincing proof of written agreement between the two regarding
the payment of interest. Respondent testified that although she accepted petitioner's offer of
loan amounting to P540,000.00, there was, nonetheless, no verbal or written agreement for her
to pay interest on the loan. 22
Petitioner presented a handwritten promissory note dated 12 September
1994 23 wherein respondent purportedly admitted owing petitioner "capital and interest".
Respondent, however, explained that it was petitioner who made a promissory note and she
was told to copy it in her own handwriting; that all her transactions with the PNO were subject
to the approval of petitioner as comptroller of the PNO; that petitioner threatened to disapprove
her transactions with the PNO if she would not pay interest; that being unaware of the law on
interest and fearing that petitioner would make good of his threats if she would not obey his
instruction to copy the promissory note, she copied the promissory note in her own handwriting;
and that such was the same promissory note presented by petitioner as alleged proof of their
written agreement on interest. 24 Petitioner did not rebut the foregoing testimony. It is evident
that respondent did not really consent to the payment of interest for the loan and that she was
merely tricked and coerced by petitioner to pay interest. Hence, it cannot be gainfully said that
such promissory note pertains to an express stipulation of interest or written agreement of
interest on the loan between petitioner and respondent. cCTAIE
Petitioner, nevertheless, claims that both the RTC and the Court of Appeals found
that he and respondent agreed on the payment of 7% rate of interest on the loan; that the agreed
7% rate of interest was duly admitted by respondent in her testimony in the Batas Pambansa
Blg. 22 cases he filed against respondent; that despite such judicial admission by respondent,
the RTC and the Court of Appeals, citing Article 1956 of the Civil Code, still held that no interest
was due him since the agreement on interest was not reduced in writing; that the application of
Article 1956 of the Civil Code should not be absolute, and an exception to the application of
such provision should be made when the borrower admits that a specific rate of interest was
agreed upon as in the present case; and that it would be unfair to allow respondent to pay only
the loan when the latter very well knew and even admitted in the Batas Pambansa Blg. 22 cases
that there was an agreed 7% rate of interest on the loan. 25
We have carefully examined the RTC Decision and found that the RTC did not make
a ruling therein that petitioner and respondent agreed on the payment of interest at the rate of
7% for the loan. The RTC clearly stated that although petitioner and respondent entered into a
valid oral contract of loan amounting to P540,000.00, they, nonetheless, never intended the
payment of interest thereon. 26 While the Court of Appeals mentioned in its Decision that it
concurred in the RTC's ruling that petitioner and respondent agreed on a certain rate of interest
as regards the loan, we consider this as merely an inadvertence because, as earlier elucidated,
both the RTC and the Court of Appeals ruled that petitioner is not entitled to the payment of
interest on the loan. The rule is that factual findings of the trial court deserve great weight and
respect especially when affirmed by the appellate court. 27 We found no compelling reason to
disturb the ruling of both courts.
Petitioner's reliance on respondent's alleged admission in the Batas Pambansa Blg.
22 cases that they had agreed on the payment of interest at the rate of 7% deserves scant
consideration. In the said case, respondent merely testified that after paying the total amount of
loan, petitioner ordered her to pay interest. 28Respondent did not categorically declare in the
same case that she and respondent made an express stipulation in writing as regards payment
of interest at the rate of 7%. As earlier discussed, monetary interest is due only if there
was an express stipulation in writing for the payment of interest. cSTCDA
There are instances in which an interest may be imposed even in the absence of
express stipulation, verbal or written, regarding payment of interest. Article 2209 of the Civil
Code states that if the obligation consists in the payment of a sum of money, and the debtor
incurs delay, a legal interest of 12% per annum may be imposed as indemnity for damages if
no stipulation on the payment of interest was agreed upon. Likewise, Article 2212 of the Civil
Code provides that interest due shall earn legal interest from the time it is judicially demanded,
although the obligation may be silent on this point.
All the same, the interest under these two instances may be imposed only as a
penalty or damages for breach of contractual obligations. It cannot be charged as a
compensation for the use or forbearance of money. In other words, the two instances apply only
to compensatory interest and not to monetary interest. 29 The case at bar involves petitioner's
claim for monetary interest.
Further, said compensatory interest is not chargeable in the instant case because it
was not duly proven that respondent defaulted in paying the loan. Also, as earlier found, no
interest was due on the loan because there was no written agreement as regards payment of
interest.
Apropos the second assigned error, petitioner argues that the principle of solutio
indebiti does not apply to the instant case. Thus, he cannot be compelled to return the alleged
excess amount paid by respondent as interest. 30
Under Article 1960 of the Civil Code, if the borrower of loan pays interest when there
has been no stipulation therefor, the provisions of the Civil Code concerning solutio indebiti shall
be applied. Article 2154 of the Civil Code explains the principle of solutio indebiti. Said provision
provides that if something is received when there is no right to demand it, and it was unduly
delivered through mistake, the obligation to return it arises. In such a case, a creditor-debtor
relationship is created under a quasi-contract whereby the payor becomes the creditor who then
has the right to demand the return of payment made by mistake, and the person who has no
right to receive such payment becomes obligated to return the same. The quasi-contract
of solutio indebiti harks back to the ancient principle that no one shall enrich himself unjustly at
the expense of another. 31 The principle of solutio indebiti applies where (1) a payment is made
when there exists no binding relation between the payor, who has no duty to pay, and the person
who received the payment; and (2) the payment is made through mistake, and not through
liberality or some other cause. 32 We have held that the principle of solutio indebiti applies in
case of erroneous payment of undue interest. 33 IcCATD
It was duly established that respondent paid interest to petitioner. Respondent was
under no duty to make such payment because there was no express stipulation in writing to that
effect. There was no binding relation between petitioner and respondent as regards the payment
of interest. The payment was clearly a mistake. Since petitioner received something when there
was no right to demand it, he has an obligation to return it.
 We shall now determine the propriety of the monetary award and damages imposed
by the RTC and the Court of Appeals.
Records show that respondent received a loan amounting to P540,000.00 from
petitioner. 34 Respondent issued two checks with a total worth of P700,000.00 in favor of
petitioner as payment of the loan. 35 These checks were subsequently encashed by
petitioner. 36 Obviously, there was an excess of P160,000.00 in the payment for the loan.
Petitioner claims that the excess of P160,000.00 serves as interest on the loan to which he was
entitled. Aside from issuing the said two checks, respondent also paid cash in the total amount
of P175,000.00 to petitioner as interest. 37 Although no receipts reflecting the same were
presented because petitioner refused to issue such to respondent, petitioner, nonetheless,
admitted in his Reply-Affidavit 38 in the Batas Pambansa Blg. 22 cases that respondent paid
him a total amount of P175,000.00 cash in addition to the two checks. Section 26, Rule 130 of
the Rules of Evidence provides that the declaration of a party as to a relevant fact may be given
in evidence against him. Aside from the amounts of P160,000.00 and P175,000.00 paid as
interest, no other proof of additional payment as interest was presented by respondent. Since
we have previously found that petitioner is not entitled to payment of interest and that the
principle of solutio indebiti applies to the instant case, petitioner should return to respondent the
excess amount of P160,000.00 and P175,000.00 or the total amount of P335,000.00.
Accordingly, the reimbursable amount to respondent fixed by the RTC and the Court of Appeals
should be reduced from P660,000.00 to P335,000.00.
As earlier stated, petitioner filed five (5) criminal cases for violation of Batas
Pambansa Blg. 22 against respondent. In the said cases, the MeTC found respondent guilty of
violating Batas Pambansa Blg. 22 for issuing five dishonored checks to petitioner. Nonetheless,
respondent's conviction therein does not affect our ruling in the instant case. The two checks,
subject matter of this case, totaling P700,000.00 which respondent claimed as payment of the
P540,000.00 worth of loan, were not among the five checks found to be dishonored or bounced
in the five criminal cases. Further, the MeTC found that respondent made an overpayment of
the loan by reason of the interest which the latter paid to petitioner. 39
Article 2217 of the Civil Code provides that moral damages may be recovered if the
party underwent physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation and similar injury. Respondent
testified that she experienced sleepless nights and wounded feelings when petitioner refused
to return the amount paid as interest despite her repeated demands. Hence, the award of moral
damages is justified. However, its corresponding amount of P300,000.00, as fixed by the RTC
and the Court of Appeals, is exorbitant and should be equitably reduced. Article 2216 of the
Civil Code instructs that assessment of damages is left to the discretion of the court according
to the circumstances of each case. This discretion is limited by the principle that the amount
awarded should not be palpably excessive as to indicate that it was the result of prejudice or
corruption on the part of the trial court. 40 To our mind, the amount of P150,000.00 as moral
damages is fair, reasonable, and proportionate to the injury suffered by respondent. SACHcD
Article 2232 of the Civil Code states that in a quasi-contract, such as solutio
indebiti, exemplary damages may be imposed if the defendant acted in anoppressive manner.
Petitioner acted oppressively when he pestered respondent to pay interest and threatened to
block her transactions with the PNO if she would not pay interest. This forced respondent to pay
interest despite lack of agreement thereto. Thus, the award of exemplary damages is
appropriate. The amount of P50,000.00 imposed as exemplary damages by the RTC and the
Court is fitting so as to deter petitioner and other lenders from committing similar and other
serious wrongdoings. 41
Jurisprudence instructs that in awarding attorney's fees, the trial court must state the
factual, legal or equitable justification for awarding the same. 42 In the case under
consideration, the RTC stated in its Decision that the award of attorney's fees equivalent to 25%
of the amount paid as interest by respondent to petitioner is reasonable and moderate
considering the extent of work rendered by respondent's lawyer in the instant case and the fact
that it dragged on for several years. 43 Further, respondent testified that she agreed to
compensate her lawyer handling the instant case such amount. 44 The award, therefore, of
attorney's fees and its amount equivalent to 25% of the amount paid as interest by respondent
to petitioner is proper.
Finally, the RTC and the Court of Appeals imposed a 12% rate of legal interest on
the amount refundable to respondent computed from 3 March 1998 until its full payment. This
is erroneous.
We held in Eastern Shipping Lines, Inc. v. Court of Appeals, 45 that
when an obligation, not constituting a loan or forbearance of money is breached, an interest on
the amount of damages awarded may be imposed at the rate of 6% per annum. We further
declared that when the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether it is a loan/forbearance of money or not, shall be
12% per annum from such finality until its satisfaction, this interim period being deemed
equivalent to a forbearance of credit. aCTcDS
In the present case, petitioner's obligation arose from a quasi-contract of solutio
indebiti and not from a loan or forbearance of money. Thus, an interest of 6% per annum should
be imposed on the amount to be refunded as well as on the damages awarded and on the
attorney's fees, to be computed from the time of the extra-judicial demand on 3 March
1998, 46 up to the finality of this Decision. In addition, the interest shall become 12% per annum
from the finality of this Decision up to its satisfaction.
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 71814, dated
16 December 2005, is hereby AFFIRMED with the following MODIFICATIONS: (1) the amount
of P660,000.00 as refundable amount of interest is reduced to THREE HUNDRED THIRTY
FIVE THOUSAND PESOS (P335,000.00); (2) the amount of P300,000.00 imposed as moral
damages is reduced to ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00);
(3) an interest of 6% per annum is imposed on the P335,000.00, on the damages awarded and
on the attorney's fees to be computed from the time of the extra-judicial demand on 3 March
1998 up to the finality of this Decision; and (4) an interest of 12% per annum is also imposed
from the finality of this Decision up to its satisfaction. Costs against petitioner.
SO ORDERED.
Ynares-Santiago, Austria-Martinez, Nachura and Leonardo-de Castro, * JJ., concur.
||| (Siga-an v. Villanueva, G.R. No. 173227, [January 20, 2009], 596 PHIL 760-777)
SECOND DIVISION
[G.R. No. 172505. October 1, 2014.]
ANTONIO M. GARCIA, petitioner, vs. FERRO CHEMICALS,
INC., respondent.
DECISION
LEONEN, J p:
Before this court is a petition for review on certiorari 1 assailing the decision 2 of the Court
of Appeals dated August 11, 2005 and its resolution 3 dated April 27, 2006, denying petitioner
Antonio Garcia's motion for reconsideration.
Antonio Garcia, as seller, and Ferro Chemicals, Inc., through Ramon Garcia, as buyer,
entered into a deed of absolute sale and purchase of shares of stock on July 15, 1988. The deed was
for the sale and purchase of shares of stock from various corporations, including one class "A" share
in Alabang Country Club, Inc. and one proprietary membership in the Manila Polo Club, Inc. 4 These
shares of stock were in the name of Antonio Garcia. 5 The contract was allegedly entered into to
prevent these shares of stock from being sold at public auction to pay the outstanding obligations of
Antonio Garcia. 6
On March 3, 1989, a deed of right of repurchase over the same shares of stock subject of
the deed of absolute sale and purchase of shares of stock was entered into between
Antonio Garcia and Ferro Chemicals, Inc. Under the deed of right of repurchase, Antonio Garcia can
redeem the properties sold within 180 days from the signing of the agreement. 7
Before the end of the 180-day period, Antonio Garcia exercised his right to repurchase the
properties. 8 However, Ferro Chemicals, Inc. did not agree to the repurchase of the shares of
stock. 9 Thus, Antonio Garcia filed an action for specific performance and annulment of transfer of
shares. 10
On September 6, 1989, the class "A" share in Alabang Country Club, Inc. and proprietary
membership in the Manila Polo Club, Inc., which were included in the contracts entered into between
Antonio Garcia and Ferro Chemicals, Inc., were sold at public auction to Philippine Investment
System Organization. 11
On September 3, 1990, the information based on the complaint of Ferro Chemicals, Inc.
was filed against Antonio Garcia before the Regional Trial Court. 12 He was charged with estafa
under Article 318 (Other Deceits) of the Revised Penal Code for allegedly misrepresenting
to Ferro Chemicals, Inc. that the shares subject of the contracts entered into were free from all liens
and encumbrances. The information reads:
The undersigned Assistant Prosecutor accuses Antonio
M. Garcia of the felony of Estafa as defined and penalized under Art. 318 of
the Revised Penal Code as amended, committed as follows:
THAT on or about 15 July 1988, in Makati, Metro Manila,
Philippines, a place within the jurisdiction of this Honorable Court, the above-
named accused, with evident bad faith and deceit, did, then and there,
willfully, unlawfully and feloniously, misrepresent to FERRO CHEMICALS,
INC. (FCI) represented by Ramon M. Garcia, that his share of
stock/proprietary share with Ayala Alabang Country Club, Inc. and Manila
Polo Club, Inc. collectively valued at about P10.00 Million Pesos, being part
of other shares of stock subject matter of a Deed of Absolute Sale and
Purchase of Shares of Stock between the accused and FCI, were free from
all liens, encumbrances and claims by third persons, when in truth and in
fact, accused well knew that aforesaid share of stock/proprietary share had
already been garnished in July 1985 and subsequently sold at public auction
in September 1989, and which misrepresentation and assurance FCI relied
upon and paid the consideration in accordance with the stipulated
condition/manner of payment, all to the damage and prejudice of FCI in the
aforestated amount of P10.00 Million Pesos. ICTcDA
Contrary to law. 13
In the decision dated December 12, 1996 of the Regional Trial Court, Antonio Garcia was
acquitted for insufficiency of evidence. 14 The Regional Trial Court held:
From the foregoing, it is very clear that private complainant was
aware of the status of the subject CLUB SHARES. Thus, the element of false
pretense, fraudulent act or fraudulent means which constitute the very
cause or the only motive which induced the private complainant to enter into
the questioned deed of sale (Exh. "A") is wanting in the case at
bar. 15 (Underscoring in the original)
Ferro Chemicals, Inc. filed a motion for reconsideration, which was denied by the Regional
Trial Court in the order dated July 29, 1997. 16
On August 25, 1997, Ferro Chemicals, Inc. appealed to the Court of Appeals the July 29,
1997 order of the Regional Trial Court as to the civil aspect of the case. 17The notice of
appeal 18 filed was entitled "Notice of Appeal Ex Gratia Abudantia Ad Cautelam (Of The Civil Aspect
of the Case)." It alleged:
4. Herein private complainant hereby gives notice, out of extreme
caution, that it is appealing the Decision dated 12 December 1996 and the
Order dated 29 July 1997 on the civil aspect of the case to the Court of
Appeals on the ground that it is not in accordance with the law and the facts
of the case.
5. This notice of appeal is without prejudice to the filing of an
appropriate petition for certiorari under Rule 65 of the Rules of Court on the
criminal aspect, upon the giving of due course thereto, private complainant
shall endeavor to seek the consolidation of this appeal with the said
petition. 19
On October 15, 1997, the Makati City Prosecutor's Office and Ferro Chemicals, Inc. also
filed a petition for certiorari 20 with this court, assailing the Regional Trial Court's December 12, 1996
decision and July 29, 1997 order acquitting Antonio Garcia. 21
The petition for certiorari 22 filed before this court sought to annul the decision of the trial
court acquitting Antonio Garcia. People of the Philippines and FerroChemicals, Inc. argued that the
trial court "acted in grave abuse of discretion amounting to lack or excess of jurisdiction when it
rendered the judgment of acquittal based on affidavits not at all introduced in evidence by either of
the parties thereby depriving the people of their substantive right to due process of law." 23 The
verification/certification against forum shopping, signed by Ramon Garcia as president
of Ferro Chemicals, Inc., disclosed that the notice of appeal was filed "with respect to the civil aspect
of the case." 24
In the resolution 25 dated November 16, 1998, this court dismissed the petition
for certiorari filed, and entry of judgment was made on December 24, 1998. 26
 On the other hand, the Court of Appeals, 27 in its decision 28 dated August 11, 2005,
granted the appeal and awarded Ferro Chemicals, Inc. the amount of PhP1,000,000.00 as actual
loss with legal interest and attorney's fees in the amount of PhP20,000.00. 29 The appellate court
found that Antonio Garcia failed to disclose the Philippine Investment and Savings Organization's lien
over the club shares. 30 Thus:
The issue in this case is whether or not Antonio Garcia disclosed
to Ferro-Chemicals, during the negotiation stage of the impending sale of
the imputed club shares, the third attachment lien in favor of Philippine
Investment and Savings Organization (PISO) which, ultimately, became the
basis of the auction sale of said club shares. We have scrutinized the records
of the case but found no evidence that Antonio Garcia intimated to his
brother the third attachment lien of PISO over the said club shares. While it
is true that Antonio Garcia divulged the two liens of Security Bank and
Insular Bank of Asia and America, the lien of PISO was clearly not discussed.
The affidavits executed by the two lawyers to the effect that the lien of PISO
was considered but deliberately left out in the deed cannot be given much
weight as they were never placed on the witness stand and cross-examined
by Ferro-Chemicals. If their affidavits, although not offered, were considered
in the criminal aspect and placed a cloud on the prosecution's thrust, they
cannot be given the same probative value in this civil aspect as only a
preponderance of evidence is necessary to carry the day for the
plaintiff, Ferro Chemicals.
While Antonio Garcia insists that no consideration was ever
made over the club shares as the same were merely given for safekeeping,
the document denominated as Deed of Absolute Sale states otherwise. It is
a basic rule of evidence that between documentary evidence and oral
evidence, the former carries more weight.
Also, We have observed that in Antonio Garcia's letter of
redemption addressed to Ferro Chemicals, he mentioned his interest in
redeeming the company shares only. That he did not include the club shares
only meant that said club shares no longer had any much redeemable value
as there was a lien over them. To redeem them would be pointless.
If they had no redeemable value to Antonio Garcia,
to Ferro Chemical they were certainly marketable assets. The non-
disclosure of the third lien in favor of PISO materially
affected Ferro Chemicals since it was not able to act on time to protect its
interest when the auction sale over the club shares actually took place. As a
result,Ferro Chemicals suffered losses due to the unfortunate public auction
sale. It is but just and fair that Antonio Garcia be made to compensate the
loss pursuant to Articles 21 and 2199 of the Civil Code.
The actual loss suffered by Ferro Chemicals amounted to
P1,000,000.00 which correspondents to the bid value of the club shares at
the time of the auction as evidenced by the Sheriff's Certificate of
Sale. 31 (Citations omitted)
Antonio Garcia filed a motion for reconsideration and Ferro Chemicals, Inc. filed a partial
motion for reconsideration of the decision of the Court of Appeals. 32These motions were denied in
the resolution 33 dated April 27, 2006. Thus, Antonio Garcia filed this petition for review
on certiorari, 34 assailing the decision and resolution of the Court of Appeals.
Antonio Garcia argues that the factual findings of the Court of Appeals were
erroneous 35 and insists that "[Ferro Chemicals, Inc.] was fully aware that the shares covered by the
Deed of Absolute Sale, including the Subject Club Shares, were not free from liens and
encumbrances and that the Deed [of] Sale was executed [to]warehouse [Antonio Garcia's] assets
based on, among other evidence, the affidavits executed by Jaime Gonzales . . . and Rolando
Navarro. . . . " 36
Antonio Garcia faults the Court of Appeals in disregarding the affidavits executed by Jaime
Gonzales and Rolando Navarro. Antonio Garcia argues that even this court in G.R. No. 130880
entitled People of the Philippines and Ferro Chemicals, Inc. v. Hon. Dennis Villa Ignacio and
Antonio Garcia where the admissibility of the affidavits was put in issue held that the trial court did
not commit any grave abuse of discretion in the challenged decision. 37 He then reasoned that
"pursuant to thelaw of the case, [the affidavits of Gonzalez and Navarro] are admissible and should
be given weight." 38
Finally, Antonio Garcia claims that both he and Ferro Chemicals, Inc. acted in bad faith
when they entered into the deed of absolute sale as a scheme to defraud Antonio Garcia's creditors.
Thus, they are in pari delicto and Ferro Chemicals, Inc. should not be allowed to recover from
Antonio Garcia. 39
In its comment, 40 Ferro Chemicals, Inc. points out that Antonio Garcia raised factual
issues not proper in a Rule 45 petition and reiterates the findings of the Court of Appeals. 41 SAEHaC
There are pertinent and important issues that the parties failed to raise before the trial
court, Court of Appeals, and this court. Nonetheless, we resolve to rule on these issues.
As a general rule, this court through its appellate jurisdiction can only decide on matters
or issues raised by the parties. 42 However, the rule admits of exceptions.43 When the unassigned
error affects jurisdiction over the subject matter 44 or when the consideration of the error is necessary
for a complete resolution of the case, 45this court can still decide on these issues.
We cannot turn a blind eye on glaring misapplications of the law or patently erroneous
decisions or resolutions simply because the parties failed to raise these errors before the court.
Otherwise, we will be allowing injustice by reason of the mistakes of the parties' counsel and
condoning reckless and negligent acts of lawyers to the prejudice of the litigants. Failure to rule on
these issues amounts to an abdication of our duty to dispense justice to all parties.
The issues are:
I. Whether the Regional Trial Court had jurisdiction over the case
II. Whether the act of Ferro Chemicals, Inc. in filing the notice of appeal
before the Court of Appeals and the petition
for certiorari assailing the same trial court decision amounted to
forum shopping
III. Whether Ferro Chemicals, Inc. was entitled to the awards given as civil
liability ex delicto
 The Regional Trial Court
did not have jurisdiction
Jurisdiction of a court over the subject matter is vested by law. 46 In criminal cases, the
imposable penalty of the crime charged in the information determines the court that has jurisdiction
over the case. 47
The information charged Antonio Garcia with violation of Article 318 of the Revised Penal
Code, which is punishable by arresto mayor, or imprisonment for a period of one (1) month and one
(1) day to six (6) months. Article 318 states: aASDTE
ART. 318: Other deceits. — The penalty of arresto mayor and a
fine of not less than the amount of the damage caused and not more than
twice such amount shall be imposed upon any person who shall defraud or
damage another by any other deceit not mentioned in the preceding articles
of this chapter.
Any person who, for profit or gain, shall interpret dreams, make
forecasts, tell fortunes, or take advantage of the credulity of the public in any
other similar manner, shall suffer the penalty of arresto mayor or a fine not
exceeding 200 pesos.
When the information was filed on September 3, 1990, the law in force was Batas
Pambansa Blg. 129 before it was amended by Republic Act No. 7691. Under Section 32 of Batas
Pambansa Blg. 129, the Metropolitan Trial Court had jurisdiction over the case:
SEC. 32. Jurisdiction of Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts in criminal cases. —
xxx xxx xxx
2. Exclusive original jurisdiction over all offenses punishable
with imprisonment of not exceeding four years and two months, or a fine of
not more than four thousand pesos, or both such fine and imprisonment,
regardless of other imposable accessory or other penalties, including the
civil liability arising from such offenses or predicated thereon, irrespective of
kind, nature, value, or amount thereof: Provided, however, That in offenses
involving damage to property through criminal negligence they shall have
exclusive original jurisdiction where the imposable fine does not exceed
twenty thousand pesos. (Emphasis supplied) DHETIS
The Regional Trial Court did not have jurisdiction to hear and decide the case. This lack
of jurisdiction resulted in voiding all of the trial court's proceedings and the judgment rendered. 48
Although the trial court's lack of jurisdiction was never raised as an issue in any part of the
proceedings and even until it reached this court, we proceed with resolving the matter.
In Pangilinan v. Court of Appeals, 49 this court held:
Thus, we apply the general rule that jurisdiction is vested by law
and cannot be conferred or waived by the parties. Even on appeal and even
if the reviewing parties did not raise the issue of jurisdiction, the reviewing
court is not precluded from ruling that the lower court had no jurisdiction over
the case[.]
xxx xxx xxx
Having arrived at the conclusion that the Regional Trial Court did
not have jurisdiction to try the case against the appellant, it is no longer
necessary to consider the other issues raised as the decision of the Regional
Trial Court is null and void. 50 CcAHEI
The trial court's lack of jurisdiction cannot be cured by the parties' silence on the
matter. 51 The failure of the parties to raise the matter of jurisdiction also cannot be construed as a
waiver of the parties. Jurisdiction is conferred by law and cannot be waived by the parties.
The assailed decision is void, considering that it originates from a void decision of the
Regional Trial Court for lack of jurisdiction over the subject matter.
Ferro Chemicals, Inc.
committed forum shopping
Forum shopping is defined as "the act of a litigant who 'repetitively availed of several
judicial remedies in different courts, simultaneously or successively, all substantially founded on the
same transactions and the same essential facts and circumstances, and all raising substantially the
same issues either pending in, or already resolved adversely by some other court . . . to increase his
chances of obtaining a favorable decision if not in one court, then in another'." 52
Once clearly established that forum shopping was committed willfully and deliberately by
a party or his or her counsel, the case may be summarily dismissed with prejudice, and the act shall
constitute direct contempt and a cause for administrative sanctions. 53 SacTCA
Forum shopping is prohibited, and sanctions are imposed on those who commit forum
shopping as "it trifles with the courts, abuses their processes, degrades the administration of justice
and adds to the already congested court dockets." 54 This court has said:
What is critical is the vexation brought upon the courts and the
litigants by a party who asks different courts to rule on the same or related
causes and grant the same or substantially the same reliefs and in the
process creates the possibility of conflicting decisions being rendered by the
different fora upon the same issues, regardless of whether the court in which
one of the suits was brought has no jurisdiction over the action. 55 (Citation
omitted)
The test and requisites that must concur to establish when a litigant commits forum
shopping are the following:
The test for determining the existence of forum shopping is
whether the elements of litis pendentia are present, or whether a final
judgment in one case amounts to res judicata in another. Thus, there is
forum shopping when the following elements are present: (a) identity of
parties, or at least such parties as represent the same interests in both
actions; (b) identity of rights asserted and relief prayed for, the relief being
founded on the same facts; and (c) the identity of the two preceding
particulars, such that any judgment rendered in the other action will,
regardless of which party is successful, amount to res judicata in the action
under consideration; said requisites are also constitutive of the requisites
for auter action pendant or lis pendens. 56 (Citation omitted)
 There is no question that Ferro Chemicals, Inc. committed forum shopping when it filed an
appeal before the Court of Appeals and a petition for certiorari before this court assailing the same
trial court decision. This is true even if Ferro Chemicals, Inc.'s notice of appeal to the Court of Appeals
was entitled "Notice of Appeal Ex Gratia Abudantia Ad Cautelam (Of The Civil Aspect of the
Case)." 57 The "civil aspect of the case" referred to by Ferro Chemicals, Inc. is for the recovery of
civil liability ex delicto. However, it failed to make a reservation before the trial court to institute the
civil action for the recovery of civil liability ex delicto or institute a separate civil action prior to the filing
of the criminal case.
There is identity of parties. Petitioner, Antonio Garcia, and respondent, Ferro Chemicals,
Inc., are both parties in the appeal filed before the Court of Appeals and the petition
for certiorari before this court.
There is identity of the rights asserted and reliefs prayed for in both actions. At a glance,
