TORTS
00 as damages for
G.R. No. L-65295 March 10, 1987
PHOENIX CONSTRUCTION, INC. and ARMANDO U. CARBONEL, petitioners,
vs.
THE INTERMEDIATE APPELLATE COURT and LEONARDO DIONISIO, respondents.
FELICIANO, J:
In the early morning of 15 November 1975 — at about 1:30 a.m. — private respondent Leonardo
Dionisio was on his way home — he lived in 1214-B Zamora Street, Bangkal, Makati — from a
cocktails-and-dinner meeting with his boss, the general manager of a marketing corporation. During
the cocktails phase of the evening, Dionisio had taken "a shot or two" of liquor. Dionisio was driving his
Volkswagen car and had just crossed the intersection of General Lacuna and General Santos Streets
at Bangkal, Makati, not far from his home, and was proceeding down General Lacuna Street, when his
car headlights (in his allegation) suddenly failed. He switched his headlights on "bright" and thereupon
he saw a Ford dump truck looming some 2-1/2 meters away from his car. The dump truck, owned by
and registered in the name of petitioner Phoenix Construction Inc. ("Phoenix"), was parked on the right
hand side of General Lacuna Street (i.e., on the right hand side of a person facing in the same
direction toward which Dionisio's car was proceeding), facing the oncoming traffic. The dump truck was
parked askew (not parallel to the street curb) in such a manner as to stick out onto the street, partly
blocking the way of oncoming traffic. There were no lights nor any so-called "early warning" reflector
devices set anywhere near the dump truck, front or rear. The dump truck had earlier that evening been
driven home by petitioner Armando U. Carbonel, its regular driver, with the permission of his employer
Phoenix, in view of work scheduled to be carried out early the following morning, Dionisio claimed that
he tried to avoid a collision by swerving his car to the left but it was too late and his car smashed into
the dump truck. As a result of the collision, Dionisio suffered some physical injuries including some
permanent facial scars, a "nervous breakdown" and loss of two gold bridge dentures.
Dionisio commenced an action for damages in the Court of First Instance of Pampanga basically
claiming that the legal and proximate cause of his injuries was the negligent manner in which Carbonel
had parked the dump truck entrusted to him by his employer Phoenix. Phoenix and Carbonel, on the
other hand, countered that the proximate cause of Dionisio's injuries was his own recklessness in
driving fast at the time of the accident, while under the influence of liquor, without his headlights on and
without a curfew pass. Phoenix also sought to establish that it had exercised due rare in the selection
and supervision of the dump truck driver.
The trial court rendered judgment in favor of Dionisio and against Phoenix and Carbonel and ordered
the latter:
(1) To pay plaintiff jointly and severally the sum of P 15,000.00 for hospital bills
and the replacement of the lost dentures of plaintiff;
(2) To pay plaintiff jointly and severally the sum of P 1,50,000.-00 as loss of
expected income for plaintiff brought about the accident in controversy and which
is the result of the negligence of the defendants;
(3) To pay the plaintiff jointly and severally the sum of P 10,000. as moral
damages for the unexpected and sudden withdrawal of plaintiff from his lifetime
career as a marketing man; mental anguish, wounded feeling, serious anxiety,
social humiliation, besmirched reputation, feeling of economic insecurity, and the
untold sorrows and frustration in life experienced by plaintiff and his family since
the accident in controversy up to the present time;
(4) To pay plaintiff jointly and severally the sum of P 10,000.
the wanton disregard of defendants to settle amicably this case with the plaintiff
before the filing of this case in court for a smaller amount.
(5) To pay the plaintiff jointly and severally the sum of P 4,500.00 due as and for
attorney's fees; and
(6) The cost of suit. (Emphasis supplied)
Phoenix and Carbonel appealed to the Intermediate Appellate Court. That court in CA-G.R. No. 65476
affirmed the decision of the trial court but modified the award of damages to the following extent:
1. The award of P15,000.00 as compensatory damages
was reduced to P6,460.71, the latter being the only amount
that the appellate court found the plaintiff to have proved as
actually sustained by him;
2. The award of P150,000.00 as loss of expected income
was reduced to P100,000.00, basically because Dionisio
had voluntarily resigned his job such that, in the opinion of
the appellate court, his loss of income "was not solely
attributable to the accident in question;" and
3. The award of P100,000.00 as moral damages was held
by the appellate court as excessive and unconscionable
and hence reduced to P50,000.00.
The award of P10,000.00 as exemplary damages
and P4,500.00 as attorney's fees and costs remained
untouched.
This decision of the Intermediate Appellate Court is now before us on a petition for review.
Both the trial court and the appellate court had made fairly explicit findings of fact relating to the
manner in which the dump truck was parked along General Lacuna Street on the basis of which both
courts drew the inference that there was negligence on the part of Carbonel, the dump truck driver, and
that this negligence was the proximate cause of the accident and Dionisio's injuries. We note, however,
that both courts failed to pass upon the defense raised by Carbonel and Phoenix that the true legal and
proximate cause of the accident was not the way in which the dump truck had been parked but rather
the reckless way in which Dionisio had driven his car that night when he smashed into the dump truck.
The Intermediate Appellate Court in its questioned decision casually conceded that Dionisio was "in
some way, negligent" but apparently failed to see the relevance of Dionisio's negligence and made no
further mention of it. We have examined the record both before the trial court and the Intermediate
Appellate Court and we find that both parties had placed into the record sufficient evidence on the
basis of which the trial court and the appellate court could have and should have made findings of fact
relating to the alleged reckless manner in which Dionisio drove his car that night. The petitioners
Phoenix and Carbonel contend that if there was negligence in the manner in which the dump truck was
parked, that negligence was merely a "passive and static condition" and that private respondent
Dionisio's recklessness constituted an intervening, efficient cause determinative of the accident and
the injuries he sustained. The need to administer substantial justice as between the parties in this
case, without having to remand it back to the trial court after eleven years, compels us to address
directly the contention put forward by the petitioners and to examine for ourselves the record pertaining
to Dionisio's alleged negligence which must bear upon the liability, or extent of liability, of Phoenix and
Carbonel.
There are four factual issues that need to be looked into: (a) whether or not private respondent Dionisio
had a curfew pass valid and effective for that eventful night; (b) whether Dionisio was driving fast or
speeding just before the collision with the dump truck; (c) whether Dionisio had purposely turned off his
car's headlights before contact with the dump truck or whether those headlights accidentally
malfunctioned moments before the collision; and (d) whether Dionisio was intoxicated at the time of the
accident.
As to the first issue relating to the curfew pass, it is clear that no curfew pass was found on the person
of Dionisio immediately after the accident nor was any found in his car. Phoenix's evidence here
consisted of the testimony of Patrolman Cuyno who had taken Dionisio, unconscious, to the Makati
Medical Center for emergency treatment immediately after the accident. At the Makati Medical Center,
a nurse took off Dionisio's clothes and examined them along with the contents of pockets together with
Patrolman Cuyno. 1 Private respondent Dionisio was not able to produce any curfew pass during the
trial. Instead, he offered the explanation that his family may have misplaced his curfew pass. He also
offered a certification (dated two years after the accident) issued by one Major Benjamin N. Libarnes of
the Zone Integrated Police Intelligence Unit of Camp Olivas, San Fernando, Pampanga, which was
said to have authority to issue curfew passes for Pampanga and Metro Manila. This certification was to
the effect that private respondent Dionisio had a valid curfew pass. This certification did not, however,
specify any pass serial number or date or period of effectivity of the supposed curfew pass. We find
that private respondent Dionisio was unable to prove possession of a valid curfew pass during the
night of the accident and that the preponderance of evidence shows that he did not have such a pass
during that night. The relevance of possession or non-possession of a curfew pass that night lies in the
light it tends to shed on the other related issues: whether Dionisio was speeding home and whether he
had indeed purposely put out his headlights before the accident, in order to avoid detection and
possibly arrest by the police in the nearby police station for travelling after the onset of curfew without a
valid curfew pass.
On the second issue — whether or not Dionisio was speeding home that night — both the trial court
and the appellate court were completely silent.
The defendants in the trial court introduced the testimony of Patrolman Cuyno who was at the scene of
the accident almost immediately after it occurred, the police station where he was based being barely
200 meters away. Patrolman Cuyno testified that people who had gathered at the scene of the
accident told him that Dionisio's car was "moving fast" and did not have its headlights on. 2 Dionisio, on
the other hand, claimed that he was travelling at a moderate speed at 30 kilometers per hour and had
just crossed the intersection of General Santos and General Lacuna Streets and had started to
accelerate when his headlights failed just before the collision took place. 3
Private respondent Dionisio asserts that Patrolman Cuyno's testimony was hearsay and did not fag
within any of the recognized exceptions to the hearsay rule since the facts he testified to were not
acquired by him through official information and had not been given by the informants pursuant to any
duty to do so. Private respondent's objection fails to take account of the fact that the testimony of
Patrolman Cuyno is admissible not under the official records exception to the hearsay rule 4 but rather
as part of the res gestae. 5 Testimonial evidence under this exception to the hearsay rule consists of
excited utterances made on the occasion of an occurrence or event sufficiently startling in nature so as
to render inoperative the normal reflective thought processes of the observer and hence made as a
spontaneous reaction to the occurrence or event, and not the result of reflective thought. 6
We think that an automobile speeding down a street and suddenly smashing into a stationary object in
the dead of night is a sufficiently startling event as to evoke spontaneous, rather than reflective,
reactions from observers who happened to be around at that time. The testimony of Patrolman Cuyno
was therefore admissible as part of the res gestae and should have been considered by the trial court.
Clearly, substantial weight should have been ascribed to such testimony, even though it did not, as it
could not, have purported to describe quantitatively the precise velocity at winch Dionisio was travelling
just before impact with the Phoenix dump truck.
A third related issue is whether Dionisio purposely turned off his headlights, or whether his headlights
accidentally malfunctioned, just moments before the accident. The Intermediate Appellate Court
expressly found that the headlights of Dionisio's car went off as he crossed the intersection but was
non-committal as to why they did so. It is the petitioners' contention that Dionisio purposely shut off his
headlights even before he reached the intersection so as not to be detected by the police in the police
precinct which he (being a resident in the area) knew was not far away from the intersection. We
believe that the petitioners' theory is a more credible explanation than that offered by private
respondent Dionisio — i.e., that he had his headlights on but that, at the crucial moment, these had in
some mysterious if convenient way malfunctioned and gone off, although he succeeded in switching
his lights on again at "bright" split seconds before contact with the dump truck.
A fourth and final issue relates to whether Dionisio was intoxicated at the time of the accident. The
evidence here consisted of the testimony of Patrolman Cuyno to the effect that private respondent
Dionisio smelled of liquor at the time he was taken from his smashed car and brought to the Makati
Medical Center in an unconscious condition. 7This testimony has to be taken in conjunction with the
admission of Dionisio that he had taken "a shot or two" of liquor before dinner with his boss that night.
We do not believe that this evidence is sufficient to show that Dionisio was so heavily under the
influence of liquor as to constitute his driving a motor vehicle per se an act of reckless
imprudence. 8 There simply is not enough evidence to show how much liquor he had in fact taken and
the effects of that upon his physical faculties or upon his judgment or mental alertness. We are also
aware that "one shot or two" of hard liquor may affect different people differently.
The conclusion we draw from the factual circumstances outlined above is that private respondent
Dionisio was negligent the night of the accident. He was hurrying home that night and driving faster
than he should have been. Worse, he extinguished his headlights at or near the intersection of General
Lacuna and General Santos Streets and thus did not see the dump truck that was parked askew and
sticking out onto the road lane.
Nonetheless, we agree with the Court of First Instance and the Intermediate Appellate Court that the
legal and proximate cause of the accident and of Dionisio's injuries was the wrongful — or negligent
manner in which the dump truck was parked in other words, the negligence of petitioner Carbonel. That
there was a reasonable relationship between petitioner Carbonel's negligence on the one hand and the
accident and respondent's injuries on the other hand, is quite clear. Put in a slightly different manner,
the collision of Dionisio's car with the dump truck was a natural and foreseeable consequence of the
truck driver's negligence.
The petitioners, however, urge that the truck driver's negligence was merely a "passive and static
condition" and that private respondent Dionisio's negligence was an "efficient intervening cause and
that consequently Dionisio's negligence must be regarded as the legal and proximate cause of the
accident rather than the earlier negligence of Carbonel. We note that the petitioners' arguments are
drawn from a reading of some of the older cases in various jurisdictions in the United States but we are
unable to persuade ourselves that these arguments have any validity for our jurisdiction. We note,
firstly, that even in the United States, the distinctions between "cause" and "condition" which the
'petitioners would have us adopt have already been "almost entirely discredited." Professors and
Keeton make this quite clear:
Cause and condition. Many courts have sought to distinguish between the active
"cause" of the harm and the existing "conditions" upon which that cause
operated. If the defendant has created only a passive static condition which
made the damage possible, the defendant is said not to be liable. But so far as
the fact of causation is concerned, in the sense of necessary antecedents which
have played an important part in producing the result it is quite impossible to
distinguish between active forces and passive situations, particularly since, as is
invariably the case, the latter are the result of other active forces which have
gone before. The defendant who spills gasoline about the premises creates a
"condition," but the act may be culpable because of the danger of fire. When a
spark ignites the gasoline, the condition has done quite as much to bring about
