[206] Gutierrez v.
Court of Appeals
G.R. No. L-31611 | November 29, 1976 | Teehankee, J.
Summary:
Workers of petitioner Gutierrez (contractor) under the supervision of Balisalisa (project engineer)
of a construction job with the Bureau of Public Works, started digging up and later by means of a
crane to speed up the excavation. The earth and mud dug up were scooped by the crane and
dumped against the exterior side of the adobe stone fence of the A. Mabini Elementary School
along the street. When the pile of earth and mud reached the height of the fence, the crane’s steel
scooper was used to press them down. Because of the stress place on the fence, a portion of it
gave way and collapsed on March 21, 1964, between 2:30 -3pm. Edna was then playing with other
children inside the school grounds. When the adobe wall collapsed, she was hit and pinned down
by the falling debris of the stone wall and was buried underneath the piled up earth and mud which
caved in and later on died.
TC and CA ruled for respondents. On appeal to SC, petitioners were claiming that there was no
ER-EE relationship between them and the negligent crane operators, so that they would not be
held liable. SC affirmed, holding that there was enough evidence to support the existence of the
same, which the petitioners could not deny, especially since their inefficient denial was tantamount
to a judicial admission.
Doctrine
The petitioners’ denial of an employer-employee relationship was an evasive and ineffective denial
of matters plainly within their knowledge as to which they could not logically (and with sincerity) or
in good faith pretend ignorance.
Ineffective denial of the employer-employee relationship failed to properly tender an issue and the
averment of relationship was deemed judicially admitted by them.
Facts
-Gutierrez and Balisalisa were contractor and project engineer, respectively, of the N. Reyes-
Severino Drainage Main, Manila Flood Control and Drainage Project, Manila.
-The workers of Gutierrez, under Balisalisa’s supervision, started digging up Severino Street first
by manual labor, later by means of a crane to speed up excavation.
-The earth and mud dug up were scooped by the crane and dumped against the exterior side of
the adobe stone fence of the A. Mabini Elementary School along the street.
-When the pile of earth and mud reached the height of the fence, the crane's steel scooper was
used to press them down.
-Because of heavy stress thus placed on the fence, a portion of it gave way and collapsed on
March 21, 1964 between 2:30 and 3:00 o'clock in the afternoon.
-Respondents' daughter Edna was then playing with other children inside the school grounds.
When the adobe wall collapsed, she was hit and pinned down by the falling debris of the adobe
stone wall and was buried underneath the piled up earth and mud which caved in. While she was
rushed to the hospital, it was in vain for she died moments after the tragic mishap.
-This prompted respondents spouses to file a suit for actual, moral, and exemplary damages
against the petitioners.
-TC: in favor of respondents. Petitioners to jointly and severally to pay them P50,000.00 as moral
and exemplary damages, P6,000.00 as actual expenses, P5,000.00 for attorney's fees or a total
sum of P61,000.00 and the costs of suit.
-CA affirmed.
-In their petition, petitioners would assign as error the appellate court's rejection of their defense
of the non-existence of employer-employee relationship between them and the crane operators.
Issues and Ratio
1. WON there was no ER-EE relationship between petitioners and the crane
operators so as to exculpate them from liability? NO.
CA found enough evidence to support the relationship
-CA: the defense of alleged non-existence of employer-employee relationship was
never raised in the lower court and could not be raised or entertained for the first time
on appeal.
-CA also found that the evidence sufficiently established the existence of such ER-EE
relationship between petitioners and the negligent crane operators.
-The contract Exhibit B-8 between the Republic of the Philippines and
defendant (petitioner) Gutierrez specifically stipulated “That the party of the
second part (referring to Gutierrez) hereby agrees to undertake complete
construction of the N. Reyes-Severino Drainage Main, Manila Flood Control
and Drainage Project, Manila furnishing himself his own funds, labor, plant,
equipment, materials and supplies needed therefor”
-The evidence indisputably shows that the crane operator was actually operating and
managing that heavy equipment in the construction site of the defendants in connection
with their construction job—not to mention that under the contract it is the defendants
who are supposed to supply themselves with labor.
Petitioners’ ineffective denial of the existence of such relationship is in effect a judicial admission
of the existence of the same.
-Petitioners' specific denial in their answer "for want of sufficient knowledge or
information" of respondents' specific allegations in their complaint of the existence of
such relations was an evasive and ineffective denial of matters plainly within their
knowledge and as to which they could not logically or in good faith pretend ignorance.
-How could they claim lack of sufficient knowledge or information as to the
express averment that the crane operators specifically named were "under
their employ and/or direction, supervision and control" when these matters
were peculiarly within their knowledge as the job contractor?
-Their ineffective denial therefore failed to properly tender an issue and the averment of
relationship was deemed judicially admitted by them.This is but in consonance with the
procedural doctrine long established that:
-Warner Barnes & Co. vs. Reyes, 103 Phil. 662: 'An unexplained denial of
information and belief of a matter of record, the means of information
concerning which are within the control of the pleader, or are readily
accessible to him, is evasive and is insufficient to constitute an effective
denial. ...'
-'the form of denial ... adopted by the appellants, although allowed by the
Rules of Court (referring to lack of sufficient knowledge or information) must
be availed of with sincerity and in good neither for the purpose of confusing
the adverse party as to what allegations of the complaint are really put in
issue nor for the purpose of delay."
2. WON the damages awarded were correct? YES.
The negligence of the petitioners has been clearly established by the evidence.
-They ought to have known that it was not the right thing to do — to pile up the big volume of earth
excavated against the wall, which was fragile, being made only of adobe stones held together by
weak mortar and without reinforcements.
-The collapse, therefore, of the said wall could reasonably be expected by any person of ordinary
prudence, if not intelligence. The danger not only to the wall but also to anybody on the other side
of the wall, being a school ground, could have been anticipated by the defendants herein and yet
they failed to take the necessary precautions to avoid the same,
-For this omission on their part, they should be held responsible for moral and exemplary
damages.
-This is more so with respect to the contractor, Benigno C. Gutierrez, in order that other
contractors similarly situated should be more careful in the performance of their
contracts. It is a matter of public knowledge that there are important public works
projects of the government that have been awarded to contractors, who are not reliable,
if not irresponsible. To cite only a few, like the Nagtahan Bridge and the underpass and
overpass complex near the City Hall, which had been awarded to the same contractor,
but who abandoned the same. Unless something is done to prevent repetition of these
acts of negligence on the part of the contractors, public welfare will suffer.
-Respondent court in effect merely affirmed the trial court's award of P50,000.00 for moral and
exemplary damages (in addition to P6,000.00 actual damages or expenses found to be duly
proven and P5,000.00 attorney's fees) and under the undisputed facts of the case and the need
of imposing exemplary damages by way of example or correction for the public good, the Court
finds no reason or basis to set aside or modify the totality of the award, regardless of any question
that may be raised as to respondent court's itemization (particularly as to the item of P6,000.00
"for the physical pain suffered by the child Edna Baloyo before she died").

Ruling
Petition DISMISSED. CA judgment affirmed in toto, with double costs against petitioners. In view
of the clear lack of merit of the appeal, decision is declared immediately executory upon
promulgation.
[207] Ong v. Metropolitan Water District caused by the fault or negligence of the person from whom the damage is claimed or
G.R. No. L-7664 | August 29, 1958 | Bautista Angelo, J. one of his employees.
● Spouses Ong tried to prove that when there was a drowning person in the bottom of the
Doctrine: Although the proprietor of a natatorium (swimming pool) is liable for injuries to a patron, big swimming pool and the boys shouted to the lifeguard for help, lifeguard Manuel
resulting from lack of ordinary care in providing for his safety, without the fault of the patron, he is Abaño did not immediately respond to the alarm and it was only upon the third call that
not, however, in any sense deemed to be the insurer of the safety of patrons. The person claiming he threw away the magazine he was reading and allowed three or four minutes to elapse
damages has the burden of proving that the damage is caused by the fault or negligence of the before retrieving the body from the water. This negligence of Abaño, they contend, is
attributable to appellee.
person from whom the damage is claimed or one of his employees.
o But the claim of these two witnesses not only was vehemently denied by
Facts:
lifeguard Abaño, but is belied by the written statements given by them in the
● Spouses Ong seek to recover damages from Metropolitan Water District, a government-
investigation conducted by the Police 3 hours after the happening of the
owned corporation, for the death of their son Dominador in one of the swimming pools
accident. After the lifeguard heard the shouts for help, the latter immediately
operated by defendant. Defendant admits the fact that plaintiffs' son was drowned in
dived into the pool to retrieve the person under water.
one of its swimming pools but avers that his death was caused by his own negligence
● Furthermore, there is sufficient evidence to show that appellee has taken all necessary
or by unavoidable accident.
precautions to avoid danger to the lives of its patrons or prevent accident which may
o Defendant also avers that it had exercised due diligence in the selection of,
cause their death (i.e. ring buoy, toy roof, towing line, oxygen resuscitator, first aid
and supervision over, its employees and that it had observed the diligence
medicine kit; the bottom of the pools is painted with black colors so as to insure clear
required by law under the circumstances.
visibility; on display in a conspicuous place within the area are certain rules and
● Defendant operates 3 swimming pools at its Balara filters. There are diving boards in
regulations; six lifeguards who are all trained; male nurse and a sanitary inspector with
the big pools and the depths of the water at different parts are indicated by appropriate
a clinic provided with oxygen resuscitator; presence of security guards). The record
marks on the wall. The care and supervision of the pools and the users thereof is shows that when the body of minor Ong was retrieved from the bottom of the pool, the
entrusted to a recreational section (chief, male nurse, and 6 lifeguards). For the safety
employees of appellee did everything possible to bring him back to life.
of its patrons, defendant has provided a ring buoy, toy roof, towing line, saving kit and
● Appellants also raised the theory that even if it be assumed that the deceased is partly
a resuscitator. There is also a sanitary inspector. Defendant has also on display in a
to be blamed for the unfortunate incident, still appellee may be held liable under the
conspicuous place certain rules and regulations governing the use of the pools, one of
doctrine of "last clear chance".
which prohibits the swimming in the pool alone or without any attendant.
o We do not see how this doctrine may apply since it is not known how minor
● Dominador and his brothers Ruben and Eusebio, went to defendant's swimming pools.
Ong came into the big swimming pool and it being apparent that he went there
They immediately went to one of the small pools where the water was shallow. At about
without any companion in violation of one of the regulations.
4:35 p.m., Dominador told his brothers that he was going to the locker room in an
o The last clear chance doctrine can never apply where the party charged is
adjoining building to drink a bottle of coke. Upon hearing this, Ruben and Eusebio went
required to act instantaneously, and if the injury cannot be avoided by the
to the bigger pool leaving Dominador in the small pool and so they did not see the latter
application of all means at hand after the peril is or should have been
when he left the pool to get a bottle of coke. Between 4:00 to 5:00 that afternoon, there discovered; at least in cases in which any previous negligence of the party
were about twenty bathers inside the pool area and Manuel Abaño (lifeguard) was going
charged cannot be said to have contributed to the injury.
around the pools to observe the bathers in compliance with the instructions of his chief.
● Lastly, there is also a strong suggestion coming that Dominador might have dived where
● Between 4:40 to 4:45 p.m., a boy informed lifeguard Abaño that somebody drowned.
the water was only 5.5 feet deep, and in so doing he might have hit or bumped his
Abaño immediately jumped into the big swimming pool and retrieved the apparently
forehead against the bottom of the pool, as a consequence of which he was stunned,
lifeless body of Dominador from the bottom. The body was placed at the edge of the
and which led to his drowning. As a boy scout he must have received instructions in
pool and Abaño immediately applied manual artificial respiration. Soon after, male nurse
swimming. He knew, or should have known that it was dangerous for him to dive in that
Armando Rule came to render assistance, followed by sanitary inspector Iluminado part of the pool.
Vicente who carried with him the resuscitator and a medicine kit. Upon arriving he
injected the boy with camphorated oil. Ruling: TC affirmed.
● After the injection, Vicente left on a jeep in order to fetch Dr. Ayuyao from UP.
Meanwhile, Abaño continued the artificial manual respiration, and when this failed to
revive him, they applied the resuscitator until the two oxygen tanks were exhausted. Not
long thereafter, Dr. Ayuyao arrived with another resuscitator, but he found the boy
already dead.