it may appear that Ferro Chemicals, Inc. asserted different rights: The appeal before the Court of
Appeals is purely on the civil aspect of the trial court's decision while the petition for certiorari before
this court is allegedly only on the criminal aspect of the case. However, the civil liability asserted
by Ferro Chemicals, Inc. before the Court of Appeals arose from the criminal act. It is in the nature of
civil liability ex delicto. Ferro Chemicals, Inc. did not reserve the right to institute the civil action for
the recovery of civil liability ex delicto or institute a separate civil action prior to the filing of the criminal
case. 58 Thus, it is an adjunct of the criminal aspect of the case. As held in Lim v. Kou Co
Ping: 59 HDIaST
The civil liability arising from the offense or ex delicto is based on
the acts or omissions that constitute the criminal offense; hence, its trial is
inherently intertwined with the criminal action. For this reason, the civil
liability ex delicto is impliedly instituted with the criminal offense. If the action
for the civil liability ex delicto is instituted prior to or subsequent to the filing
of the criminal action, its proceedings are suspended until the final outcome
of the criminal action. The civil liability based on delict is extinguished when
the court hearing the criminal action declares that 'the act or omission from
which the civil liability may arise did not exist'." 60 (Emphasis supplied,
citations omitted).
When the trial court's decision was appealed as to its criminal aspect in the petition
for certiorari before this court, the civil aspect thereof is deemed included in the appeal. Thus, the
relief prayed for by Ferro Chemicals, Inc., that is, recovery of civil liability ex delicto, is asserted in
both actions before this court and the Court of Appeals.
Even the allegations in the notice of appeal readily show that Ferro Chemicals, Inc.
committed forum shopping, to wit: cDECIA
5. This notice of appeal is without prejudice to the filing of an
appropriate petition for certiorari under Rule 65 of the Rules of Court on the
criminal aspect, upon the giving of due course thereto, private complainant
shall endeavor to seek the consolidation of this appeal with the said
petition. 61
As to the third requisite, on the assumption that the trial court had jurisdiction over the
case, this court's decision in G.R. No. 130880 affirming the trial court's decision acquitting the
accused for lack of an essential element of the crime charged amounts to res judicata to assert the
recovery of civil liability arising from the offense. This court's resolution dismissing the petition
for certiorari filed by Ferro Chemicals, Inc. states:
In any event, petitioners failed to sufficiently show that any grave
abuse of discretion was committed by the Regional Trial Court in rendering
the challenged decision and order which, on the contrary, appear to be in
accord with the facts and the applicable law and jurisprudence. 62
Litigants cannot avail themselves of two separate remedies for the same relief in the hope
that in one forum, the relief prayed for will be granted. This is the evil sought to be averted by the
doctrine of non-forum shopping, and this is the problem that has happened in this case. This court
denied the petition for certiorari filed byFerro Chemicals, Inc. resulting in finality of the trial court's
decision. The decision found Antonio Garcia not guilty of the offense charged, and no civil liability
was awarded to Ferro Chemicals, Inc. However, at present, there is a conflicting decision from the
Court of Appeals awarding Ferro Chemicals, Inc. civil indemnity arising from the offense
charged. EHCcIT
When the civil action for the recovery of civil liability ex delicto is instituted with the criminal
action, whether by choice of private complainant (i.e., no reservation is made or no prior filing of a
separate civil action) or as required by the law or rules, the case will be prosecuted under the direction
and control of the public prosecutor. 63 The civil action cannot proceed independently of the criminal
case. This includes subsequent proceedings on the criminal action such as an appeal. In any
case, Ferro Chemicals, Inc. joined the public prosecutor in filing the petition for certiorari before this
court. Ramon Garcia, President of Ferro Chemicals, Inc., signed the verification and certification of
non-forum shopping of the petition for certiorari. 64
We must clarify, however, that private complainants in criminal cases are not precluded
from filing a motion for reconsideration and subsequently an appeal on the civil aspect of a decision
acquitting the accused. An exception to the rule that only the Solicitor General can bring actions in
criminal proceedings before the Court of Appeals or this court is "when the private offended party
questions the civil aspect of a decision of a lower court." 65 As discussed in Mobilia Products, Inc. v.
Hajime Umezawa: 66
In a criminal case in which the offended party is the State, the
interest of the private complainant or the offended party is limited to the civil
liability arising therefrom. Hence, if a criminal case is dismissed by the trial
court or if there is an acquittal, a reconsideration of the order of dismissal or
acquittal may be undertaken, whenever legally feasible, insofar as the
criminal aspect thereof is concerned and may be made only by the public
prosecutor; or in the case of an appeal, by the State only, through the OSG.
The private complainant or offended party may not undertake such motion
for reconsideration or appeal on the criminal aspect of the case. However,
the offended party or private complainant may file a motion for
reconsideration of such dismissal or acquittal or appeal therefrom but only
insofar as the civil aspect thereof is concerned. In so doing, the private
complainant or offended party need not secure the conformity of the public
prosecutor. If the court denies his motion for reconsideration, the private
complainant or offended party may appeal or file a petition
for certiorari or mandamus, if grave abuse amounting to excess or lack of
jurisdiction is shown and the aggrieved party has no right of appeal or given
an adequate remedy in the ordinary course of law. 67 (Citations omitted)
This is in consonance with the doctrine that: acEHCD
[T]he extinction of the penal action does not necessarily carry with
it the extinction of the civil action, whether the latter is instituted with or
 separately from the criminal action. The offended party may still claim civil
liability ex delicto if there is a finding in the final judgment in the criminal
action that the act or omission from which the liability may arise exists.
Jurisprudence has enumerated three instances when, notwithstanding the
accused's acquittal, the offended party may still claim civil liability ex delicto:
(a) if the acquittal is based on reasonable doubt as only preponderance of
evidence is required; (b) if the court declared that the liability of the accused
is only civil; and (c) if the civil liability of the accused does not arise from or
is not based upon the crime of which the accused is acquitted. 68
However, if the state pursues an appeal on the criminal aspect of a decision of the trial
court acquitting the accused and private complainant/s failed to reserve the right to institute a
separate civil action, the civil liability ex delicto that is inherently attached to the offense is likewise
appealed. The appeal of the civil liability ex delicto is impliedly instituted with the petition
for certiorari assailing the acquittal of the accused. Private complainant cannot anymore pursue a
separate appeal from that of the state without violating the doctrine of non-forum shopping.
On the other hand, the conclusion is different if private complainant reserved the right to
institute the civil action for the recovery of civil liability ex delicto before the Regional Trial Court or
institute a separate civil action prior to the filing of the criminal case in accordance with Rule 111 of
the Rules of Court. In these situations, the filing of an appeal as to the civil aspect of the case cannot
be considered as forum shopping. This is not the situation here.
We see no more reason to discuss the issues presented by the parties in light of the
foregoing discussion.
Entry of judgment having been made on the resolution of the court in G.R. No. 130880
involving the same parties and issues and by virtue of the doctrine of finality of judgment, we reiterate
the resolution of this court.
WHEREFORE, the resolution in G.R. No. 130880 is reiterated. We grant the petition
insofar as it prays for the setting aside of the Court of Appeals' decision dated August 11, 2005 and
resolution dated April 27, 2006 as a final decision over the assailed Regional Trial Court decision that
was rendered on November 16, 1998 in G.R. No. 130880. ESHcTD
SO ORDERED.
Velasco, Jr., * Brion, Del Castillo and Villarama, Jr., ** JJ., concur.
||| (Garcia v. Ferro Chemicals, Inc., G.R. No. 172505, [October 1, 2014], 744 PHIL 590-612)
FIRST DIVISION
[G.R. No. 207949. September 9, 2015.]
PEOPLE OF THE PHILIPPINES, plaintiff-
appellee, vs. ARMANDO DIONALDO y EBRON, RENATO DIONALDO y
EBRON, MARIANO GARIGUEZ, JR. y RAMOS, and RODOLFO LARIDO
y EBRON, accused-appellants.
RESOLUTION
PERLAS-BERNABE, J p:
On July 23, 2014, the Court rendered its Resolution 1 in this case finding accused-
appellants Armando Dionaldo y Ebron, Renato Dionaldo y Ebron (Renato), Mariano Gariguez,
Jr. y Ramos, and Rodolfo Larido y Ebron (accused-appellants) guilty beyond reasonable doubt
of the special complex crime of Kidnapping for Ransom with Homicide, the dispositive portion
of which reads:
WHEREFORE, the appeal is DISMISSED. The Decision dated
February 15, 2013 of the Court of Appeals in CA-G.R. CR-H.C. No. 02888
is hereby AFFIRMED with the MODIFICATION that all the accused-
appellants herein are equally found GUILTY of the special complex crime
of Kidnapping for Ransom with Homicide, and are sentenced to each
suffer the penalty of reclusion perpetua, without eligibility for parole, and
to pay, jointly and severally, the family of the kidnap victim Edwin Navarro
the following amounts: (1) P100,000.00 as civil indemnity; (2)
P100,000.00 as moral damages; and (3) P100,000.00 as exemplary
damages, all with interest at the rate of six percent (6%) per annum from
the date of finality of judgment until fully paid.
SO ORDERED.
Accused-appellants collectively moved for reconsideration 2 thereof, which the Court
denied with finality in its Resolution 3 dated September 24, 2014.
On even date, the Court received a letter 4 from the Bureau of Corrections dated
September 16, 2014 informing Us of the death of one of the accused-appellants in this case,
Renato, on June 10, 2014, as evidenced by the Certificate of Death 5 attached thereto. As
Renato's death transpired before the promulgation of the Court's July 23, 2014 Resolution in
this case, i.e., when his appeal before the Court was still pending resolution, his criminal liability
is totally extinguished in view of the provisions of Article 89 of the Revised Penal Code which
states: aScITE
Art. 89. How criminal liability is totally extinguished. — Criminal liability is
totally extinguished:
1. By the death of the convict, as to the personal penalties; and
as to pecuniary penalties, liability therefor is
extinguished only when the death of the offender
occurs before final judgment;
xxx xxx xxx
In People v. Amistoso, 6 the Court explained that the death of the accused pending
appeal of his conviction extinguishes his criminal liability, as well as his civil liability ex
delicto. 7 Consequently, Renato's death on June 10, 2014 renders the Court's July 23, 2014
Resolution irrelevant and ineffectual as to him, and is therefore set aside. Accordingly, the
criminal case against Renato is dismissed.
WHEREFORE, the Resolutions dated July 23, 2014 and September 24, 2014 of the
Court are hereby SET ASIDE and Criminal Case No. C-68329 before the Regional Trial Court
of Caloocan City, Branch 129 is DISMISSED insofar as accused-appellant
RENATO DIONALDO y EBRON is concerned, in view of his demise.
SO ORDERED.
Sereno, C.J., Leonardo-de Castro, Bersamin and Perez, JJ., concur.
||| (People v. Dionaldo y Ebron, G.R. No. 207949 (Resolution), [September 9, 2015])
EN BANC
[G.R. No. 48006. July 8, 1942.]
FAUSTO BARREDO, petitioner, vs. SEVERINO GARCIA and TIMOTEA
ALMARIO, respondents.
Celedonio P. Gloria and Antonio Barredo for petitioner.
Jose G. Advincula for respondents.
SYLLABUS
1. DAMAGES; QUASI-DELICT OR "CULPA AQUILIANA"; PRIMARY AND DIRECT
RESPONSIBILITY OF EMPLOYERS UNDER ARTICLES 1902-1910 OF THE CIVIL CODE. —
A head-on collision between a taxi and a carretela resulted in the death of a 16-year-old boy,
one of the passengers of the carretela. A criminal action was filed against the taxi driver and he
was convicted and sentenced accordingly. The court in the criminal case granted the petition
that the right to bring a separate civil action be reserved. Thereafter the parents of the deceased
brought suit for damages against the proprietor of the taxi, the employer of the taxi driver, under
article 1903 of the Civil Code. Defendant contended that his liability was governed by the
Revised Penal Code, according to which his responsibility was only secondary, but no civil
action had been brought against the taxi driver. Held: That this separate civil action lies, the
employer being primarily and directly responsible in damages under articles 1902 and 1903 of
the Civil Code.
2. ID.; ID.; ID. — A quasi-delict or "culpa aquiliana" is a separate legal institution
under the Civil Code, with a substantivity all its own, and individuality that is entirely apart and
independent from a delict or crime. Upon this principle, and on the wording and spirit of article
1903 of the Civil Code, the primary and direct responsibility of employers may be safely
anchored.
3. ID.; ID.; ID. — The individuality of cuasi-delito or culpa extra- contractual looms
clear and unmistakable. This legal institution is of ancient lineage, one of its early ancestors
being the Lex Aquilia in the Roman Law. In fact, in Spanish legal terminology, this responsibility
is often referred to as culpa aquiliana. The Partidas also contributed to the genealogy of the
present fault or negligence under the Civil Code: for instance, Law 6, Title 15, of Partida 7, says:
"Tenudo es de fazer emienda, porque, como quier que el non fizo a sabiendas el daño al otro,
pero acaescio por su culpa."
4. ID.; ID.; ID. — The distinctive nature of cuasi-delitos survives in the Civil Code.
According to article 1089, one of the five sources of obligations is this legal institution of cuasi-
delito or culpa extra- contractual: "los actos . . . en que intervenga cualquier genero de culpa o
negligencia." Then article 1093 provides that this kind of obligation shall be governed by Chapter
II of Title XVI of Book IV, meaning articles 1902-1910. This portion of the Civil Code is
exclusively devoted to the legal institution of culpa aquiliana.
5. ID.; ID.; ID.; DISTINCTION BETWEEN CRIMES UNDER THE PENAL CODE AND
THE "CULPA AQUILIANA" OR "CUASI-DELITO" UNDER THE CIVIL CODE. — A distinction
exists between the civil liability arising from a crime and the responsibility for cuasi-
delitos or culpa extra-contractual. The same negligent act causing damages may produce civil
liability arising from a crime under article 100 of the Revised Penal Code, or create an action for
cuasi-delito or culpa extra-contractualunder articles 1902-1910 of the Civil Code. Plaintiffs were
free to choose which remedy to enforce. Some of the differences between crimes under the
Penal Code and the culpa aquiliana or cuasi-delito under the Civil Code are enumerated in the
decision.
6. ID.; ID.; ID.; OPINIONS OF JURISTS. — The decision sets out extracts from
opinions of jurists on the separate existence of cuasi- delicts and the employer's primary and
direct liability under article 1903 of the Civil Code.
7. ID.; ID.; ID.; SENTENCES OF THE SUPREME TRIBUNAL OF SPAIN. — The
decision cites sentences of the Supreme Tribunal of Spain upholding the principles above set
forth: that a cuasi-delict or culpa extra- contractual is a separate and distinct legal institution,
independent from the civil responsibility arising from criminal liability, and that an employer is,
under article 1903 of the Civil Code, primarily and directly responsible for the negligent acts of
his employee.
8. ID.; ID.; ID.; DECISIONS OF THIS COURT. — Decisions of this Court are also
cited holding that, in this jurisdiction, the separate individuality of a cuasi-delitoor culpa
aquiliana under the Civil Code has been fully and clearly recognized, even with regard to a
negligent act for which the wrongdoer could have been prosecuted and convicted in a criminal
case and for which, after such a conviction, he could have been sued for his civil liability arising
from his crime.
9. ID.; ID.; ID.; FOUNDATIONS OF DOCTRINES ABOVE SET FORTH; LITERAL
MEANING OF THE LAW. — The Revised Penal Code punishes not only reckless but also
simple negligence; if it should be held that articles 1902-1910, Civil Code, apply only to
negligence not punishable by law, culpa aquiliana would have very little application in actual
life. The literal meaning of the law will not be used to smother a principle of such ancient origin
and such full-grown development as culpa aquiliana.
10. ID.; ID.; ID.; ID.; DEGREE OF PROOF. — There are numerous cases of criminal
negligence which can not be shown beyond reasonable doubt, but can be proved by a
preponderance of evidence. In such cases, defendant can and should be made responsible in
a civil action under articles 1902 to 1910, Civil Code. Ubi jus ibi remedium.
11. ID.; ID.; ID.; ID.; EXPEDITIOUS REMEDY. — The primary and direct
responsibility of employer under article 1903, Civil Code, is more likely to facilitate remedy for
civil wrongs. Such primary and direct responsibility of employers is calculated to protect society.
12. ID.; ID.; ID.; ID.; PRACTICE OF RELYING SOLELY ON CIVIL RESPONSIBILITY
FOR A CRIME. — The harm done by such practice is pointed out, and the principle of
responsibility for fault or negligence under articles 1902 et seq., of the Civil Code is restored to
its full vigor.
||| (Barredo v. Garcia, G.R. No. 48006, [July 8, 1942], 73 PHIL 607-621)
ECOND DIVISION
[G.R. No. 182356. December 4, 2013.]
DRA. LEILA A. DELA LLANA, petitioner, vs. REBECCA BIONG, doing
business under the name and style of Pongkay Trading,respondent.
DECISION
BRION, J p:
Every case essentially turns on two basic questions: questions of fact and questions of
law. Questions of fact are for the parties and their counsels to respond to, based on what supporting
facts the legal questions require; the court can only draw conclusion from the facts or evidence
adduced. When the facts are lacking because of the deficiency of presented evidence, then the court
can only draw one conclusion: that the case must fail for lack of evidentiary support.
The present case is one such case as Dra. Leila A. dela Llana's (petitioner) petition for
review on certiorari 1 challenging the February 11, 2008 decision 2 and the March 31, 2008
resolution 3 of the Court of Appeals (CA) in CA-G.R. CV No. 89163.
The Factual Antecedents
On March 30, 2000, at around 11:00 p.m., Juan dela Llana was driving a 1997 Toyota
Corolla car along North Avenue, Quezon City. 4 His sister, Dra. dela Llana, was seated at the front
passenger seat while a certain Calimlim was at the backseat. 5 Juan stopped the car across the
Veterans Memorial Hospital when the signal light turned red. A few seconds after the car halted, a
dump truck containing gravel and sand suddenly rammed the car's rear end, violently pushing the car
forward. Due to the impact, the car's rear end collapsed and its rear windshield was shattered. Glass
splinters flew, puncturing Dra. dela Llana. Apart from these minor wounds, Dra. dela Llana did not
appear to have suffered from any other visible physical injuries. 6 ACIEaH
The traffic investigation report dated March 30, 2000 identified the truck driver as Joel
Primero. It stated that Joel was recklessly imprudent in driving the truck. 7Joel later revealed that his
employer was respondent Rebecca Biong, doing business under the name and style of "Pongkay
Trading" and was engaged in a gravel and sand business. 8
In the first week of May 2000, Dra. dela Llana began to feel mild to moderate pain on the
left side of her neck and shoulder. The pain became more intense as days passed by. Her injury
became more severe. Her health deteriorated to the extent that she could no longer move her left
arm. On June 9, 2000, she consulted with Dr. Rosalinda Milla, a rehabilitation medicine specialist, to
examine her condition. Dr. Milla told her that she suffered from a whiplash injury, an injury caused by
the compression of the nerve running to her left arm and hand. Dr. Milla required her to undergo
physical therapy to alleviate her condition.
Dra. dela Llana's condition did not improve despite three months of extensive physical
therapy. 9 She then consulted other doctors, namely, Drs. Willie Lopez, Leonor Cabral-Lim and Eric
Flores, in search for a cure. Dr. Flores, a neuro-surgeon, finally suggested that she undergo a cervical
spine surgery to release the compression of her nerve. On October 19, 2000, Dr. Flores operated on
her spine and neck, between the C5 and the C6 vertebrae. 10 The operation released the
impingement of the nerve, but incapacitated Dra. dela Llana from the practice of her profession since
June 2000 despite the surgery. 11
Dra. dela Llana, on October 16, 2000, demanded from Rebecca compensation for her
injuries, but Rebecca refused to pay. 12 Thus, on May 8, 2001, Dra. dela Llanasued Rebecca for
damages before the Regional Trial Court of Quezon City (RTC). She alleged that she lost the mobility
of her arm as a result of the vehicular accident and claimed P150,000.00 for her medical expenses
(as of the filing of the complaint) and an average monthly income of P30,000.00 since June 2000.
She further prayed for actual, moral, and exemplary damages as well as attorney's fees. 13
In defense, Rebecca maintained that Dra. dela Llana had no cause of action against her
as no reasonable relation existed between the vehicular accident and Dra. dela Llana's injury. She
pointed out that Dra. dela Llana's illness became manifest one month and one week from the date of
the vehicular accident. As a counterclaim, she demanded the payment of attorney's fees and costs
of the suit. 14
At the trial, Dra. dela Llana presented herself as an ordinary witness 15 and Joel as a
hostile witness. 16 Dra. dela Llana reiterated that she lost the mobility of her arm because of the
vehicular accident. To prove her claim, she identified and authenticated a medical certificate dated
November 20, 2000 issued by Dr. Milla. The medical certificate stated that Dra. dela Llana suffered
from a whiplash injury. It also chronicled her clinical history and physical examinations. 17 Meanwhile,
Joel testified that his truck hit the car because the truck's brakes got stuck. 18
In defense, Rebecca testified that Dra. dela Llana was physically fit and strong when they
met several days after the vehicular accident. She also asserted that she observed the diligence of a
good father of a family in the selection and supervision of Joel. She pointed out that she required Joel
to submit a certification of good moral character as well as barangay, police, and NBI clearances prior
to his employment. She also stressed that she only hired Primero after he successfully passed the
driving skills test conducted by Alberto Marcelo, a licensed driver-mechanic. 19
Alberto also took the witness stand. He testified that he checked the truck in the morning
of March 30, 2000. He affirmed that the truck was in good condition prior to the vehicular accident.
He opined that the cause of the vehicular accident was a damaged compressor. According to him,
the absence of air inside the tank damaged the compressor. 20 cDTHIE
RTC Ruling
The RTC ruled in favor of Dra. dela Llana and held that the proximate cause of Dra.
dela Llana's whiplash injury to be Joel's reckless driving. 21 It found that a whiplash injury is an injury
caused by the sudden jerking of the spine in the neck area. It pointed out that the massive damage
the car suffered only meant that the truck was over-speeding. It maintained that Joel should have
driven at a slower pace because road visibility diminishes at night. He should have blown his horn
and warned the car that his brake was stuck and could have prevented the collision by swerving the
truck off the road. It also concluded that Joel was probably sleeping when the collision occurred as
Joel had been driving for fifteen hours on that fateful day.
The RTC further declared that Joel's negligence gave rise to the presumption that Rebecca
did not exercise the diligence of a good father of a family in Joel's selection and supervision of Joel.
Rebecca was vicariously liable because she was the employer and she personally chose him to drive
the truck. On the day of the collision, she ordered him to deliver gravel and sand to Muñoz Market,
Quezon City. The Court concluded that the three elements necessary to establish Rebecca's liability
were present: (1) that the employee was chosen by the employer, personally or through another; (2)
that the services were to be rendered in accordance with orders which the employer had the authority
to give at all times; and (3) that the illicit act of the employee was on the occasion or by reason of the
functions entrusted to him.
The RTC thus awarded Dra. dela Llana the amounts of P570,000.00 as actual damages,
P250,000.00 as moral damages, and the cost of the suit. 22
CA Ruling
In a decision dated February 11, 2008, the CA reversed the RTC ruling. It held that Dra.
dela Llana failed to establish a reasonable connection between the vehicular accident and her
whiplash injury by preponderance of evidence. Citing Nutrimix Feeds Corp. v. Court of Appeals, 23 it
declared that courts will not hesitate to rule in favor of the other party if there is no evidence or the
evidence is too slight to warrant an inference establishing the fact in issue. It noted that the interval
between the date of the collision and the date when Dra. dela Llana began to suffer the symptoms of
her illness was lengthy. It concluded that this interval raised doubts on whether Joel's reckless driving
and the resulting collision in fact caused Dra. dela Llana's injury.
 It also declared that courts cannot take judicial notice that vehicular accidents cause by way of exception, when the conflict exists in findings of the RTC and the CA. 27 We see this
whiplash injuries. It observed that Dra. dela Llana did not immediately visit a hospital to check if she exceptional situation here and thus accordingly examine the relevant evidence presented before the
sustained internal injuries after the accident. Moreover, her failure to present expert witnesses was trial court.
fatal to her claim. It also gave no weight to the medical certificate. The medical certificate did not
explain how and why the vehicular accident caused the injury. 24 Dra. dela Llana failed to establish
her case by preponderance of
The Petition evidence
Dra. dela Llana points out in her petition before this Court that Nutrimix is inapplicable in Article 2176 of the Civil Code provides that "[w]hoever by act or omission causes damage
the present case. She stresses that Nutrimix involved the application of Articles 1561 and 1566 of to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or
the Civil Code, provisions governing hidden defects. Furthermore, there was absolutely no evidence negligence, if there is no pre-existing contractual relation between the parties, is a quasi-delict." Under
in Nutrimix that showed that poisonous animal feeds were sold to the respondents in that this provision, the elements necessary to establish a quasi-delict case are: (1) damages to the
case. acIHDA plaintiff; (2) negligence, by act or omission, of the defendant or by some person for whose acts the
defendant must respond, was guilty; and (3) the connection of cause and effect between such
As opposed to the respondents in Nutrimix, Dra. dela Llana asserts that she has negligence and the damages. 28 These elements show that the source of obligation in a quasi-
established by preponderance of evidence that Joel's negligent act was the proximate cause of her delict case is the breach or omission of mutual duties that civilized society imposes upon its members,
whiplash injury. First, pictures of her damaged car show that the collision was strong. She posits that or which arise from non-contractual relations of certain members of society to others. 29 AHcDEI
it can be reasonably inferred from these pictures that the massive impact resulted in her whiplash
injury. Second, Dr. Milla categorically stated in the medical certificate that Dra. dela Llana suffered Based on these requisites, Dra. dela Llana must first establish by preponderance of
from whiplash injury. Third, her testimony that the vehicular accident caused the injury is credible evidence the three elements of quasi-delict before we determine Rebecca's liability as Joel's
because she was a surgeon. employer. She should show the chain of causation between Joel's reckless driving and her whiplash
injury. Only after she has laid this foundation can the presumption — that Rebecca did not exercise
Dra. dela Llana further asserts that the medical certificate has probative value. Citing the diligence of a good father of a family in the selection and supervision of Joel — arise. 30 Once
several cases, she posits that an uncorroborated medical certificate is credible if negligence, the damages and the proximate causation are established, this Court can then proceed
uncontroverted. 25 She points out that expert opinion is unnecessary if the opinion merely relates to with the application and the interpretation of the fifth paragraph of Article 2180 of the Civil
matters of common knowledge. She maintains that a judge is qualified as an expert to determine the Code. 31 Under Article 2176 of the Civil Code, in relation with the fifth paragraph of Article 2180, "an
causation between Joel's reckless driving and her whiplash injury. Trial judges are aware of the fact action predicated on an employee's act or omission may be instituted against the employer who is
that whiplash injuries are common in vehicular collisions. held liable for the negligent act or omission committed by his employee." 32 The rationale for these
graduated levels of analyses is that it is essentially the wrongful or negligent act or omission itself
The Respondent's Position which creates the vinculum juris in extra-contractual obligations. 33
In her Comment, 26 Rebecca points out that Dra. dela Llana raises a factual issue which
In civil cases, a party who alleges a fact has the burden of proving it. He who alleges has
is beyond the scope of a petition for review on certiorari under Rule 45 of the Rules of Court. She
the burden of proving his allegation by preponderance of evidence or greater weight of
maintains that the CA's findings of fact are final and conclusive. Moreover, she stresses that Dra.
credible evidence. 34 The reason for this rule is that bare allegations, unsubstantiated by evidence,
dela Llana's arguments are not substantial to merit this Court's consideration.
are not equivalent to proof. In short, mere allegations are not evidence. 35
The Issue
In the present case, the burden of proving the proximate causation between Joel's
The sole issue for our consideration in this case is whether Joel's reckless driving is the negligence and Dra. dela Llana's whiplash injury rests on Dra. dela Llana. She must establish by
proximate cause of Dra. dela Llana's whiplash injury. preponderance of evidence that Joel's negligence, in its natural and continuous sequence, unbroken
by any efficient intervening cause, produced her whiplash injury, and without which her whiplash
Our Ruling injury would not have occurred. 36
We find the petition unmeritorious. Notably, Dra. dela Llana anchors her claim mainly on three pieces of evidence: (1) the
pictures of her damaged car, (2) the medical certificate dated November 20, 2000, and (3) her
The Supreme Court may review
testimonial evidence. However, none of these pieces of evidence show the causal relation between
questions of fact in a petition for
the vehicular accident and the whiplash injury. In other words, Dra. dela Llana, during trial, did not
review on certiorari when the
adduce the factum probans or the evidentiary facts by which the factum probandum or the
findings of fact by the lower courts
ultimate fact can be established, as fully discussed below. 37
are conflicting
The issue before us involves a question of fact and this Court is not a trier of facts. As a A. The pictures of the
general rule, the CA's findings of fact are final and conclusive and this Court will not review them on damaged car only
appeal. It is not the function of this Court to examine, review or evaluate the evidence in a petition for demonstrate the impact of
review on certiorari under Rule 45 of the Rules of Court. We can only review the presented evidence, the collision
 Dra. dela Llana contends that the pictures of the damaged car show that the massive This is the medical certificate that Dra. Milla made out for me.
impact of the collision caused her whiplash injury. We are not persuaded by this bare claim. Her
insistence that these pictures show the causation grossly belies common logic. These pictures indeed Atty. Yusingco:
demonstrate the impact of the collision. However, it is a far-fetched assumption that the whiplash
injury can also be inferred from these pictures. HaIATC Your Honor, this has been marked as Exhibit H.