the fire as the spark; and since that is the very risk which the defendant has
created, the defendant will not escape responsibility. Even the lapse of a
considerable time during which the "condition" remains static will not necessarily
affect liability; one who digs a trench in the highway may still be liable to another
 who fans into it a month afterward. "Cause" and "condition" still find occasional
mention in the decisions; but the distinction is now almost entirely discredited. So
far as it has any validity at all, it must refer to the type of case where the forces
set in operation by the defendant have come to rest in a position of apparent
safety, and some new force intervenes. But even in such cases, it is not the
distinction between "cause" and "condition" which is important but the nature of
the risk and the character of the intervening cause. 9
We believe, secondly, that the truck driver's negligence far from being a "passive and static condition"
was rather an indispensable and efficient cause. The collision between the dump truck and the private
respondent's car would in an probability not have occurred had the dump truck not been parked askew
without any warning lights or reflector devices. The improper parking of the dump truck created an
unreasonable risk of injury for anyone driving down General Lacuna Street and for having so created
this risk, the truck driver must be held responsible. In our view, Dionisio's negligence, although later in
point of time than the truck driver's negligence and therefore closer to the accident, was not an efficient
intervening or independent cause. What the Petitioners describe as an "intervening cause" was no
more than a foreseeable consequent manner which the truck driver had parked the dump truck. In
other words, the petitioner truck driver owed a duty to private respondent Dionisio and others similarly
situated not to impose upon them the very risk the truck driver had created. Dionisio's negligence was
not of an independent and overpowering nature as to cut, as it were, the chain of causation in fact
between the improper parking of the dump truck and the accident, nor to sever the juris vinculum of
liability. It is helpful to quote once more from Professor and Keeton:
Foreseeable Intervening Causes. If the intervening cause is one which in
ordinary human experience is reasonably to be anticipated or one which the
defendant has reason to anticipate under the particular circumstances, the
defendant may be negligence among other reasons, because of failure to guard
against it; or the defendant may be negligent only for that reason. Thus one who
sets a fire may be required to foresee that an ordinary, usual and customary wind
arising later wig spread it beyond the defendant's own property, and therefore to
take precautions to prevent that event. The person who leaves the combustible
or explosive material exposed in a public place may foresee the risk of fire from
some independent source. ... In all of these cases there is an intervening cause
combining with the defendant's conduct to produce the result and in each case
the defendant's negligence consists in failure to protect the plaintiff against that
very risk.
Obviously the defendant cannot be relieved from liability by the fact that the risk
or a substantial and important part of the risk, to which the defendant has
subjected the plaintiff has indeed come to pass. Foreseeable intervening forces
are within the scope original risk, and hence of the defendant's negligence. The
courts are quite generally agreed that intervening causes which fall fairly in this
category will not supersede the defendant's responsibility.
Thus it has been held that a defendant will be required to anticipate the usual
weather of the vicinity, including all ordinary forces of nature such as usual wind
or rain, or snow or frost or fog or even lightning; that one who leaves an
obstruction on the road or a railroad track should foresee that a vehicle or a train
will run into it; ...
The risk created by the defendant may include the intervention of the foreseeable
negligence of others. ... [The standard of reasonable conduct may require the
defendant to protect the plaintiff against 'that occasional negligence which is one
of the ordinary incidents of human life, and therefore to be anticipated.' Thus, a
defendant who blocks the sidewalk and forces the plaintiff to walk in a street
where the plaintiff will be exposed to the risks of heavy traffic becomes liable
when the plaintiff is run down by a car, even though the car is negligently
driven; and one who parks an automobile on the highway without lights at night is
not relieved of responsibility when another negligently drives into it. --- 10
We hold that private respondent Dionisio's negligence was "only contributory," that the "immediate and
proximate cause" of the injury remained the truck driver's "lack of due care" and that consequently
respondent Dionisio may recover damages though such damages are subject to mitigation by the
courts (Article 2179, Civil Code of the Philippines).
Petitioners also ask us to apply what they refer to as the "last clear chance" doctrine. The theory here
of petitioners is that while the petitioner truck driver was negligent, private respondent Dionisio had the
"last clear chance" of avoiding the accident and hence his injuries, and that Dionisio having failed to
take that "last clear chance" must bear his own injuries alone. The last clear chance doctrine of the
common law was imported into our jurisdiction by Picart vs. Smith 11 but it is a matter for debate
whether, or to what extent, it has found its way into the Civil Code of the Philippines. The historical
function of that doctrine in the common law was to mitigate the harshness of another common law
doctrine or rule that of contributory negligence. 12 The common law rule of contributory negligence
prevented any recovery at all by a plaintiff who was also negligent, even if the plaintiff's negligence was
relatively minor as compared with the wrongful act or omission of the defendant. 13 The common law
notion of last clear chance permitted courts to grant recovery to a plaintiff who had also been negligent
provided that the defendant had the last clear chance to avoid the casualty and failed to do
so. 14 Accordingly, it is difficult to see what role, if any, the common law last clear chance doctrine has
to play in a jurisdiction where the common law concept of contributory negligence as an absolute bar to
recovery by the plaintiff, has itself been rejected, as it has been in Article 2179 of the Civil Code of the
Philippines. 15
Is there perhaps a general concept of "last clear chance" that may be extracted from its common law
matrix and utilized as a general rule in negligence cases in a civil law jurisdiction like ours? We do not
believe so. Under Article 2179, the task of a court, in technical terms, is to determine whose negligence
— the plaintiff's or the defendant's — was the legal or proximate cause of the injury. That task is not
simply or even primarily an exercise in chronology or physics, as the petitioners seem to imply by the
use of terms like "last" or "intervening" or "immediate." The relative location in the continuum of time of
the plaintiff's and the defendant's negligent acts or omissions, is only one of the relevant factors that
may be taken into account. Of more fundamental importance are the nature of the negligent act or
omission of each party and the character and gravity of the risks created by such act or omission for
the rest of the community. The petitioners urge that the truck driver (and therefore his employer) should
be absolved from responsibility for his own prior negligence because the unfortunate plaintiff failed to
act with that increased diligence which had become necessary to avoid the peril precisely created by
the truck driver's own wrongful act or omission. To accept this proposition is to come too close to
wiping out the fundamental principle of law that a man must respond for the forseeable consequences
of his own negligent act or omission. Our law on quasi-delicts seeks to reduce the risks and burdens of
living in society and to allocate them among the members of society. To accept the petitioners' pro-
position must tend to weaken the very bonds of society.
Petitioner Carbonel's proven negligence creates a presumption of negligence on the part of his
employer Phoenix 16in supervising its employees properly and adequately. The respondent appellate
court in effect found, correctly in our opinion, that Phoenix was not able to overcome this presumption
of negligence. The circumstance that Phoenix had allowed its truck driver to bring the dump truck to his
home whenever there was work to be done early the following morning, when coupled with the failure
to show any effort on the part of Phoenix to supervise the manner in which the dump truck is parked
when away from company premises, is an affirmative showing of culpa in vigilando on the part of
Phoenix.
Turning to the award of damages and taking into account the comparative negligence of private
respondent Dionisio on one hand and petitioners Carbonel and Phoenix upon the other hand, 17 we
believe that the demands of substantial justice are satisfied by allocating most of the damages on a 20-
80 ratio. Thus, 20% of the damages awarded by the respondent appellate court, except the award of
P10,000.00 as exemplary damages and P4,500.00 as attorney's fees and costs, shall be borne by
private respondent Dionisio; only the balance of 80% needs to be paid by petitioners Carbonel and
Phoenix who shall be solidarity liable therefor to the former. The award of exemplary damages and
attorney's fees and costs shall be borne exclusively by the petitioners. Phoenix is of course entitled to
reimbursement from Carbonel. 18 We see no sufficient reason for disturbing the reduced award of
damages made by the respondent appellate court.
WHEREFORE, the decision of the respondent appellate court is modified by reducing the aggregate
amount of compensatory damages, loss of expected income and moral damages private respondent
Dionisio is entitled to by 20% of such amount. Costs against the petitioners.
SO ORDERED.
G.R. No. 112160 February 28, 2000
OSMUNDO S. CANLAS and ANGELINA CANLAS, petitioner,
vs.
COURT OF APPEALS, ASIAN SAVINGS BANK, MAXIMO C. CONTRARES and VICENTE
MAÑOSCA,respondents.
PURISIMA, J.:
At bar is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to review and
set aside the Decision1 of the Court of Appeals in CA-G.R. CV No. 25242, which reversed the
Decision2 of Branch 59 of the Regional Trial Court of Makati City in Civil Case No. M-028; the
dispositive portion of which reads:
WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE and a
new one is hereby entered DISMISSING the complaint of the spouses Osmundo and
Angelina Canlas. On the counterclaim of defendant Asian Savings Bank, the plaintiffs
Canlas spouses are hereby ordered to pay the defendant Asian Savings Bank the amount
of P50,000.00 as moral and exemplary damages, plus P15,000.00 as and for attorney's
fees.
With costs against appellees.
3
SO ORDERED.
The facts that matter:
Sometime in August, 1982, the petitioner, Osmundo S. Canlas, and private respondent, Vicente
Mañosca, decided to venture in business and to raise the capital needed therefor. The former then
executed a Special Power of Attorney authorizing the latter to mortgage two parcels of land situated in
San Dionisio, (BF Homes) Paranaque, Metro Manila, each lot with semi-concrete residential house
existing thereon, and respectively covered by Transfer Certificate of Title No. 54366 in his (Osmundo's)
name and Transfer Certificate of Title No. S-78498 in the name of his wife Angelina Canlas.
Subsequently, Osmundo Canlas agreed to sell the said parcels of land to Vicente Mañosca, for and in
consideration of P850,000.00, P500,000.00 of which payable within one week, and the balance of
P350,000.00 to serve as his (Osmundo's) investment in the business. Thus, Osmundo Canlas
delivered to Vicente Mañosca the transfer certificates of title of the parcels of land involved. Vicente
Mañosca, as his part of the transaction, issued two postdated checks in favor of Osmundo Canlas in
the amounts of P40,000.00 and P460,000.00, respectively, but it turned out that the check covering the
bigger amount was not sufficiently funded.4
On September 3, 1982, Vicente Mañosca was able to mortgage the same parcels of land for
P100,000.00 to a certain Attorney Manuel Magno, with the help of impostors who misrepresented
themselves as the spouses, Osmundo Canlas and Angelina Canlas.5
On September 29, 1982, private respondent Vicente Mañosca was granted a loan by the respondent
Asian Savings Bank (ASB) in the amount of P500,000.00, with the use of subject parcels of land as
security, and with the involvement of the same impostors who again introduced themselves as the
Canlas spouses.6 When the loan it extended was not paid, respondent bank extrajudicially foreclosed
the mortgage.
On January 15, 1983, Osmundo Canlas wrote a letter informing the respondent bank that the
execution of subject mortgage over the two parcels of land in question was without their (Canlas
spouses) authority, and request that steps be taken to annul and/or revoke the questioned mortgage.
On January 18, 1983, petitioner Osmundo Canlas also wrote the office of Sheriff Maximo O. Contreras,
asking that the auction sale scheduled on February 3, 1983 be cancelled or held in abeyance. But
respondents Maximo C. Contreras and Asian Savings Bank refused to heed petitioner Canlas' stance
and proceeded with the scheduled auction sale.7
Consequently, on February 3, 1983 the herein petitioners instituted the present case for annulment of
deed of real estate mortgage with prayer for the issuance of a writ of preliminary injunction; and on
May 23, 1983, the trial court issued an Order restraining the respondent sheriff from issuing the
corresponding Certificate of Sheriff's Sale.8
For failure to file his answer, despite several motions for extension of time for the filing thereof, Vicente
Mañosca was declared in default.9
On June 1, 1989, the lower court a quo came out with a decision annulling subject deed of mortgage
and disposing, thus:
Premises considered, judgment is hereby rendered as follows.1âwphi1.nêt
1. Declaring the deed of real estate mortgage (Exhibit "L") involving the
properties of the plaintiffs as null and void;
2. Declaring the public auction sale conducted by the defendant Sheriff, involving
the same properties as illegal and without binding effect;
3. Ordering the defendants, jointly and severally, to pay the plaintiffs the sum of
P20,000.00 representing attorney's fees;
4. On defendant ASB's crossclaim: ordering the cross-defendant Vicente
Mañosca to pay the defendant ASB the sum of P350,000.00, representing the
amount which he received as proceeds of the loan secured by the void
mortgage, plus interest at the legal rate, starting February 3, 1983, the date when
the original complaint was filed, until the amount is fully paid;
5. With costs against the defendants.
SO ORDERED.10
From such Decision below, Asian Savings Bank appealed to the Court of Appeals, which handed down
the assailed judgment of reversal, dated September 30, 1983, in CA-G.R. CV No. 25242. Dissatisfied
therewith, the petitioners found their way to this Court via the present Petition; theorizing that:
I
RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT THE MORTGAGE OF THE
PROPERTIES SUBJECT OF THIS CASE WAS VALID.
 II
RESPONDENT COURT OF APPEALS ERRED IN HIOLDING THAT PETITIONERS ARE NOT
ENTITLED TO RELIEF BECAUSE THEY WERE NEGLIGENT AND THEREFORE MUST BEAR THE
LOSS.
III
RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT ASB
EXERCISED DUE DILIGENCE IN GRANTING THE LOAN APPLICATION OF RESPONDENT.
spouses OSMUNDO CANLAS and ANGELINA CANLAS, the basis for such approval was
that according to you all the signatures and other things taken into account matches with
that of the document previously executed by the spouses CANLAS?
Q: That is the only basis for accepting the signature on the mortgage, the basis for the
recommendation of the approval of the loan are the financial statement of MAÑOSCA?
A: Yes; among others the signature and TAX Account Number, Residence Certificate
appearing on the previous loan executed by the spouses CANLAS, I am referring to
EXHIBIT 5, mortgage to ATTY. MAGNO, those were made the basis.