Issue/Ratio: Whether the death of minor Dominador can be attributed to the negligence of
defendant and/or its employees so as to entitle plaintiffs to recover damages. – NO.
● Although the proprietor of a natatorium (swimming pool) is liable for injuries to a patron,
resulting from lack of ordinary care in providing for his safety, without the fault of the
patron, he is not, however, in any sense deemed to be the insurer of the safety of
patrons. The person claiming damages has the burden of proving that the damage is
[208] St. Francis High School v. Court of Appeals
G.R. No. 82465 | February 25, 1991 | PARAS, J:
SUMMARY: Ferdinand Castillo attended a picnic undertaken by 2 classes from his batch. He
drowned in the picnic which resulted to his death. The RTC and CA ruled in favor of the
respondents. The SC affirmed the CA decision and opined that the school had exercised the
proper diligence to absolve it from liability and it was the parents’ fault for allowing their child to go
to the picnic.
DOCTRINE: See highlighted portion
FACTS:
- Ferdinand Castillo, then a freshman student of Section 1-C at the St. Francis High School,
wanted to join a school picnic undertaken by Class I-B and Class I-C at Talaan Beach,
Sariaya, Quezon.
o Ferdinand's parents, respondents spouses Dr. Romulo Castillo and Lilia Cadiz
Castillo, because of short notice, did not allow their son to join but merely allowed
him to bring food to the teachers for the picnic, with the directive that he should go
back home after doing so.
o However, because of persuasion of the teachers, Ferdinand went on with them to
the beach
- During the picnic and while the students, including Ferdinand, were in the water, one of the
female teachers was apparently drowning. Some of the students, including Ferdinand, came
to her rescue, but in the process, it was Ferdinand himself who drowned.
o His body was recovered but efforts to resuscitate him ashore failed.
o He was brought to a certain Dr Luna and later to Mt Carmel General Hospital where
he was pronounced dead on arrival
- Respondent spouses filed a complaint in the Regional Trial Court, Branch LVIII of Lucena
City, against the St. Francis High School, represented by the spouses Fernando Nantes and
Rosario Lacandula, Benjamin Illumin (its principal), and the teachers: Tirso de Chaves,
Luisito Vinas, Connie Arquio, Nida Aragones, Yoly Jaro, and Patria Cadiz, for Damages
which respondents allegedly incurred from the death of their 13-year old son.
o Contending that the death of their son was due to the failure of the petitioners to
exercise the proper diligence of a good father of the family in preventing their son's
drowning, respondents prayed of actual, moral and exemplary damages,
attorney's fees and expenses for litigation.
- Trial court: in favor of respondents and ordered petitioners-teachers to pay respondents the
sum of P30,000.00 as actual damages, P20,000.00 as moral damages, P15,000.00 as
attorney's fees, and to pay the costs.
o failed to exercise the diligence required of them by law under the circumstances to
guard against the harm they had foreseen
o defendants Yoly Jaro and Nida Araagones arrived late but by coming late, they
were remiss in their duty to safeguard the students.
o students, young as they were then (12 to 13 years old), were easily attracted to
the sea without aforethought of the dangers it offers. Yet, the precautions and
reminders allegedly performed by the defendants-teachers fell short of the
standard required by law
o Had the defendant teachers made an actual and physical observation of the water
before they allowed the students to swim, they could have found out that the area
where the children were swimming was indeed dangerous.
o male teachers who according to the female teachers were there to supervise the
children to ensure their safety were not even at the area where the children were
swimming. They were somewhere and as testified to by plaintiffs' witness they
were having a drinking spree.
o the trial court dismissed the case against the St. Francis High School, Benjamin
Illumin and Aurora Cadorna.
"As shown and adverted to above, this Court cannot find sufficient evidence
showing that the picnic was a school sanctioned one.. It has been sufficiently
shown that Benjamin Illumin had himself not consented to the picnic and in fact he
did not join it. On the other hand, defendant Aurora Cadorna had then her own
class to supervise and in fact she was not amongst those allegedly invited by
defendant Connie Arquio to supervise class I-C to which Ferdinand Castillo
belongs."
- CA: found plaintiffs-appellants' submission well-taken.
“Even were we to find that the picnic in question was not a school sponsored
activity, the same was held under the supervision of the teachers employed by the said
school, particularly the teacher in charge of Class I-C to whom the victim belonged, and those
whom she invited to help her in supervising the class during the picnic. Considering that
the court a quo found negligence on the part of the six defendants-teachers who, as
such, were charged with the supervision of the children during the picnic, the St.
Francis High School and the school principal, Benjamin Illumin, are liable under
Article 2176 taken together with the 1st, 4th and 5th paragraphs of Article 2180 of the
Civil Code. “
The school principal had knowledge of the picnic even from its planning stage and
had even been invited to attend the affair; and yet he did not express any prohibition
against undertaking the picnic, nor did he prescribe any precautionary measures to be
adopted during the picnic… the principal, Benjamin Illumin, had acquiesced to the holding of
the picnic.
- “Under Article 2180, supra, the defendant school and defendant school principal
must be found jointly and severally liable with the defendants-teachers for the
damages incurred by the plaintiffs as a result of the death of their son. It is the
rule that in cases where the above-cited provisions find application, the
negligence of the employees in causing the injury or damage gives rise to a
presumption of negligence on the part of the owner and/or manager of the
establishment (in the present case, St. Francis High School and its principal); and
while this presumption is not conclusive, it may be overthrown only by clear and convincing
proof that the owner and/or manager exercised the care and diligence
of a good father of a family in the selection and/or supervision of the employee
or employees causing the injury or damage (in this case, the defendants- teachers). The
record does not disclose such evidence as would serve to overcome the aforesaid
presumption “
- “We agree with the trial court in its finding that whether or not the victim's parents had given
such permission to their son was immaterial. What is material to such a determination is
whether or not there was negligence on the part of defendants vis-a-vis the supervision of
the victim's group during the picnic; and, as correctly found by the trial court, an affirmative
reply to this question has been satisfactorily established by the evidence, as already pointed
out”
- Sustained the TC’s decision re: Jaro and Aragones.
ISSUE: W/N petitoners are liable for negligence – NO
- Petitioners are neither guilty of their own negligence or guilty of the negligence of those under
them. They cannot be held liable for damages of any kind.
- At the outset, it should be noted that respondent spouses, parents of the victim Ferdinand,
allowed their son to join the excursion
- From the testimony of the parent, the fact that he gave money to his son to buy food for the
picnic even without knowing where it will be held, is a sign of consent for his son to join the
same.
- Testimony of Dr. Lazaro also indicated that the mother also consented:
 “I have interviewed several persons and the patient herself. She even felt guilty about the
death of her son because she cooked adobo for him so he could join the excursion where
her son died of drowning”
- Respondent Court of Appeals committed an error in applying Article 2180 of the Civil
Code in rendering petitioner school liable for the death of respondent's son.
o Under this paragraph, it is clear that before an employer may be held liable for the
negligence of his employee, the act or omission which caused damage or prejudice
must have occurred while an employee was in the performance of his assigned
tasks
o The teachers/petitioners were not in the actual performance of their assigned
tasks. The incident happened not within the school premises, not on a school day
and most importantly while the teachers and students were holding a purely private
affair, a picnic. It is clear from the beginning that the incident happened while some
members of the I-C class of St. Francis High School were having a picnic at Talaan
Beach. This picnic had no permit from the school head or its principal.
- Mere knowledge by petitioner/principal Illumin of the planning of the picnic by the students
and their teachers does not in any way or in any manner show acquiescence or consent to
the holding of the same.
- If we were to affirm the findings of respondent Court on this score, employers will forever be
exposed to the risk and danger of being hailed to Court to answer for the misdeeds or
omissions of the employees even if such act or omission he committed while they are not in
the performance of their duties.
- No negligence could be attributable to the petitioners-teachers to warrant the award of
damages to the respondents-spouses.
- Petitioners Connie Arquio, the class adviser of I-C, the section where Ferdinand
belonged, did her best and exercised diligence of a good father of a family to prevent
any untoward incident or damages to all the students who joined the picnic.
- In fact, Connie invited co-petitioners Tirso de Chavez and Luisito Vinas who are both
P.E. instructors and scout masters who have knowledge in First Aid application and
swimming.
- The defendants (petitioners herein) had life savers and records show that petitioners
did all what is humanly possible to save the child
- With these facts in mind, no moral nor exemplary damages may be awarded in favor of
respondents-spouses. The case at bar does not fall under any of the grounds to grant moral
damages.
- Moreover, as already pointed out hereinabove, petitioners are not guilty of any fault or
negligence, hence, no moral damages can be assessed against them.
- In the case at bar, petitioners were able to prove that they had exercised the required
diligence. Hence, the claim for moral or exemplary damages becomes baseless
RULING: PREMISES CONSIDERED, the questioned decision dated November 19, 1987, finding
petitioners herein guilty of negligence and liable for the death of Ferdinand Castillo and awarding
the respondents damages, is hereby SET ASIDE insofar as the petitioners herein are concerned,
but the portion of the said decision dismissing their counterclaim, there being no merit, is hereby
AFFIRMED.
SO ORDERED.
Dissenting Opinion: Padilla, J:
- the record clearly shows negligence on the part of the petitioners- teachers, with the
exception of Aragones and Jaro.
- petitioners may have tarried too long in securing immediate medical attention for the
deceased. I refer to the trial court's finding that "it still took the jeep which brought Ferdinand
Castillo to the poblacion six (6) minutes before it finally moved to await the other teachers."
- Despite awareness that the waters in the area were deep, petitioners-teachers did not take
concrete steps to make sure their wards did not stray too far and too deeply. Petitioners-
teachers should have first "tested the waters", to ensure which parts thereof were safe for
swimming purposes.
- At best, it appears that only oral safety instructions were imparted to the young excursionists.
- The male physical education instructors, were nowhere within the immediate vicinity but
were, in fact, as admitted by the latter, "at his house getting some foods (sic) and drinks.
They were somewhere and as testified to by plaintiffs' witness they were having a drinking
spree!" It thus appears that the petitioners-teachers failed to exercise the proper diligence o
- The test in determining whether or not a person is negligent in doing an act whereby injury
or damage results to the person or property of another is this: Would a prudent man in the
position of the person to whom negligence is attributed foresee harm to the person injured
as a reasonable consequence of the course about to be pursued? If so, the law imposes the
duty on the doer TO TAKE PRECAUTION against its mischievous results and the failure to
do so constitutes negligence
- Although the excursion may not have been attended by the appropriate school authorities,
the presence or stamp of authority of the school nevertheless pervaded by reason of the
participation not of one but of several teachers, the petitioners. Moreover, the record
indicates that petitioner Benjamin Illumin, school principal, knew of the excursion and had, in
fact, been invited to attend. It seems to me that having known of the forthcoming activity,
petitioner Illumin, as school principal, should have taken appropriate measures to ensure the
safety of his students. It is precisely his silence and negligence in performing his role as
principal head of the school that must be construed as an implied consent to such activity.
- Article 2176 in conjunction with Article 2180, paragraphs (1) and (5) are applicable to
the situation.
o Agrees with the respondent court that no proof was presented to absolve the owner
and/or manager, herein petitioners-spouses Nantes and Lacandula, and Illumin.
Thus, as correctly held by the respondent court, they too must be accountable for
the death of Ferdinand Castillo
- Educational institutions have responsibilities which cannot be equated with those of the
ordinary employer or business establishment. They hold the tremendous responsibility of
exercising supervision over young children.
- Anent the issue of damages, from the foregoing discussion the award thereof is clearly
proper. I only wish to point out the basis for moral damages which is found in Article 2219 of
the Civil Code, to wit:
- "Moral damages may be recovered in the following and analogous cases:
2. Quasi-delicts causing physical injuries;
xxx xxx xxx"
- It should be noted that the term "physical injuries" must not be construed in its penal sense
alone but rather in its generic sense, in the spirit of this Court's rulings in Carandang vs.
Santiago. Thus, the death of private respondents' son as a result of petitioners' negligence
gives rise to an action for quasi-delict which, as provided, entitles the claimant to an award
of moral damages
[209] PROFESSIONAL SERVICES, INC. v. AGANA
G.R. No. 12697, 126467 & 127590 | February 2, 2010 | Corona, J.
SUMMARY: The spouses Agana (Natividad was later substituted by her heirs) filed a complaint
for damages against Dr. Miguel Ampil, Dr. Juan Fuentes and PSI for the injuries suffered by
Natividad when the doctors neglected to remove two (2) pieces of gauze from her body after the
hysterectomy they performed on her on April 11, 1984 at the Medical City General
Hospital(MCGH) owned and operated by PSI. The RTC ruled PSI solidarily liable with the two
doctors. The CA absolved Dr. Fuentes but affirmed the liability of Dr. Ampil and PSI, subject to
PSI’s right to claim reimbursement for the former. In its January 31, 2007 decision, the Supreme
Court affirmed the CA decision. PSI filed a motion for reconsideration but was denied by the Court
in its February 11, 2008 decision. The Court upheld its previous decision and held that PSI is liable
to the Aganas.
DOCTRINE: The hospital may be liable for the negligence of the doctor it the following instances:
(1) Where an ER-EE relationship exists, the hospital may held liable under Article 2176
in relation to Article 2180 or the principle of respondeat superior.
(2) BUT, even when no such relationship exists, the hospital may still be held vicariously
liable under the principle of apparent authority if it is shown that the hospital holds
out to the patient that the doctor is its agent.
(3) Moreover, regardless of its relationship with the doctor, the hospital may be held
directly liable to the patient for its own negligence or failure to follow established
standard of conduct to which it should conform as a corporation.
In cases where there is ER-EE relationship, control as a determinative factor in testing the
employer-employee relationship between doctor and hospital under which the hospital could
be held vicariously liable to a patient in medical negligence cases is a requisite fact to be
established by preponderance of evidence.
FACTS:
● This is a Resolution on the second motion for reconsideration filed by Profession
Services, Inc. (PSI) seeking the modification of the decision dated January 31, 2007
and resolution dated February 11, 2008 which affirmed PSI’s vicarious and direct liability
for damages to respondents Enrique Agana and the heirs of Natividad Agana.
● Manila Medical Services (MMSI), Asian Hospital, Inc. (AHI), Private Hospital
Association of the Philippines all intervened in these cases on the ground that the
assailed decision and resolution will jeopardize the financial viability of private hospitals
and jack up the cost of health care.
● To recall the facts of the case:
○ The spouses Agana (Natividad was later substituted by her heirs) filed a
complaint for damages against Dr. Miguel Ampil, Dr. Juan Fuentes and PSI
for the injuries suffered by Natividad when the doctors neglected to remove
two (2) pieces of gauze from her body after the hysterectomy they performed
on her on April 11, 1984 at the Medical City General Hospital(MCGH) owned
and operated by PSI.
○ The RTC PSI solidarily liable with the two doctors.
○ The CA absolved Dr. Fuentes but affirmed the liability of Dr. Ampil and PSI,
subject to PSI’s right to claim reimbursement for the former.
○ In its January 31, 2007 decision, the Supreme Court affirmed the CA decision.
PSI filed a motion for reconsideration but was denied by the Court in its
February 11, 2008 decision.
○ In upholding PSI’s liability, the Court ruled that:
(1) There existed between PSI and Dr. Ampil employer-employee
relationship for the purposes of allocation responsibility in medical
negligence cases, as held in Ramos v. Court of Appeals.
1
For this occasion only.
(2) By accrediting Dr. Ampil and advertising his qualifications, PSi
created the public impression that he was its agent.
(3) As owner and operator of MCGH, PSI was bound by its duty to
provide comprehensive medical services to Natividad Agana, to
exercise reasonable care to protect her from harm, to oversee or
supervise all persons who practice medicine within its walls, and to
take active steps in fixing any form of negligence committed its
premises.
● PSI is now asking the Court to reconsider its decision for the following reasons:
○ The ruling in Ramos v. Court of Appeals that “an employer-employee
relationship exists between hospital and their consultants has been reversed.
○ Respondents Aganas engaged Dr. Miguel Ampil as their doctor and did not
primarily and specifically look to the Medical City Hospital (PSI) for medical
care and support.
○ PSI cannot be liable under the doctrine of corporate negligence since the
proximate cause of Mrs. Agana’s injury was the negligence of Dr. Ampil,
which is an element of the principle of corporate negligence
Issue/Ratio: Whether or not PSI may be held liable for the negligence of physician consultants
allowed to practice in its premises [YES]
● PSI is liable to the Aganas, not under the principle of respondeat superior (vicarious
liability of employers), but under the principle of ostensible agency for the negligence of
Dr. Ampil and, pro hac vice1, under the principle of corporate negligence for its failure
to perform its duties as a hospital.
○ In this case, the principle of respondeat superior does not apply due to lack
of proof of employer-employee relationship.
● While in theory a hospital as a juridical entity cannot practice medicine, in reality it
utilizes doctors, surgeons and medical practitioners in the conduct of its business of
facilitating medical and surgical treatment. Within that
● reality, three legal relationships crisscross:
(1) between the hospital and the doctor practicing within its premises;
(2) between the hospital and the patient being treated or examined within its
premises; and
(3) between the patient and the doctor.
● The exact nature of each relationship determines the basis and extent of the liability of
the hospital for the negligence of the doctor.
○ Where an ER-EE relationship exists, the hospital may held liable under
Article 2176 in relation to Article 2180 or the principle of respondeat superior.
○ BUT, even when no such relationship exists, the hospital may still be held
vicariously liable under the principle of apparent authority if it is shown
that the hospital holds out to the patient that the doctor is its agent.
○ Moreover, regardless of its relationship with the doctor, the hospital may be
held directly liable to the patient for its own negligence or failure to follow
established standard of conduct to which it should conform as a corporation.
On the ER-EE relationship between PSI and Dr. Ampil
● It appears to have escaped the Court’s attention that both the RTC and the CA found
no employment relationship between PSI and Dr. Ampil, and that the Aganas did not
question such finding. as there was no dispute over the RTC finding that PSI and Dr.
Ampil had no employer-employee relationship, such finding became final and
conclusive even to this Court.
● Control as a determinative factor in testing the employer-employee relationship
between doctor and hospital under which the hospital could be held vicariously liable to
a patient in medical negligence cases is a requisite fact to be established by
preponderance of evidence.
 ○ In this case, there was insufficient evidence that PSI exercised the power of
control over the means and the details of the specific process by which Dr.
Ampil applied his skills in the treatment of Natividad.
On the principle of apparent authority
● There is ample evidence that the hospital (PSI) held out to Natividad that the doctor was
its agent. The two factors that determine apparent authority are present in this case:
(1) The hospital’s implied manifestation to the patient which led the latter to
conclude that the doctor was the hospital’s agent; and
(2) The patient’s reliance upon the conduct of the hospital and the doctor,
consistent with ordinary care and prudence.
● Based on the testimony of Enrique Agana, his decision to tell Natividad to consult Dr.
Ampil was significantly influenced by the impression that Dr. Ampil was a staff member
of Medical City General Hospital, and that said hospital was well known and prominent.
Enrique looked upon Dr. Ampil not as independent of but as integrally related to Medical
City.
● PSI’s acts tended to confirm and reinforce, rather than negate, Enrique’s view. It is of
record that PSI required a “consent for hospital care” to be signed preparatory to
the surgery of Natividad.
○ By such ACT, PSI virtually reinforced the public impression that Dr. Ampil was
a physician of its hospital, rather than one independently practicing in it; that
the medications and treatments he prescribed were necessary and desirable;
and that the hospital staff was prepared to carry them out.
○ Corollary to its non-delegable undertaking to review potential incidents of
negligence committed within its premises, PSI had the duty to take notice of
medical records prepared by its own staff and submitted to its custody,
especially when these bear earmarks of a surgery gone awry.
● It should be borne in mind that the corporate negligence ascribed to PSI is different from
the medical negligence attributed to Dr. Ampil. The duties of the hospital are distinct
from those of the doctor-consultant practicing within its premises in relation to the
patient.
● All this notwithstanding, we make it clear that PSI’s hospital liability based on ostensible
agency and corporate negligence applies only to this case, pro hac vice. It is not
intended to set a precedent and should not serve as a basis to hold hospitals liable for
every form of negligence of their doctors-consultants under any and all circumstances.
○ The ruling is unique to this case, for the liability of PSI arose from an implied
agency with Dr. Ampil and an admitted corporate duty to Natividad.
DISPOSITIVE: WHEREFORE, the second motion for reconsideration is DENIED and the motions
for intervention are NOTED. Professional Services, Inc. is ORDERED pro hac vice to pay
Natividad (substituted by her children Marcelino Agana III, Enrique Agana, Jr., Emma Agana-
Andaya, Jesus Agana and Raymund Agana) and Enrique Agana the total amount of P15 million,
subject to 12% p.a. Interest from the finality of this resolution to full satisfaction. No further
pleadings by any party shall be entertained in this case. Let the long-delayed entry of judgment
be made in this case upon receipt by all concerned parties of this resolution.