B. The medical certificate Atty. Yusingco:

cannot be considered
because it was not admitted What other medical services were done on you, Dra. dela Llana, as a result
in evidence of that feeling, that pain that you felt in your left arm?

Furthermore, the medical certificate, marked as Exhibit "H" during trial, should not be Witness:
considered in resolving this case for the reason that it was not admitted in evidence by the RTC in an
Well, aside from the medications and physical therapy, a re-evaluation of my
order dated September 23, 2004. 38 Thus, the CA erred in even considering this documentary
condition after three months indicated that I needed
evidence in its resolution of the case. It is a basic rule that evidence which has not been admitted
surgery. ISHCcT
cannot be validly considered by the courts in arriving at their judgments.
Atty. Yusingco:
However, even if we consider the medical certificate in the disposition of this case, the
medical certificate has no probative value for being hearsay. It is a basic rule that evidence, whether Did you undergo this surgery?
oral or documentary, is hearsay if its probative value is not based on the personal knowledge of the
witness but on the knowledge of another person who is not on the witness stand. 39 Hearsay Witness:
evidence, whether objected to or not, cannot be given credence 40 except in very unusual
circumstance that is not found in the present case. Furthermore, admissibility of evidence should not So, on October 19, I underwent surgery on my neck, on my spine.
be equated with weight of evidence. The admissibility of evidence depends on its relevance and
competence, while the weight of evidence pertains to evidence already admitted and its tendency to Atty. Yusingco:
convince and persuade. Thus, a particular item of evidence may be admissible, but its evidentiary
weight depends on judicial evaluation within the guidelines provided by the Rules of Court. 41 And, what was the result of that surgical operation?

During trial, Dra. dela Llana testified: Witness:

"Q: Did your physician tell you, more or less, what was the reason why you
were feeling that pain in your left arm?
A: Well, I got a certificate from her and in that certificate, she stated
that my condition was due to a compression of the nerve,
which supplied my left arm and my left hand.
Court:
Well, the operation was to relieve the compression on my nerve, which did
not resolve by the extensive and prolonged physical therapy that
I underwent for more than three months." 42 (emphasis ours)
Evidently, it was Dr. Milla who had personal knowledge of the contents of the medical certificate.
However, she was not presented to testify in court and was not even able to identify and affirm
the contents of the medical certificate. Furthermore, Rebecca was deprived of the opportunity
to cross-examine Dr. Milla on the accuracy and veracity of her findings.

By the way, what is the name of this physician, Dra.? We also point out in this respect that the medical certificate nonetheless did not explain
the chain of causation in fact between Joel's reckless driving and Dra. delaLlana's whiplash injury. It
Witness: did not categorically state that the whiplash injury was a result of the vehicular accident. A perusal of
the medical certificate shows that it only attested to her medical condition, i.e., that she was suffering
Her name is Dra. Rosalinda Milla. She is a Rehabilitation Medicine from whiplash injury. However, the medical certificate failed to substantially relate the vehicular
Specialist. accident to Dra. dela Llana's whiplash injury. Rather, the medical certificate only chronicled her
medical history and physical examinations.
Atty. Yusingco:
C. Dra. dela Llana's opinion
You mentioned that this Dra. Rosalinda Milla made or issued a medical that Joel's negligence
certificate. What relation does this medical certificate, caused her whiplash injury
marked as Exhibit H have to do with that certificate, you said has no probative value
was made by Dra. Milla?

