Republic of the Philippines December 12, 1975, Atty.
Julio Francisco, the private prosecutor,
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-46179 January 31, 1978
CANDIDA VIRATA, TOMAS VIRATA, MANOLITO VIRATA,
EDERLINDA VIRATA, NAPOLEON VIRATA, ARACELY VIRATA,
ZENAIDA VIRATA, LUZMINDA VIRATA, PACITA VIRATA, and
EVANGELINA VIRATA, petitioners, vs.VICTORIO OCHOA, MAXIMO
BORILLA and THE COURT OF FIRST INSTANCE OF CAVITE, 7th
JUDICIAL DISTRICT, BRANCH V, stationed at BACOOR,
CAVITE, respondents.
Remulla, Estrella & Associates for petitioners
Exequil C. Masangkay for respondents.
FERNANDEZ, J.:
This is an appeal by certiorari, from the order of the Court of First
Instance of Cavite, Branch V, in Civil Case No. B-134 granting the
motion of the defendants to dismiss the complaint on the ground that
there is another action pending between the same parties for the same
cause. 1
The record shows that on September 24, 1975 one Arsenio Virata
died as a result of having been bumped while walking along Taft
Avenue, Pasay City by a passenger jeepney driven by Maximo
Borilla and registered in the name Of Victoria Ochoa; that Borilla is
the employer of Ochoa; that for the death of Arsenio Virata, a action
for homicide through reckless imprudence was instituted on
September 25, 1975 against Maximo Borilla in the Court of First
Instance of Rizal at Pasay City, docketed as C Case No. 3162-P of
said court; that at the hearing of the said criminal case on
made a reservation to file a separate civil action for damages
against the driver on his criminal liability; that on February 19, 1976
Atty. Julio Francisco filed a motion in said c case to withdraw the
reservation to file a separate civil action; that thereafter, the private
prosecutor actively participated in the trial and presented evidence
on the damages; that on June 29, 1976 the heirs of Arsenio Virata
again reserved their right to institute a separate civil action; that on
July 19, 1977 the heirs of Arsenio Virata, petitioners herein,
commenced Civil No. B-134 in the Court of First Instance of Cavite
at Bacoor, Branch V, for damages based on quasi-delict against the
driver Maximo Borilla and the registered owner of the jeepney,
Victorio Ochoa; that on August 13, 1976 the defendants, private
respondents filed a motion to dismiss on the ground that there is
another action, Criminal Case No. 3162-P, pending between the
same parties for the same cause; that on September 8, 1976 the
Court of First Instance of Rizal at Pasay City a decision in Criminal
Case No. 3612-P acquitting the accused Maximo Borilla on the
ground that he caused an injury by name accident; and that on
January 31, 1977, the Court of First Instance of Cavite at Bacoor
granted the motion to Civil Case No. B-134 for damages.  2
The principal issue is weather or not the of the Arsenio Virata, can
prosecute an action for the damages based on quasi-delict against
Maximo Borilla and Victoria Ochoa, driver and owner, respectively
on the passenger jeepney that bumped Arsenio Virata.
It is settled that in negligence cases the aggrieved parties may
choose between an action under the Revised Penal Code or of
quasi-delict under Article 2176 of the Civil Code of the Philippines.
What is prohibited by Article 2177 of the Civil Code of the
Philippines is to recover twice for the same negligent act.
The Supreme Court has held that:
According to the Code Commission: 'The foregoing provision
(Article 2177) though at first sight startling, is not so novel or
extraordinary when we consider the exact nature of criminal
and civil negligence. The former is a violation of the criminal
law, while the latter is a 'culpa aquiliana' or quasi-delict, of
ancient origin, having always had its own foundation and
individuality, separate from criminal negligence. Such
distinction between criminal negligence and 'culpa extra-
contractual' or quasi-delito has been sustained by decision of
the Supreme Court of Spain and maintained as clear, sound
and perfectly tenable by Maura, an outstanding Spanish jurist.
Therefore, under the proposed Article 2177, acquittal from an
accusation of criminal negligence, whether on reasonable doubt
or not, shall not be a bar to a subsequent civil action, not for
civil liability arising from criminal negligence, but for damages
due to a quasi-delict or 'culpa aquiliana'. But said article
forestalls a double recovery. (Report of the Code Commission,
p. 162.)