On the principle of corporate negligence

● The Court noted that in its MR, PSI admitted that had Natividad Agana “inform ed the
hospital of her discomfort and pain, the hospital would have been obliged to act on it.”
The significance of this admission is crucial because:
(1) They constitute judicial admission by PSI that while it had no power to control
the means or method by which Dr. Ampil conducted the surgery on Natividad
Agana, it had the power to review or cause the review of what may have
irregularly transpired within its walls.
(2) It is a judicial admission that, by virtue of the nature of its business as well as
its prominence in the hospital industry, it assumed a duty to “tread on” the
“captain of the ship” role of any doctor rendering services within its premises
for the purpose of ensuring the safety of the patients availing themselves of
its services and facilities.
(3) By such admission, PSI defined the standards of ts corporate conduct under
the circumstances of this case, specifically:
(a) that it had a corporate duty to Natividad even after her operation to
ensure her safety as a patient;
(b) that its corporate duty was not limited to having its nursing staff
note or record the two missing gauzes and
(c) that its corporate duty extended to determining Dr. Ampil’s role in
it, bringing the matter to his attention, and correcting his negligence
(4) By such admission, PSI barred itself from arguing in its second motion for
reconsideration that the concept of corporate responsibility was not yet in
existence at the time Natividad underwent treatment; and that if it had any
corporate responsibility, the same was limited to reporting the missing gauzes
and did not include “taking an active step in fixing the negligence committed.”
● Essentially, PSI defined for itself the standard of conduct in cases of medical negligence
of physician-consultants working in its premises. Unfortunately, it failed to measure up
to such standard.
○ To begin with, PSI could not simply wave off the problem and nonchalantly
delegate to Dr. Ampil the duty to review what transpired during the operation.
○ While Dr. Ampil may have had the primary responsibility of notifying Natividad
about the missing gauzes, PSI imposed upon itself the separate and
independent responsibility of initiating the inquiry into the missing gauzes.
[210] MERCURY DRUG CORPORATION and ROLANDO J. DEL ROSARIO, Petitioners, -
versus - SPOUSES RICHARD HUANG and CARMEN HUANG, and STEPHEN HUANG,
Respondents.
G.R. No. 172122 | June 22, 2007 | Puno, C.J.
FACTS:
● Petitioner Mercury Drug Corporation (Mercury Drug) is the registered owner of a six-
wheeler 1990 Mitsubishi Truck with plate number PRE 641 (truck).
o It has in its employ petitioner Rolando J. del Rosario as driver.
● Respondent spouses Richard and Carmen Huang are the parents of respondent
Stephen Huang and own the red 1991 Toyota Corolla GLI Sedan with plate number
PTT 775 (car).
● Respondent Stephen Huang was driving the car, weighing 1,450 kg., while petitioner
Del Rosario was driving the truck, weighing 14,058 kg.
● Both were traversing the C-5 Highway, north bound, coming from the general direction
of Alabang going to Pasig City.
● The car was on the left innermost lane while the truck was on the next lane to its right,
when the truck suddenly swerved to its left and slammed into the front right side of the
car.
● The collision hurled the car over the island where it hit a lamppost, spun around and
landed on the opposite lane.
● The truck also hit a lamppost, ran over the car and zigzagged towards, and finally
stopped in front of Buellah Land Church.
● At the time of the accident, petitioner Del Rosario only had a Traffic Violation Receipt
(TVR).
o His driver’s license had been confiscated because he had been previously
apprehended for reckless driving.
● Respondent Stephen Huang sustained massive injuries to his spinal cord, head, face,
and lung and was paralyzed for life from his chest down
● Respondents fault petitioner Del Rosario for committing gross negligence and reckless
imprudence while driving, and petitioner Mercury Drug for failing to exercise the
diligence of a good father of a family in the selection and supervision of its driver.
● In contrast, petitioners allege that the immediate and proximate cause of the accident
was respondent Stephen Huangs recklessness.
o According to petitioner Del Rosario, he was driving on the left innermost lane
when the car bumped the trucks front right tire.
● The trial court, in its Decision dated September 29, 2004, found petitioners Mercury
Drug and Del Rosario jointly and severally liable
● Court of Appeals affirmed the decision of the trial court but reduced the award of moral
damages
Issue: W/N Mercury Drug should be solidarily liable with Del Rosario – YES
Mercury Drug’s liability
● The liability of the employer under Art. 2180 of the Civil Code is direct or immediate.
o It is not conditioned on a prior recourse against the negligent employee, or a
prior showing of insolvency of such employee. It is also joint and solidary with
the employee.
● To be relieved of liability, petitioner Mercury Drug should show that it exercised
the diligence of a good father of a family, both in the selection of the employee
and in the supervision of the performance of his duties.
● Thus, in the selection of its prospective employees, the employer is required to
examine them as to their qualifications, experience, and service records.
● With respect to the supervision of its employees, the employer should formulate
standard operating procedures, monitor their implementation, and impose
disciplinary measures for their breach.
● To establish compliance with these requirements, employers must submit
concrete proof, including documentary evidence.
● In the instant case, petitioner Mercury Drug presented testimonial evidence on its hiring
procedure.
o According to Mrs. Merlie Caamic, the Recruitment and Training Manager of
petitioner Mercury Drug, applicants are required to take theoretical and actual
driving tests, and psychological examination.
o In the case of petitioner Del Rosario, he took the tests when he applied for
the position of Delivery Man, but not when he applied for the position of Truck
Man.
o Del Rosario used a Galant which is a light vehicle, instead of a truck during
the driving tests.
o No tests were conducted on the motor skills development, perceptual speed,
visual attention, depth visualization, eye and hand coordination and
steadiness of petitioner Del Rosario.
o No NBI and police clearances were presented.
o Del Rosario attended only three driving seminars on June 30, 2001, February
5, 2000 and July 7, 1984.
o Mercury Drug does not provide for a back-up driver for long trips.
● Mercury Drug likewise failed to show that it exercised due diligence on the supervision
and discipline over its employees.
o In fact, on the day of the accident, petitioner Del Rosario was driving without
a license.
o He testified that he reported the incident to his superior, but nothing was done
about it. He was not suspended or reprimanded.
● Mercury Drug has failed to discharge its burden of proving that it exercised due diligence
in the selection and supervision of its employee, petitioner Del Rosario.
Del Rosario’s negligence
● Del Rosario was negligent.
o The evidence does not support petitioners claim that at the time of the
accident, the truck was at the left inner lane and that it was respondent
Stephen Huangs car, at its right, which bumped the right front side of the
truck.
● Firstly, petitioner Del Rosario could not precisely tell which part of the truck was hit by
the car
● Del Rosario could not also explain why the car landed on the opposite lane of C-5 which
was on its left side.
o He said that the car did not pass in front of him after it hit him or under him or
over him or behind him.
o If the truck were really at the left lane and the car were at its right, and the car
hit the truck at its front right side, the car would not have landed on the
opposite side, but would have been thrown to the right side of the C-5
Highway.
● The testimony of Dr. Marlon Rosendo H. Daza, an expert in the field of physics:
o Dr. Daza testified that given the foregoing assumptions, if the lighter vehicle
hits the right front portion of the heavier vehicle, the general direction of the
light vehicle after the impact would be to the right side of the heavy vehicle,
not the other way around.
o The truck, he opined, is more difficult to move as it is heavier.
o It is the car, the lighter vehicle, which would move to the right of, and away
from the truck.
o Thus, there is very little chance that the car will move towards the opposite
side, i.e., to the left of the truck.
IN VIEW THEREOF, the petition is DENIED. The Decision and Resolution of the Court of Appeals
dated February 16, 2006 and March 30, 2006, respectively, in CA-G.R. CV No. 83981, are
AFFIRMED.
[211] Mariano Mendoza and Elvira Lim v. Spouse Gomez the displayed number becomes a "snare and delusion", if courts will entertain such
G.R. No. 160110 | June 18, 2014 | Perez, J. defenses as that put forward by appellee in this case. No responsible person or
corporation could be held liable for the most outrageous acts of negligence, if they
SUMMARY should be allowed to place a "middleman" between them and the public, and escape
This case is a collision between two vehicles, a Mayamy bus hitting an Isuzu truck. The riders of liability by the manner in which they recompense their servants.
the truck filed a case for damages. However, the bus was under a "kabit" system, having a Generally, when an injury is caused by the negligence of a servant or employee, there instantly
registered owner and an actual owner. The Court ruled that the riders were entitled to damages arises a presumption of law that there was negligence on the part of the master or employer either
but which employer was liable? The Court cited Filcar Transport Services v. Espinas and ruled in the selection of the servant or employee (culpa in eligiendo) or in the supervision over him after
that the registered owner is vicariously liable, the reason being provided by Erezo v. Jepte: the the selection (culpa vigilando), or both.
purpose of registration is to identify the vehicle and operator in case of an accident. ● Presumption of negligence can be rebutted by a showing of due diligence in the
DOCTRINE selection and supervision of the employee
The registered owner is vicariously liable as the employer of the negligent driver (Filcare Transport However, with the enactment of the motor vehicle registration law, the defenses available under
Services v. Espinas). However, the registered owner has the right to be indemnified by the actual Article 2180 of the Civil Code — that the employee acts beyond the scope of his assigned task or
owner for the amount paid (principle of unjust enrichment and Article 2181). that it
FACTS: exercised the due diligence of a good father of a family to prevent damage — are no longer
● An Isuzu Elf truck (Leonora: owner, Perez: driver), coming from Katipunan road and available to the registered owner of the motor vehicle, because the motor vehicle registration law,
heading towards E. Rodriguez, was hit by a Mayamy Bus (Lim: registered owner, to a certain extent, modified Article 2180.
Mendoza: driver) Mariano Mendoza and Elvira Lim are solidarily liable. Lim is vicariously liable.
● A case was filed against Mendoza for reckless imprudence resulting in damage to He can however, go after Enriquez and Mendoza under Art. 2181. Under the civil law principle of
property and multiple physical injuries unjust enrichment, the registered owner of the motor vehicle has a right to be indemnified by the
● However, Mendoza eluded arrest, so a case for damages for compensation for lost actual employer of the driver; and under Article 2181 of the Civil Code, whoever pays for the
income, moral damages, exemplary damages, attorney’s fees, and cost of the suit damage caused by his dependents or employees may recover from the latter what he has paid or
● According to the testimony of PO1 Rosales, the Mayamy bus while traversing the delivered in satisfaction of the claim.
opposite lane in a fast speed, intruded on the lane of Isuzu and after hitting the bus, Damages awarded: actual or compensatory damages (plus additional for the medical expenses
Mendoza tried to escape by speeding away with legal interest), exemplary damages, cost of suit
● Ownership of the bus was put in question:
o Respondent: they aver that while Lim was the registered owner, SPO1 Cirilo