Witness:
 Interestingly, the present case is peculiar in the sense that Dra. dela Llana, as the plaintiff
in this quasi-delict case, was the lone physician-witness during trial. Significantly, she merely testified
as an ordinary witness before the trial court. Dra. dela Llana essentially claimed in her testimony
that Joel's reckless driving caused her whiplash injury.
Despite the fact that Dra. dela Llana is a physician and even assuming that she is an
expert in neurology, we cannot give weight to her opinion that Joel's reckless driving caused her
whiplash injury without violating the rules on evidence.
Under the Rules of Court, there is a substantial difference between an ordinary witness
and an expert witness. The opinion of an ordinary witness may be received in evidence
regarding: (a) the identity of a person about whom he has adequate knowledge; (b) a handwriting
with which he has sufficient familiarity; and (c)the mental sanity of a person with whom he is
sufficiently acquainted. Furthermore, the witness may also testify on his impressions of the emotion,
behavior, condition or appearance of a person. 43 On the other hand, the opinion of an expert witness
may be received in evidence on a matter requiring special knowledge, skill, experience or training
which he shown to possess. 44
However, courts do not immediately accord probative value to an admitted expert
testimony, much less to an unobjected ordinary testimony respecting special knowledge. The reason
is that the probative value of an expert testimony does not lie in a simple exposition of the expert's
opinion. Rather, its weight lies in the assistance that the expert witness may afford the courts by
demonstrating the facts which serve as a basis for his opinion and the reasons on which the logic of
his conclusions is founded. 45
In the present case, Dra. dela Llana's medical opinion cannot be given probative value for
the reason that she was not presented as an expert witness. As an ordinary witness, she was not
competent to testify on the nature, and the cause and effects of whiplash injury. Furthermore, we
emphasize that Dra. dela Llana, during trial, nonetheless did not provide a medical explanation on
the nature as well as the cause and effects of whiplash injury in her testimony.
The Supreme Court cannot take
judicial notice that vehicular
accidents cause whiplash injuries
Indeed, a perusal of the pieces of evidence presented by the parties before the trial court
shows that Dra. dela Llana did not present any testimonial or documentary evidence that
directly shows the causal relation between the vehicular accident and Dra. dela Llana's injury.
Her claim that Joel's negligence caused her whiplash injury was not established because of the
deficiency of the presented evidence during trial. We point out in this respect that courts cannot take
judicial notice that vehicular accidents cause whiplash injuries. This proposition is not public
knowledge, or is capable of unquestionable demonstration, or ought to be known to judges because
of their judicial functions. 46 We have no expertise in the field of medicine. Justices and judges are
only tasked to apply and interpret the law on the basis of the parties' pieces of evidence and their
corresponding legal arguments. ITSaHC
In sum, Dra. dela Llana miserably failed to establish her case by preponderance of
evidence. While we commiserate with her, our solemn duty to independently and impartially assess
the merits of the case binds us to rule against Dra. dela Llana's favor. Her claim, unsupported by
preponderance of evidence, is merely a bare assertion and has no leg to stand on.
WHEREFORE, premises considered, the assailed Decision dated February 11, 2008 and
Resolution dated March 31, 2008 of the Court of Appeals are herebyAFFIRMED and the petition is
hereby DENIED for lack of merit.
SO ORDERED.
Carpio, Del Castillo, Perez and Perla-Bernabe, JJ., concur.
||| (Dela Llana v. Biong, G.R. No. 182356, [December 4, 2013], 722 PHIL 743-763)
SECOND DIVISION
[G.R. No. 193577. September 7, 2011.]
ANTONIO FRANCISCO, substituted by his heirs: NELIA
E.S. FRANCISCO, EMILIA F. BERTIZ, REBECCA E.S. FRANCISCO,
ANTONIO E.S. FRANCISCO, JR., SOCORRO F. FONTANILLA, and
JOVITO E.S. FRANCISCO, petitioners, vs. CHEMICAL BULK
CARRIERS, INCORPORATED, respondent.
DECISION
CARPIO, J p:
The Case
This is a petition for review 1 of the 31 May 2010 Decision 2 and 31 August 2010
Resolution 3 of the Court of Appeals in CA G.R. CV No. 63591. In its 31 May 2010 Decision,
the Court of Appeals set aside the 21 August 1998 Decision 4 of the Regional Trial of Pasig
City, Branch 71 (trial court), and ordered petitioner AntonioFrancisco (Francisco) to pay
respondent Chemical Bulk Carriers, Incorporated (CBCI) P1,119,905 as actual damages. In its
31 August 2010 Resolution, the Court of Appeals denied Francisco's motion for
reconsideration. DHSCEc
The Facts
Since 1965, Francisco was the owner and manager of a Caltex station in Teresa,
Rizal. Sometime in March 1993, four persons, including Gregorio Bacsa (Bacsa), came
to Francisco's Caltex station and introduced themselves as employees of CBCI. Bacsa offered
to sell to Francisco a certain quantity of CBCI's diesel fuel.
After checking Bacsa's identification card, Francisco agreed to purchase CBCI's
diesel fuel. Francisco imposed the following conditions for the purchase: (1) that Petron
Corporation (Petron) should deliver the diesel fuel to Francisco at his business address which
should be properly indicated in Petron's invoice; (2) that the delivery tank is sealed; and (3) that
Bacsa should issue a separate receipt to Francisco.
The deliveries started on 5 April 1993 and lasted for ten months, or up to 25 January
1994. 5 There were 17 deliveries to Francisco and all his conditions were complied with.
In February 1996, CBCI sent a demand letter to Francisco regarding the diesel fuel
delivered to him but which had been paid for by CBCI. 6 CBCI demanded thatFrancisco pay
CBCI P1,053,527 for the diesel fuel or CBCI would file a complaint against him in
court. Francisco rejected CBCI's demand.
On 16 April 1996, CBCI filed a complaint for sum of money and damages
against Francisco and other unnamed defendants. 7 According to CBCI, Petron, on various
dates, sold diesel fuel to CBCI but these were delivered to and received
by Francisco. Francisco then sold the diesel fuel to third persons from whom he received
payment. CBCI alleged that Francisco acquired possession of the diesel fuel without authority
from CBCI and deprived CBCI of the use of the diesel fuel it had paid for. CBCI demanded
payment from Francisco but he refused to pay. CBCI argued that Francisco should have known
that since only Petron, Shell and Caltex are authorized to sell and distribute petroleum products
in the Philippines, the diesel fuel came from illegitimate, if not illegal or criminal, acts. CBCI
asserted thatFrancisco violated Articles 19, 8 20, 9 21, 10 and 22 11 of the Civil Code and that
he should be held liable. In the alternative, CBCI claimed that Francisco, in receiving CBCI's
diesel fuel, entered into an innominate contract of do ut des (I give and you give) with CBCI for
which Francisco is obligated to pay CBCI P1,119,905, the value of the diesel fuel. CBCI also
prayed for exemplary damages, attorney's fees and other expenses of litigation.
On 20 May 1996, Francisco filed a Motion to Dismiss on the ground of forum
shopping. 12 CBCI filed its Opposition. 13 In an Order dated 15 November 1996, the trial court
denied Francisco's motion. 14
Thereafter, Francisco filed his Answer. 15 Francisco explained that he operates the
Caltex station with the help of his family because, in February 1978, he completely lost his
eyesight due to sickness. Francisco claimed that he asked Jovito, his son, to look into and verify
the identity of Bacsa, who introduced himself as a radio operator and confidential secretary of
a certain Mr. Inawat (Inawat), CBCI's manager for operations. Francisco said he was satisfied
with the proof presented by Bacsa. When asked to explain why CBCI was selling its fuel, Bacsa
allegedly replied that CBCI was in immediate need of cash for the salary of its daily paid workers
and for petty cash. Francisco maintained that Bacsa assured him that the diesel fuel was not
stolen property and that CBCI enjoyed a big credit line with Petron.Francisco agreed to
purchase the diesel fuel offered by Bacsa on the following conditions:
1) Defendant [Francisco] will not accept any delivery if it is not
company (Petron) delivered, with his name and address as shipping point
properly printed and indicated in the invoice of Petron, and that the product
on the delivery tank is sealed; [and]
2) Although the original invoice is sufficient evidence of delivery
and payment, under ordinary course of business, defendant still required Mr.
Bacsa to issue a separate receipt duly signed by him acknowledging receipt
of the amount stated in the invoice, for and in behalf of CBCI. 16
During the first delivery on 5 April 1993, Francisco asked one of his sons to verify
whether the delivery truck's tank was properly sealed and whether Petron issued the
invoice. Francisco said all his conditions were complied with. There were 17 deliveries made
from 5 April 1993 to 25 January 1994 and each delivery was for 10,000 liters of diesel fuel at
P65,865. 17 Francisco maintained that he acquired the diesel fuel in good faith and for
value. Francisco also filed a counterclaim for exemplary damages, moral damages and
attorney's fees. aCITEH
In its 21 August 1998 Decision, the trial court ruled in Francisco's favor and
dismissed CBCI's complaint. The dispositive portion of the trial court's 21 August 1998 Decision
reads:
WHEREFORE, Judgment is hereby rendered:
1. Dismissing the complaint dated March 13, 1996 with costs.
2. Ordering plaintiff (CBCI), on the counterclaim, to pay defendant
the amount of P100,000.00 as moral damages and
P50,000.00 as and by way of attorney's fees.
SO ORDERED. 18
CBCI appealed to the Court of Appeals. 19 CBCI argued that Francisco acquired the
diesel fuel from Petron without legal ground because Bacsa was not authorized to deliver and
sell CBCI's diesel fuel. CBCI added that Francisco acted in bad faith because he should have
inquired further whether Bacsa's sale of CBCI's diesel fuel was legitimate.
In its 31 May 2010 Decision, the Court of Appeals set aside the trial court's 21 August
1998 Decision and ruled in CBCI's favor. The dispositive portion of the Court of Appeals' 31 May
2010 Decision reads:
IN VIEW OF THE FOREGOING, the assailed decision is hereby
REVERSED and SET ASIDE. Antonio Francisco is ordered to
pay Chemical Bulk Carriers, Incorporated the amount of P1,119,905.00 as
actual damages.
SO ORDERED. 20
On 15 January 2001, Francisco died. 21 Francisco's heirs, namely: Nelia
E.S. Francisco, Emilia F. Bertiz, Rebecca E.S. Francisco, Antonio E.S. Francisco, Jr., Socorro
F. Fontanilla, and Jovito E.S. Francisco (heirs of Francisco) filed a motion for
substitution. 22 The heirs of Francisco also filed a motion for reconsideration. 23 In its 31
August 2010 Resolution, the Court of Appeals granted the motion for substitution but denied the
motion for reconsideration.
Hence, this petition.
The Ruling of the Trial Court
The trial court ruled that Francisco was not liable for damages in favor of CBCI
because the 17 deliveries were covered by original and genuine invoices. The trial court
declared that Bacsa, as confidential secretary of Inawat, was CBCI's authorized representative
who received Francisco's full payment for the diesel fuel. The trial court stated that if Bacsa was
not authorized, CBCI should have sued Bacsa and not Francisco. The trial court also
considered Francisco a buyer in good faith who paid in full for the merchandise without notice
that some other person had a right to or interest in such diesel fuel. The trial court pointed out
that good faith affords protection to a purchaser for value. Finally, since CBCI was bound by the
acts of Bacsa, the trial court ruled that CBCI is liable to pay damages to Francisco.
The Ruling of the Court of Appeals
The Court of Appeals set aside the trial court's 21 August 1998 Decision and ruled
that Bacsa's act of selling the diesel fuel to Francisco was his personal act and, even if Bacsa
connived with Inawat, the sale does not bind CBCI.
The Court of Appeals declared that since Francisco had been in the business of
selling petroleum products for a considerable number of years, his blindness was not a
hindrance for him to transact business with other people. With his condition and
experience, Francisco should have verified whether CBCI was indeed selling diesel fuel and if
it had given Bacsa authority to do so. Moreover, the Court of Appeals stated
that Francisco cannot feign good faith since he had doubts as to the authority of Bacsa yet he
did not seek confirmation from CBCI and contented himself with an improvised
receipt. Francisco's failure to verify Bacsa's authority showed that he had an ulterior motive. The
receipts issued by Bacsa also showed his lack of authority because it was on a plain sheet of
bond paper with no letterhead or any indication that it came from CBCI. The Court of Appeals
ruled that Francisco cannot invoke estoppel because he was at fault for choosing to ignore the
tell-tale signs of petroleum diversion and for not exercising prudence. CTIDcA
The Court of Appeals also ruled that CBCI was unlawfully deprived of the diesel fuel
which, as indicated in the invoices, CBCI had already paid for. Therefore, CBCI had the right to
recover the diesel fuel or its value from Francisco. Since the diesel fuel can no longer be
returned, the Court of Appeals ordered Francisco to give back the actual amount paid by CBCI
for the diesel fuel.
The Issues
The heirs of Francisco raise the following issues:
I. WHETHER THE COURT OF APPEALS ERRED IN NOT FINDING THAT
DEFENDANT ANTONIO FRANCISCO EXERCISED THE
REQUIRED DILIGENCE OF A BLIND PERSON IN THE
CONDUCT OF HIS BUSINESS; and
II. WHETHER ON THE BASIS OF THE FACTUAL FINDINGS OF THE
COURT OF APPEALS AND THE TRIAL COURT AND
ADMITTED FACTS, IT CAN BE CONCLUDED THAT THE
PLAINTIFF APPROVED EXPRESSLY OR TACITLY THE
TRANSACTIONS. 24
The Ruling of the Court
The petition has no merit.
Required Diligence of a Blind Person
The heirs of Francisco argue that the Court of Appeals erred when it ruled
that Francisco was liable to CBCI because he failed to exercise the diligence of a good father
of a family when he bought the diesel fuel. They argue that since Francisco was blind, the
standard of conduct that was required of him was that of a reasonable person under like
disability. Moreover, they insist that Francisco exercised due care in purchasing the diesel fuel
by doing the following: (1) Franciscoasked his son to check the identity of Bacsa;
(2) Francisco required direct delivery from Petron; (3) Francisco required that he be named as
the consignee in the invoice; and (4) Francisco required separate receipts from Bacsa to
evidence actual payment.
Standard of conduct is the level of expected conduct that is required by the nature of
the obligation and corresponding to the circumstances of the person, time and place. 25 The
most common standard of conduct is that of a good father of a family or that of a reasonably
prudent person. 26 To determine the diligence which must be required of all persons, we use
as basis the abstract average standard corresponding to a normal orderly person. 27
However, one who is physically disabled is required to use the same degree of care
that a reasonably careful person who has the same physical disability would use. 28 Physical
handicaps and infirmities, such as blindness or deafness, are treated as part of the
circumstances under which a reasonable person must act. Thus, the standard of conduct for a
blind person becomes that of a reasonable person who is blind.
We note that Francisco, despite being blind, had been managing and operating the
Caltex station for 15 years and this was not a hindrance for him to transact business until this
time. In this instance, however, we rule that Francisco failed to exercise the standard of conduct
expected of a reasonable person who is blind. First, Francisco merely relied on the identification
card of Bacsa to determine if he was authorized by CBCI. Francisco did not do any other
background check on the identity and authority of Bacsa. Second, Francisco already expressed
his misgivings about the diesel fuel, fearing that they might be stolen property, 29 yet he did not
verify with CBCI the authority of Bacsa to sell the diesel fuel. Third, Francisco relied on the
receipts issued by Bacsa which were typewritten on a half sheet of plain bond
paper. 30 If Francisco exercised reasonable diligence, he should have asked for an official
receipt issued by CBCI. Fourth, the delivery to Francisco, as indicated in Petron's invoice, does
not show that CBCI authorized Bacsa to sell the diesel fuel to Francisco.
Clearly, Francisco failed to exercise the standard of conduct expected of a reasonable person
who is blind.
Express or Tacit Approval of the Transaction
The heirs of Francisco argue that CBCI approved expressly or tacitly the
transactions. According to them, there was apparent authority for Bacsa to enter into the
transactions. They argue that even if the agent has exceeded his authority, the principal is
solidarily liable with the agent if the former allowed the later to act as though he had full
powers. 31 They insist CBCI was not unlawfully deprived of its property because Inawat gave
Bacsa the authority to sell the diesel fuel and that CBCI is bound by such action. Lastly, they
argue that CBCI should be considered in estoppel for failure to act during the ten month period
that deliveries were being made to Francisco. ACDIcS
The general principle is that a seller without title cannot transfer a better title than he
has. 32 Only the owner of the goods or one authorized by the owner to sell can transfer title to
the buyer. 33 Therefore, a person can sell only what he owns or is authorized to sell and the
buyer can, as a consequence, acquire no more than what the seller can legally transfer. 34
Moreover, the owner of the goods who has been unlawfully deprived of it may recover
it even from a purchaser in good faith. 35 Thus, the purchaser of property which has been stolen
from the owner has been held to acquire no title to it even though he purchased for value and
in good faith.
The exception from the general principle is the doctrine of estoppel where the owner
of the goods is precluded from denying the seller's authority to sell. 36But in order that there
may be estoppel, the owner must, by word or conduct, have caused or allowed it to appear that
title or authority to sell is with the seller and the buyer must have been misled to his damage. 37
In this case, it is clear that Bacsa was not the owner of the diesel fuel. Francisco was
aware of this but he claimed that Bacsa was authorized by CBCI to sell the diesel fuel.
However, Francisco's claim that Bacsa was authorized is not supported by any evidence except
his self-serving testimony. First, Francisco did not even confirm with CBCI if it was indeed selling
its diesel fuel since it is not one of the oil companies known in the market to be selling petroleum
products. This fact alone should have put Francisco on guard. Second, it does not appear that
CBCI, by some direct and equivocal act, has clothed Bacsa with the indicia of ownership or
apparent authority to sell CBCI's diesel fuel. Francisco did not state if the identification card
presented by Bacsa indicated that he was CBCI's agent or a mere employee. Third, the receipt
issued by Bacsa was typewritten on a half sheet of plain bond paper. There was no letterhead
 or any indication that it came from CBCI. We agree with the Court of Appeals that this was a
personal receipt issued by Bacsa and not an official receipt issued by CBCI. Consequently,
CBCI is not precluded by its conduct from denying Bacsa's authority to sell. CBCI did not hold
out Bacsa or allow Bacsa to appear as the owner or one with apparent authority to dispose of
the diesel fuel.
Clearly, Bacsa cannot transfer title to Francisco as Bacsa was not the owner of the
diesel fuel nor was he authorized by CBCI to sell its diesel fuel. CBCI did not commit any act to
clothe Bacsa with apparent authority to sell the diesel fuel that would have
misled Francisco. Francisco, therefore, did not acquire any title over the diesel fuel. Since CBCI
was unlawfully deprived of its property, it may recover from Francisco, even if Francisco pleads
good faith.
WHEREFORE, we DENY the petition. We AFFIRM the 31 May 2010 Decision and
31 August 2010 Resolution of the Court of Appeals.
SO ORDERED.
Brion, Peralta, * Perez and Mendoza, ** JJ., concur.
||| (Francisco v. Chemical Bulk Carriers, Inc., G.R. No. 193577, [September 7, 2011], 672 PHIL 795-
806)
FIRST DIVISION
[G.R. No. 14335. January 28, 1920.]
MANUEL DE GUIA, plaintiff-appellant, vs. THE MANILA ELECTIC
RAILROAD & LIGHT COMPANY, defendant-appellant.
Sumulong & Estrada, Crossfield & O'Brien and Francisco A. Delgado for plaintiff-
appellant.
Lawrence & Ross for defendant-appellant.
SYLLABUS
1. CONTRACTS; NEGLIGENT PERFORMANCE; POWER OF COURT TO
MODERATE LIABILITY. — In determining the extent of liability for losses or damages resulting
from negligence in the fulfillment of a contractual obligation the courts have a discretionary
power to moderate liability according to the circumstances.
2. CARRIERS; CARRIAGE OF PASSENGERS FOR HIRE; CONTRACTUAL
OBLIGATION OF CARRIER. — The obligation assumed by a street-railway company, engaged
in the transportation of passengers for hire, towards a person who embarks for conveyance in
one of its coaches, is of a contractual nature; and the company is bound to convey its
passengers safely and securely with reference to the degree of care required by law and custom
applicable to the case.
3. ID., ID.; ID.; LIABILITY OF CARRIER FOR NEGLIGENCE OF EMPLOYEE. —
Upon failure to comply with this obligation the carrier incurs the liability commonly incident to
the breach of contractual obligations; and where the delinquency is due to the negligence if its
employee, the carrier cannot avail itself of the defense that it had exercised due care in the
selection and instruction of such employee and that he was in fact an experienced and reliable
servant.
4. ID.; ID.; ID.; EXTENT OF CARRIER S LIABILITY FOR LOSSES AND DAMAGES;
GOOD FAITH. — A street-railway company which has exercised due care in the selection and
instruction of the motorman upon one of its cars should be considered a debtor in good faith as
regards liability towards a passenger who is injured by the negligence of the motorman in
directing the car; and the liability of the carrier to the injured party extends to such losses and
damages only as could be reasonably foreseen as a probable consequence of the physical
injuries inflicted upon the passenger and which are in fact a necessary result of those injuries.
5. PHYSICAL INJURIES; DAMAGES; EXPENSES OF MEDICAL SERVICE. — A
person who is entitled to recover expenses of cure as an item of damage in a civil action for
physical injuries cannot recover doctor's bills for services gratuitously rendered; and the claim
must furthermore be limited to medical services reasonably suited to the case. Charges of
professional experts retained merely with a view to promote the success of the action for
damages should not be allowed.
DECISION
STREET, J p:
This is an appeal prosecuted both by the plaintiff and the defendant from a
judgment of the Court of First Instance of the City of Manila, whereby the plaintiff was awarded
the sum of P6,100, with interest and costs, as damages incurred by him in consequence of
physical injuries sustained while riding on one of the defendant's car.
The accident which gave rise to the litigation occurred on September 4, 1915, near
the end of the street-car line in Caloocan, Rizal, a northern suburb of the city of Manila. It
appears that, at about 8 o'clock p. m., of the date mentioned, the plaintiff Manuel de Guia, a
physician residing in Caloocan, boarded a car at the end of the line with the intention of
coming to the city. At about 30 meters from the starting point the car entered a switch, the
plaintiff remaining on the back platform holding the handle of the right-hand door. Upon
coming out of the switch, the small wheels of the rear truck left the track, ran for a short
distance along the macadam filling, which was flush with the rails, and struck a concrete post
at the left of the track. The post was shattered; and as the car stopped the plaintiff was thrown
against the door with some violence, receiving bruises and possibly certain internal injuries,
the extent of which is a subject of dispute.
The trial court found that the motorman of the derailed car was negligent in having
maintained too rapid a speed. This inference appears to be based chiefly upon the results of
the shock, involving the shattering of the post and the bending of the kingpost of the car. It is
insisted for the defendant company that the derailment was due to the presence of a stone,
somewhat larger than a goose egg, which had become accidentally lodged between the rails
at the juncture of the switch and which was unobserved by the motorman. In this view the
derailment of the car is supposed to be due to casus fortuitos and not chargeable to the
negligence of the motorman.
Even supposing that the derailment of the car was due to the accidental presence
of such a stone as suggested, we do not think that the existence of negligence is disproved.
The motorman says that upon approaching the switch he reduced the electrical energy to the
point that the car barely entered the switch under its own momentum, and this operation was
repeated as he passed out. Upon getting again on the straight track he put the control
successively at points one, two, three and lastly at point four. At the moment when the control
was placed at point four he perceived that the rear wheels were derailed and applied the
brake; but at the same instant the car struck the post, some 40 meters distant from the exit of
the switch. One of the defendant's witnesses stated in court that the rate of a car propelled by
electricity with the control at point "four" should be about five or 6 miles per hour. There was
some other evidence to the effect that the car was behind schedule time and that it was being
driven, after leaving the switch, at a higher I ate than would ordinarily be indicated by the
control at point four. This inference is rendered more tenable by the circumstance that the car
was practically empty. On the whole, we are of the opinion that the finding of negligence in the
operation of the car must be sustained, as not being clearly contrary to the evidence; not so
much because of excessive speed as because of the distance which the car was allowed to
run with the front wheels of the rear truck derailed. It seems to us that an experienced and
attentive motorman should have discovered that something was wrong and would have
stopped before he had driven the car over the entire distance from the point where the wheels
left the track to the place where the post was struck.
The conclusion being accepted that there was negligence on the part of the
motorman in driving the car, it results that the company is liable for the damage resulting to
the plaintiff as a consequence of that negligence. The plaintiff had boarded the car as a
passenger for the city of Manila and the company undertook to convey him for hire. The
relation between the parties was, therefore, of a contractual nature, and the duty of the carrier
is to be determined with reference to the principles of contract law, that is, the company was
bound to convey and deliver the plaintiff safely and securely with reference to the degree of
care which, under the circumstances, is required by law and custom applicable to the case
(art. 1258, Civil Code). Upon failure to comply with that obligation the company incurred the
liability defined in articles 1103-1107 of the Civil Code. (Cangco vs. Manila Railroad Company,
38 Phil. Rep., 768; Manila Railroad Company vs. Compañia Trasatlantica, and Atlantic, Gulf &
Pacific Co., 38 Phil. Rep., 875.)
From the nature of the liability thus incurred, it is clear that the defendant company
can not avail itself of the last paragraph of article 1903 of the Civil Code, since that provision
has reference to liability incurred by negligence in the absence of contractual relation, that is,
to the culpa aquiliana of the civil law. It was therefore irrelevant for the defendant company to
prove, as it did, that the company had exercised due care in the selection and instruction of
the motorman who was in charge of its car and that he was in fact an experienced and reliable
servant.
At this point, however, it should be observed that although in case like this the
defendant must answer for the consequences of the negligence of its employee, the court has
the power to moderate liability according to the circumstances of the case (art. 1103, Civ.
Code) . Furthermore, we think it obvious that an employer who has in fact displayed due
diligence in choosing and instructing his servants is entitled to be considered a debtor in good
faith, within the meaning of article 1107 of the same Code. Construing these two provisions