Although, again, this Article 2177 does seem to literally refer to
only acts of negligence, the same argument of Justice Bocobo
about construction that upholds 'the spirit that given life' rather
than that which is literal that killeth the intent of the lawmaker
should be observed in applying the same. And considering that
the preliminary chapter on human relations of the new Civil
Code definitely establishes the separability and independence
of liability in a civil action for acts criminal in character (under
Articles 29 to 32) from the civil responsibility arising from crime
fixed by Article 100 of the Penal Code, and, in a sense, the
Rules of Court, under Sections 2 and 3(c), Rule 111,
contemplate also the same separability, it is 'more congruent'
with the spirit of law, equity and justice, and more in harmony
with modern progress', to borrow the felicitous language in
Rakes vs. Atlantic Gulf and Pacific Co., 7 Phil. to 359, to hod as
We do hold, that Article 2176, where it refers to 'fault covers not
only acts 'not punishable by law' but also criminal in character,
whether intentional and voluntary or consequently, a separate
civil action lies against the in a criminal act, whether or not he is
criminally prosecuted and found guilty and acquitted, provided
that the offended party is not allowed, if he is actually charged
also criminally, to recover damages on both scores, and would
be entitled in such eventuality only to the bigger award of the,
two assuming the awards made in the two cases vary. In other
words the extinction of civil liability refereed to in Par. (c) of
Section 13, Rule 111, refers exclusively to civil liability founded
on Article 100 of the Revised Penal Code, whereas the civil
liability for the same act considered as a quasi-delict only and
not as a crime is not extinguished even by a declaration in the
criminal case that the criminal act charged has not happened or
has not been committed by the accused. Brief stated, We hold,
in reitration of Garcia, that culpa aquilina includes voluntary and
negligent acts which may be punishable by law.  3
The petitioners are not seeking to recover twice for the same
negligent act. Before Criminal Case No. 3162-P was decided,
they manifested in said criminal case that they were filing a
separate civil action for damages against the owner and driver of
the passenger jeepney based on quasi-delict. The acquittal of the
driver, Maximo Borilla, of the crime charged in Criminal Case No.
3162-P is not a bar to the prosecution of Civil Case No. B-134 for
damages based on quasi-delict The source of the obligation
sought to be enforced in Civil Case No. B-134 is quasi-delict, not
an act or omission punishable by law. Under Article 1157 of the
Civil Code of the Philippines, quasi-delict and an act or omission
punishable by law are two different sources of obligation.
Moreover, for the petitioners to prevail in the action for damages,
Civil Case No. B-134, they have only to establish their cause of
action by preponderance of the evidence.
WHEREFORE, the order of dismissal appealed from is hereby
set aside and Civil Case No. B-134 is reinstated and remanded to
the lower court for further proceedings, with costs against the
private respondents.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-40570 January 30, 1976
TEODORO C. UMALI, petitioner, vs.
HON. ANGEL BACANI, in his capacity as Presiding Judge of
Branch IX of the Court of First Instance of Pangasinan and
FIDEL H. SAYNES, respondents.
Julia M. Armas for petitioner.
Antonio de los Reyes for private respondent.
ESGUERRA, J.:
Petition for certiorari to review the decision of the Court of First
Instance of Pangasinan Branch IX, in Civil Case No. U2412,
entitled, "Fidel H. Saynes, plaintiff-appellee versus Teodoro C.
Umali, defendant-appellant", which found the death by
electrocution of Manuel Saynes, a boy of 3 years and 8 months,
as "due to the fault or negligence of the defendant (Umali) as
owner and manager of the Alcala Electric Plant", although the
liability of defendant is mitigated by the contributory negligence of
the parents of the boy "in not providing for the proper and
delegate supervision and control over their son The dispositive
part of the decision reads as follows:
Wherefore, the Court hereby renders judgment in favor of the
plaintiff by ordering the defendant to pay to the plaintiff the sum of
Five Thousand Pesos (P5,000.00) for the death of his son,
Manuel Saynes; the sum of One Thousand Two Hundred Pesos
(P1,200.00) for actual expenses for and in connection with the
burial of said deceased child, and the further sum of Three
Thousand Pesos (P3,000.00) for moral damages and Five
Hundred (P500.00) Pesos as reasonable attorney's fee, or a total
of Nine Thousand Seven Hundred (P9,700.00) Pesos, and to pay
the costs of this suit. It Is So Ordered.
Undisputed facts appearing of record are:
On May 14, 1972, a storm with strong rain hit the Municipality of
Alcala Pangasinan, which started from 2:00 o'clock in the
afternoon and lasted up to about midnight of the same day.
During the storm, the banana plants standing on an elevated
ground along the barrio road in San Pedro Ili of said municipality
and near the transmission line of the Alcala Electric Plant were
blown down and fell on the electric wire. As a result, the live
electric wire was cut, one end of which was left hanging on the
electric post and the other fell to the ground under the fallen
banana plants.
On the following morning, at about 9:00 o'clock barrio captain
Luciano Bueno of San Pedro Iii who was passing by saw the
broken electric wire and so he warned the people in the place not
to go near the wire for they might get hurt. He also saw Cipriano
Baldomero, a laborer of the Alcala Electric Plant near the place
and notified him right then and there of the broken line and asked
him to fix it, but the latter told the barrio captain that he could not
do it but that he was going to look for the lineman to fix it.