Enriquez was the actual owner. They also aver that Mayamy Bus was a
corporation
o Petitioner: Teresita Gutierrez was the sole business proprietor
● RTC: Mendoza is liable, Lim is also vicariously liable based on the Certificate of
Registration by LTO. It is an essential principle in transpo law that the registered owner
is the one held liable
● CA: affirmed with exception to the payment of unrealized income
ISSUES/ HELD:
1. W/N Mendoza’s negligence is duly proven – YES
Mendoza was negligent in driving the subject Mayamy bus, as demonstrated by the fact that, at
the time of the collision, the bus intruded on the lane intended for the Isuzu truck. Having
encroached on the opposite lane, Mendoza was clearly in violation of traffic laws. Article 2185 of
the Civil Code provides that unless there is proof to the contrary, it is presumed that a person
driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic
regulation. In the case at bar, Mendoza's violation of traffic laws was the proximate cause of the
harm
2. W/N Lim can be held liable – YES
Filcar Transport Services v. Espinas: we held that the registered owner is deemed the employer
of the negligent driver, and is thus vicariously liable under Article 2176, in relation to Article 2180,
of the Civil Code. Citing Equitable Leasing Corporation v. Suyom, the Court ruled that in so far as
third persons are concerned, the registered owner of the motor vehicle is the employer of the
negligent driver, and the actual employer is considered merely as an agent of such owner.
Thus, whether there is an employer-employee relationship between the registered owner
and the driver is irrelevant in determining the liability of the registered owner who the law
holds primarily and directly responsible for any accident, injury or death caused by the
operation of the vehicle in the streets and highways.
Erezo v. Jepte: The main aim of motor vehicle registration is to identify the owner so that if any
accident happens, or that any damage or injury is caused by the vehicles on the public highways,
responsibility therefore can be fixed on a definite individual, the registered owner.
● Renders it certain that the violator of the law or of the rules of safety shall not escape
because of lack of means to discover him. The purpose of the statute is thwarted, and
[212] Pleyto & Phil. Rabbit v. Maria & Carmela Lomboy
G.R. No. 148737 | 16 Jun 2004 | Quisumbing, J.
PROVISION
● Art. 2180 (Par. 5). Employers shall be liable for the damages caused by their employees
and household helpers acting within the scope of their assigned tasks, even though the
former are not engaged in any business or industry.
SUMMARY: A head-on collision between a bus and a car along McArthur Highway in Gerona,
Tarlac happened on May 16, 1995 at around 11:30am. Petitioner Philippine Rabbit Bus Lines, Inc
(PRBL), bound for Vigan, Ilocos Sur at the time of the accident, is engaged in carrying passengers
and goods for a fare servicing various routes in Central and Northern Luzon. Its driver was Ernesto
Pleyto.Ricardo Lomboy was a passenger to a Mitsubishi Lancer car driven by Arnulfo Asuncion,
Ricardo’s brother-in-law. Carmela, the daughter of Ricardo, also a passenger to said car, suffered
injuries requiring hospitalization. But her father Ricardo Lomboy died. Ricardo’s heirs filed an
action for damages against Pleyto and PRBL.Trial court rendered decision in favor of the plaintiffs
awarding P1,642,521.00 for lost earnings of Ricardo Lomboy. It found that Pleyto is negligent
and lacked precaution when he overtook the tricycle disregarding completely the
approaching car in the other lane. CA affirmed.
DOCTRINE: [Applying Art. 2180] When the employee is found negligent, the employer is
presumed to be negligent either in the selection or in the supervision of that employee. The
employer failed to show it maintained proper supervision because it they merely alleged the
existence of hiring procedures and supervisory policies without anything more
FACTS:
● Petitioner Phil. Rabbit, with principal office in Tarlac City, is a public carrier engaged in
carrying passengers and goods for a fare
○ It served routes in Central and Northern Luzon
○ Pleyto was a bus driver employed by Phil. Rabbit at the time
● Maria Lomboy of Calasiao, Pangasinan, is the surviving spouse of Ricardo; Carmela is their
daughter
○ 16 May 1995: Ricardo died and Carmela suffered injuries in Pasolingan, Gerona,
Tarlac, when the bus driven by Pleyto and the car where Ricardo collided
● Resps, as pauper-litigants, filed an action for damages against the Pet’rs, praying for
indemnification for:
○ Ricardos untimely death
○ His lost earnings
○ Medical and hospitalization expenses of Carmela
○ Moral damages
● Facts of accident:
○ On a rainy morning, a bus was trying to overtake a tricycle along MacArthur
Highway but hit it instead
○ Pleyto swerved into the oncoming lane when it smashed into the Mitsubishi Lancer
carrying Ricardo and Carmela head-on
● Petitioners both claimed the bus was running slowly at the time; they pointed out that the bus
had been inspected by Pleyto and examined by a mechanic, in accordance with the
company’s standard operating procedure—the bus was in good condition
● Pleyto claimed that he was following behind the tricycle when the latter suddenly stopped in
the middle of the road; Pleyto stepped on the brakes, but since it skidded toward the tricycle,
he swerved the bus to the other lane to avoid hitting it, only to collide with the Mitsubishi
● RTC found Pleyto negligent and found bus passenger Rolly O.’s testimony credible and
persuasive; they found Pleyto in violation of traffic rules and regulations, and applied Art.
2185, NCC; Phil. Rabbit was vicariously liable under Art. 2180 for failing to maintain proper
supervision of its employees despite strict selection standards
● RTC ordered the Resps to pay solidarily:
○ Php50,000 for the death of Ricardo
○ Php1,642,521 for his lost earnings
○ Php59,550 for actual damages for funeral, wake, religious services, and prayer for
the soul of the departed
○ Php53,000 for Carmela’s medical treatment and medicine
○ Php500,000 as moral damages for wife and children excluding Carmela
○ Php50,000 for moral damages for Carmela
○ Costs of litigation
● CA affirmed RTC decision, modifying the award of damages:
○ Php39,550 for funeral and religious services
○ Php27,000 for Carmela’s medical expenses
○ Php1,152,000 for Ricardo’s lost earnings
● MR denied, hence this petition.
ISSUE w/ HELD & RATIO [on liability of employer]
[1] W/N Pleyto is guilty of negligence - YES.
● The issue of negligence is factual and, in quasi-delicts, crucial in the award for damages
● Based on the facts, indeed, Pleyto violated traffic rules and regulations when he overtook the
tricycle despite the presence of an oncoming car in the other lane
o Art. 2185 lays down the presumption of negligence in such a case, which Petitioner
failed to rebut
o A driver abandoning his proper lane to overtake another vehicle in an ordinary
situation has the duty to see to it that the road is clear and not to proceed if he
cannot do so in safety
o When a motor vehicle is approaching or rounding a curve, there is a special
necessity for keeping to the right side of the road and the driver has no right to
drive on the left hand side relying upon having time to turn to the right if a car
approaching form the opposite direction comes into view
[2] W/N Pleyto’s employer, Phil. Rabbit, is also liable from his employer’s negligence - YES
● Phil. Rabbit is liable pursuant to Art. 2180 in relation to Art. 2176 because when the
employee is found negligent, the employer is presumed to be negligent either in the
selection or in the supervision of that employee
o The employer failed to show it maintained proper supervision because it they
merely alleged the existence of hiring procedures and supervisory policies without
anything more
o While Petitioner has a list of procedures and testing when it comes to recruitment
and another list of what should be done with its buses before they are allowed to
run on the road, it has no list of procedures and duties to be followed by a driver
while he is operating a vehicle to prevent injury to persons and damage to property
OTHER ISSUE (not relevant to topic):
[3] W/N CA disregarded the doctrine in Villa Rey Transit v. CA, when it arbitrarily pegged monthly
living expenses at 50% of gross earnings.
● Villa Rey Transit: “Earning capacity, as an element of damages to one’s estate for his death
by wrongful act is necessarily his net earning capacity or his capacity to acquire money, less
the necessary expense for his own living. Stated otherwise, the amount recoverable
is not loss of the entire earning, but rather the loss of that portion of the earnings which the
beneficiary would have received. In other words, only net earnings, not gross earning, are to
be considered that is, the total of the earnings less expenses necessary in the creation of
such earnings or income and less living and other incidental expenses”
● In considering the earning capacity of the victim as an element of damages, the net earnings,
which is computed by deducting necessary expenses from the gross earnings, and not
the gross earnings, is to be utilized in the computation
● CA & RTC used net, not gross earnings in computing loss, arrived at after deducting the
necessary expenses (pegged at 50% of gross income) from the gross annual income
o This computation is in accord with settled jurisprudence, including the Villa
Rey case
● Failure to present documentary evidence to support a claim for loss of earning capacity of
the deceased need not be fatal to its cause; testimonial evidence suffices to establish a basis
for which the court can make a fair and reasonable estimate of the loss of earning capacity
o Testimony of the widow that her husband was earning a monthly income
of Php8,000 is sufficient
● Factors in determining the compensable amount of lost earnings
o Life expectancy: number of years for which the victim would otherwise have lived
▪ Computed by applying the formula (2/3 x [80 - age at death]) adopted in
the American Expectancy Table of Mortality or the Actuarial Combined
Experience Table of Mortality
o Rate of loss sustained by the heirs of the deceased
▪ Computed by multiplying the life expectancy by the net earnings of the
deceased, i.e., the total earnings less expenses necessary in the
creation of such earnings or income and less living and other incidental
expenses
▪ Net earning is ordinarily computed at fifty percent (50%) of the gross
earnings
● Formula used by this Court in computing loss of earning capacity is: Net Earning Capacity
= [2/3 x (80 age at time of death) x (gross annual income reasonable and necessary
living expenses)]
● Ricardo was 44 at the time of his death, earning Php8000 a month (Gross annual income or
GAI = Php96,000)
● Detail:
o NET = LIFE EXPECTANCY x GROSS LIVING EARNING [2/3 (80-age at the time
ANNUAL EXPENSES CAPACITY (X) of death) INCOME (GAI) (50% OF GAI)
▪ X = [2/3 (80-44)] x [P96,000 (50% x P96,000)
▪ X = [2/3 (36)] x [P96,000 48,000]
▪ X = 24 x 48,000
● X = P 1,152,000.00
● Thus, no reversible error in fixing the loss of earning capacity
● SC also sustains the award for actual damages because these were duly supported by
receipts
o To justify an award of actual damages, there must be competent proof of the actual
amount of loss, credence can be given only to claims which are duly supported by
receipts
● However, while the award of Php50,000 as moral damages to Carmela is sustained, the
award for moral damages of P500,000 to the heirs of Ricardo should be reduced for being
excessive
o Art. 2206: the spouse, legitimate children and illegitimate descendants and
ascendants of the deceased may demand moral damages for mental anguish by
reason of the death of the deceased
o However, moral damages, though incapable of pecuniary estimation, are in the
category of an award designed to compensate the claimant for actual injury and
are not meant to enrich Pet’r at the expense of Resp
o Moral damages are awarded to enable the injured party to obtain means,
diversions or amusements that will serve to alleviate the moral suffering he/she
has undergone, by reason of the Resp’s culpable action; its award is aimed at
restoration, as much as possible, of the spiritual status quo ante; thus it must be
proportionate to the suffering inflicted
o An award for Php100,000 for the heirs would be justified and in keeping with the
purpose of the law and jurisprudence