together, and applying them to the facts of this case, it results that the defendant's liability is
limited to such damages as might, at the time of the accident, have been reasonably foreseen
as a probable consequence of the physical injuries inflicted upon the plaintiff and which were
in fact a necessary result of those injuries. There is nothing novel in this proposition, since
both the civil and the common law are agreed upon the point that the damages ordinarily
recoverable for the breach of a contractual obligation, against a person who has acted in good
faith, are such as can reasonably be foreseen at the time the obligation is contracted. In
Daywalt vs. Corporacion de PP. Agustinos Recoletos (39 Phil., 687), we said: "The extent of
the liability for the breach of a contract must be determined in the light of the situation in
existence at the time the contract is made; and the damages ordinarily recoverable are in all
events limited to such as might be reasonably foreseen in the light of the facts then known to
the contracting parties."
This brings us to consider the amount which may be awarded to the plaintiff as
damages. Upon this point the trial judge found that, as a result of the physical and nervous
derangement resulting from the accident, Dr. De Guia was unable properly to attend to his
professional labors for three months and suspended his practice for that period. It was also
proved by the testimony of the plaintiff that his customary income, as a physician, was about
P300 per month. The trial judge accordingly allowed P900, as damages for loss of
professional earnings. This allowance is attacked upon appeal by the defendant as excessive
both as to the period and rate of allowance. Upon examining the evidence we fell disinclined
to disturb this part of the judgment, though it must be conceded that the estimate of the trial
judge on this point was liberal enough to the plaintiff.
Another item allowed by the trial judge consists of P3,900, which the plaintiff is
supposed to have lost by reason of his inability to accept a position as district health officer in
Occidental Negros. It appears in this connection that Mr. Alunan, representative from
Occidental Negros, had asked Dr. Montinola, who supposedly had the authority to make the
appointment, to nominate the plaintiff to such position. The job was supposed to be good for
two years, with a salary of P1,600 per annum, and possibility of outside practice worth P350.
Accepting these suggestions as true, it is evident that the damages thus incurred are too
speculative to be the basis of recovery in a civil action. This element of damages must
therefore be eliminated. It goes without saying that damage of this character could not, at. the
time of the accident, have been foreseen by the delinquent party as a probable consequence
of the injury inflicted — a circumstance which makes applicable article 1107 of the Civil Code,
as already expounded.
The last element of damages to be considered is the item of the plaintiff's doctor's
bills, a subject which we momentarily pass for discussion further on, since the controversy on
this point can be more readily understood in connection with the question raised by the
plaintiff's appeal.
The plaintiff alleges in the complaint that the damages incurred by him as a result
of the injuries in question ascend to the amount of P40,000. Of this amount the sum of
P10,000 is supposed to represent the cost of medical treatment and other expenses incident
to the plaintiff's cure, while the remainder (P30,000) represents the damage resulting from the
character of his injuries, which are supposedly such as to incapacitate him for the exercise of
the medical profession in the future. In support of these claims the plaintiff introduced
evidence, consisting of his own testimony and that of numerous medical experts, tending to
show that as a result of the injuries in question he had developed infarct of the liver and
traumatic neurosis, accompanied by nervousness, vertigo, and other disturbing symptoms of a
serious and permanent character, it being claimed that these manifestations of disorder
rendered him liable to a host of other dangerous diseases, such as pleuresy, tuberculosis,
pneumonia, and pulmonary gangrene, and that restoration to health could only be
accomplished, if at all, after long years of complete repose. The trial judge did not take these
pretensions very seriously, and, as already stated, limited the damages to the three items of
professional earnings, expenses of medical treatment, and the loss of the appointment as
medical inspector in Occidental Negros. As the appeal of the plaintiff opens the whole case
upon the question of damages, it is desirable to present a somewhat fuller statement than that
already given with respect to extent and character of the injuries in question.
 The plaintiff testified that, at the time the car struck against the concrete post, he
was standing on the rear platform, grasping the handle of the right-hand door. The shock of
the impact threw him forward, and the left part of his chest struck against the door causing him
to fall. In falling, the plaintiff says, his head struck one of the seats and he became
unconscious. He was presently taken to his home which was only a short distance away,
where he was seen at about 10 o'clock p. m., by a physician in the employment of the
defendant company. This physician says that the plaintiff was then walking about and
apparently suffering somewhat from bruises on his chest. He said nothing about his head
being injured and refused to go to a hospital. Later, during the same night Dr. Carmelo Basa
was called in to see the plaintiff. This physician says that he found Doctor De Guia lying in bed
and complaining of a severe pain in the side. During the visit of Doctor Basa the plaintiff
several times spit up blood, a manifestation no doubt due to the effects of the bruises received
in his side. The next day Doctor De Guia went into Manila to consult another physician, Doctor
Miciano, and during the course of a few weeks he called into consultation other doctors who
were introduced as witnesses in his behalf at the trial of this case. According to the testimony
of these witnesses, as well as that of the plaintiff himself, the symptoms of physical and
nervous derangement in the plaintiff speedily developed in portentous degree.
Other experts were introduced by the defendant whose testimony tended to show
that the plaintiff's injuries, considered in their physical effects, were trivial and that the
attendant nervous derangement, with its complicated train of ailments, was merely simulated.
Upon this question the opposing medical experts ventilated a considerable mass of
professional learning with reference to the nature and effects of the baffling disease known as
traumatic neurosis, or traumatic hysteria — a topic which has been the occasion of much
controversy in actions of this character in the tribunals of Europe and America. The subject is
one of considerable interest from a medico-legal point of view, but we deem it unnecessary in
this opinion to enter upon a discussion of its voluminous literature. It is enough to say that in
our opinion the plaintiff's case for large damages in respect to his supposed incapacitation for
future professional practice is not made out. Of course in this jurisdiction damages can not be
assessed in favor of the plaintiff as compensation for the physical or mental pain which he
may have endured (Marcelo vs. Velasco, 11 Phil. Rep., 287); and the evidence relating to the
injuries, both external and internal, received by him must be examined chiefly in its bearing
upon his material welfare, that is, in its results upon his earning capacity and the expenses
incurred in restoration to the usual condition of health.
The evidence before us shows that immediately after the accident in question
Doctor De Guia, sensing in the situation a possibility of profit, devoted himself with great
assiduity to the promotion of this litigation; and with the aid of his own professional knowledge,
supplemented by suggestions obtained from his professional friends and associates, he
enveloped himself more or less unconsciously in an atmosphere of delusion which rendered
him incapable of appreciating at their true value the symptoms of disorder which he
developed. The trial court was in our opinion fully justified in rejecting the exaggerated
estimate of damages thus created.
We now pass to the consideration of the amount allowed to the plaintiff by the trial
judge as the expenses incurred for medical service. In this connection Doctor Montes testified
that he was first called to see the plaintiff upon September 14, 1915, when he found him
suffering from traumatic neurosis. Three months later he was called upon to treat the same
patient for an acute catarrhal condition, involving disturbance in the pulmonary region. The
treatment for this malady was successful after two months, but at the end of six months the
same trouble recurred and required further treatment. In October of the year 1916, or more
than a year after the accident in question occurred, Doctor Montes was called in consultation
with Doctor Guerrero to make an examination of the plaintiff. Doctor Montes says that his
charges altogether for services rendered to the plaintiff amount to P350, of which the sum of
P200 had been paid by the plaintiff upon bills rendered from time to time. This physician
speaks in the most general terms with respect to the times and extent of the services
rendered; and it is by no means clear that those services which were rendered many months,
or year, after the accident had in fact any necessary or legitimate relation to the injuries
received by the plaintiff. In view of the vagueness and uncertainty of the testimony relating to
Doctor Montes's services we are of the opinion that the sum of P200, or the amount actually
paid to him by the plaintiff, represents the extent of the plaintiff's obligation with respect to
treatment for said injuries.
With regard to the obligation supposedly incurred by the plaintiff to three other
physicians, we are of the opinion that they are not a proper subject of recovery in this action;
and this for more than one reason. In the first place, it does not appear that said physicians
have in fact made charges for those services with the intention of imposing obligations on the
plaintiff to pay for them. On the contrary it would seem that said services were gratuitously
rendered out of courtesy to the plaintiff as a member of the medical profession. The
suggestions made on the stand by these physicians to the effect that their services were worth
the amounts stated by them are not sufficient to prove that the plaintiff had incurred the
obligation to pay those amounts. In the second place, we are convinced that in employing so
many physicians the plaintiff must have bad in view the successful promotion of the issue of
this lawsuit rather than the bona fide purpose of effecting the cure of his injuries. In order to
constitute a proper element of recovery in an action of this character, the medical service for
which reimbursement is claimed should not only be such as to have created a legal obligation
upon the plaintiff but such as was reasonably necessary in view of his actual condition. It can
not be permitted that a litigant should retain an unusual and unnecessary number of
professional experts with a view to the successful promotion of a lawsuit and expect to recover
against his adversary the entire expense thus incurred. His claim for medical services must be
limited to such expenditures as were reasonably suited to the case.
The second error assigned in the brief of the defendant company presents a
question of practice which, though not vital to the solution of this case, is of sufficient general
importance to merit notice. It appears that four of the physicians examined as witnesses for
the plaintiff had made written statements at various dates certifying the results of their
respective examinations into the condition of the plaintiff. When these witnesses were
examined in court they identified their respective signatures to these certificates and the trial
judge, over the defendant's objection, admitted the documents as primary evidence in the
case. This was undoubtedly erroneous. A document of this character is not primary evidence
in any sense, since it is fundamentally of a hearsay nature; and the only legitimate use to
which one of these certificates could be put, as evidence for the plaintiff, was to allow the
physician who issued it to refer thereto to refresh his memory upon details which he might
have forgotten. In Zwangizer vs. Newman (83 N. Y. Supp., 1071) which was also an action to
recover damages for personal injury, it appeared that a physician, who had been sent by one
of the parties to examine the plaintiff had made at the time a written memorandum of the
results of the examination; and it was proposed to introduce this document in evidence at the
trial. It was excluded by the trial judge, and it was held upon appeal that this was proper. Said
the court: "There was no failure or exhaustion of the memory, and no impeachment of the
memorandum on cross- examination; and the document was clearly incompetent as evidence
in chief."
It results from the foregoing that the judgment appealed from must be modified by
reducing the amount of the recovery to eleven hundred pesos (P1,100), with legal interest
from November 8, 1916. As thus modified the judgment is affirmed, without any special
pronouncement as to costs of this instance. So ordered.
 Arellano, C. J., Torres, Araullo, Malcolm and Avanceña, JJ., concur.
||| (De Guia v. Manila Electric Railroad and Light Co., G.R. No. 14335, [January 28, 1920], 40 PHIL
706-717)
IRST DIVISION
[G.R. No. 7567. November 12, 1912.]
THE UNITED STATES, plaintiff-appellee, vs.
SEGUNDO BARIAS, defendant-appellant.
Bruce, Lawrence, Ross & Block for appellant.
Solicitor-General Harvey for appellee.
SYLLABUS
1. NEGLIGENCE DEFINED. — Negligence is "the failure to observe, for the
protection of the interests of another person, that degree of care, precaution and vigilance
which the circumstances justly demand, whereby such other person suffers injury."
2. ID.; ID. — Silvela's observation that "if a moment's attention and reflexion would
have shown a person that the act which he was about to perform was liable to have the
harmful consequences which it had, such person acted with temerity and may be guilty
of imprudencia temeraria," cited with approval.
3. ID.; ID. — "The diligence with which the law requires the individual at all times to
govern his conduct varies with the nature of the situation in which he is placed and with the
importance of the act which he is to perform." (U. S. vs. Reyes, 1 Phil. Rep., 375, 377.)
4. ID.; STREET RAILWAYS; DUTIES AND RESPONSIBILITIES OF MOTORMEN.
— Held, that a motorman operating a street car on a public street in a densely populated
section of the city of Manila is bound to know and to recognize that any negligence on his part
in observing the track over which he is running his car may result in fatal accidents. He has no
right, when he starts from a standstill, to assume that the track before his car is clear. It is his
duty to satisfy himself of that fact by keeping a sharp lookout and doing everything in his
power to avoid the danger which is necessarily incident to the operation of heavy street cars
on thoroughfares in populous sections of the city.
5. ID.; ID.; ID. — In the absence of some regulation of his employers, a motorman
who has brought his car to a standstill is not bound to keep his eyes directly to the front while
the car is stopped, but before setting it again in motion, it is his duty to satisfy himself that the
track is clear, and for that purpose to look and to see the track just in front of his car.
6. ID.; ID.; ID. — The reasons of public policy which impose upon street car
companies and their employees the duty of exercising the utmost degree of diligence in
securing the safety of passengers, apply with equal force to the duty of avoiding infliction of
injuries upon pedestrians and others upon the public streets and thoroughfares over which
such companies are authorized to run their cars.
7. ID.; ID.; ID. — It is the manifest duty of a motorman operating an electric street car on a
public thoroughfare in as thickly settled district, to satisfy himself that the track is clear
immediately in front of his car before setting it in motion from a standstill and for that purpose
to incline his body slightly forward, if that be necessary, in order to bring the track immediately
in front of his car within his line of vision.
DECISION
CARSON, J p:
This is an appeal from a sentence imposed by the Honorable A. S. Crossfield,
judge of the Court of First Instance of Manila, for homicide resulting from reckless negligence.
The information charges:
"That on or about November 2, 1911, in the city of Manila,
Philippine Islands, the said Segundo Barias was a motorman on street car
No. 9, run 7, of the Pasay-Cervantes lines of the Manila Electric Railroad
and Light Company, a corporation duly organized and doing business in the
city of Manila, Philippine Islands; as such motorman he was controlling and
operating said street car along Rizal Avenue, formerly Calle Cervantes, of
this city, and as such motorman of said street car he was under obligation to
run the same with due care and diligence to avoid any accident that might
occur to vehicles and pedestrians who were traveling on said Rizal Avenue;
said accused, at said time and place, did willfully, with reckless imprudenced
and inexcusable negligence and in violation of the regulations promulgated
to that effect, control and operate said street car, without heeding the
pedestrians crossing Rizal Avenue from one side to the other, thus knocking
down and causing by his carelessness and imprudent negligence that said
street car No. 9, operated and controlled by said accused, as hereinbefore
stated, should knock down and pass over the body and head of one Fermina
Jose, a girl 2 years old, who at said time and place was crossing the said
Rizal Avenue, the body of said girl being dragged along the street-car track
on said Rizal Avenue for a long distance, thus crushing and destroying her
head and causing her sudden death as a result of the injury received; that if
the acts executed by the accused had been done with malice, he would be
guilty of the serious crime of homicide."
The defendant was a motorman for the Manila Electric Railroad and Light
Company. At about 6 o'clock on the morning of November 2, 1911, he was driving his car
along Rizal Avenue and stopped it near the intersection of that street with Calle Requesen to
take on some passengers. When the car stopped, the defendant looked backward,
presumably to note whether all the passengers were aboard, and then started his car. At that
moment Ferminia Jose, a child about 3 years old, walked or ran in front of the car. She was
knocked down and dragged some little distance underneath the car, and was left dead upon
the track. The motorman proceeded with his car to the end of the track, some distance from
the place of the accident, and apparently knew nothing of it until his return, when he was
informed of what had happened.
There is no substantial dispute as to the facts. It is true that one witness testified
that the defendant started the car without turning his head, and while he was still looking
backwards and that this testimony was directly contradicted by that of another witness. But we
do not deem it necessary to make an express finding as to the precise direction in which the
defendant's head was turned at the moment when he started his car. It is sufficient for the
purpose of our decision to hold, as we do, that the evidence clearly discloses that he started
his car from a standstill without looking over the track immediately in front of the car to satisfy
himself that it was clear. He did not see the child until after he had run his car over it, and after
he had returned to the place where it was found dead, and we think we are justified in saying
that wherever he was looking at the moment when he started his car, he was not looking at
the track immediately in front of the car, and that he had not satisfied himself that this portion
of the track was clear immediately before putting the car in motion.
The trial court found the defendant guilty of imprudencia temeraria (reckless
negligence) as charged in the information, and sentenced him to one year and one month of
imprisonment in Bilibid Prison, and to pay the costs of the action.
The sole question raised by this appeal is whether the evidence shows such
carelessness or want of ordinary care on the part of the defendant as to amount to reckless
negligence (imprudencia temeraria).
Judge Cooley in his work on Torts (3d ed., 1324) defines negligence to be: "The
failure to observe, for the protection of the interests of another person, that degree of care,
precaution and vigilance which the circumstances justly demand, whereby such other person
suffers injury."
In the case of U. S. vs. Nava, (1 Phi. Rep., 580), we held that: "Reckless
negligence consists of the failure to take such precautions or advance measures in the
performance of an act as the most common prudence would suggest whereby injury is caused
to persons or to property."
Silvela says in his "Derecho Penal," in speaking of reckless imprudence
(imprudencia temeraria):
"The word 'negligencia' used in the code, and the term 'imprudencia' with
which this punishable act is defined, express this idea in such a clear manner
that it is not necessary to enlarge upon it. He who has done everything on
his part to prevent his actions from causing damage to another, although he
has not succeeded in doing so, notwithstanding his efforts, is the victim of
an accident, and cannot be considered responsible for the same." (Vol. 2, p.
127 [153].)
"Temerario is, in our opinion, one who omits, with regard to his actions,
which are liable to cause injury to another, that care and diligence, that
attention, which can be required of the least careful, attentive, or diligent. If
a moment's attention and reflection would have shown a person that the act
which he was about to perform was liable to have the harmful consequence
which it had, such person acted with temerity and may be guilty of
'imprudencia temeraria." It may be that in practice this idea has been given
a greater scope and acts of imprudence which did not show carelessness as
carried to such a high degree, might have been punished as 'imprudencia
temeraria;' but in our opinion, the proper meaning of the word does not
authorize another interpretation." (Id., p 133 [161].)
Groizard, commenting upon "imprudencia temeraria," on page 389, volume 8, of his
work on the Penal Code, says:
"Prudence is that cardinal virtue which teaches us to discern and
distinguish the good from the bad, in order to adopt or to flee from it. It also
means good judgment, temperance, and moderation in one's action.
'Temerario' without reflection and without examining the same.
Consequently, he who from lack of good judgment, temperance, or
moderation in his action, exposes himself without reflection and examination
to the danger of committing a crime, must be held responsible under the
provision of law aforementioned."
Negligence is want of the care required by the circumstances. It is a relative or
comparative, not an absolute, term and its application depends upon the situation of the
parties and the degree of care and vigilance which the circumstances reasonably require.
Where the danger is great, a high degree of care is necessary, and the failure to observe it is
a want of ordinary care under the circumstances. (Ahern vs. Oregon Telephone Co., 24 Oreg.,
276, 294; 35 Pac., 549.)
Ordinary care, if the danger is great, may rise to the grade of a very exact and
unchangeable attention. (Parry Mfg. Co. vs. Eaton, 41 Ind. App., 81, 1908; 83 N. E., 510.)
In the case of U. S. vs. Reyes (1 Phil. Rep., 375-377), we held that: "The diligence
with which the law requires the individual at all times to govern his conduct varies with the
nature of the situation in which he is placed and with the importance of the act which he is to
perform."
The question to be determined then, is whether, under all the circumstances, and
having in mind the situation of the defendant when he put his car in motion and ran it over the
child, he was guilty of a failure to take such precautions or advance measures as common
prudence would suggest.
The evidence shows that the thoroughfare on which the incident occurred was a
public street in a densely populated section of the city. The hour was six in the morning, or
about the time when the residents of such streets begin to move about. Under such conditions
a motorman of an electric street car was clearly charged with a high degree of diligence in the
performance of his duties. He was bound to know and to recognize that any negligence on his
part in observing the track over which he was running his car might result in fatal accidents.
He had no right to assume that the track before his car was clear. It was his duty to satisfy
himself of that fact by keeping a sharp lookout, and to do everything in his power to avoid the
danger which is necessarily incident to the operation of heavy street cars on public
thoroughfares in populous sections of the city.
Did he exercise the degree of diligence required of him? We think this question
must be answered in the negative. We do not go so far as to say that having brought his car to
a standstill it was his bounden duty to keep his eyes directed to the front. Indeed, in the
absence of some regulation of his employers, we can well understand that, at times, it might
be highly proper and prudent for him to gland back before again setting his car in motion, to
satisfy himself that he understood correctly a signal to go forward or that all the passengers
had safely alighted or gotten on board. But we do insist that before setting his car again in
motion, it was his duty to satisfy himself that the track was clear, and, for that purpose, to look
and to see the track just in front of his car. This the defendant did not do, and the result of his
negligence was the death of the child.
In the case of Smith vs. St. Paul City Ry. Co., (32 Min., p. 1), the supreme court of
Minnesota, in discussing the diligence required of street railway companies in the conduct of
their business observed that: "The defendant was a carrier of passengers for hire, owning and
controlling the tracks and cars operated thereon. It is therefore subject to the rules applicable
to passenger carriers. (Thompson's Carriers, 442; Barrett vs. Third Ave. R. Co., 1 Sweeny,
568; 8 Abb. Pr. (N. S.), 205.) As respects hazards and dangers incident to the business or
employment, the law enjoins upon such carrier the highest degree of care consistent with its
undertaking, and it is responsible for the slightest negligence. (Wilson vs. Northern Pacific R.
Co., 26 minn., 278; Warren vs. Fitchburg R. Co., 8 Allen, 233; 43 Am. Dec. 354, 356, notes
and cases.) . . . The severe rule which enjoins upon the carrier such extraordinary care and
diligence, is intended, for reasons of public policy, to secure the safe carriage of passengers,
in so far as human skill and foresight can affect such result." The case just cited was a civil
case, and the doctrine therein announced d especial reference to the care which should be
exercised in securing the safety of passengers. But we hold that the reasons of public policy
which imposed upon street car companies and their employees the duty of exercising the
utmost degree of diligence in securing the safety of passengers, apply with equal force to the
duty of avoiding the infliction of injuries upon pedestrians and others on the public streets and
thoroughfares over which these companies are authorized to run their cars. And while, in a
criminal case, the courts will require proof of the guilt of the company or its employees beyond
a reasonable doubt, nevertheless the care or diligence required of the company and its
employees is the same in both cases, and the only question to be determined is whether the
proof shows beyond a reasonable doubt that the failure to exercise such care or diligence was
the cause of the accident, and that the defendant was guilty thereof.
Counsel for the defendant insist that the accident might have happened despite the
exercise of the utmost care by the defendant, and they have introduced photographs into the
record for the purpose of proving that while the motorman was standing in his proper place on
the front platform of the car, a child might have walked up immediately in front of the car, a
child might have walked up immediately in front of the car without coming within the line of his
vision. Examining the photographs, we think that this contention may have some foundation in
fact; but only to this extent, that standing erect, at the position he would ordinarily assume
while the car is in motion, the eye of the average motorman might just miss seeing the top of
the head of a child, about three years old, standing or walking close up to the front of the car.
But it is also very evident that by inclining the head and shoulders forward very slightly, and