IV
RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT ASB DID NOT
ACT WITH BAD FAITH IN PROCEEDING WITH THE FORECLOSURE SALE OF THE PROPERTIES.
A: That is just the basis of accepting the signature, because at that time the loan have
been approved already on the basis of the financial statement of the client the Bank
Statement. Wneh (sic) it was approved we have to base it on the Financial statement of the
client, the signatures were accepted only for the purpose of signing the mortgage not for the
approval, we don't (sic) approve loans on the signature.

V ATTY. CLAROS:

RESPONDENT COURT OF APPEALS ERRED IN AWARDING RESPONDENT ASB MORAL Would you agree that as part of ascertaining the identify of the parties particularly
DAMAGES.11 the mortgage, you don't consider also the signature, the Residence Certificate,
the particular address of the parties involved.

The Petition is impressed with merit.

A: I think the question defers (sic) from what you asked a while ago.

Art. 1173 of the Civil Code, provides:

Q: Among others?

Art. 1173. The fault or negligence of the obligor consist in the omission of that diligence
which is required by the nature of the obligation and corresponds with the circumstances of A: We have to accept the signature on the basis of the other signatures given to us it
the persons, of the time and of the place. When negligence shows bad faith, the provisions being a public instrument.
of articles 1171 and 2201, paragraph 2, shall apply.
ATTY. CARLOS:
If the law or contract does not state the diligence which is to be observed in the
performance, that which is expected of a good father of a family shall be required. (1104) You mean to say the criteria of ascertaining the identity of the mortgagor does
not depend so much on the signature on the residence certificate they have
The degree of diligence required of banks is more than that of a good father of a family;12 in keeping presented.
with their responsibility to exercise the necessary care and prudence in dealing even on a registered or
titled property. The business of a bank is affected with public interest, holding in trust the money of the A: We have to accept that.
depositors, which bank deposits the bank should guard against loss due to negligence or bad faith, by
reason of which the bank would be denied the protective mantle of the land registration law, accorded
only to purchasers or mortgagees for value and in good faith.13 xxx xxx xxx

In the case under consideration, from the evidence on hand it can be gleaned unerringly that A: We accepted the signature on the basis of the mortgage in favor of ATTY. MAGNO
respondent bank did not observe the requisite diligence in ascertaining or verifying the real identity of duly notarized which I have been reiterrting (sic) entitled to full faith considering that it is a
the couple who introduced themselves as the spouses Osmundo Canlas and Angelina Canlas. It is public instrument.
worthy to note that not even a single identification card was exhibited by the said impostors to show
their true identity; and yet, the bank acted on their representations simply on the basis of the residence
certificates bearing signatures which tended to match the signatures affixed on a previous deed of ATTY. CARLOS:
mortgage to a certain Atty. Magno, covering the same parcels of land in question. Felizado Mangubat,
Assistant Vice President of Asian Savings Bank, thus testified inter alia: What other requirement did you take into account in ascertaining the
identification of the parties particularly the mortgagor in this case.
xxx xxx xxx
A: Residence Certificate.
Q: According to you, the basis for your having recommended for the approval of
MANASCO's (sic) loan particularly that one involving the property of plaintiff in this case, the Q: Is that all, is that the only requirement?
 A: We requested for others but they could not produce, and because they presented Collectively, the foregoing circumstances cannot but conjure to a single conclusion that
to us the Residence Certificate which matches on the signature on the Residence Certificate Osmundo active participated in the loan application of defendant Asian Savings Bank, which
in favor of Atty. Magno.14 culminated in his receiving a portion of the process thereof:18

Evidently, the efforts exerted by the bank to verify the identity of the couple posing as Osmundo Canlas
and Angelina Canlas fell short of the responsibility of the bank to observe more than the diligence of a
good father of a family. The negligence of respondent bank was magnified by the fact that the previous
deed of mortgage (which was used as the basis for checking the genuineness of the signatures of the
supposed Canlas spouses) did not bear the tax account number of the spouses,15 as well as the
Community Tax Certificate of Angelina Canlas.16 But such fact notwithstanding, the bank did not
require the impostors to submit additional proof of their true identity.
A meticulous and painstaking scrutiny of the Records on hand, reveals, however, that the findings
arrived at by the Court of Appeals are barren of any sustainable basis. For instance, the execution of
the deeds of mortgages constituted by Mañosca on subject pieces of property of petitioners were made
possible not by the Special Power of Attorney executed by Osmundo Canlas in favor of Mañosca but
through the use of impostors who misrepresented themselves as the spouses Angelina Canlas and
Osmundo Canlas. It cannot be said therefore, that the petitioners authorized Vicente Mañosca to
constitute the mortgage on their parcels of land.