RULING: PETITION DENIED; CA Decision MODIFIED as to award of moral damages from

Php500k to Php100k.
[213] Merritt v. Government
G.R. No. L-11154 | March 21, 1916 | Trent, J.
Petitioner(s): E. Merritt
Respondent(s): Government of the PH Islands
Doctrine: A special agent is one who receives a definite and fixed order or commission, foreign
to the exercise of the duties of his office if he is a special official, so that in representation of the
state and being bound to act as an agent thereof, he executes the trust confided to him.
CASE SUMMARY
Trigger Word(s):
FACTS: General Hospital ambulance struck the plaintiff which resulted to severe injuries and loss
of wages due to impaired mental and physical condition. The Attorney-General on behalf of the
defendant urges that the trial court erred in holding that the Government of the Philippine Islands
is liable for the damages sustained by the plaintiff as a result of the collision, even if it be true that
the collision was due to the negligence of the chauffeur.
HELD: Paragraph 5 of article 1903 of the Civil Code: The state is liable in this sense when it acts
through a special agent, but not when the damage should have been caused by the official to
whom properly it pertained to do the act performed. In this case, the Court held that the State is
only liable for the acts of its agents, officers and employees when they act as special agents within
the meaning of paragraph 5 of article 1903, and that the chauffeur of the ambulance of the General
Hospital was not such an agent.
FACTS
 When the plaintiff, riding on a motorcycle, was going toward the western part of Calle
Padre Faura, passing along the west side thereof at a speed of 10-12 miles an hour,
upon crossing Taft Avenue and when he was 10 feet from the southwestern intersection
of said streets, the General Hospital ambulance, upon reaching said avenue, instead of
turning toward the south, after passing the center thereof, so that it would be on the left
side of said avenue, as is prescribed by the ordinance and the Motor Vehicle Act, turned
suddenly and unexpectedly and long before reaching the center of the street, into the
right side of Taft Avenue, without having sounded any whistle or horn, by which
movement it struck the plaintiff, who was already 6 feet from the southwestern point or
from the post placed there.
 By reason of the resulting collision, the plaintiff was so severely injured that, according
to Dr. Saleeby:
o He was suffering from a depression in the left parietal region, a wound in the
same place and in the back part of his head, while blood issued from his nose
and he was entirely, unconscious.
o The marks revealed that he had one or more fractures of the skull and that
the grey matter and brain mass had suffered material injury. At 10pm of the
night in question, which was the time set for performing the operation, his
pulse was so weak and so irregular that, in his opinion, there was little hope
that he would live. His right leg was broken in such a way that the fracture
extended to the outer skin in such manner that it might be regarded as double
and the wound would be exposed to infection, for which reason it was of the
most serious nature.
o At another examination 6 days before the day of the trial, Dr. Saleeby noticed
that the plaintiff's leg showed a contraction of an inch and a half and a
curvature that made his leg very weak and painful at the point of the fracture.
2
An Act authorizing E. Merritt to bring suit against the Government of the Philippine Islands and authorizing
the Attorney-General of said Islands to appear in said suit.
Examination of his head revealed a notable readjustment of the functions of
the brain and nerves. The patient apparently was slightly deaf, had a slight
weakness in his eyes and in his mental condition. This latter weakness was
always noticed when the plaintiff had to do any difficult mental labor,
especially when he attempted to use his memory for mathematical
calculations.
 According to the various merchants who testified as witnesses, the plaintiff's mental and
physical condition prior to the accident was excellent and that after having received the
injuries that have been discussed, his physical condition had undergone a noticeable
depreciation, for he had lost the agility, energy, and ability that he had constantly
displayed before the accident as one of the best constructors of wooden buildings and
he could not now earn even a half of the income that he had secured for his work
because he had lost 50% of his efficiency. As a contractor, he could no longer, as he
had before done, climb up ladders and scaffoldings to reach the highest parts of the
building.
o As a consequence of the loss the plaintiff suffered in the efficiency of his work
as a contractor, he had to dissolve the partnership he had formed with the
engineer, Wilson, because he was incapacitated from making mathematical
calculations on account of the condition of his leg and of his mental faculties,
and he had to give up a contract he had for the construction of the Uy Chaco
building.
 Counsel for the plaintiff insist that the trial court erred (1) "in limiting the general
damages which the plaintiff suffered to P5,000, instead of P25,000 as claimed in the
complaint," and (2) "in limiting the time when plaintiff was entirely disabled to two months
and twenty-one days and fixing the damage accordingly in the sum of P2,666, instead
of P6,000 as claimed by plaintiff in his complaint."
 The Attorney-General on behalf of the defendant urges that the trial court erred: (a) in
finding that the collision between the plaintiff's motorcycle and the ambulance of the
General Hospital was due to the negligence of the chauffeur; (b) in holding that the
Government of the Philippine Islands is liable for the damages sustained by the plaintiff
as a result of the collision, even if it be true that the collision was due to the negligence
of the chauffeur; and (c) in rendering judgment against the defendant for the sum of
P14,741.
ISSUES + HELD
ISSUE #1: W/N the TC erred as to the award of damages and loss of wages – Damages ->
NO; Wages -> YES
 As to the first award for general damages due to permanent injuries, the Court finds
nothing in the record which would justify increasing it. As to the second, the record
shows, and the trial court so found, that the plaintiffs services as a contractor were worth
P1,000 per month. TC, however, limited the time to two months and twenty-one days,
which the plaintiff was actually confined in the hospital. In this the Court thinks there
was error, because it was clearly established that the plaintiff was wholly incapacitated
for a period of six months. The mere fact that he remained in the hospital only two
months and twenty-one days while the remainder of the six months was spent in his
home, would not prevent recovery for the whole time. The amount of damages
sustained by the plaintiff, without any fault on his part, is P18,075.
ISSUE #2: W/N the Government is legally liable for the damages resulting from the collision
caused by an agent or employee of the Government (Did the defendant, in enacting Act No.
24572, simply waive its immunity from suit or did it also concede its liability to the plaintiff?)
– NO acts performed by its employees in the discharge of the functions
pertaining to their office, because neither fault nor even negligence
SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of First Instance of the city of can be presumed on the part of the state in the organization of
Manila against the Government of the Philippine Islands in order to fix the responsibility for the branches of the public service and in the appointment of its agents
collision between his motorcycle and the ambulance of the General Hospital, and to determine the xxx.
amount of the damages, if any, to which Mr. E. Merritt is entitled on account of said collision, and  That the responsibility of the state is limited by article 1903 to the
the Attorney-General of the Philippine Islands is hereby authorized and directed to appear at the case wherein it acts through a special agent (one who receives a
trial on the behalf of the Government of said Islands, to defend said Government at the same. definite and fixed order or commission, foreign to the exercise of
the duties of his office if he is a special official) so that in
representation of the state and being bound to act as an agent
 The Act was passed "in order that said questions may be decided." The Court "decided" thereof, he executes the trust confided to him. This concept does
that the accident was due solely to the negligence of the chauffeur, who was at the time not apply to any executive agent who is an employee of the active
an employee of the defendant, and has also fixed the amount of damages sustained by administration and who on his own responsibility performs the
the plaintiff as a result of the collision. Does the Act authorize to hold that the functions which are inherent in and naturally pertain to his office
Government is legally liable for that amount? and which are regulated by law and the regulations.
 In the United States the rule that the state is not liable for the torts committed by its  The responsibility of the state is limited to that which it contracts
officers or agents whom it employs, except when expressly made so by legislative through a special agent, duly empowered by a definite order or
enactment, is well settled. "The Government," 'says Justice Story, "does not undertake commission to perform some act or charged with some definite
to guarantee to any person the fidelity of the officers or agents whom it employs, since purpose which gives rise to the claim, and not where the claim is
that would involve it in all its operations in endless embarrassments, difficulties and based on acts or omissions imputable to a public official charged
losses, which would be subversive of the public interest." with some administrative or technical office who can be held to the
o Melvin vs. State: No claim arises against any government in favor of an proper responsibility in the manner laid down by the law of civil
individual, by reason of the misfeasance, laches, or unauthorized exercise of responsibility.
powers by its officers or agents.  It is, therefore, evident that the State (the Government of the Philippine Islands) is only
o By consenting to be sued a state simply waives its immunity from suit. It does liable, according to the above quoted decisions of the Supreme Court of Spain, for the
not thereby concede its liability to plaintiff, or create any cause of action in his acts of its agents, officers and employees when they act as special agents within the
favor, or extend its liability to any cause not previously recognized. It merely meaning of paragraph 5 of article 1903, supra, and that the chauffeur of the ambulance
gives a remedy to enforce a preexisting liability and submits itself to the of the General Hospital was not such an agent.
jurisdiction of the court, subject to its right to interpose any lawful defense.
o Apfelbacher vs. State: The Act simply gives authority to commence suit for
the purpose of settling plaintiffs controversies with the state. Nowhere in the DAMAGES AWARDED – YES / NO
act is there a whisper or suggestion that the court or courts in the disposition 1. Permanent injuries – 5000
of the suit shall depart f rom well established principles of law, or that the 2. Loss of wages – 6000
amount of damages is the only question to be settled. The act opened the 3. Other awards (not stated but a total of P18,075 was mentioned) - 7075
door of the court to the plaintiff. It did not pass upon the question of liability,
but left the suit just where it would be in the absence of the state's immunity RULING: The Government simply waived its immunity from suit. It did not concede liability to the
from suit. If the Legislature had intended to change the rule that obtained in plaintiff.
this state so long and" to declare liability on the part of the state, it would not
have left so important a matter to mere inference, but would have done so in
express terms.
o Denning vs. State: xxx said statute did not create any liability or cause of
action against the state where none existed before, but merely gave an
additional remedy to enforce such liability as would have existed if the statute
had not been enacted.
o Murdock Grate Co. vs. Commonwealth: The statute we are discussing
discloses no intention to create against the state a new and heretofore
unrecognized class of liabilities, but only an intention to provide a judicial
tribunal where well recognized existing liabilities can be adjudicated.
o Sipple vs. State: It must be conceded that the state can be made liable for
injuries arising from the negligence of its agents or servants, only by force of
some positive statute assuming such liability.
 Paragraph 5 of article 1903 of the Civil Code: The state is liable in this sense when it
acts through a special agent, but not when the damage should have been caused by
the official to whom properly it pertained to do the act performed, in which case the
provisions of the preceding article shall be applicable.
o SC of Spain (in defining the scope of this paragraph):
 xxx the state, by virtue of such provisions of law, is not responsible
for the damages suffered by private individuals in consequence of
[214] Air Transportation Office v. Spouses Ramos
G.R. No. 159402 | February 23, 2011 | J. Bersamin
SUMMARY: Spouses David and Elisea Ramos (respondents) discovered that a portion of their
land was being used as part of the runway and running shoulder of the Loakan Airport being
operated by petitioner Air Transportation Office (ATO). ATO failed to pay for compensation for the
use of said land so the Spouses Ramos commenced an action for collection against ATO but the
latter invoked its immunity from suit saying that they cannot be sued without the State’s consent.
This is in accordance with Proclamation No. 1358 which allowed them to use the said land for the
Loakan Airport. The SC held that ATO can still be sued. The State’s immunity from suit does not
extend to the petitioner because it is an agency of the State engaged in an enterprise that is far
from being the State’s exclusive prerogative.
DOCTRINE: Not all government entities, whether corporate or non-corporate, are immune from
suits. Immunity from suits is determined by the character of the objects for which the entity was
organized.
The doctrine of sovereign immunity cannot be successfully invoked to defeat a valid claim for
compensation arising from the taking without just compensation and without the proper
expropriation proceedings being first resorted to of the plaintiffs’ property
FACTS:
● Spouses David and Elisea Ramos (respondents) discovered that a portion of their land
registered under Transfer Certificate of Title No. T-58894 of the Baguio City land records
with an area of 985 square meters, more or less, was being used as part of the runway
and running shoulder of the Loakan Airport being operated by petitioner Air
Transportation Office (ATO).
● the respondents agreed after negotiations to convey the affected portion by deed of sale
to the ATO in consideration of the amount of ₱778,150.00. However, the ATO failed to
pay despite repeated verbal and written demands.
● Thus, on April 29, 1998, the respondents filed an action for collection against the ATO
and some of its officials in the RTC
● In their answer, the ATO and its co-defendants invoked as an affirmative defense the
issuance of Proclamation No. 1358, whereby President Marcos had reserved certain
parcels of land that included the respondents’ affected portion for use of the Loakan
Airport. They asserted that the RTC had no jurisdiction to entertain the action without
the State’s consent considering that the deed of sale had been entered into in the
performance of governmental functions.
○ The Civil Aeronautics Administration (CAA, predecessor of ATO) comes
under the category of a private entity. Although not a body corporate it was
created, like the National Airports Corporation, not to maintain a necessary
function of government, but to run what is essentially a business, even if
revenues be not its prime objective but rather the promotion of travel and the
convenience of the travelling public. It is engaged in an enterprise which, far
from being the exclusive prerogative of state, may, more than the construction
of public roads, be undertaken by private concerns
● The doctrine of sovereign immunity cannot be successfully invoked to defeat a valid
claim for compensation arising from the taking without just compensation and without
the proper expropriation proceedings being first resorted to of the plaintiffs’ property
● Moreover, this issue has been rendered moot by the passage of Republic Act No. 9497,
otherwise known as the Civil Aviation Authority Act of 2008, which abolished ATO.
○ Under its Transitory Provisions, R.A. No. 9497 established in place of the
ATO the Civil Aviation Authority of the Philippines (CAAP), which thereby
assumed all of the ATO’s powers, duties and rights, assets, real and personal
properties, funds, and revenues
○ Section 23 of R.A. No. 9497 enumerates the corporate powers vested in the
CAAP, including the power to sue and be sued, to enter into contracts of every
class, kind and description, to construct, acquire, own, hold, operate,
maintain, administer and lease personal and real properties, and to settle,
under such terms and conditions most advantageous to it, any claim by or
against it.
RULING: WHEREFORE, the Court denies the petition for review on certiorari, and affirms the
decision promulgated by the Court of Appeals.

ISSUE: whether or not the ATO could be sued without the State’s consent. YES. ATO can be
sued.

RATIO:
● The immunity of the State from suit, known also as the doctrine of sovereign immunity
or non-suability of the State, is expressly provided in Article XVI of the 1987 Constitution,
viz:

“Section 3. The State may not be sued without its consent.”

● The immunity from suit is based on the political truism that the State, as a sovereign,
can do no wrong
● Practical considerations dictate the establishment of an immunity from suit in favor of
the State. Otherwise, and the State is suable at the instance of every other individual,
government service may be severely obstructed and public safety endangered because
of the number of suits that the State has to defend against.
● Not all government entities, whether corporate or non-corporate, are immune from suits.
Immunity from suits is determined by the character of the objects for which the entity
was organized.
[215] ROSETE V AUDITOR GENERAL
G.R. No. L-1120 | August 31, 1948 | Feria, J.
TOPIC: Persons Liable - State
PETITIONER: Inocencio Rosete
RESPONDENT: The Auditor General
SUMMARY
There was a fire at ECA motor pool which burned the properties of the Rosete Family. The building
that was burned was used by the Emergency Control Administration as a bodega for storing oil
and gasoline. The fire was started by Jose Franio when he ignited his cigarette-lighter near a 5-
gallon drum where gasoline was stored. With this, Inocencio Rosete filed a claim with the Auditor
General, but this was denied on the grounds that government cannot be prejudiced by the illegal
or tortious acts of its servants.
SC held that the government is not liable because it was not shown that whatever negligence may
be imputed to the Emergency Control Administration or its officers, was done by an special agent,
because the officers of the Emergency Control Administration did not act as special agents of the
Government within the meaning of that word in article 1903 of the Civil Code.
DOCTRINE
 The responsibility of the state is limited by article 1903 to the case wherein it acts
through a special agent so that in representation of the state and being bound to act as
an agent thereof, he executes the trust confided in him.
 This concept does not apply to any executive agent who is an employee of the active
administration and who on his own responsibility performs the functions which are
inherent in and naturally pertain to his office and which are regulated by law and the
regulations.
PROVISIONS
ART. 1903. The obligation imposed by the preceding article is enforceable not only for personal
acts and omissions but also for those persons for whom another is responsible.
xxx xxx xxx
"The state is liable in this sense when it acts through a special agent, but not when the damage
should have been caused by the official to whom it properly pertained to do the act performed, in
which case the provisions of the preceding article shall be applicable.
CASE: This is an appeal from Insular Auditor decision to deny claim of Rosete and others against
Government in the amount of P35,376 for damages caused to buildings belonging to the claimant.
FACTS
Facts from Dissent
 On Nov. 2, 1945, there was a fire at ECA motor pool, 22 Azcarraga Manila, which
burned books, jewelries, clothing, furniture, silverwares, and other household
equipment of Inocencio Rosete and family – Total value lost: Php 35,376.
 The building which was burned was used by the ECA (Emergency Control
Administration) as a bodega in which oil and gasoline, among others, have been
stored.
o ECA: Organized by the government for the same substantial purposes for
which the Philippine Relief and Rehabilitation Administration (PRRA) has
been created by Commonwealth Act No. 716, where its purposes are
specifically stated.
 Jose Fraino started the fire by igniting his cigarette-lighter, which he had just filled with
gasoline, near a 5-gallon drum into which gasoline was then being drained.
o The spark produced by the lighter set fire on the gasoline, burning the bodega
as well as the surrounding inhabited houses, together with their contents,
among which, being the properties of claimant and his family.
o The storage of gasoline and other combustible and inflammable substances
requires the securing of license and permit under the provisions of Acts 649,
650, and 651 of the revised ordinances of Manila and Ordinance No. 1985.
 The Mayor of Manila certified that ECA was not granted any permit to store gasoline in
its motor pool. This was corroborated by Acting Assistant Treasure and by the Acting
Chief of the Fire Department of Manila.
 Inocencio Rosete filed a claim with the Auditor General, but this was denied on October
3, 1946.
o Ground: even granting that the officials and employees of the former
Emergency Control Administration (ECA) were negligent, the government
cannot be prejudiced by the illegal or tortious acts of its servants.
Appellant’s Claims:
 Appellant claims that buildings were destroyed by a fire that came from the
contiguous warehouse of the Emergency Control Administration, located at No. 2262
Azcarraga, due to the negligence of:
o Jose Frayno y Panlilio in igniting recklessly his cigarette-lighter near a five
gallon drum into which gasoline was being drained, and
o and of officers of the ECA, which is an office or agency of the Government,
in storing gasoline in said warehouse contrary to provisions of Ordinances of
the City of Manila
 Claimant contends that Auditor General erred in not finding the government agency
or instrumentality known as the Emergency Control Administration of the officers
guilty of negligence in storing highly combustible and inflammable substance in its
warehouse on bodega.
o In violation of City Ordinances
o Therefore, the government is liable for damages sustained by the claimant
under Art 1903 CC
ISSUES: W/N Government is liable – No
RATIO:
 Merritt v. Government:
o Supreme Court of Spain:
 The state, by virtue of such provisions of law, is not responsible for
the damage suffered by private individuals in consequence of acts
performed by its employees in the discharge of the functions
pertaining to their office, because neither fault nor even negligence
can be presumed on the part of the state in the organization of
branches of the public service and in the appointment of its agents.
 On the contrary, we must presuppose all foresight humanly
possible on its part in order that each branch of service serves the
general weal and that of private persons interested in its operation.
 Between these latter and the state, therefore, no relations of a
private nature governed by the civil law can arise except in a case
where the state acts as a judicial person capable of acquiring rights
and contracting obligations.
o The responsibility of the state is limited by article 1903 to the case
wherein it acts through a special agent so that in representation of the
state and being bound to act as an agent thereof, he executes the trust
confided in him. This concept does not apply to any executive agent who
is an employee of the active administration and who on his own
responsibility performs the functions which are inherent in and
naturally pertain to his office and which are regulated by law and the
regulations.
 o That according to par 5 of art 1903, CC the responsibility of the state is limited
to that which it contracts through a special agent, duly empowered by a
definite order or commission to perform some act or charged with some
definite purpose which gives rise to the claim, not where the claim is
based on acts or omissions imputable to a public official charged with some
administrative or technical office who can be held to the proper responsibility
in the manner laid down by the law of civil responsibility.
 In this case, there being no showing that whatever negligence may be imputed to
the ECA was done by a special agent, because the officers of the ECA did not act
as special agents in storing gasoline in the warehouse of the ECA, the government is
not responsible.
 Case cited by Appellant – Marine Trading v. Government – not applicable because the
plaintiff in that case recovered under the special provisions of Code of Commerce and
the Philippine Marine Regulations of the Collector of Customs, regarding collision of
vessels, and not on the ground of tort in general provided for in article 1903 of the Civil
Code.
o such as the Philippine National Bank, the National Development Company,
the National Coconut Corporation, the National Tobacco Corporation, and
many other government enterprises.
 In qualifying the special agent with the adjective "special", the Civil Code aimed at
distinguishing it from the regular or ordinary agent of government, which refers to all
officers and employees in the public service.
o No dispute that all persons in the active service of the government,
regardless of department or branch, are agents of the State or of the
people.
o All of them are properly designated as servants of the people.
o SERVANTS ARE AGENTS.
o The Civil Code uses the adjective "special", because its authors could not
miss the fact that the official, mentioned in paragraph 5 of article 1903, is also
an agent.