glancing in front of the car, a person in the position of a motorman could not fail to see a child
on the track immediately in front of his car; and we hold that it is the manifest duty of a
motorman, who is about to start his car on a public thoroughfare in a thickly-settled district, to
satisfy himself that the track is clear immediately in front of his car, a person in the position of
a motorman could not fail to see a child on the track immediately in front of his car; and we
hold that it is the manifest duty of a motorman, who is about to start his car on a public
thoroughfare in a thickly-settled district, to satisfy himself that the track is clear immediately in
front of his car, and to incline his body slightly forward, if that be necessary, in order to bring
the whole track within his line of vision. Of course, this may not be, and usually is not
necessary when the car is in motion, but we think that it is required by the dictates of the most
ordinary prudence in starting from a standstill.
We are not unmindful of our remarks in the case of U. S. vs. Bacho (10 Phil. Rep.,
577), to which our attention is directed by counsel for appellant. In that case we said that:
". . . In the general experience of mankind, accidents apparently
unavoidable and often inexplicable are unfortunately too frequent to
permit us to conclude that some one must be criminally liable for negligence
in every case where an accident occurs. it is the duty of the prosecution in
each case to prove by competent evidence not only the existence of criminal
negligence, but that the accused was guilty thereof."
Nor do we overlook the ruling in the case of U. S. vs. Barnes (12 Phil. Rep., 93), to
which our attention is also invited, wherein we held that the defendant was not guilty of
reckless negligence, where it appeared that he killed another by the discharge of his gun
under such circumstances that he might have been held guilty of criminally reckless
negligence had he had knowledge at that moment that another person was in such position as
to be in danger if the gun should be discharged. In this latter case the defendant had no
reason to anticipate that the person who was injured was in the line of fire, or that there was
any probability that he or anyone else would place himself in the line of fire. In the case at bar,
however, it was, as we have seen, the manifest duty of the motorman to take reasonable
precautions in starting his car to see that in doing so he was not endangering the life of any
pedestrian, old or young; and to this end it was further his duty to guard against the
reasonable possibility that some one might be on the evidence showing, is it does, that the
child was killed at the moment when the car was set in motion, we are justified in holding that,
had the motorman seen the child, he could have avoided the accident; the accident was not,
therefore, "unavoidable or inexplicable," and it appearing that the motorman, by the exercise
of ordinary diligence, might have seen the child before he set the car in motion, his failure to
satisfy himself that the track was clear before doing so was reckless negligence, of which he
was properly convicted in the court below.
We think, however, that the penalty should be reduced to that of six months and
one day of prision correccional. Modified by substituting for so much thereof as imposes the
penalty of one year and one month of imprisonment, the penalty of six months and one day of
prision correccional, the judgment of the lower court convicting and sentencing the appellant is
affirmed, with the costs of both instances against him. So ordered.
Arellano, C.J., Torres and Mapa, JJ., concur.
Johnson, J., concurs in the result.
Trent, J., dissents.
||| (U.S. v. Barias, G.R. No. 7567, [November 12, 1912], 23 PHIL 434-443)
THIRD DIVISION
[G.R. No. 141258. April 9, 2003.]
TOMASA SARMIENTO, petitioner, vs. SPS. LUIS & ROSE SUN-
CABRIDO and MARIA LOURDES SUN, respondents.
Liberato G. Casilan, Jr. for petitioner.
Victor dela Serna for respondents.
SYNOPSIS
The controversy herein arose when a piece of diamond was broken by Zenon Santos, an
employee at the jewelry shop, in the process of dismounting it from an original setting. The diamond
was claimed to be .33 carat and almost perfect in cut and clarity. As a result of the incident, the
petitioner herein was forced to replace the broken diamond to its owner in the amount of P30,000.00.
The petitioner filed a complaint for damages with the Metropolitan Trial Court in Cities (MTCC) and
claimed that the dismounting of the diamond from its original setting was part of the obligation
assumed by the respondents under the contract of service, the respondentspouses being the owner
of the jewelry shop and the other respondent their employee. Thus, they should be held liable for the
damages arising from its breakage. The MTCC decided in favor of the petitioner herein. But on
appeal, the Regional Trial Court (RTC) reversed the decision; thus absolving the respondents of any
responsibility arising from breach of contract. The Court of Appeals affirmed the judgment of the RTC,
hence, this petition for review.
According to the Supreme Court, preponderance of evidence supported the view that
Marilou and Zenon Santos were employed at the jewelry shop in order to perform activities, which
were usually necessary or desirable in its business. The Court, therefore, held that an obligation to
pay actual damages arose in favor of the petitioner against the respondent spouses who admittedly
owned and managed the jewelry shop. It was proven that petitioner replaced the damaged jewelry in
the amount of P30,000.00. The facts of the case also justified the award of moral damages. The
petition was granted and the assailed decision of the Court of Appeals was reversed and set aside
by the Supreme Court ordering the respondent spouses to pay petitioner actual damages of
P30,000.00 and moral damages of P10,000.00.
SYLLABUS
1. CIVIL LAW; OBLIGATIONS; SHALL HAVE THE FORCE OF LAW BETWEEN
PARTIES WHEN THE SAME AROSE FROM CONTRACTS; EFFECT OF FAULT OR NEGLIGENCE
IN THE PERFORMANCE THEREOF. — Obligations arising from contracts have the force of law
between the contracting parties. Corollarily, 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. 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.
2. ID.; DAMAGES; MORAL DAMAGES; GENERALLY NOT RECOVERABLE IN
ACTIONS FOR BREACH OF CONTRACT; EXCEPTION. — As a general rule, moral damages are
not recoverable in actions for damages predicated on a breach of contract for it is not one of the items
enumerated under Article 2219 of the Civil Code. Moral damages may be awarded in a breach of
contract only when there is proof that defendant acted in bad faith, or was guilty of gross negligence
amounting to bad faith, or in wanton disregard of his contractual obligation. TSacCH
DECISION
CORONA, J p:
This appeal by certiorari stems from the Decision 1 of respondent Court of Appeals
promulgated on November 26, 1999 in CA-G.R. SP No. 47431 declaring the private respondents not
liable for damages.
Petitioner, Tomasa Sarmiento, states that sometime in April 1994, a friend, Dra. Virginia
Lao, requested her to find somebody to reset a pair of diamond earrings into two gold
rings. 2 Accordingly, petitioner sent a certain Tita Payag with the pair of earrings to Dingding's Jewelry
Shop, owned and managed by respondent spousesLuis and Rose Cabrido, 3 which accepted the job
order for P400. 4
Petitioner provided 12 grams of gold to be used in crafting the pair of ring settings. 5 After
3 days, Tita Payag delivered to the jewelry shop one of Dra. Lao's diamond earrings which was earlier
appraised as worth .33 carat and almost perfect in cut and clarity. 6 Respondent Ma. Lourdes
(Marilou) Sun went on to dismount the diamond from its original setting. Unsuccessful, she asked
their goldsmith, Zenon Santos, to do it. Santos removed the diamond by twisting the setting with a
pair of pliers, breaking the gem in the process. 7
Petitioner required the respondents to replace the diamond with the same size and quality.
When they refused, the petitioner was forced to buy a replacement in the amount of P30,000. 8
Respondent Rose Cabrido, manager of Dingding's Jewelry Shop, denied having entered
into any transaction with Tita Payag whom she met only after the latter came to the jewelry shop to
seek compensation from Santos for the broken piece of jewelry. 9 However, it was possible that
Payag may have availed of their services as she could not have known every customer who came to
their shop. Rose disclosed that she usually arrived at 11:00 a.m. When she was not around, her
mother and sister tended the shop. 10
Marilou admitted knowing Payag who came to Dingding's Jewelry Shop to avail of their
services regarding a certain piece of jewelry. After a short conversation, Payag went inside the shop
to see Santos. When the precious stone was broken by Santos, Payag demanded P15,000 from him.
As the latter had no money, she turned to Marilou for reimbursement apparently thinking that Marilou
was the owner of the shop. 11
For his part, Santos recalled that Payag requested him to dismount what appeared to him
was a sapphire. While clipping the setting with the use of a small pair of pliers, the stone accidentally
broke. Santos denied being an employee of Dingding's Jewelry Shop. 12
Attempts to settle the controversy before the barangay lupon proved
futile. 13 Consequently, petitioner filed a complaint for damages on June 28, 1994 with the Municipal
Trial Court in Cities (MTCC) of Tagbilaran City docketed as Civil Case No. 2339 which rendered a
decision 14 in favor of the petitioner, the dispositive portion of which reads:
WHEREFORE, Decision is hereby rendered in favor of plaintiff
Tomasa Sarmiento and against defendants Spouses Luis and Rose Sun-
Cabrido, ordering defendants to pay jointly and severally the amount of Thirty
Thousand Pesos (P30,000.00) as actual or compensatory damages; Three
Thousand Pesos (P3,000.00) as moral damages; Five Thousand Pesos
(P5,000.00) as attorney's fees; Two Thousand Pesos (P2,000.00) as
litigation expenses, with legal interest of 6% per annum from the date of this
decision and 12% per annum from the date when this decision becomes final
until the amounts shall have been fully paid and to pay the costs.
This case as against defendant Maria Lourdes Sun as well as
defendants' counterclaim are dismissed for lack of merit.
SO ORDERED.
On appeal, the Regional Trial Court (RTC) of Tagbilaran City, Branch 3, reversed the
decision of the MTCC, thus absolving the respondents of any responsibility arising from breach of
contract. 15 Finding no reversible error, the Court of Appeals (CA) affirmed the judgment of the RTC
in its Decision promulgated on November 26, 1999. 16
Unable to accept the decision, the petitioner filed the instant petition for review with the
following assigned errors:
I
 THE COURT OF APPEALS ERRED IN MAINTAINING AND SO HOLDING
THAT ZENON SANTOS IS NOT AN EMPLOYEE OF DEFENDANT (herein
respondent) ROSE SUN-CABRIDO, AND IS THEREFORE ANSWERABLE
FOR HIS OWN ACTS OR OMISSIONS
II
THE HONORABLE COURT OF APPEALS ERRED IN SUSTAINING THE
REGIONAL TRIAL COURT'S PRONOUNCEMENTS THAT THERE EXISTS
NO AGREEMENT BETWEEN THE PETITIONER AND RESPONDENTS
THAT THE LATTER WOULD ANSWER FOR ANY LIABILITY SHOULD THE
DIAMOND BE DAMAGED IN THE PROCESS OF DISMOUNTING THEM
FROM THE EARRINGS.
Essentially, petitioner claims that the dismounting of the diamond from its original setting
was part of the obligation assumed by the private respondents under the contract of service. Thus,
they should be held liable for damages arising from its breakage. On the other hand, the version of
the private respondents, upheld by the RTC and the CA, is that their agreement with the petitioner
was for crafting two gold rings mounted with diamonds only and did not include the dismounting of
the said diamonds from their original setting. 17 Consequently, the crux of the instant controversy is
the scope of the obligation assumed by the private respondents under the verbal contract of service
with the petitioner.
The Court notes that, during the trial, private respondents vigorously denied any
transaction between Dingding's' Jewelry Shop and the petitioner, through Tita Payag. Rose Cabrido,
for instance, denied having ever met Payag before the latter came to seek reimbursement for the
value of the broken diamond. Likewise, while Marilou acknowledged acquaintance with Payag, she
nevertheless denied accepting any job order from her. Debunking their protestations, however, the
MTCC of Tagbilaran City rendered its decision on November 26, 1999 in favor of herein petitioner.
Apparently realizing the weakness and futility of their position, private respondents
conceded, on appeal, the existence of an agreement with the petitioner for crafting a pair of gold rings
mounted with diamonds. This apparent concession by the private respondents, however, was really
nothing but an ingenious maneuver, designed to preclude, just the same, any recovery for damages
by the petitioner. Thus, while ostensibly admitting the existence of the said agreement, private
respondents, nonetheless denied assuming any obligation to dismount the diamonds from their
original settings. 18
The inconsistent position of the private respondents impugns their credibility. They cannot
be permitted to adopt a certain stance, only to vacillate later to suit their interest. We are therefore
inclined to agree with the MTCC in giving credence to the version of the petitioner. The MTCC had
the unique opportunity to actually observe the behavior and demeanor of the witnesses as they
testified during the trial. 19
At any rate, the contemporaneous and subsequent acts of the parties 20 support the
version of the petitioner. Thus, when Tita Payag asked Marilou of Dingding's Jewelry Shop to reset a
pair of diamond earrings, she brought with her the said pieces of jewelry so that the diamonds which
were still mounted could be measured and the new ring settings crafted accordingly. On the said
occasion, Marilou expressed no reservation regarding the dismounting of the diamonds which, after
all, was an integral part of petitioner's job order. She should have instructed Payag to have them
dismounted first if Marilou had actually intended to spare the jewelry shop of the task but she did not.
Instead, petitioner was charged P400 for the job order which was readily accepted. Thus, a perfected
contract to reset the pair of diamond earrings arose between the petitioner, through Payag, and
Dingding's Jewelry Shop, through Marilou.
Marilou's subsequent actuations were even more revealing as regards the scope of
obligation assumed by the jewelry shop. After the new settings were completed in 3 days, she called
up the petitioner to bring the diamond earrings to be reset. 21 Having initially examined one of them,
Marilou went on to dismount the diamond from its original setting. Unsuccessful, she then delegated
the task to their goldsmith, Zenon Santos. Having acted the way she did, Marilou cannot now deny
the shop's obligation to reset the pair of earrings.
Obligations arising from contracts have the force of law between the contracting
parties. 22 Corollarily, 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. 23 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. 24
In the case at bar, it is beyond doubt that Santos acted negligently in dismounting the
diamond from its original setting. It appears to be the practice of the trade to use a miniature wire saw
in dismounting precious gems, such as diamonds, from their original settings. 25 However, Santos
employed a pair of pliers in clipping the original setting, thus resulting in breakage of the diamond.
The jewelry shop failed to perform its obligation with the ordinary diligence required by the
circumstances. It should be pointed out that Marilou examined the diamond before dismounting it
from the original setting and found the same to be in order. Its subsequent breakage in the hands of
Santos could only have been caused by his negligence in using the wrong equipment. Res ipsa
loquitur.
Private respondents seek to avoid liability by passing the buck to Santos who claimed to
be an independent worker. They also claim, rather lamely, that Marilou simply happened to drop by
at Dingding's Jewelry Shop when Payag arrived to place her job order. 26
We do not think so.
The facts show that Santos had been working at Dingding's Jewelry Shop as goldsmith
for about 6 months accepting job orders through referrals from private respondents. 27 On the other
hand, Payag stated that she had transacted with Dingding's Jewelry Shop on at least 10 previous
occasions, always through Marilou. 28 The preponderance of evidence supports the view that Marilou
and Zenon Santos were employed at Dingding's Jewelry Shop in order to perform activities which
were usually necessary or desirable in its business. 29
We therefore hold that an obligation to pay actual damages arose in favor of the petitioner
against the respondents spouses who admittedly owned and managed Dingding's Jewelry Shop. It
was proven that petitioner replaced the damaged jewelry in the amount of P30,000. 30
The facts of the case also justify the award of moral damages. As a general rule, moral
damages are not recoverable in actions for damages predicated on a breach of contract for it is not
one of the items enumerated under Article 2219 of the Civil Code. 31 Moral damages may be
awarded in a breach of contract only when there is proof that defendant acted in bad faith, or was
guilty of gross negligence amounting to bad faith, or in wanton disregard of his contractual
obligation. 32 Santos was a goldsmith for more than 40 years. 33 Given his long experience in the
trade, he should have known that using a pair of pliers instead of a miniature wire saw in dismounting
a precious stone like a diamond would have entailed an unnecessary risk of breakage. He went on
with it anyway. Hence, respondent spouses are liable for P10,000 as moral damages due to the gross
negligence of their employee.
However, private respondent's refusal to pay the value of the damaged jewelry emanated
from an honest belief that they were not responsible therefor, hence, negating any basis for the award
of attorney's fees. 34
WHEREFORE, the instant petition is GRANTED and the assailed decision of the Court of
Appeals dated November 26, 1999 is hereby reversed and set aside. Private respondents Luis
Cabrido and Rose Sun-Cabrido are hereby ordered to pay, jointly and severally, the amount of
P30,000 as actual damages and P10,000 as moral damages in favor of the petitioner. TIcEDC
No costs.
SO ORDERED.
Puno, Panganiban, Sandoval-Gutierrez, and Carpio Morales, JJ., concur.
||| (Sarmiento v. Spouses Sun-Cabrido, G.R. No. 141258, [April 9, 2003], 449 PHIL 108-117)
SECOND DIVISION
[G.R. Nos. 91383-84. May 31, 1991.]
SOCORRO
COSTA CRISOSTOMO, petitioner, vs. COURT OF APPEALS and
NORMA SAN JOSE, DIANA J. TORRES, respondents.
Quiason, Makalintal, Barot, Torres, Ibarra & Sison for petitioner.
Augusto J. Salas for Diana J. Torres.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF THE COURT OF APPEALS,
GENERALLY UPHELD ON APPEAL; EXCEPTION; CASE AT BAR. — While it is settled that the
jurisdiction of the Supreme Court in cases brought to it from the Court of Appeals is limited to
reviewing and revising errors of law imputed to the latter, the
findingsof fact of the Court of Appeals may be set aside, among others, on the following grounds: ".
. . (2) the inference made is manifestly mistaken; . . . (6) the
findings of factof the Court of Appeals are contrary to those of the trial court; . . ." A careful
study of the records shows that the Court of Appeals erred in finding that private respondent Diana
Torres is a mortgagee in good faith on the basis of the evidence.
2. CIVIL LAW; AGENCY; PRINCIPAL IS BOUND BY THE NEGLIGENCE OF AGENT. — Even
assuming that Torres does not in fact know the circumstances of the sale, she is bound by the
knowledge of Atty. Martinez or by the latter's negligence in her haphazard investigation because the
negligence of her agents is her own negligence (PCIB vs. Villalva, 48 SCRA 37 [1972]).
3. LAND TITLES AND DEEDS; TORRENS SYSTEM; A PURCHASER OR MORTGAGEE
CANNOT CLOSE HIS EYES TO FACTS WHICH SHOULD PUT A REASONABLE MAN UPON HIS
GUARD; CASE AT BAR. — It is a well-settled rule that a purchaser or mortgagee cannot close his
eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in
good faith under the belief that there was no defect in the title of the vendor or mortgagor. His mere
refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of the
existence of a defect in the vendor's or mortgagor's title, will not make him an innocent purchaser or
mortgagee for value, if it afterwards develops that the title was in fact defective, and it appears that
he had such notice of the defects as would have led to its discovery had he acted with the
measure of precaution which may be required of a prudent man in a like situation; because
respondent Torres was not a mortgagee in good faith, there is no sufficient basis for the
appellate court to order the notation of the Deed of Real Estate Mortgage in favor of private
respondent Diana Torres on the Certificate of title which is to be re-issued to herein petitioner.
DECISION
PARAS, J p:
This is a petition for review on certiorari of the: (1) decision * of the Court of Appeals dated July 31,
1989 in CA-G.R. CV Nos. 11816 and 11817, entitled "Socorro CostaCrisostomo vs. Norma San
Jose and Diana Torres", which modified the decision of the Regional Trial Court, Branch 154,
Pasig, Metro Manila, and (2) resolution dated December 11, 1989, which denied the motion for
reconsideration. prLL
As gathered from the records, the facts of the case are as follows:
Socorro Costa Crisostomo (Crisostomo for short) was the registered owner of a residential house
and lot known as Lot No. 6, Block 60, located in Mandaluyong, Metro Manila and covered by
Transfer Certificate of Title No. 39286 of the Register of Deeds of Pasig. Crisostomo has occupied
the property ever since she had the house built and has introduced other improvements thereon like
fruit bearing trees and ornamental plants (Rollo, Petition, p. 9). LLjur
Sometime in 1978, Norma San Jose (San Jose for short) offered to buy the above-mentioned
parcel of land including the house thereon for the sum of P300,000.00 which amount was agreed
upon to be paid from the proceeds of a loan that was to be obtained by said respondent San Jose
from a bank using petitioner Crisostomo's title as collateral. As payment, San Jose issued three (3)
post dated Far East Bank and Trust Company checks in the total amount of P300,000.00 (Ibid., p.
4).
Crisostomo accepted the offer, lent her title to San Jose and on May 17, 1978 executed a
Deed of Absolute Sale in favor of San Jose (Rollo, Petitioner's Memorandum, p. 106).
On May 22, 1978, Crisostomo, upon San Jose's request, executed another deed of sale over the
same property with the understanding that said document was for the purpose of reducing San
Jose's registration fees and tax liabilities (Ibid.).
On May 26, 1978, San Jose registered the second deed of absolute sale with the
Registry of Deeds of Pasig. At the same time, Transfer Certificate of Title No. 39286 was cancelled,
and in its place, Transfer Certificate of Title No. 11835 was issued (Rollo, Petition, pp. 10-11).
After Crisostomo got tired of San Jose's unfulfilled promises to make good the postdated checks,
the former decided to encash the postdated checks after their maturity dates with Far East Bank
and Trust Company. Unfortunately, the same were all dishonored and returned to Crisostomo with
the notation of the Bank as "Account Closed." (Ibid.).
Upon inquiry by Crisostomo, San Jose replied that when her application for a loan with a second
bank, the Philippine Commercial and Industrial Bank, was not approved, she shifted to Security
Bank and Trust Company. Soon enough, Crisostomo discovered that San Jose's loan application
was disapproved because the collateral was insufficient for the amount of the loan she was
borrowing (Ibid.).
For Crisostomo's protection, San Jose signed a written undertaking for the forfeiture of the earnest
money in the amount of P20,000.00 in favor of herein petitioner with a certification that the title to
the property will be returned within one (1) month after non-effectivity of its sale, duly registered in
petitioner's name. The aforementioned amount of P20,000.00 was the only
payment Crisostomo ever received from San Jose (Ibid.). LLjur
Upon Crisostomo's insistence for the return of the title, San Jose informed Crisostomo that the title
was in the possession of Diana J. Torres, the mortgagee (Rollo, Memorandum for Petitioner, p.
108).
San Jose never returned the said title as she had promised nor did she ever make any payment to
the petitioner (Ibid.). cdphil
Crisostomo made a written demand to Diana J. Torres (Torres for short) to reconvey the subject
property to her. This demand was not satisfied (Ibid.).
Petitioner was thus compelled to file Civil Case No. 34356 on September 3, 1979 against San Jose
but this was later amended to include Torres (Ibid.).
On the other hand, San Jose filed in an apparent attempt to forestall the extrajudicial foreclosure
and public auction sale scheduled on September 18, 1979, Civil Case No. 34489 on September 17,
1979 against respondent Torres. On January 9, 1980 both actions were consolidated on
motion of the parties and were jointly tried thereafter (Ibid.).
In a decision dated March 31, 1986, the Regional Trial Court of Pasig, Branch CLIV (154) decided
in favor of the petitioner, the dispositive portion of which decision reads:
"WHEREFORE, judgment is hereby rendered against the defendants in
favor of the plaintiff as follows:
In Civil Case No. 34356 —
1) The Deed of Absolute Sale executed by plaintiff over the property
covered by Transfer Certificate of Title No. 39286 of the
Register of Deeds of Pasig, Metro Manila, is hereby ordered rescinded;
2) Transfer Certificate of Title No. 11835 of the Register of Deeds of Pasig,
Metro Manila, in the name of defendant Norma San Jose is hereby ordered
cancelled;
3) Defendant Norma San Jose is hereby ordered to reconvey the title
covering subject property within twenty (20) days from the finality of this
judgment;
4) Defendants are also hereby ordered, jointly and severally, to pay plaintiff
(a) the amount of P100,000.00 representing moral damages, (b)
P20,000.00 as attorney's fees, and (c) the costs;
5) As a consequence of the rescission of the sale, plaintiff is ordered to
return the amount of P20,000.00 which she received as earnest money.
However, this amount shall be off-set against the amount of damages
assessed against defendants;
6) The Deed of Real Estate Mortgage executed by defendant Norma San
Jose in favor of defendant Diana Torres is hereby order (sic) nullified. The
Register of Deedsof Pasig, Metro Manila is authorized to cancel the
annotation of said mortgage on the title to be issued in favor of plaintiff.
In Civil Case No. 34489 —
1) Defendant Norma San Jose is hereby ordered to pay defendant Diana
Torres the amount of P100,000.00.
SO ORDERED." (Rollo, Annex "A", pp. 37-38).
Torres appealed the above-stated decision to the Court of Appeals which modified the
judgment of the trial court in a decision, the dispositive portion of which reads as follows:
"WHEREFORE, the decision appealed from is hereby MODIFIED in that
the Deed of Real Estate Mortgage in favor of appellant Diana Torres be
noted on the Certificate ofTitle which is to be re-issued to the appellee,
and, appellant Diana Torres is hereby excluded from indemnifying the
appellee the amounts representing moral damages, attorney's fees, and
costs but is AFFIRMED in all other respects.
SO ORDERED." (Rollo, Annex "A", p. 41)
Petitioner filed a motion, for partial reconsideration of the appellate court's decision but the same
was denied in a Resolution dated December 11, 1989 (Rollo, Annex "B", p. 45).
Hence, the petition.
The Court in its resolution dated June 27, 1990 gave due course to the petition and required both
parties to submit their respective memoranda (Rollo, Resolution, p. 78).
The only issue to be resolved in the instant case is whether or not private respondent Diana Torres
is a mortgagee in good faith.
The petition is impressed with merit.
While it is settled that the jurisdiction of the Supreme Court in cases brought to it from
the Court of Appeals is limited to reviewing and revising errors of law imputed to the latter, the
findings of fact of the Court of Appeals may be set aside, among others, on the following grounds: ".
. . (2) the inference made is manifestly mistaken; . . . (6) the
findings of fact of the Court of Appeals are contrary to those of the trial court; . . ." (Tolentino vs. De
Jesus, 56 SCRA 167 [1974]; Villamor vs. Court of Appeals, 162 SCRA 574 [1988]; Layugan vs.
Intermediate Appellate Court, 167 SCRA 363 [1988]).
A careful study of the records shows that the Court of Appeals erred in finding that private
respondent Diana Torres is a mortgagee in good faith on the basis of the evidence.
There are strong indications that Atty. Flor Martinez, the lawyer of Diana J. Torres, the mortgagee, Q You mean she was introduced to you to inspect that property in
knew of the defect of San Jose's title. question?