Under the doctrine of last clear chance, which is applicable here, the respondent bank must suffer the What is more, Osmundo Canlas was introduced as "Leonardo Rey" by Vicente Mañosca, only on the
resulting loss. In essence, the doctrine of last clear chance is to the effect that where both parties are occasion of the luncheon meeting at the Metropolitan Club.19 Thereat, the failure of Osmundo Canlas
negligent but the negligent act of one is appreciably later in point of time than that of the other, or to rectify Mañosca's misrepresentations could not be taken as a fraudulent act. As well explained by
where it is impossible to determine whose fault or negligence brought about the occurrence of the the former, he just did not want to embarrass Mañosca, so that he waited for the end of the meeting to
incident, the one who had the last clear opportunity to avoid the impending harm but failed to do so, is correct Mañosca.20
chargeable with the consequences arising therefrom. Stated differently, the rule is that the antecedent
negligence of a person does not preclude recovery of damages caused by the supervening negligence
of the latter, who had the last fair chance to prevent the impending harm by the exercise of due Then, too, Osmundo Canlas recounted that during the said luncheon meeting, they did not talk about
diligence.17 the security or collateral for the loan of Mañosca with ASB.21 So also, Mrs. Josefina Rojo, who was the
Account Officer of Asian Savings Bank when Mañosca applied for subject loan, corroborated the
testimony of Osmundo Canlas, she testified:
Assuming that Osmundo Canlas was negligent in giving Vicente Mañosca the opportunity to perpetrate
the fraud, by entrusting to latter the owner's copy of the transfer certificates of title of subject parcels of
land, it cannot be denied that the bank had the last clear chance to prevent the fraud, by the simple xxx xxx xxx
expedient of faithfully complying with the requirements for banks to ascertain the identity of the persons
transacting with them. QUESTION: Now could you please describe out the lunch conference at the Metro
Club in Makati?
For not observing the degree of diligence required of banking institutions, whose business is impressed
with public interest, respondent Asian Savings Bank has to bear the loss sued upon. ANSWER: Mr. Mangubat, Mr. Mañosca and I did not discuss with respect to the loan
application and discuss primarily his business.
In ruling for respondent bank, the Court of Appeals concluded that the petitioner Osmundo Canlas was
a party to the fraudulent scheme of Mañosca and therefore, estopped from impugning the validity of xxx xxx xxx
subject deed of mortgage; ratiocinating thus:

QUESTION: So, what is the main topic of your discussion during the meeting?
xxx xxx xxx

ANSWER: The main topic war then, about his business although, Mr. Leonardo Rey,
Thus, armed with the titles and the special power of attorney, Mañosca went to the who actually turned out as Mr. Canlas, supplier of Mr. Mañosca.
defendant bank and applied for a loan. And when Mañosca came over to the bank to submit
additional documents pertinent to his loan application, Osmundo Canlas was with him,
together with a certain Rogelio Viray. At that time, Osmundo Canlas was introduced to the QUESTION: I see . . . other than the business of Mr. Mañosca, were there any other
bank personnel as "Leonardo Rey". topic discussed?