 Act No. 327, in authorizing the Bling of claims against the Government with the Insular
Auditor, and appeal by private persons or entities from the latter's decision to the
Supreme Court, does not make any and all claims against the Government allowable,
and the latter responsible for all claims which may be Bled with the Insular Auditor under
the provisions of said Act

RULING: Decision appealed from is dismissed

DISSENT:
Perfecto, J.
 The decision of the Auditor General, dated Oct. 3, 1946, denying petitioner's claim
should be set aside, not only because it is not supported by law, but because it is
premised on the totalitarian philosophy of the State's immunity for whatever wrong it
may perpetrate.
 The Auditor General should be ordered to grant appellant's claim in the amount that
may be supported by evidence, to present which, the Auditor General shall first give
opportunity to claimant.
 The Auditor General failed to examine the merits of the claim in so far as the amount
thereof is concerned.
 Applying the provisions of articles 1902 and 1903 of the Civil Code, the foregoing
provisions present two situations:
1. When the state "acts through a special agent"
 In this case, the State is subject to liability for damages caused
by the special agent.
2. When an act is performed by an official "upon whom previously
devolved
 It is the official, not the State, who is liable for damages caused
by the act performed.
 “Official” vs. “Special Agents” under Paragraph 5, Art 1903
o Official : comprises all officials and employees of the government who
exercise duties of their respective public offices.
o Special Agents: All others who are acting by commission of the government,
whether individual or juridical bodies.
 In this case, ECA was not a branch or office of the government (such as the
legislative bodies, executive offices or tribunals)
o It was an agency set up for specific purposes which were not attainable
through the official functions entrusted by law to the government or its
branches.
o It is one of the groups of special agents created by the government for
activities ordinarily ungovernmental in character
[216] US v. GUINTO
GR 76607 | February 26, 1990 | Cruz, J.
SUMMARY
This is the resolution of 4 consolidated cases involving the doctrine of state immunity. The USA
was not impleaded in the complaints but has moved to dismiss them on the ground that the
complaints against their agents are in effect suits against them to which they have not consented
to. All their motions were dismissed by the lower court.
DOCTRINE
The rule is that if the judgment against such officials will require the state itself to perform an
affirmative act to satisfy the same, such as the appropriation of the amount needed to pay the
damages awarded against them, the suit must be regarded as against the state itself although it
has not been formally impleaded. In such a situation, the state may move to dismiss the complaint
on the ground that it has been filed without its consent.
The US like any other state, will be deemed to have impliedly waived its non-suability if it has
entered into a contract in its proprietary or private capacity. It is only when the contract involves
its sovereign or governmental capacity that no such waiver may be implied.
FACTS
4 consolidated cases involving the doctrine of state immunity
- The USA was not impleaded in the complaints but has moved to dismiss them on the ground
that they are suits against them to which they have not consented to
- They are now contesting the denials of their Motions to Dismiss
GR 76607
- The Western Pacific Contracting Office, Okinawa Area Exchange, U.S. Air Force, solicited
bids for contracts for barber services in their Clark Air Base
- Among those who submitted their bids were the private respondents who had been a
concessionaire inside Clark for many years.3
- Bidding was won by Ramon Dizon, over the objection of the private respondents, who
claimed that he had made a bid for four facilities, including the Civil Engineering Area, which
was not included in the invitation to bid.
o Resps: complained to the Philippine Area Exchange (PHAX).
o PHAX: the Civil Engineering concession had not been awarded to Dizon as a result
of the same bidding; Dizon was already operating this concession
o The solicitation of the CE barbershop would be available only by the end of June
and the private respondents would be notified.
- Complaint: to compel PHAX and the individual petitioners to cancel the award to defendant
Dizon, to conduct a rebidding for the barbershop concessions and to allow the private
respondents by a writ of preliminary injunction to continue operating the concessions pending
litigation.
- MTD: it is a suit against the USA which had not waived its non-suability.
o The individual defendants as employees of the US Air Force, were also immune
from suit
- TC: denied the writ of preliminary injunction and the MTD
GR 79470
- Complainant had poured urine into the soup stock used in cooking the vegetables served to
the club customers.
- The club manager suspended him and thereafter referred the case to a board of arbitrators
which unanimously found him guilty and recommended his dismissal.
3 5
Valencia for 34 years; del Pilar for 12 years; and Tanglao for 50 years.
4
Article XVI, Section 3
- Dismissal was effected the by Lamachia, the Commander of the 3rd Combat Support Group,
PACAF Clark Air Force Base.
- Complaint: damages against petitioners for his dismissal as cook in the U.S. Air Force
Recreation Center at the John Hay Air Station in Baguio City.
- MTD: Lamachia, as an officer of the U.S. Air Force was immune from suit for the acts done
by him in his official capacity. They argued that the suit was in effect against the United
States, which had not given its consent to be sued.
- TC: denied the MTD
GR 80018
- Complainant, employed as a barracks boy in Camp O' Donnell, an extension of Clark Air
Base, was arrested following a buy-bust operation conducted by the petitioners, officers of
the U.S. Air Force and special agents of the Air Force Office of Special Investigators (AFOSI).
- Information for a violation of the Dangerous Drugs Act was filed
- As a result, Bautista was dismissed from his employment.
- Complaint: damages against the individual petitioners
- MTD: they were acting in their official capacity, and the complaint against them was in effect
a suit against the United States without its consent.
- TC: denied motion
GR 80258
- Complaint: damages for injuries sustained as a result of the acts of the defendants
- According to plaintiffs:
o The defendants beat them up, handcuffed them and unleashed dogs on them
which bit them in several parts of their bodies and caused extensive injuries to
them.
- According to defendants
o Plaintiffs were arrested for theft and were bitten by the dogs because they were
struggling and resisting arrest; the dogs were called off and the plaintiffs were
immediately taken to the medical center
- MTD: the suit was a suit against the US which had not given its consent to be sued.
o The defendants were immune from suit under the RP-US Bases Treaty for acts
done by them in the performance of their official functions.
- TC: denied motion
ISSUE
W/n petitioners cannot be sued.
76607 79470 80018 80258
CAN CAN’T CAN’T Remanded
RATIO
A State may not be sued without its consent
- This rule is now expressed in the 1987 Constitution4
- It is one of the generally accepted principles of international law that we have adopted as
part of the law of our land
- Even without such provision, we would still be bound by the generally accepted principles of
international law under the doctrine of incorporation.5
- As applied to the local state, the doctrine of state immunity is based on the justification given
by Justice Holmes that "there can be no legal right against the authority which makes the law
on which the right depends."
- In the case of the foreign state sought to be impleaded in the local jurisdiction, all states are
sovereign equals and cannot assert jurisdiction over one another.
o A contrary disposition would, in the language of a celebrated case, "unduly vex the
peace of nations."
As accepted by the majority of states, such principles are deemed incorporated in the law of every civilized
state as a condition and consequence of its membership in the society of nations. Upon its admission to such
society, the state is automatically obligated to comply with these principles in its relations with other states.
- The doctrine is also applicable to complaints filed against officials of the state for acts
allegedly performed by them in the discharge of their duties.
o The rule is that if the judgment against such officials will require the state
itself to perform an affirmative act to satisfy the same, such as the
appropriation of the amount needed to pay the damages awarded against
them, the suit must be regarded as against the state itself although it has not
been formally impleaded. In such a situation, the state may move to dismiss
the complaint on the ground that it has been filed without its consent.
- Doctrine is not absolute as the state may consent to being sued
o Consent may be manifested expressly or impliedly.
o Express: embodied in a general law or a special law.67
 Only through the will of the legislature
o Implied: state enters into a contract8 or it itself commences litigation.
 In contracts, distinction must be made between sovereign and
proprietary acts
 When filing a complaint, the claim must be an affirmative relief from the
defendant
In the case of the United States of America
- The customary rule of international law on state immunity is expressed with more specificity
in the RP-US Bases Treaty. Article III thereof provides as follows:
It is mutually agreed that the United States shall have the rights, power and authority
within the bases which are necessary for the establishment, use, operation and defense
thereof or appropriate for the control thereof and all the rights, power and authority within
the limits of the territorial waters and air space adjacent to, or in the vicinity of, the bases
which are necessary to provide access to them or appropriate for their control.
- PET: relies on jurisprudence to support their position that they are not suable
o The jurisprudence showed instances when complaints were dismissed as being
against the US, and what or whose acts are considered as reflecting that of the
US and so could be sued upon.
o (SEE END FOR SUMMARY OF THE JURISPRUDENCE USED)
- The above jurisprudence do not confer on the United States of America a blanket immunity
for all acts done by it or its agents in the Philippines.
- The US like any other state, will be deemed to have impliedly waived its non-suability
if it has entered into a contract in its proprietary or private capacity. It is only when the
contract involves its sovereign or governmental capacity that no such waiver may be
implied. In USA v. Ruiz:
o ‘because the activities of states have multiplied, it has been necessary to
distinguish them — between sovereign and governmental acts (jure imperii) and
private, commercial and proprietary acts (jure gestionis). The result is that State
immunity now extends only to acts jure imperii. The restrictive application of State
immunity is now the rule in the US, the UK and other states in Western Europe.’
o A State may be said to have descended to the level of an individual and can thus
be deemed to have tacitly given its consent to be sued only when it enters into
business contracts.
o It does not apply where the contract relates to the exercise of its sovereign
functions. In Ruiz, the projects are an integral part of the naval base which is
devoted to the defense of both the United States and the Philippines, indisputably
a function of the government of the highest order; they are not utilized for nor
dedicated to commercial or business purposes.
- PET: they acted in their official functions as officers or agents of the US.
- The charges against them may not be summarily dismissed on their mere assertion that their
acts are imputable to the USA; the defendants are sought to be held answerable for personal
6 7
In Act No. 3083, the Philippine government "consents and submits to be sued upon any moneyed claim
involving liability arising from contract, express or implied, which could serve as a basis of civil action between
private parties."
torts in which the United States itself is not involved. If found liable, they and they alone must
satisfy the judgment.
As applied to the cases
GR 76607 – barbershop case
- The barbershops are commercial enterprises operated by private persons.
- They are not agencies of the US Armed Forces nor are their facilities demandable as a matter
of right by the American servicemen.
- These establishments provide services more than what is required in most military
organizations, and all for a fee.
- All the barbershop concessionaires are under the terms of their contracts, required to remit
to the US govt fixed commissions in consideration of the exclusive concessions granted to
them in their respective areas.
- Case remanded to receive evidence to determine liability
GR 79470 – pee on soup
- Restaurant services offered in Jon Hay Ais Station is undertaken by the US govt. in its
proprietary capacity.
- Such services are not extended to the American servicemen for free as a perquisite of
membership in the Armed Forces of the United States; they are available to the general
public. Such services are undoubtedly operated for profit, as a commercial and not a
governmental activity.
- Doctrine of state immunity cannot be invoked by petitioner
- HOWEVER, the complaint must still be dismissed.
- Dismissal of the private respondent was decided upon only after a thorough investigation
where it was established beyond doubt that he had polluted the soup stock with urine. It is
surprising that he should still have the temerity to file his complaint for damages after
committing his utterly disgusting offense.
GR 80018 – buy-bust
- Petitioners were acting in the exercise of their official functions
- They were connected with the Air Force Office of Special Investigators and were charged
precisely with the function of preventing the distribution, possession and use of prohibited
drugs and prosecuting those guilty of such acts. For discharging their duties as agents of the
US, they cannot be directly impleaded for acts imputable to their principal
- RES: invokes CC Art 2180 which holds the government liable if it acts through a special
agent.
o SC: Suability is different from liability
o Being suable does mean it is liable, and there can be no liability if it cannot be
sued. When the state does waive its immunity, it is only giving the plaintiff the
chance to prove, if it can, that the defendant is liable.
GR 80258 – doggy bites
- We hesitate to make the same conclusion as in GR 80018.
- The contradictory factual allegations are too meager to indicate if the defendants were really
discharging their official duties or had actually exceeded their authority when the incident in
question occurred. Lacking this information, this Court cannot directly decide this case.
- The case must first be remanded for the needed inquiry
Jurisprudence relied upon be petitioner
- Baer v. Tizon: The invocation of the doctrine of immunity from suit of a foreign state without
its consent is appropriate.
In Merritt v. Government of the Philippine Islands, a special law was passed to enable a person to sue the
government for an alleged tort.
8
When the government enters into a contract, it is deemed to have descended to the level of the other
contracting party and divested of its sovereign immunity from suit with its implied consent.
- Raquiza v. Bradford:9 'It is well settled that a foreign army, permitted to march through a
friendly country or to be stationed in it, by permission of its government or sovereign, is
exempt from the civil and criminal jurisdiction of the place.'
- Tubb and Tedrow v. Griess: the Court relying on Raquiza v. Bradford said that after the
conclusion of the Philippine-American Military Bases Agreement, the treaty provisions
should control on such matter, the assumption being that there was a manifestation of the
submission to jurisdiction on the part of the foreign power whenever appropriate.
- Syquia v. Almeda Lopez: 'It is clear that the courts of the Philippines including the
Municipal Court of Manila have no jurisdiction over the present case as…the U.S.
Government has not given its consent to the filing of this suit which is essentially against
her, though not in name. This case is of a citizen filing an action against a foreign
government without said government's consent, which renders more obvious the lack of
jurisdiction of the courts of his country.
- Marquez Lim v. Nelson: 'that the vessel belonged to the United States Government, that
the defendants merely acted as agents of said Government, and that the United States
Government is therefore the real party in interest.'
- Philippine Alien Property Administration v. Castelo: a suit against Alien Property Custodian
and the Attorney General of the US involving vested property under the Trading with the
Enemy Act is in substance a suit against the United States.
- Parreno v. McGranery:, 'It is a widely accepted principle of international law, which is made
a part of the law of the land (Consti Art II, Section 3), that a foreign state may not be
brought to suit before the courts of another state or its own courts without its consent.'
- Johnson v. Turner: defendant, then Commanding General, Philippine Command (Air
Force, with office at Clark Field), was considered as an agent of the US and so could not
be sued