Atty. Martinez is a close acquaintance of Norma San Jose, their long relationship dating back to A Yes.
1974 (Rollo, p. 60). When the subject property was offered by San Jose as collateral for a loan,
Atty. Martinez referred her to a client, Diana Torres. For her part, Torres instructed and authorized Q Why was that supposed inspection to be made on
Atty. Martinez to view and inspect the property as well as to ascertain the genuineness and behalf of the Meycauayan Bank?
authenticity of San Jose's title (Hearing of October 6, 1989, TSN, p. 6; Rollo, p. 113). Cdpr
A She claimed that that was the bank wherein she was borrowing her loan.
While feigning ignorance of the owner of subject property, she admitted later on cross-examination
that Socorro Crisostomo was the owner from whom San Jose allegedly bought the property Q In connection with that inspection supposed to be made, what was the
(Hearing of April 20, 1983, TSN, pp. 6-11). purpose, if you know?

Even more persuasive is the fact that when Atty. Martinez personally inspected the property with A To facilitate to (sic) processing, according to them. " (T.S.N., pp. 16-17,
San Jose for her client Torres, she allowed herself to be introduced to Socorro Crisostomo who was Feb. 5, 1981).
then actually occupying the house, as a Bank Inspector of the Development Bank of Meycauayan,
Bulacan from whom the loan was being obtained, obviously to convince Crisostomo that the xxx xxx xxx
procedure is in accordance with her agreement with San Jose. cdrep
On cross-examination of Atty. Flor Martinez by Atty. Beltran, she stated:
Thus, petitioner Crisostomo and Atty. Flor Martinez testified as follows in the trial court:
"xxx xxx xxx
TESTIMONY OF PETITIONER SOCORRO COSTA CRISOSTOMO:
Q But your visit of the premises was purposely for the benefit of this Diana
"Atty. Beltran — Torres, am I right?