When he was introduced as "Leonardo Rey" for the first time Osmundo should have ANSWER: YES.
corrected Mañosca right away. But he did not. Instead, he even allowed Mañosca to avail of
his (Osmundo's) membership privileges at the Metropolitan Club when Mañosca invited two
QUESTION: And what was the topic:
officers of the defendant bank to a luncheon meeting which Osmundo also attended. And
during that meeting, Osmundo did not say who he really is, but even let Mañosca introduced
him again as "Leonardo Rey", which all the more indicates that he connived with Mañosca ANSWER: General Economy then.
in deceiving the defendant bank.
xxx xxx x x x22
Finally after the loan was finally approved, Osmundo accompanied Mañosca to the bank
when the loan was released. At that time, a manger's check for P200,000.00 was issued in
the name of Oscar Motorworks, which Osmundo admits he owns and operates. Verily, Osmundo Canlas was left unaware of the illicit plan of Mañosca, explaining thus why he
(Osmundo) did not bother to correct what Mañosca misrepresented and to assert ownership over the
two parcels of land in question.
Not only that; while it is true that Osmundo Canlas was with Vicente Mañosca when the latter
submitted the documents needed for his loan application, and when the check of P200,000.00 was
released, the former did not know that the collateral used by Mañosca for the said loan were their
(Canlas spouses') properties. Osmundo happened to be with Mañosca at the time because he wanted
to make sure that Mañosca would make good his promise to pay the balance of the purchase price of
the said lots out of the proceeds of the loan.23
The receipt by Osmundo Canlas of the P200,000.00 check from ASB could not estop him from
assailing the validity of the mortgage because the said amount was in payment of the parcels of land
he sold to Mañosca.24
What is decisively clear on record is that Mañosca managed to keep Osmundo Canlas uninformed of
his (Mañosca's) intention to use the parcels of land of the Canlas spouses as security for the loan
obtained from Asian Savings Bank. Since Vicente Mañosca showed Osmundo Canlas several
certificates of title of lots which, according to Mañosca were the collaterals, Osmundo Canlas was
confident that their (Canlases') parcels of land were not involved in the loan transactions with the Asian
Savings Bank.25 Under the attendant facts and circumstances, Osmundo Canlas was undoubtedly
negligent, which negligence made them (petitioners) undeserving of an award of attorney's fees.
Settled is the rule that a contract of mortgage must be constituted only by the absolute owner on the
property mortgaged;26 a mortgage, constituted by an impostor is void.27 Considering that it was
established indubitably that the contract of mortgage sued upon was entered into and signed by
impostors who misrepresented themselves as the spouses Osmundo Canlas and Angelina Canlas, the
Court is of the ineluctible conclusion and finding that subject contract of mortgage is a complete nullity.
WHEREFORE, the Petition is GRANTED and the Decision of the Court of Appeals, dated September
30, 1993, in CA-G.R. CV No. 25242 SET ASIDE. The Decision of Branch 59 of the Regional Trial
Court of Makati City in Civil Case No. M-028 is hereby REINSTATED. No pronouncement as to costs.
SO ORDERED.1âwphi1.nêt
FIRST DIVISION
G.R. No. 97626 March 14, 1997
PHILIPPINE BANK OF COMMERCE, now absorbed by PHILIPPINE COMMERCIAL
INTERNATIONAL BANK, ROGELIO LACSON, DIGNA DE LEON, MARIA ANGELITA PASCUAL, et
al., petitioners,
vs.
THE COURT OF APPEALS, ROMMEL'S MARKETING CORP., represented by ROMEO LIPANA,
its President & General Manager, respondents.
HERMOSISIMA, JR., J.:
Challenged in this petition for review is the Decision dated February 28, 19911 rendered by public
respondent Court of Appeals which affirmed the Decision dated November 15, 1985 of the Regional
Trial Court, National Capital Judicial Region, Branch CLX (160), Pasig City, in Civil Case No. 27288
entitled "Rommel's Marketing Corporation, etc. v. Philippine Bank of Commerce, now absorbed by
Philippine Commercial and Industrial Bank."
The case stemmed from a complaint filed by the private respondent Rommel's Marketing Corporation
(RMC for brevity), represented by its President and General Manager Romeo Lipana, to recover from
the former Philippine Bank of Commerce (PBC for brevity), now absorbed by the Philippine
Commercial International Bank, the sum of P304,979.74 representing various deposits it had made in
its current account with said bank but which were not credited to its account, and were instead
deposited to the account of one Bienvenido Cotas, allegedly due to the gross and inexcusable
negligence of the petitioner bank.
RMC maintained two (2) separate current accounts, Current Account Nos. 53-01980-3 and 53-01748-
7, with the Pasig Branch of PBC in connection with its business of selling appliances.
In the ordinary and usual course of banking operations, current account deposits are accepted by the
bank on the basis of deposit slips prepared and signed by the depositor, or the latter's agent or
representative, who indicates therein the current account number to which the deposit is to be credited,
the name of the depositor or current account holder, the date of the deposit, and the amount of the
deposit either in cash or checks. The deposit slip has an upper portion or stub, which is detached and
given to the depositor or his agent; the lower portion is retained by the bank. In some instances,
however, the deposit slips are prepared in duplicate by the depositor. The original of the deposit slip is
retained by the bank, while the duplicate copy is returned or given to the depositor.
From May 5, 1975 to July 16, 1976, petitioner Romeo Lipana claims to have entrusted RMC funds in
the form of cash totalling P304,979.74 to his secretary, Irene Yabut, for the purpose of depositing said
funds in the current accounts of RMC with PBC. It turned out, however, that these deposits, on all
occasions, were not credited to RMC's account but were instead deposited to Account No. 53-01734-7
of Yabut's husband, Bienvenido Cotas who likewise maintains an account with the same bank. During
this period, petitioner bank had, however, been regularly furnishing private respondent with monthly
statements showing its current accounts balances. Unfortunately, it had never been the practice of
Romeo Lipana to check these monthly statements of account reposing complete trust and confidence
on petitioner bank.
Irene Yabut's modus operandi is far from complicated. She would accomplish two (2) copies of the
deposit slip, an original and a duplicate. The original showed the name of her husband as depositor
and his current account number. On the duplicate copy was written the account number of her
husband but the name of the account holder was left blank. PBC's teller, Azucena Mabayad, would,
however, validate and stamp both the original and the duplicate of these deposit slips retaining only the
original copy despite the lack of information on the duplicate slip. The second copy was kept by Irene
Yabut allegedly for record purposes. After validation, Yabut would then fill up the name of RMC in the
space left blank in the duplicate copy and change the account number written thereon, which is that of
her husband's, and make it appear to be RMC's account number, i.e., C.A. No. 53-01980-3. With the
daily remittance records also prepared by Ms. Yabut and submitted to private respondent RMC
together with the validated duplicate slips with the latter's name and account number, she made her
company believe that all the while the amounts she deposited were being credited to its account when,
in truth and in fact, they were being deposited by her and credited by the petitioner bank in the account
of Cotas. This went on in a span of more than one (1) year without private respondent's knowledge.
Upon discovery of the loss of its funds, RMC demanded from petitioner bank the return of its money,
but as its demand went unheeded, it filed a collection suit before the Regional Trial Court of Pasig,
Branch 160. The trial court found petitioner bank negligent and ruled as follows:
WHEREFORE, judgment is hereby rendered sentencing defendant Philippine
Bank of Commerce, now absorbed by defendant Philippine Commercial &
Industrial Bank, and defendant Azucena Mabayad to pay the plaintiff, jointly and
severally, and without prejudice to any criminal action which may be instituted if
found warranted:
1. The sum of P304,979.72, representing plaintiffs lost deposit, plus interest
thereon at the legal rate from the filing of the complaint;
 2. A sum equivalent to 14% thereof, as exemplary damages;
3. A sum equivalent to 25% of the total amount due, as and for attorney's fees;
and
4. Costs.
Defendants' counterclaim is hereby dismissed for lack of merit.2
On appeal, the appellate court affirmed the foregoing decision with modifications, viz:
WHEREFORE, the decision appealed from herein is MODIFIED in the sense that
the awards of exemplary damages and attorney's fees specified therein are
eliminated and instead, appellants are ordered to pay plaintiff, in addition to the
principal sum of P304,979.74 representing plaintiff's lost deposit plus legal
interest thereon from the filing of the complaint, P25,000.00 attorney's fees and
costs in the lower court as well as in this Court.3
Hence, this petition anchored on the following grounds:
1) The proximate cause of the loss is the negligence of respondent Rommel
Marketing Corporation and Romeo Lipana in entrusting cash to a dishonest
employee.
2) The failure of respondent Rommel Marketing Corporation to cross-check the
bank's statements of account with its own records during the entire period of
more than one (1) year is the proximate cause of the commission of subsequent
frauds and misappropriation committed by Ms. Irene Yabut.
3) The duplicate copies of the deposit slips presented by respondent Rommel
Marketing Corporation are falsified and are not proof that the amounts appearing
thereon were deposited to respondent Rommel Marketing Corporation's account
with the bank,
4) The duplicate copies of the deposit slips were used by Ms. Irene Yabut to
cover up her fraudulent acts against respondent Rommel Marketing Corporation,
and not as records of deposits she made with the bank.4
The petition has no merit.
Simply put, the main issue posited before us is: What is the proximate cause of the loss, to the tune of
P304,979.74, suffered by the private respondent RMC — petitioner bank's negligence or that of private
respondent's?
Petitioners submit that the proximate cause of the loss is the negligence of respondent RMC and
Romeo Lipana in entrusting cash to a dishonest employee in the person of Ms. Irene
Yabut.5 According to them, it was impossible for the bank to know that the money deposited by Ms.
Irene Yabut belong to RMC; neither was the bank forewarned by RMC that Yabut will be depositing
cash to its account. Thus, it was impossible for the bank to know the fraudulent design of Yabut
considering that her husband, Bienvenido Cotas, also maintained an account with the bank. For the
bank to inquire into the ownership of the cash deposited by Ms. Irene Yabut would be irregular.
Otherwise stated, it was RMC's negligence in entrusting cash to a dishonest employee which provided
Ms. Irene Yabut the opportunity to defraud RMC.6
Private respondent, on the other hand, maintains that the proximate cause of the loss was the
negligent act of the bank, thru its teller Ms. Azucena Mabayad, in validating the deposit slips, both
original and duplicate, presented by Ms. Yabut to Ms. Mabayad, notwithstanding the fact that one of
the deposit slips was not completely accomplished.
We sustain the private respondent.
Our law on quasi-delicts states:
Art. 2176. Whoever by act or omission causes damage to another, there being
fault or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of this Chapter.
There are three elements of a quasi-delict: (a) damages suffered by the plaintiff; (b) fault or negligence
of the defendant, or some other person for whose acts he must respond; and (c) the connection of
cause and effect between the fault or negligence of the defendant and the damages incurred by the
plaintiff.7
In the case at bench, there is no dispute as to the damage suffered by the private respondent (plaintiff
in the trial court) RMC in the amount of P304,979.74. It is in ascribing fault or negligence which caused
the damage where the parties point to each other as the culprit.
Negligence is the omission to do something which a reasonable man, guided by those considerations
which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a
prudent and reasonable man would do. The seventy-eight (78)-year-old, yet still relevant, case
of Picart v. Smith,8 provides the test by which to determine the existence of negligence in a particular
case which may be stated as follows: Did the defendant in doing the alleged negligent act use that
reasonable care and caution which an ordinarily prudent person would have used in the same
situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to
be supplied by the imaginary conduct of the discreet paterfamilias of the Roman law. The existence of
negligence in a given case is not determined by reference to the personal judgment of the actor in the
situation before him. The law considers what would be reckless, blameworthy, or negligent in the man
of ordinary intelligence and prudence and determines liability by that.
Applying the above test, it appears that the bank's teller, Ms. Azucena Mabayad, was negligent in
validating, officially stamping and signing all the deposit slips prepared and presented by Ms. Yabut,
despite the glaring fact that the duplicate copy was not completely accomplished contrary to the self-
imposed procedure of the bank with respect to the proper validation of deposit slips, original or
duplicate, as testified to by Ms. Mabayad herself, thus:
Q: Now, as teller of PCIB, Pasig Branch, will you please tell
us Mrs. Mabayad your important duties and functions?
A: I accept current and savings deposits from depositors
and encashments.
Q: Now in the handling of current account deposits of bank
clients, could you tell us the procedure you follow?
A: The client or depositor or the authorized representative
prepares a deposit slip by filling up the deposit slip with the
name, the account number, the date, the cash breakdown,
if it is deposited for cash, and the check number, the
amount and then he signs the deposit slip.
 Q: Now, how many deposit slips do you normally require in
accomplishing current account deposit, Mrs. Mabayad?
A: The bank requires only one copy of the deposit although
some of our clients prepare the deposit slip in duplicate.
Q: Now in accomplishing current account deposits from
your clients, what do you issue to the depositor to evidence
the deposit made?
A: We issue or we give to the clients the depositor's stub as
a receipt of the deposit.
Q: And who prepares the deposit slip?
A: The depositor or the authorized representative sir?
Q: Where does the depositor's stub comes (sic) from Mrs.
Mabayad, is it with the deposit slip?
A: The depositor's stub is connected with the deposit slip or
the bank's copy. In a deposit slip, the upper portion is the
depositor's stub and the lower portion is the bank's copy,
and you can detach the bank's copy from the depositor's
stub by tearing it sir.
Q: Now what do you do upon presentment of the deposit
slip by the depositor or the depositor's authorized
representative?
A: We see to it that the deposit slip9 is properly
accomplished and then we count the money and then we
tally it with the deposit slip sir.
Q: Now is the depositor's stub which you issued to your
clients validated?
A: Yes, sir. 10 [Emphasis ours]
Clearly, Ms. Mabayad failed to observe this very important procedure. The fact that the
duplicate slip was not compulsorily required by the bank in accepting deposits should not
relieve the petitioner bank of responsibility. The odd circumstance alone that such duplicate
copy lacked one vital information — that of the name of the account holder — should have
already put Ms. Mabayad on guard. Rather than readily validating the incomplete duplicate
copy, she should have proceeded more cautiously by being more probing as to the true
reason why the name of the account holder in the duplicate slip was left blank while that in
the original was filled up. She should not have been so naive in accepting hook, line and
sinker the too shallow excuse of Ms. Irene Yabut to the effect that since the duplicate copy
was only for her personal record, she would simply fill up the blank space later on. 11 A
"reasonable man of ordinary prudence" 12 would not have given credence to such
explanation and would have insisted that the space left blank be filled up as a condition for
validation. Unfortunately, this was not how bank teller Mabayad proceeded thus resulting in
huge losses to the private respondent.
Negligence here lies not only on the part of Ms. Mabayad but also on the part of the bank itself in its
lackadaisical selection and supervision of Ms. Mabayad. This was exemplified in the testimony of Mr.
Romeo Bonifacio, then Manager of the Pasig Branch of the petitioner bank and now its Vice-President,
to the effect that, while he ordered the investigation of the incident, he never came to know that blank
deposit slips were validated in total disregard of the bank's validation procedures, viz:
Q: Did he ever tell you that one of your cashiers affixed the
stamp mark of the bank on the deposit slips and they
validated the same with the machine, the fact that those
deposit slips were unfilled up, is there any report similar to
that?
A: No, it was not the cashier but the teller.
Q: The teller validated the blank deposit slip?
A: No it was not reported.
Q: You did not know that any one in the bank tellers or
cashiers validated the blank deposit slip?
A: I am not aware of that.
Q: It is only now that you are aware of that?
A: Yes, sir. 13
Prescinding from the above, public respondent Court of Appeals aptly observed:
xxx xxx xxx
It was in fact only when he testified in this case in February, 1983, or after the
lapse of more than seven (7) years counted from the period when the funds in
question were deposited in plaintiff's accounts (May, 1975 to July, 1976) that
bank manager Bonifacio admittedly became aware of the practice of his teller
Mabayad of validating blank deposit slips. Undoubtedly, this is gross, wanton,
and inexcusable negligence in the appellant bank's supervision of its
employees. 14
It was this negligence of Ms. Azucena Mabayad, coupled by the negligence of the petitioner bank in
the selection and supervision of its bank teller, which was the proximate cause of the loss suffered by
the private respondent, and not the latter's act of entrusting cash to a dishonest employee, as insisted
by the petitioners.
Proximate cause is determined on the facts of each case upon mixed considerations of logic, common
sense, policy and precedent. 15 Vda. de Bataclan v. Medina, 16 reiterated in the case of Bank of the
Phil. Islands v. Court of Appeals, 17 defines proximate cause as "that cause, which, in natural and
continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without
which the result would not have occurred. . . ." In this case, absent the act of Ms. Mabayad in
negligently validating the incomplete duplicate copy of the deposit slip, Ms. Irene Yabut would not have
the facility with which to perpetrate her fraudulent scheme with impunity. Apropos, once again, is the
pronouncement made by the respondent appellate court, to wit:
 . . . . Even if Yabut had the fraudulent intention to misappropriate the funds
entrusted to her by plaintiff, she would not have been able to deposit those funds
in her husband's current account, and then make plaintiff believe that it was in
the latter's accounts wherein she had deposited them, had it not been for bank
teller Mabayad's aforesaid gross and reckless negligence. The latter's negligence
was thus the proximate, immediate and efficient cause that brought about the
loss claimed by plaintiff in this case, and the failure of plaintiff to discover the
same soon enough by failing to scrutinize the monthly statements of account
being sent to it by appellant bank could not have prevented the fraud and
misappropriation which Irene Yabut had already completed when she deposited
plaintiff's money to the account of her husband instead of to the latter's
accounts. 18
Furthermore, under the doctrine of "last clear chance" (also referred to, at times as "supervening
negligence" or as "discovered peril"), petitioner bank was indeed the culpable party. This doctrine, in
essence, states that where both parties are negligent, but the negligent act of one is appreciably later
in time than that of the other, or when it is impossible to determine whose fault or negligence should be
attributed to the incident, the one who had the last clear opportunity to avoid the impending harm and
failed to do so is chargeable with the consequences thereof. 19Stated differently, the rule would also
mean that an antecedent negligence of a person does not preclude the recovery of damages for the
supervening negligence of, or bar a defense against liability sought by another, if the latter, who had
the last fair chance, could have avoided the impending harm by the exercise of due diligence. 20Here,
assuming that private respondent RMC was negligent in entrusting cash to a dishonest employee, thus
providing the latter with the opportunity to defraud the company, as advanced by the petitioner, yet it
cannot be denied that the petitioner bank, thru its teller, had the last clear opportunity to avert the injury
incurred by its client, simply by faithfully observing their self-imposed validation procedure.
At this juncture, it is worth to discuss the degree of diligence ought to be exercised by banks in dealing
with their clients.
The New Civil Code provides:
Art. 1173. The fault or negligence of the obligor consists in the omission of that
diligence which is required by the nature of the obligation and corresponds with
the circumstances of the persons, of the time and of the place. When negligence
shows bad faith, the provisions of articles 1171 and 2201, paragraph 2, shall
apply.
If the law or contract does not state the diligence which is to be observed in the
performance, that which is expected of a good father of a family shall be
required. (1104a)
In the case of banks, however, the degree of diligence required is more than that of a good father of a
family. Considering the fiduciary nature of their relationship with their depositors, banks are duty bound
to treat the accounts of their clients with the highest degree of care. 21
As elucidated in Simex International (Manila), Inc. v. Court of Appeals, 22 in every case, the depositor
expects the bank to treat his account with the utmost fidelity, whether such account consists only of a
few hundred pesos or of millions. The bank must record every single transaction accurately, down to
the last centavo, and as promptly as possible. This has to be done if the account is to reflect at any
given time the amount of money the depositor can dispose as he sees fit, confident that the bank will
deliver it as and to whomever he directs. A blunder on the part of the bank, such as the failure to duly
credit him his deposits as soon as they are made, can cause the depositor not a little embarrassment if
not financial loss and perhaps even civil and criminal litigation.
The point is that as a business affected with public interest and because of the nature of its functions,
the bank is under obligation to treat the accounts of its depositors with meticulous care, always having
in mind the fiduciary nature of their relationship. In the case before us, it is apparent that the petitioner
bank was remiss in that duty and violated that relationship.
Petitioners nevertheless aver that the failure of respondent RMC to cross-check the bank's statements
of account with its own records during the entire period of more than one (1) year is the proximate
cause of the commission of subsequent frauds and misappropriation committed by Ms. Irene Yabut.
We do not agree.
While it is true that had private respondent checked the monthly statements of account sent by the
petitioner bank to RMC, the latter would have discovered the loss early on, such cannot be used by the
petitioners to escape liability. This omission on the part of the private respondent does not change the
fact that were it not for the wanton and reckless negligence of the petitioners' employee in validating
the incomplete duplicate deposit slips presented by Ms. Irene Yabut, the loss would not have occurred.
Considering, however, that the fraud was committed in a span of more than one (1) year covering
various deposits, common human experience dictates that the same would not have been possible
without any form of collusion between Ms. Yabut and bank teller Mabayad. Ms. Mabayad was
negligent in the performance of her duties as bank teller nonetheless. Thus, the petitioners are entitled
to claim reimbursement from her for whatever they shall be ordered to pay in this case.
The foregoing notwithstanding, it cannot be denied that, indeed, private respondent was likewise
negligent in not checking its monthly statements of account. Had it done so, the company would have
been alerted to the series of frauds being committed against RMC by its secretary. The damage would
definitely not have ballooned to such an amount if only RMC, particularly Romeo Lipana, had exercised
even a little vigilance in their financial affairs. This omission by RMC amounts to contributory
negligence which shall mitigate the damages that may be awarded to the private respondent 23 under
Article 2179 of the New Civil Code, to wit:
. . . When the plaintiff's own negligence was the immediate and proximate cause
of his injury, he cannot recover damages. But if his negligence was only
contributory, the immediate and proximate cause of the injury being the
defendant's lack of due care, the plaintiff may recover damages, but the courts
shall mitigate the damages to be awarded.
In view of this, we believe that the demands of substantial justice are satisfied by allocating
the damage on a 60-40 ratio. Thus, 40% of the damage awarded by the respondent
appellate court, except the award of P25,000.00 attorney's fees, shall be borne by private
respondent RMC; only the balance of 60% needs to be paid by the petitioners. The award of
attorney's fees shall be borne exclusively by the petitioners.
WHEREFORE, the decision of the respondent Court of Appeals is modified by reducing the amount of
actual damages private respondent is entitled to by 40%. Petitioners may recover from Ms. Azucena
Mabayad the amount they would pay the private respondent. Private respondent shall have recourse
against Ms. Irene Yabut. In all other respects, the appellate court's decision is AFFIRMED.
Proportionate costs.
SO ORDERED.
Bellosillo, Vitug and Kapunan, JJ., concur.
Separate Opinions