9
Justice Hilado, speaking for the Court, citing Coleman v. Tennessee
[217] SSS vs CA
G.R. No.L-41299 | 21 February 1983 | Melencio-Herrera, J.
SUMMARY:
Sps Cruz obtained a loan from SSS, mortgaging their residential lot as collateral. They used the
proceeds of said loan to build a residential house in the mortgaged lot. At some point, they
defaulted in their monthly payments of the loan, but the late payments were nonetheless accepted
by SSS. SSS filed an application to foreclose the mortgaged property, and publish the notice for
the 1st time in Sunday Chronicle. After the 1st publication, the sps informed SSS that it was not
them but a certain Socorro J. Cruz who was actually in default, and that SSS accepted their late
payments. Despite this, SSS proceeded with publishing the notice for the 2nd and 3rd times. The
sps filed an action for damages which was granted by CFI, after it found that SSS committed a
clerical error and it was indeed Socorro J. Cruz and not Socorro C. Cruz (the wife) who was in
default. CA affirmed. SC affirmed, ruling that SSS can be sued pursuant to express provision in
its enabling law allowing for the same, but deleted all the damages awarded except nominal and
attys fees.
PROVISIONS APPLICABLE:
ART. 2180. The State is responsible in like manner when it acts through a special agent; but not
when the damage has been caused by the official to whom the task done properly pertains, in
which case what is provided in Article 2176 shall be applicable.
DOCTRINE:
At the outset, an injustice should not be perpetrated and when damage is caused to a citizen, esp.
when it arises from a purely private and contractual relationship, right of redress should be allowed
to the citizen
As a general rule, an entity performing governmental functions enjoys immunity from suit,
except when its enabling law provides otherwise
● This exception should not mean however that such entity concede to any liability
FACTS:
● Sps. David and Socorro C. Cruz applied for and were granted a real estate loan by the
SSS with their residential lot at Lozada Street, Sto. Rosario, Pateros, Rizal covered by
TCT No. 2000 as collateral
○ Pursuant to this real estate ban, said sps. executed a corresponding real
estate mortgage (REM) in the amount of P48,000 covering the said lot
■ There was an automatic acceleration clause in the contract,
allowing SSS to foreclose the property
○ SSS furnished the sps w/ a passbook to record their monthly payments of
their amortizations, which were due every 1st five days of the month
● The sps constructed their residential house using the proceeds of the loan on the
mortgaged property
● Although initially the sps religiously paid their amortizations, at some points there were
delays
● SSS filed an application for the foreclosure of the REM on the ff grounds:
○ Sps defaulted in paying in full the installments including the interest
○ The indebtedness of the sps amounts to P10,702.58, excluding
interests, plus 20% thereof as atty’s fees, which were secured by the said
mortgage
● Notice of the Sheriff’s sale of the mortgaged property at a public auction was published
in the Sunday Chronicle
● After this first publication, the sps (plaintiff) demanded that SSS desist from foreclosing
and further publishing the notice of sale, arguing that they were up-to-date in their
payments
○ Their were exchanges of telegrams for purposes of setting up a meeting but
nothing happened
● The notice of sale was published for the 2nd and 3rd time in the Sunday Chronicle
● The sps filed an action for damages and atty’s fees against SSS and Provincial Sheriff
before CFI of Rizal, arguing that they were not in default
○ SSS stressed its right to foreclose by virtue of the automatic acceleration
clause
● CFI enjoined SSS from holding the sale, and ruled in favor of the sps
○ Found the ff:
■ It was not the wife Socorro C. Cruz but a certain Socorro J.
Cruz who was in default and in arrears in the amount of
P10,702; however, SSS denied committing such clerical error
○ Awarded the ff damages to the sps:
■ P2,500.00 as actual damage;
● To compensate for expenses incurred for wardrobe the
sps were supposed to use during their trip abroad, w/c
was aborted bc of the filing of foreclosure application
■ P35,000.00 as moral damage;
● Altho the 1st publication was made in good faith, it was
committed in gross negligence by SSS -- P5k
● For the 2nd publication, the sps notified SSS that there
was a mistake in accounting for their obligation but SSS
did not take any corrective measure to rectify its
error -- thus the publishing was made with malice and w/
intent to cow sps into submission -- P10k
● The 3rd publication was made in outright disregard of the
reputation and standing of the sps -- P30k
■ P10,000.00 as exemplary or corrective damages; and
■ P5,000.00 as attorney's fees.
● On appeal, CA affirmed but deleted the P5k moral damages awarded for the 1st
publication. Found that:
○ SSS committed a clerical error as found by CFI
■ the outstanding obligation of the sps was P38,875 and not P10,702
○ Although the payment of amortizations of the sps was not regular, the late
payments were nonetheless accepted by SSS and as such, SSS could
no longer suddenly and w/o prior notice to the sps apply for foreclosure
● Hence, the present petition
○ For failure of the 1st Division of SC to obtain concurrence, the case was
referred to the Court en banc
ISSUES/HOLDING/RATIO:
1. W/N Sps. Cruz defaulted in the payment of their loan -- NO, and so the foreclosure cannot
be done
● As a general rule, factual findings of CA are not subject to review by SC
○ Since this issue revolves around the question of appreciation of the evidence
by the CFI as concurred by CA, and that it does not fall under the exceptions
to the general rule, the appraisal of facts should be left undisturbed
2. W/N SSS can be held liable for damages -- YES
● SEE DOCTRINE
● SSS is a juridical entity with a personality of its own and has corporate powers separate
and distinct from the Government
○ Its own organic act provides that it can “sue and be sued” in Court, w/c
covers all civil process incident to a legal action
■ As an effect, SSS has been required to submit to the jurisdiction of
the Courts
○ In light of this express provision, the ff questions/arguments become
unimportant:
■ whether SSS performs governmental or proprietary functions
■ whether or not SSS is profit-oriented
 ● SC: nonetheless, SSS enters into contractual loan ● A contrary rule as that enunciated in the majority opinion invites conspiracy between
agreements for profit given that borrowers pay interests officials and employees of the SSS and private parties to create financial liabilities
■ “To hold liable SSS for damages would deplete benefit funds against the System
allotted for covered members”
● SC: expenditures of SSS are not confined to payment of
benefits only, but also to payment of salaries
● Needless to say, SSS cannot be held liable for damages
○ For actual damages, the findings of CFI are speculative.
■ The abortion of the trip abroad was imputable to the sps when they
did not renew their expired passports nor secure the necessary
visas
○ For moral and temperate damages, altho CA found that the negligence was
not so gross, it merely reduced the amount awarded instead of deleting the
entire amount
■ Considering also that SSS acted in the belief that it has a right to
foreclose by virtue of the automatic acceleration clause and thus
w/o malice or bad faith
○ Exemplary or corrective damages must also be deleted since compensatory,
moral and temperate damages are to be deleted
○ However, nominal damages is awarded considering the adamant refusal of
SSS to acknowledge the error it committed -- P3k
○ Atty’s fees is also awarded -- P5k

RULING:
WHEREFORE, the judgment sought to be reviewed is hereby modified in that petitioner SSS shall
pay private respondents: P3,000.00 as nominal damages; and P5,000.00 as attorney's fees.

DISSENT, Makasiar, J.:

SSS is not liable; it is its officers who must be held liable
● Such waiver of immunity from suit by virtue of its juridical personality and express
provision “sue and be sued” is not an admission of liability.
○ SSS can interpose the defense provided in Art. 2180 -- that it is not liable for
tortious acts committed by its officers
■ In this case, SSS’s officers were grossly negligent, bordering on
malice or bad faith in applying for the extrajudicial foreclosure even
after the sps brought to their attention the clerical error committed
● The negligent acts did not amount simply to a contractual
breach but to tort
● That there was pre-existing contractual relationship does
not bar tort liability of SSS; the act that breaks the
contract may also be a tort, as in this case
● Pursuant to Art. 2180, NCC, since SSS did not act thru a special agent, SSS cannot be
liable for damages caused by tortious acts of its officers.
○ The remedy therefore of the sps is to proceed against the guilty officers and
employees, by virtue of Art. 2176, NCC

SSS cannot be liable for damages

● Since SSS is an entity of government performing governmental functions -- hence, not
profit-oriented -- it cannot be held liable for damages
○ The strictly governmental function of the SSS is spelled out unmistakably in
Section 2 of R.A. No. 1161 entitled "The Social Security Act of 1954": a social
security system which shall be suitable to the needs of the people throughout
the Philippines, and shall provide protection against the hazards of disability,
sickness, old age and death
○ The question whether such functions are constituent or ministrant is no longer
important since the SC in ACCFA vs CUGCO abandoned the distinction
between the two
[218] PALAFOX v. PROVINCE OF ILOCOS NORTE
G.R No. L-10659 | January 31, 1958 | Bengzon, J.
SUMMARY: Palafox died after being run over by a freight truck driven by Torralba, who is a
chauffeur of the Provincial Government of Ilocos Norte. The heirs of Palafox sued the Province for
civil liability. The Court held that the Province is not liable because at the time of the accident,
Torralba is working on the construction or maintenance of roads, which are government activities.
PROVISIONS:
ART. 103. Subsidiary civil liability of other persons. - The subsidiary liability established in the
next preceding article shall also apply to employers, teachers, persons, and corporations engaged
in any kind of industry for felonies committed by their servants, pupils, workmen, apprentices,
or employees in the discharge of their duties
ART. 1903. The obligation imposed by the next preceding articles is enforceable not only for
personal acts and omissions, but also for those of persons for whom another is responsible. x x
x.
The State is liable in this sense when it acts through a special agent, but not when the damage
has been caused by the official upon whom properly devolved the duty of doing the act performed,
in which case the provisions of the preceding article shall be applicable. x x x.”
DOCTRINE: If the negligent employee was engaged in the performance of governmental duties,
as distinguished from corporate or proprietary or business functions – the government is not liable.
FACTS:
● On September 30, 1948, Proceto Palafox died after being run over by a freight truck
driven by Sabas Torralba.
● Torralba was a chauffeur of the Provincial Government of Ilocos Norte detailed to the
office of the District Engineer; and on the said date he drove the motor vehicle along
the National Highway in compliance with his duties as such.
○ He was prosecuted for homicide through reckless imprudence, to which he
pleaded guilty and was accordingly sentenced.
● The heirs of Palafox, who have reserved their right to file civil action, subsequently
began these proceedings against the province, the District Engineer, the Provincial
Treasurer and Torralba.
● Upon motion to dismiss, the CFI quashed the civil case against the defendants, except
Torralba:
○ There being no allegation that said province and officers had been “engaged
in some kind of industry” as provided in Art. 103 of the RPC, no cause of
action exists against them
● Hence, this appeal.
○ Palafox heirs insist that Art. 1903 applies and that the State should be liable.
○ The municipality is not liable for the acts of its officers or agents in the
performance of its governmental functions.
■ Governmental affairs do not lose their governmental character by
being delegated to the municipal governments or performed by
officers.
■ The municipality is also immune for injuries suffered by private
individuals in the administration of strictly governmental functions,
unless it is expressly made liable by statute.”
○ A municipality is not exempt from liability for the negligent performance
of its corporate or proprietary or business functions.
■ In the administration of its patrimonial property, it is to be regarded
as a private corporation or individual. Damages may be collected
from it for the torts of its officers or agents within the scope of their
employment in precisely the same manner and to the same extent
as those of private corporations or individuals.
■ As to such matters the principles of respondeat superior applies. It
is for these purposes that the municipality is made liable to suits in
the courts.
● Thus, if the negligent employee was engaged in the performance of governmental
duties, as distinguished from corporate or proprietary or business functions –
the government is not liable.
○ This is because the Government “does not undertake to guarantee to any
person the fidelity of the officers or agents whom it employs, since that would
involve in all its operations in endless embarrassments, difficulties and loses
which would be subversive of the public interest.” (U.S. v. Kirkpatrick)
● In this case, the construction or maintenance of roads in which the truck and the
driver worked at the time of the accident are admittedly governmental activities.
Thus, the province is not liable for the death of Palafox.
RULING: JUDGMENT AFFIRMED.