Q Do you know Atty. Martinez here, have you ever met Atty. Martinez? A Of course, because she is my client.

A I met her June 17, 1978. Q And so in that visit of yours, you saw the plaintiff here personally?

Q Where did you meet Atty. Martinez? A Yes, I saw her then.

A She came at home that evening with Norma San Jose. Q And you had a conversation with her?

Q Where were you when Atty. Martinez and Norma San Jose came to your A I had.
house?
xxx xxx xxx
A I was at home.
Q Will you please tell the Honorable Court what was the main
Q Did you have any companion there? purpose of your visit at the premises?

A I was with my maid. A As the lawyer of the prospective mortgagee, I was duty bound to make a
fair assessment as to whether the proposed collateral (sic)
Q Before that date, did you have occasion to meet Atty. Martinez? commensurate to the amount applied for. In other words, it was
in connection with the mortgage.
A Yes. (sic) That was my first time to meet her.
xxx xxx xxx
Q Was there any introduction made to you?
Q And did you inquire from the plaintiff why was she there at the moment?
A She was introduced as a Bank Inspector of Private Development
Bank of Meycauayan, Bulacan. (Emphasis supplied). A She was introduced to me as the Tia Coring.

Q Who introduced her to you? Q And from your conversation, did you come to know that the plaintiff here,
Socorro Crisostomo, is the same Tia Coring whom she
A Norma San Jose. mentioned to you she bought the property from? (Emphasis
supplied)
 A Yes, the same Tia Coring who sold the property to her. (Emphasis Melencio-Herrera, Padilla and Sarmiento, JJ., concur.
supplied).
Regalado, J., took no part.
xxx xxx xxx
||| (Crisostomo v. Court of Appeals, G.R. Nos. 91383-84, [May 31, 1991], 274 PHIL 1134-1143)
Q And under these circumstances, you never inquired from the plaintiff
whom you personally saw why she was there in the property or
until when she would remain in that place? (Emphasis supplied)

A No, because it would be unethical to ask that question, she being the Tia
Coring of (sic) the owner. (Emphasis supplied) (T.S.N., pp. 81-
85, April 28, 1983).

xxx xxx xxx

Finally, when Torres herself visited the property she carefully evaded seeing Crisostomo personally,
the actual occupant thereof, who could have easily enlightened her as to the true owner (Rollo, p.
116). Such unnatural behavior points more convincingly to the fact that she was aware that San
Jose was not its real owner.

In Philippine National Bank vs. Court of Appeals (153 SCRA 435 [1987]), the Supreme Court had
the occasion to rule that a person dealing with registered land has a right to rely upon the fact of the
Torrens Certificate of Title and to dispense with the need of inquiring further, except when the party
concerned has actual knowledgeof facts and circumstances that would impel a reasonably cautious
man to make further inquiries (Gonzales vs. Intermediate Appellate Court, 157 SCRA 587
[1988]). llcd

Even assuming that Torres does not in fact know the circumstances of the sale, she is bound by the
knowledge of Atty. Martinez or by the latter's negligence in her haphazard investigation because the
negligence of her agents is her own negligence (PCIB vs. Villalva, 48 SCRA 37 [1972]).

It is a well-settled rule that a purchaser or mortgagee cannot close his eyes to facts which should
put a reasonable man upon his guard, and then claim that he acted in good faith under the belief
that there was no defect in the title of the vendor or mortgagor. His mere refusal to believe that such
defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in the
vendor's or mortgagor's title, will not make him an innocent purchaser or mortgagee for value, if it
afterwards develops that the title was in fact defective, and it appears that he had such notice of the
defects as would have led to its discovery had he acted with the measure ofprecaution which may
be required of a prudent man in a like situation (Leung Yee vs. Strong Machinery Co., 37 Phil. 644;
RFC vs. Javillonar, 57 O.G. 39, September 25, 1961; C.N. Hodges vs. Dy Buncio and Co., Inc., 116
Phil. 595; Manacop vs. Cansino, 61 O.G. 21, August 2, 1965, 1 SCRA 527; Gaticana vs. Gaffud, 27
SCRA 706 [1969]). LexLib

The appellate court, therefore, gravely erred in the appreciation of evidence on the good
faith of private respondent Diana Torres. Consequently, because respondent Torres was not a
mortgagee in good faith, there is no sufficient basis for the appellate court to order the
notation of the Deed of Real Estate Mortgage in favor of private respondent Diana Torres on the
Certificate of title which is to be re-issued to herein petitioner. prcd

PREMISES CONSIDERED, the decision of the respondent appellate court is REVERSED and SET
ASIDE, and the decision of the trial court is REINSTATED.

SO ORDERED.