PADILLA, J., dissenting:
I regret that I cannot join the majority in ruling that the proximate cause of the damage suffered by
Rommel's Marketing Corporation (RMC) is mainly "the wanton and reckless negligence of the
petitioner's employee in validating the incomplete duplicate deposit slips presented by Ms. Irene Yabut"
(Decision, p. 15). Moreover, I find it difficult to agree with the ruling that "petitioners are entitled to claim
reimbursement from her (the bank teller) for whatever they shall be ordered to pay in this case."
It seems that an innocent bank teller is being unduly burdened with what should fall on Ms. Irene
Yabut, RMC's own employee, who should have been charged with estafa or estafa through falsification
of private document. Interestingly, the records are silent on whether RMC had ever filed any criminal
case against Ms. Irene Yabut, aside from the fact that she does not appear to have been impleaded
even as a party defendant in any civil case for damages. Why is RMC insulating Ms. Irene Yabut from
liability when in fact she orchestrated the entire fraud on RMC, her employer?
To set the record straight, it is not completely accurate to state that from 5 May 1975 to 16 July 1976,
Miss Irene Yabut had transacted with PCIB (then PBC) through only one teller in the person of
Azucena Mabayad. In fact, when RMC filed a complaint for estafa before the Office of the Provincial
Fiscal of Rizal, it indicted all the tellers of PCIB in the branch who were accused of conspiracy to
defraud RMC of its current account deposits. (See Annex B, Rollo p. 22 and 47).
Even private respondent RMC, in its Comment, maintains that "when the petitioner's tellers" allowed
Irene Yabut to carry out her modus operandi undetected over a period of one year, "their negligence
cannot but be gross." (Rollo, p. 55; see also Rollo pp. 58 to 59). This rules out the possibility that there
may have been some form of collusion between Yabut and bank teller Mabayad. Mabayad was just
unfortunate that private respondent's documentary evidence showed that she was the attending teller
in the bulk of Yabut's transactions with the bank.
Going back to Yabut's modus operandi, it is not disputed that each time Yabut would transact business
with PBC's tellers, she would accomplish two (2) copies of the current account deposit slip. PBC's
deposit slip, as issued in 1975, had two parts. The upper part was called the depositor's stub and the
lower part was called the bank copy. Both parts were detachable from each other. The deposit slip was
prepared and signed by the depositor or his representative, who indicated therein the current account
number to which the deposit was to be credited, the name of the depositor or current account holder,
the date of the deposit, and the amount of the deposit either in cash or in checks. (Rollo, p. 137)
Since Yabut deposited money in cash, the usual bank procedure then was for the teller to count
whether the cash deposit tallied with the amount written down by the depositor in the deposit slip. If it
did, then the teller proceeded to verify whether the current account number matched with the current
account name as written in the deposit slip.
In the earlier days before the age of full computerization, a bank normally maintained a ledger which
served as a repository of accounts to which debits and credits resulting from transactions with the bank
were posted from books of original entry. Thus, it was only after the transaction was posted in the
ledger that the teller proceeded to machine validate the deposit slip and then affix his signature or
initial to serve as proof of the completed transaction.
It should be noted that the teller validated the depositor's stub in the upper portion and the bank copy
on the lower portion on both the original and duplicate copies of the deposit slips presented by Yabut.
The teller, however, detached the validated depositor's stub on the original deposit slip and allowed
Yabut to retain the whole validated duplicate deposit slip that bore the same account number as the
original deposit slip, but with the account name purposely left blank by Yabut, on the assumption that it
would serve no other purpose but for a personal record to complement the original validated
depositor's stub.
Thus, when Yabut wrote the name of RMC on the blank account name on the validated duplicate copy
of the deposit slip, tampered with its account number, and superimposed RMC's account number, said
act only served to cover-up the loss already caused by her to RMC, or after the deposit slip was
validated by the teller in favor of Yabut's husband. Stated otherwise, when there is a clear evidence of
tampering with any of the material entries in a deposit slip, the genuineness and due execution of the
document become an issue in resolving whether or not the transaction had been fair and regular and
whether the ordinary course of business had been followed by the bank.
It is logical, therefore, to conclude that the legal or proximate cause of RMC's loss was when Yabut, its
employee, deposited the money of RMC in her husband's name and account number instead of that of
RMC, the rightful owner of such deposited funds. Precisely, it was the criminal act of Yabut that directly
caused damage to RMC, her employer, not the validation of the deposit slip by the teller as the deposit
slip was made out by Yabut in her husband's name and to his account.
Even if the bank teller had required Yabut to completely fill up the duplicate deposit slip, the original
deposit slip would nonetheless still be validated under the account of Yabut's husband. In fine, the
damage had already been done to RMC when Yabut deposited its funds in the name and account
number of her husband with petitioner bank. It is then entirely left to speculation what Yabut would
have done afterwards — like tampering both the account number and the account name on the stub of
the original deposit slip and on the duplicate copy — in order to cover up her crime.
Under the circumstances in this case, there was no way for PBC's bank tellers to reasonably foresee
that Yabut might or would use the duplicate deposit slip to cover up her crime. In the first place, the
bank tellers were absolutely unaware that a crime had already been consummated by Yabut when her
transaction by her sole doing was posted in the ledger and validated by the teller in favor of her
husband's account even if the funds deposited belonged to RMC.
The teller(s) in this case were not in any way proven to be parties to the crime either as accessories or
accomplices. Nor could it be said that the act of posting and validation was in itself a negligent act
because the teller(s) simply had no choice but to accept and validate the deposit as written in the
original deposit slip under the account number and name of Yabut's husband. Hence, the act of
validating the duplicate copy was not the proximate cause of RMC's injury but merely a remote cause
which an independent cause or agency merely took advantage of to accomplish something which was
not the probable or natural effect thereof. That explains why Yabut still had to tamper with the account
number of the duplicate deposit slip after filling in the name of RMC in the blank space.
Coming now to the doctrine of "last clear chance," it is my considered view that the doctrine assumes
that the negligence of the defendant was subsequent to the negligence of the plaintiff and the same
must be the proximate cause of the injury. In short, there must be a last and a clear chance, not a
last possible chance, to avoid the accident or injury. It must have been a chance as would have
enabled a reasonably prudent man in like position to have acted effectively to avoid the injury and the
resulting damage to himself.
In the case at bar, the bank was not remiss in its duty of sending monthly bank statements to private
respondent RMC so that any error or discrepancy in the entries therein could be brought to the bank's
attention at the earliest opportunity. Private respondent failed to examine these bank statements not
because it was prevented by some cause in not doing so, but because it was purposely negligent as it
admitted that it does not normally check bank statements given by banks.
It was private respondent who had the last and clear chance to prevent any further misappropriation by
Yabut had it only reviewed the status of its current accounts on the bank statements sent to it monthly
or regularly. Since a sizable amount of cash was entrusted to Yabut, private respondent should, at
least, have taken ordinary care of its concerns, as what the law presumes. Its negligence, therefore, is
not contributory but the immediate and proximate cause of its injury.
I vote to grant the petition.