ISSUES:
[1] W/N the Province of Ilocos Norte is civilly responsible — NO
● To attach liability to the State for the negligence of Torralba under Art. 1903, a
declaration must be made that he was a “special agent,” - and not one upon whom
properly devolved the duty of driving the truck on that occasion.
○ In Merrit v. Government of the Philippines, the Court absolved the
Government from liability for damages caused through the negligence of the
driver of a PGH ambulance holding that the driver was not a special agent of
the Government within the scope of Art. 1903.
○ “The State” meant “Government of the Philippines,” and these words include
both central and the local governments. (Sec. 2 Revised Administrative
Code.)
The principle of respondeat superior does not apply.
● As illustrated in Mendoza v. De Leon:
[219] Republic v Palacio
G.R No L-20322, 29 May 1968, Reyes, J.B.L., J.
Petitioner: Republic of the Philippines
Respondents: HON. PERFECTO R. PALACIO, as Judge of the Court of First Instance of
Camarines Sur, MACARIO M. OFILADA, as ex-officio Sheriff of Manila, and ILDEFONSO ORTIZ
Summary of the Facts:
Private Respondent Ildefonso Ortiz brought an action for recovery for property with damages
against Handiong Irrigation Association (Handiong) and the Irrigation Service Unit (ISU). This is
allegedly because ISU induced Handiong to enter and occupy Ildefonso’s land. The Trial Court
then ordered a writ of execution and garnishment to be levied on a trust fund owned by ISU. The
Republic, through the Solicitor General, opposed this motion because the trust fund is in the nature
of public funds; public funds are exempt from execution. The Trial Court and Court of Appeals
ruled against the OSG; hence, an appeal to the Supreme Court.
The Supreme Court reversed the Lower Courts, stating that the trust fund was indeed in the nature
of Public Funds, as the alleged “for profit” activites that ISU was engaging in were in fact for the
purpose of financing its public works.
Furthermore, the Court held that the State’s liability to Ildefonso, if any, was based in Tort. The
Civil Code provides that as a general rule, only special agents of the State which are
commissioned to do special duties outside of its regular functions may be liable for tort; otherwise,
the State may not be liable based on tort.
Provisions applicable:
Art. 2180 (6), NCC. The obligation imposed by article 2176 is demandable not only for one's own
acts or omissions, but also for those of persons for whom one is responsible.
XXX
The State is responsible in like manner when it acts through a special agent; but not when the
damage has been caused by the official to whom the task done properly pertains, in which case
what is provided in article 2176 shall be applicable.
Relevant info on the topic10:
The Pump Irrigation Trust Fund is a public fund and cannot be made to answer for damages
awarded, as the State can only be made liable for torts committed by special agents who are
specifically commissioned to carry out acts complained of, outside of such agent’s regular duties.
No proof that ISU was specifically commissioned to induce Handong Association to invade and
occupy subject lot.
Full FACTS:
 This is an appeal to the Supreme Court to restrain a writ of execution on the trust fund
in the account of the Irrigation Service Unit with the Philippine National Bank.
 2 April 1960: Respondent Ildefonso Ortiz instituted a civil action in the CFI of Camarines
Sur against the Handong Irrigation Association (Private Corporation), and the Irrigation
Service Unit (an office or agency under the Dept. of Public Works and Communications).
o Cause of action: Recovery of possession with damages of a plot of land in
Handong, San Juan, Libmanan, CamSur (958 square meters).
o Allegedly, Handong Irrigation Association entered and occupied said land at
the insistence of the Irrigation Service Unit.
 3 June 1960: The Republic of the Philippines, through the Office of the Solicitor
General, moved to dismiss the case
o They claim that the Irrigation Service Unit has no personality, so it cannot sue
or be sued;
10
From B2017 MRT Torts Reviewer
o The Court DENIED this motion, as though it is an Agency of the Republic, it
is still engaged in the private business of selling irrigation pumps and
construction materials.
 29 January 1962: A writ of execution was then served against the private respondents
in the above-mentioned civil action.
 16 February 1962: An order of garnishment was served by the Sheriff of Manila against
the trust fund of the Irrigation Service Unit which was with the Philippine National Bank.
 8 March 1962: The Solicitor General filed an urgent motion to lift the order of
garnishment.
o They alleged that the money in the trust fund are public funds which are
exempt from execution.
 This motion was denied by the Trial Court, and the Court of Appeals sustained such
denial.
o CA: Based on the finding that the Irrigation Service Unit was engaged in
private business, such agency is deemed to have consented to the suit.
 Hence, the OSG appeals to the Supreme Court.
ISSUES/RATIOS:
W/N The Irrigation Service Unit Trust Fund is in the Character of Public Funds, and thus
exempt from execution? YES
 The Court looked into the history and the nature of the Irrigation Service Unit and its
trust fund.
o The Irrigation Service Unit was organized under the Department of
Agriculture and Natural Resources;
o This agency was later transferred to the Department of Public Works and
Communications;
 The Irrigation Service Unit performs public functions, and such activities are funded
by the Trust fund (Counterpart Fund-Special Account).
o The Irrigation Service Unit would sell irrigation pumps and construction
materials to farmers on an installment basis, and interest would be charged
on the installment payments;
o It was seen that the proceeds from sales of irrigation pumps and construction
materials to farmers would go into such Trust Fund;
o The trust fund would then form part of the Irrigation Service Unit’s annual
budget, helping to fund its public works.
 From the foregoing, it is apparent that the Irrigation Service Unit is a public agency that
is not engaged in business for profit.
o Just because interest is charged on the installment payments does not mean
that the gov’t agency is engaging in business for profit;
o In fact, these interest payments help finance the agency’s public works
by replenishing its trust fund.
 CONCLUSION: The Trust Fund is in the Nature of Public Funds, exempt from
execution by the Courts.
W/N The State is liable for inducing Handiong to enter and occupy Ildefonso Ortiz’s Land?
NO (PERTINENT ISSUE)
 The Court of Appeals ignored the fact that the initial complaint against the Irrigation
Service Unit comes from such agency’s act of inducing Handong Irrigation Association
to enter and occupy the land owned by Private Respondent Ildefonso Ortiz.
o The source of the state’s liability, if any, is therefore from TORT and not
Contract
 Article 2180 of the Civil Code exempts the State from any liability arising from tort
(general rule).11
11
Merritt vs. Insular Government, 34 Phil. 311 (1916)
 o Exception: Only special agents of the state, commissioned to perform the acts
complained of (which are outside of its regular duties), may be held liable for
tort.
 There being no proof that the Irrigation Service Unit tortuously induced Handong to enter
Ortiz’s property, the State and its public funds remain exempt from execution.

Ruling:
WHEREFORE, the decision of the Court of Appeals under review is reversed and set aside, and
the order of garnishment issued by the Sheriff of Manila on the Pump Irrigation Trust Fund in the
account of the Irrigation Service Unit, with the Philippine National Bank, is hereby declared null
and void. The writ of preliminary injunction heretofore issued is made permanent. No costs.

NOTE (this was discussed in the case, so keep this in mind even if it isn’t relevant to the
topic on torts):
Even if the State has waved its immunity and allowed itself to be sued, this does not mean that
public funds have become subject to seizure by the Courts.
[220] FONTANILLA v MALIAMAN
194 SCRA 486 | Paras, J. | Feb. 27, 1991 | Persons Liable > State
Warning about the case
The case that ma’am assigned, as cited in the syllabus, is a 2nd MR— it is only 8 pages long (the
remaining pages are concurring opinions from the other justices) — and merely discusses the
nature of National Irrigation Administration (NIA) as a government agency. In the 8-page case, it
compared NIA to other government agencies. In the entirety of the case, there was little to no
narration of the facts which gave rise to this 2nd MR. The narration immediately below is a
summary of the case from which this 2nd MR arose. Also, Justice Feliciano’s concurring opinion
is a good read, points were raised that Ma’am might ask about.
SUMMARY
NIA questioned the decision of the Court holding them liable for tortious acts of their agent (driver)
who bumped a bicycle, causing the victim to die. SC ruled against NIA.
DOCTRINE
Not all enterprises which benefit the public or which has, for its purpose, public welfare, are
governmental— some are proprietary in nature.
Water improvement districts are of a purely local nature, created for the sole benefit of its own
members. The fact that a water district might benefit the surrounding public is merely incidental
to its primary and chief object which is the irrigation of lands forming part of the district. It is
obvious, then, that the purposes and duties of such districts do not come within the
definition of public rights, purposes, and duties which would entitle the district to the
exemption raised by the common law as a protection to corporations having a purely public
purpose and performing essentially public duties.
ANTECEDENT CASE
Fontanilla v Maliaman and NIA | G.R. No. 111097 | JULY 20, 1974
FACTS
A pickup owned and operated by respondent National Irrigation Administration, a
government agency, then driven officially by Hugo Garcia, an employee of said agency as its
regular driver, bumped a bicycle ridden by Francisco Fontanilla, son of herein petitioners, and
Restituto Deligo, at Maasin, San Jose City along the Maharlika Highway. As a result of the impact,
Francisco Fontanilla and Restituto Deligo were injured and brought to the San Jose City
Emergency Hospital for treatment. Fontanilla was later transferred to the Cabanatuan Provincial
Hospital where he died.
The NIA was held liable for damages resulting to the death of the son of herein petitioner
spouses caused by the fault and/or negligence of the driver of the said agency.
The NIA maintains, however, that it does not perform solely and primarily proprietary functions,
but is an agency of the government tasked with governmental functions, and is therefore not liable
for the tortuous act of its driver Garcia, who was not its special agent.
ISSUE
Whether or not the award of moral damages, exemplary damages and attorney's fees is legally
proper in a complaint for damages based on quasi-delict which resulted in the death of the son of
herein petitioners. — YES
HELD
Yes. The National Irrigation Administration is an agency of the government exercising
proprietary functions, by express provision of Rep. Act No. 3601. Section 1. Indubitably, the NIA
is a government corporation with juridical personality and not a mere agency of the government.
Since it is a corporate body performing non-governmental functions, it now becomes liable
for the damage caused by the accident resulting from the tortious act of its driver-
employee. In this particular case, the NIA assumes the responsibility of an ordinary employer and
as such, it becomes answerable for damages.
This assumption of liability, however, is predicated upon the existence of negligence on the part
of respondent NIA. The negligence referred to here is the negligence of supervision.
Evidently, there was negligence in the supervision of the driver for the reason that they were
travelling at a high speed within the city limits and yet the supervisor of the group, Ely Salonga,
failed to caution and make the driver observe the proper and allowed speed limit within the
city. Under the situation, such negligence is further aggravated by their desire to reach their
destination without even checking whether or not the vehicle suffered damage from the object it
bumped, thus showing imprudence and recklessness on the part of both the driver and the
supervisor in the group.
Respondent NIA is hereby directed to pay herein petitioners-spouses the amounts of P12,000.00
for the death of Francisco Fontanilla; P3,389.00 for hospitalization and burial expenses of the
aforenamed deceased; P30,000.00 as moral damages; P8,000.00 as exemplary damages and
attorney's fees of 20% of the total award.
CASE ASSIGNED
Assailing the above decision of this Court, NIA filed the present Motion for Reconsideration,
alleging that NIA does not perform solely or primarily proprietary functions but is an
agency of the government tasked with governmental functions; thus, it may not be held
liable for damages for injuries caused by its employee to a third person. Citing PD 552, NIA
argues that its functions and responsibilities directly concern public benefit and public welfare.
ISSUE: WN NIA can be sued — YES
WN NIA can be held liable for the acts of its agents, who are not special agents — YES
PRELIMINARY ISSUE: [this issue determines the answer to above-issues] WN NIA is a
government agency exercising governmental functions— NO
A.
Sol-Gen filed a 2nd MR, maintaining that the National Irrigation System (NIA) “does not perform
solely and primarily proprietary functions but is an agency of the government tasked with
governmental functions, and is therefore not liable for the tortious act of its driver Hugo
Garcia, who was not its special agent.”
● Cited PD No. 552 - which created NIA
○ That PD 552 reasoned that the NIA was created as an agency for public
welfare and benefit and is, therefore, an exercise of sovereign. [see C.2.
and C.3.]
● Cited Angat River Irrigation System v Angat River Workers’ Union - where majority
opinion declared Angat System (like the NIA) as exercising governmental function
B.
SC said that Angat River Irrigation System v Angat River Workers’ Union contained dissenting
opinions from CJ Concepcion and AJ JBL Reyes which held that Angat River System was a
government entity exercising proprietary functions.
C.
SC used these dissenting opinions to resolve the 2nd MR of the Sol-Gen, regarding the
status of NIA:
1. That as irrigation districts in the US are identical to ours, it is appropriate to apply certain
American jurisprudential doctrines:
a. “An irrigation district is a public quasi corporation, organized, however, to
conduct a business for the private benefit of the owners of land within its
limits. It is, in the administration of its business, the owner of its system in a
proprietary rather than a public capacity, and must assume and bear the
 burdens of proprietary ownership” — hence, the government is not
liable for any negligence— the irrigation district alone is responsible for
any negligent construction or operation.
2. Not all enterprises which benefit the public or which has, for its purpose, public welfare,
are governmental— some are proprietary in nature.
3. Water improvement districts are of a purely local nature, created for the sole benefit of
its own members. The fact that a water district might benefit the surrounding public is
merely incidental to its primary and chief object which is the irrigation of lands forming
part of the district. It is obvious, then, that the purposes and duties of such districts
do not come within the definition of public rights, purposes, and duties which
would entitle the district to the exemption raised by the common law as a protection to
corporations having a purely public purpose and performing essentially public duties.
D.
SC also cited numerous other jurisprudence to driver their point:
● NAWASA v NWSA Consolidated Unions: “the NAWASA is not an agency performing
governmental functions; rather it performs proprietary functions x x x.”
The functions of providing water supply and sewerage service are regarded as mere
optional functions of government even though the service rendered caters to the
community as a whole and the goal is for the general interest of society.
Padilla, J.
● Metropolitan Water District v Court of Industrial Relations: the business of supplying
water “may for all practical purposes be likened to an industry engaged in by coal
companies, gas companies, power plants, ice plants, and the like.” — such property is
not employed for governmental purposes and in the ownership and operation
thereof the municipality acts in its proprietary capacity
Conclusions of the Supreme Court:
1. NIA was not created for purposes of the local government
2. NIA was created for the purpose of “constructing, improving, rehabilitating, and
administering all national irrigation systems in the Philippines, including all communal
and pump irrigation projects.” Certainly, the state and the community as a whole are
largely benefited by the services the agency renders, but these functions are only
incidental to the principal aim of the agency, which is the irrigation of lands.
3. NIA is a government agency invested with a corporate personality separate and
distinct from the government, thus is governed by the Corporation Law.
a. It has its own assets and liabilities
b. It can exercise own corporate powers through its Board of Directors
4. National Irrigation Administration is a government agency with a juridical personality
separate and distinct from the government. It is not a mere agency of the
government but a corporate body performing proprietary functions. Therefore, it
may be held liable for the damages caused by the negligent act of its driver who
was not its special agent.
CONCURRING OPINIONS
Feliciano, J.
● National Irrigation Administration (NIA) is liable for the acts of its employee Hugo Garcia.
● Did not agree with the reasoning of the majority opinion in reaching above-mentioned
conclusion
● Liability of an agency or instrumentality of the Government for torts of its employees
under Article 2180, 6th paragraph, of the Civil Code is not contingent upon the
technical characterization of the functions or activities carried out by that agency
or instrumentality as “governmental,” on the one hand, or “proprietary,” upon the
other.
12
plaintiff was hit by an ambulance of the Philippine General Hospital, while operated by its regular driver)
● governments in our day and age do not restrict themselves to the original basic and
primitive functions— instead they now carry out all kinds of activities which they may
determine to redound to the general interest and benefit of the population.
● Art. 2180 of the CC provides: “The State is responsible in like manner when it acts
through a special agent xxx” — the term “State” as used above properly refers to
the “Government of the Republic of the Philippines”
○ term “State” as used in Article 2180 of the Civil Code refers to that juridical
person that is constituted by the Government of the Republic of the
Philippines and logically does not include agencies, instrumentalities or
other entities which their enabling laws have invested with juridical
personality separate and distinct from that of the Republic of the Philippines.
● NIA is not part of the “State” or of the “Government of the Republic of the
Philippines”; it follows, that NIA should not be regarded as part of the State for
purposes of application of Article 2180 of the Civil Code.
● NIA, then, should be subjected to the ordinary liabilities of a corporate person: one
of those liabilities is the vicarious liability of an employer under Article 2180 of the
Civil Code, 6th paragraph, for injurious acts done by its employees within the scope of
their assigned tasks.
● On PGH: Merritt case12 was decided when PGH was not an entity legally separate nor
distinct from the PH government
● NI is maintained and operated by the government in the performance of its
governmental function of providing the Filipino people, particularly, the farmers
nationwide, improved irrigation systems to increase the country’s agricultural
production.
● The fact that its charter treats the NIA as incorporated under the Corporation Law, and
confers upon it a separate juridical personality, is not the test in determining whether it
is performing a governmental or proprietary function. The spirit, intent or purpose
behind its creation determines its true character.
● It is important to determine whether (1) the sovereign immunity of the state from suit is
enjoyed, or has been waived by NIA and (2) the NIA is liable for damages arising from
tort committed by its employees
Test:
(1) For incorporated agencies of the government, the test of its suability is
found in its charter. The simple rule is that it is suable if its charter says
so, and this is true regardless of the functions it is performing
■ charter of the NIA provides that it may sue
(2) During the deliberations of this case, it was suggested that the term “State”
as used in Article 2180, par. 6 of the Civil Code could be limited to the State
proper and not construed to include incorporated entities even if performing
governmental functions, such as the NIA
■ untenable because it would lay stress on form rather than
substance. The test should still be whether the governmental
entity performs governmental and, therefore, sovereign
functions, regardless of whether it is incorporated or not. If the
government agency performs governmental and, therefore,
sovereign functions, it is within the context of the term “State”
as used in Art. 2180, par. 6 of the Civil Code and may not, as a
consequence, be held liable for tort committed by its officials
and employees, except when they are “special agents.”