Separate Opinions
PADILLA, J., dissenting:
I regret that I cannot join the majority in ruling that the proximate cause of the damage suffered by
Rommel's Marketing Corporation (RMC) is mainly "the wanton and reckless negligence of the
petitioner's employee in validating the incomplete duplicate deposit slips presented by Ms. Irene Yabut"
(Decision, p. 15). Moreover, I find it difficult to agree with the ruling that "petitioners are entitled to claim
reimbursement from her (the bank teller) for whatever they shall be ordered to pay in this case."
It seems that an innocent bank teller is being unduly burdened with what should fall on Ms. Irene
Yabut, RMC's own employee, who should have been charged with estafa or estafa through falsification
of private document. Interestingly, the records are silent on whether RMC had ever filed any criminal
case against Ms. Irene Yabut, aside from the fact that she does not appear to have been impleaded
even as a party defendant in any civil case for damages. Why is RMC insulating Ms. Irene Yabut from
liability when in fact she orchestrated the entire fraud on RMC, her employer?
To set the record straight, it is not completely accurate to state that from 5 May 1975 to 16 July 1976,
Miss Irene Yabut had transacted with PCIB (then PBC) through only one teller in the person of
Azucena Mabayad. In fact, when RMC filed a complaint for estafa before the Office of the Provincial
Fiscal of Rizal, it indicted all the tellers of PCIB in the branch who were accused of conspiracy to
defraud RMC of its current account deposits. (See Annex B, Rollo p. 22 and 47).
Even private respondent RMC, in its Comment, maintains that "when the petitioner's tellers" allowed
Irene Yabut to carry out her modus operandi undetected over a period of one year, "their negligence
cannot but be gross." (Rollo, p. 55; see also Rollo pp. 58 to 59). This rules out the possibility that there
may have been some form of collusion between Yabut and bank teller Mabayad. Mabayad was just
unfortunate that private respondent's documentary evidence showed that she was the attending teller
in the bulk of Yabut's transactions with the bank.
Going back to Yabut's modus operandi, it is not disputed that each time Yabut would transact business
with PBC's tellers, she would accomplish two (2) copies of the current account deposit slip. PBC's
deposit slip, as issued in 1975, had two parts. The upper part was called the depositor's stub and the
lower part was called the bank copy. Both parts were detachable from each other. The deposit slip was
prepared and signed by the depositor or his representative, who indicated therein the current account
number to which the deposit was to be credited, the name of the depositor or current account holder,
the date of the deposit, and the amount of the deposit either in cash or in checks. (Rollo, p. 137)
Since Yabut deposited money in cash, the usual bank procedure then was for the teller to count
whether the cash deposit tallied with the amount written down by the depositor in the deposit slip. If it
did, then the teller proceeded to verify whether the current account number matched with the current
account name as written in the deposit slip.
In the earlier days before the age of full computerization, a bank normally maintained a ledger which
served as a repository of accounts to which debits and credits resulting from transactions with the bank
were posted from books of original entry. Thus, it was only after the transaction was posted in the
ledger that the teller proceeded to machine validate the deposit slip and then affix his signature or
initial to serve as proof of the completed transaction.
It should be noted that the teller validated the depositor's stub in the upper portion and the bank copy
on the lower portion on both the original and duplicate copies of the deposit slips presented by Yabut.
The teller, however, detached the validated depositor's stub on the original deposit slip and allowed
Yabut to retain the whole validated duplicate deposit slip that bore the same account number as the
original deposit slip, but with the account name purposely left blank by Yabut, on the assumption that it
would serve no other purpose but for a personal record to complement the original validated
depositor's stub.
Thus, when Yabut wrote the name of RMC on the blank account name on the validated duplicate copy
of the deposit slip, tampered with its account number, and superimposed RMC's account number, said
act only served to cover-up the loss already caused by her to RMC, or after the deposit slip was
validated by the teller in favor of Yabut's husband. Stated otherwise, when there is a clear evidence of
tampering with any of the material entries in a deposit slip, the genuineness and due execution of the
document become an issue in resolving whether or not the transaction had been fair and regular and
whether the ordinary course of business had been followed by the bank.
It is logical, therefore, to conclude that the legal or proximate cause of RMC's loss was when Yabut, its
employee, deposited the money of RMC in her husband's name and account number instead of that of
RMC, the rightful owner of such deposited funds. Precisely, it was the criminal act of Yabut that directly
caused damage to RMC, her employer, not the validation of the deposit slip by the teller as the deposit
slip was made out by Yabut in her husband's name and to his account.
Even if the bank teller had required Yabut to completely fill up the duplicate deposit slip, the original
deposit slip would nonetheless still be validated under the account of Yabut's husband. In fine, the
damage had already been done to RMC when Yabut deposited its funds in the name and account
number of her husband with petitioner bank. It is then entirely left to speculation what Yabut would
have done afterwards — like tampering both the account number and the account name on the stub of
the original deposit slip and on the duplicate copy — in order to cover up her crime.
Under the circumstances in this case, there was no way for PBC's bank tellers to reasonably foresee
that Yabut might or would use the duplicate deposit slip to cover up her crime. In the first place, the
bank tellers were absolutely unaware that a crime had already been consummated by Yabut when her
transaction by her sole doing was posted in the ledger and validated by the teller in favor of her
husband's account even if the funds deposited belonged to RMC.
The teller(s) in this case were not in any way proven to be parties to the crime either as accessories or
accomplices. Nor could it be said that the act of posting and validation was in itself a negligent act
because the teller(s) simply had no choice but to accept and validate the deposit as written in the
original deposit slip under the account number and name of Yabut's husband. Hence, the act of
validating the duplicate copy was not the proximate cause of RMC's injury but merely a remote cause
which an independent cause or agency merely took advantage of to accomplish something which was
not the probable or natural effect thereof. That explains why Yabut still had to tamper with the account
number of the duplicate deposit slip after filling in the name of RMC in the blank space.
Coming now to the doctrine of "last clear chance," it is my considered view that the doctrine assumes
that the negligence of the defendant was subsequent to the negligence of the plaintiff and the same
must be the proximate cause of the injury. In short, there must be a last and a clear chance, not a
last possible chance, to avoid the accident or injury. It must have been a chance as would have
enabled a reasonably prudent man in like position to have acted effectively to avoid the injury and the
resulting damage to himself.
In the case at bar, the bank was not remiss in its duty of sending monthly bank statements to private
respondent RMC so that any error or discrepancy in the entries therein could be brought to the bank's
attention at the earliest opportunity. Private respondent failed to examine these bank statements not
because it was prevented by some cause in not doing so, but because it was purposely negligent as it
admitted that it does not normally check bank statements given by banks.
It was private respondent who had the last and clear chance to prevent any further misappropriation by
Yabut had it only reviewed the status of its current accounts on the bank statements sent to it monthly
or regularly. Since a sizable amount of cash was entrusted to Yabut, private respondent should, at
least, have taken ordinary care of its concerns, as what the law presumes. Its negligence, therefore, is
not contributory but the immediate and proximate cause of its injury.
I vote to grant the petition.
G.R. No. 116100 February 9, 1996
SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES LITO and MARIA CRISTINA
SANTOS,petitioners,
vs.
COURT OF APPEALS, HEIRS OF PACIFICO C. MABASA and REGIONAL TRIAL COURT OF
PASIG, METRO MANILA, BRANCH 181, respondents.
DECISION
REGALADO, J.:
This petition for review on certiorari assails the decision of respondent Court of Appeals in CA-G.R. CV
No. 29115, promulgated on November 10, 1993, which affirmed with modification the decision of the
trial court, as well as its resolution dated July 8, 1994 denying petitioner's motion for reconsideration. 1
On August 26, 1982, Civil Case No. 47466 for the grant of an easement of right of way was filed by
Pacifico Mabasa against Cristino Custodio, Brigida R. Custodio, Rosalina R. Morato, Lito Santos and
Maria Cristina C. Santos before the Regional Trial Court of Pasig and assigned to Branch 22 thereof.2
The generative facts of the case, as synthesized by the trial court and adopted by the Court of
Appeals, are as follows:
Perusing the record, this Court finds that the original plaintiff Pacifico Mabasa died during
the pendency of this case and was substituted by Ofelia Mabasa, his surviving spouse [and
children].
The plaintiff owns a parcel of land with a two-door apartment erected thereon situated at
Interior P. Burgos St., Palingon, Tipas, Tagig, Metro Manila. The plaintiff was able to acquire
said property through a contract of sale with spouses Mamerto Rayos and Teodora Quintero
as vendors last September 1981. Said property may be described to be surrounded by
other immovables pertaining to defendants herein. Taking P. Burgos Street as the point of
reference, on the left side, going to plaintiff's property, the row of houses will be as follows:
That of defendants Cristino and Brigido Custodio, then that of Lito and Maria Cristina
Santos and then that of Ofelia Mabasa. On the right side (is) that of defendant Rosalina
Morato and then a Septic Tank (Exhibit "D"). As an access to P. Burgos Street from
plaintiff's property, there are two possible passageways. The first passageway is
approximately one meter wide and is about 20 meters distan(t) from Mabasa's residence to
P. Burgos Street. Such path is passing in between the previously mentioned row of houses.
The second passageway is about 3 meters in width and length from plaintiff Mabasa's
residence to P. Burgos Street; it is about 26 meters. In passing thru said passageway, a
less than a meter wide path through the septic tank and with 5-6 meters in length, has to be
traversed.
When said property was purchased by Mabasa, there were tenants occupying the remises
and who were acknowledged by plaintiff Mabasa as tenants. However, sometime in
February, 1982, one of said tenants vacated the apartment and when plaintiff Mabasa went
to see the premises, he saw that there had been built an adobe fence in the first
passageway making it narrower in width. Said adobe fence was first constructed by
defendants Santoses along their property which is also along the first passageway.
Defendant Morato constructed her adobe fence and even extended said fence in such a
way that the entire passageway was enclosed. (Exhibit "1-Santoses and Custodios, Exh.
"D" for plaintiff, Exhs. "1-C", "1-D" and "1-E") And it was then that the remaining tenants of
said apartment vacated the area. Defendant Ma. Cristina Santos testified that she
constructed said fence because there was an incident when her daughter was dragged by a
bicycle pedalled by a son of one of the tenants in said apartment along the first
passageway. She also mentioned some other inconveniences of having (at) the front of her
house a pathway such as when some of the tenants were drunk and would bang their doors
and windows. Some of their footwear were even lost. . . .3 (Emphasis in original text;
corrections in parentheses supplied)
On February 27, 1990, a decision was rendered by the trial court, with this dispositive part:
Accordingly, judgment is hereby rendered as follows:
1) Ordering defendants Custodios and Santoses to give plaintiff permanent access ingress
and egress, to the public street;
2) Ordering the plaintiff to pay defendants Custodios and Santoses the sum of Eight
Thousand Pesos (P8,000) as indemnity for the permanent use of the passageway.
The parties to shoulder their respective litigation expenses.4
Not satisfied therewith, therein plaintiff represented by his heirs, herein private respondents, went to
the Court of Appeals raising the sole issue of whether or not the lower court erred in not awarding
damages in their favor. On November 10, 1993, as earlier stated, the Court of Appeals rendered its
decision affirming the judgment of the trial court with modification, the decretal portion of which
disposes as follows:
WHEREFORE, the appealed decision of the lower court is hereby AFFIRMED WITH
MODIFICATION only insofar as the herein grant of damages to plaintiffs-appellants. The
Court hereby orders defendants-appellees to pay plaintiffs-appellants the sum of Sixty Five
Thousand (P65,000) Pesos as Actual Damages, Thirty Thousand (P30,000) Pesos as Moral
Damages, and Ten Thousand (P10,000) Pesos as Exemplary Damages. The rest of the
appealed decision is affirmed to all respects.5
On July 8, 1994, the Court of Appeals denied petitioner's motion for reconsideration.6 Petitioners then
took the present recourse to us, raising two issues, namely, whether or not the grant of right of way to
herein private respondents is proper, and whether or not the award of damages is in order.
With respect to the first issue, herein petitioners are already barred from raising the same. Petitioners
did not appeal from the decision of the court a quo granting private respondents the right of way, hence
they are presumed to be satisfied with the adjudication therein. With the finality of the judgment of the
trial court as to petitioners, the issue of propriety of the grant of right of way has already been laid to
rest.
For failure to appeal the decision of the trial court to the Court of Appeals, petitioners cannot obtain any
affirmative relief other than those granted in the decision of the trial court. That decision of the court
below has become final as against them and can no longer be reviewed, much less reversed, by this
Court. The rule in this jurisdiction is that whenever an appeal is taken in a civil case, an appellee who
has not himself appealed may not obtain from the appellate court any affirmative relief other than what
was granted in the decision of the lower court. The appellee can only advance any argument that he
may deem necessary to defeat the appellant's claim or to uphold the decision that is being disputed,
and he can assign errors in his brief if such is required to strengthen the views expressed by the
court a quo. These assigned errors, in turn, may be considered by the appellate court solely to
maintain the appealed decision on other grounds, but not for the purpose of reversing or modifying the
judgment in the appellee's favor and giving him other affirmative reliefs.7
However, with respect to the second issue, we agree with petitioners that the Court of Appeals erred in
awarding damages in favor of private respondents. The award of damages has no substantial legal
basis. A reading of the decision of the Court of Appeals will show that the award of damages was
based solely on the fact that the original plaintiff, Pacifico Mabasa, incurred losses in the form of
unrealized rentals when the tenants vacated the leased premises by reason of the closure of the
passageway.
However, the mere fact that the plaintiff suffered losses does not give rise to a right to recover
damages. To warrant the recovery of damages, there must be both a right of action for a legal wrong
inflicted by the defendant, and damage resulting to the plaintiff therefrom. Wrong without damage, or
damage without wrong, does not constitute a cause of action, since damages are merely part of the
remedy allowed for the injury caused by a breach or wrong.8
There is a material distinction between damages and injury. Injury is the illegal invasion of a legal right;
damage is the loss, hurt, or harm which results from the injury; and damages are the recompense or
compensation awarded for the damage suffered. Thus, there can be damage without injury in those
instances in which the loss or harm was not the result of a violation of a legal duty. These situations
are often called damnum absque injuria.9
In order that a plaintiff may maintain an action for the injuries of which he complains, he must establish
that such injuries resulted from a breach of duty which the defendant owed to the plaintiff a
concurrence of injury to the plaintiff and legal responsibility by the person causing it. 10 The underlying
basis for the award of tort damages is the premise that an individual was injured in contemplation of
law. Thus, there must first be the breach of some duty and the imposition of liability for that breach
before damages may be awarded; it is not sufficient to state that there should be tort liability merely
because the plaintiff suffered some pain and suffering.11
Many accidents occur and many injuries are inflicted by acts or omissions which cause damage or loss
to another but which violate no legal duty to such other person, and consequently create no cause of
action in his favor. In such cases, the consequences must be borne by the injured person alone. The
law affords no remedy for damages resulting from an act which does not amount to a legal injury or
wrong.12
was only that decision which gave private respondents the right to use the said passageway after
payment of the compensation and imposed a corresponding duty on petitioners not to interfere in the
exercise of said right.
Hence, prior to said decision, petitioners had an absolute right over their property and their act of
fencing and enclosing the same was an act which they may lawfully perform in the employment and
exercise of said right. To repeat, whatever injury or damage may have been sustained by private
respondents by reason of the rightful use of the said land by petitioners is damnum absque injuria.17
A person has a right to the natural use and enjoyment of his own property, according to his pleasure,
for all the purposes to which such property is usually applied. As a general rule, therefore, there is no
cause of action for acts done by one person upon his own property in a lawful and proper manner,
although such acts incidentally cause damage or an unavoidable loss to another, as such damage or
loss is damnum absque injuria. 18 When the owner of property makes use thereof in the general and
ordinary manner in which the property is used, such as fencing or enclosing the same as in this case,
nobody can complain of having been injured, because the incovenience arising from said use can be
considered as a mere consequence of community life. 19
The proper exercise of a lawful right cannot constitute a legal wrong for which an action will
lie, 20 although the act may result in damage to another, for no legal right has been invaded. 21 One
may use any lawful means to accomplish a lawful purpose and though the means adopted may cause
damage to another, no cause of action arises in the latter's favor. An injury or damage occasioned
thereby is damnum absque injuria. The courts can give no redress for hardship to an individual
resulting from action reasonably calculated to achieve a lawful means. 22
WHEREFORE, under the compulsion of the foregoing premises, the appealed decision of respondent
Court of Appeals is hereby REVERSED and SET ASIDE and the judgment of the trial court is
correspondingly REINSTATED.

In other words, in order that the law will give redress for an act causing damage, that act must be not
only hurtful, but wrongful. There must be damnum et injuria.13 If, as may happen in many cases, a
person sustains actual damage, that is, harm or loss to his person or property, without sustaining any
legal injury, that is, an act or omission which the law does not deem an injury, the damage is regarded
as damnum absque injuria.14

In the case at bar, although there was damage, there was no legal injury. Contrary to the claim of
private respondents, petitioners could not be said to have violated the principle of abuse of right. In
order that the principle of abuse of right provided in Article 21 of the Civil Code can be applied, it is
essential that the following requisites concur: (1) The defendant should have acted in a manner that is
contrary to morals, good customs or public policy; (2) The acts should be willful; and (3) There was
damage or injury to the plaintiff.15

The act of petitioners in constructing a fence within their lot is a valid exercise of their right as owners,
hence not contrary to morals, good customs or public policy. The law recognizes in the owner the right
to enjoy and dispose of a thing, without other limitations than those established by law.16 It is within the
right of petitioners, as owners, to enclose and fence their property. Article 430 of the Civil Code
provides that "(e)very owner may enclose or fence his land or tenements by means of walls, ditches,
live or dead hedges, or by any other means without detriment to servitudes constituted thereon."

At the time of the construction of the fence, the lot was not subject to any servitudes. There was no
easement of way existing in favor of private respondents, either by law or by contract. The fact that
private respondents had no existing right over the said passageway is confirmed by the very decision
of the trial court granting a compulsory right of way in their favor after payment of just compensation. It