Sometime after the barrio captain and Cipriano Baldomero had
left the place, a small boy of 3 years and 8 months old by the
name of Manuel P. Saynes, whose house is just on the opposite
side of the road, went to the place where the broken line wire was
and got in contact with it. The boy was electrocuted and he
subsequently died. It was only after the electrocution of Manuel
Saynes that the broken wire was fixed at about 10:00 o'clock on
the same morning by the lineman of the electric plant.
Petitioner claims that he could not be liable under the concept of
quasi-delict or tort as owner and manager of the Alcala Electric
Plant because the proximate cause of the boy's death
electrocution could not be due to any negligence on his part, but
rather to a fortuitous event-the storm that caused the banana
plants to fall and cut the electric line-pointing out the absence of
negligence on the part of his employee Cipriano Baldomero who
tried to have the line repaired and the presence of negligence of
the parents of the child in allowing him to leave his house during
that time.
A careful examination of the record convinces Us that a series of
negligence on the part of defendants' employees in the Alcala
Electric Plant resulted in the death of the victim by electrocution.
First, by the very evidence of the defendant, there were big and
tall banana plants at the place of the incident standing on an
elevated ground which were about 30 feet high and which were
higher than the electric post supporting the electric line, and yet
the employees of the defendant who, with ordinary foresight,
could have easily seen that even in case of moderate winds the
electric line would be endangered by banana plants being blown
down, did not even take the necessary precaution to eliminate
that source of danger to the electric line. Second, even after the
employees of the Alcala Electric Plant were already aware of the
possible damage the storm of May 14, 1972, could have caused
their electric lines, thus becoming a possible threat to life and
property, they did not cut off from the plant the flow of electricity
along the lines, an act they could have easily done pending
inspection of the wires to see if they had been cut. Third,
employee Cipriano Baldomero was negligent on the morning of
the incident because even if he was already made aware of the
live cut wire, he did not have the foresight to realize that the same
posed a danger to life and property, and that he should have
taken the necessary precaution to prevent anybody from
approaching the live wire; instead Baldomero left the premises
because what was foremost in his mind was the repair of the line,
obviously forgetting that if left unattended to it could endanger life
and property.
On defendants' argument that the proximate cause of the victim's
death could be attributed to the parents' negligence in allowing a
child of tender age to go out of the house alone, We could readily
see that because of the aforementioned series of negligence on
the part of defendants' employees resulting in a live wire lying on
the premises without any visible warning of its lethal character,
anybody, even a responsible grown up or not necessarily an
innocent child, could have met the same fate that befell the
victim. It may be true, as the lower Court found out, that the
contributory negligence of the victim's parents in not properly
taking care of the child, which enabled him to leave the house
alone on the morning of the incident and go to a nearby place cut
wire was very near the house (where victim was living) where the
fatal fallen wire electrocuted him, might mitigate respondent's
liability, but we cannot agree with petitioner's theory that the
parents' negligence constituted the proximate cause of the
victim's death because the real proximate cause was the fallen
live wire which posed a threat to life and property on that morning
due to the series of negligence adverted to above committed by
defendants' employees and which could have killed any other
person who might by accident get into contact with it. Stated
otherwise, even if the child was allowed to leave the house
unattended due to the parents' negligence, he would not have
died that morning where it not for the cut live wire he accidentally
touched.
Art. 2179 of the Civil Code provides that if the negligence of the
plaintiff (parents of the victim in this case) was only contributory,
the immediate and proximate cause of the injury being the
defendants' lack of due care, the plaintiff may recover damages,
but the courts shall mitigate the damages to be awarded. This law
may be availed of by the petitioner but does not exempt him from
liability. Petitioner's liability for injury caused by his employees
negligence is well defined in par. 4, of Article 2180 of the Civil
Code, which states:
The owner and manager of an establishment or enterprise are
likewise responsible for damages caused by their employees in
the service of the branches in which the latter are employed or on
tile occasion of their functions.

The negligence of the employee is presumed to be the

negligence of the employer because the employer is supposed to
exercise supervision over the work of the employees. This liability
of the employer is primary and direct (Standard Vacuum Oil Co.
vs. Tan and Court of Appeals, 107 Phil. 109). In fact the proper
defense for the employer to raise so that he may escape liability
is to prove that he exercised, the diligence of the good father of
the family to prevent damage not only in the selection of his
employees but also in adequately supervising them over their
work. This defense was not adequately proven as found by the
trial Court, and We do not find any sufficient reason to deviate
from its finding.

Notwithstanding diligent efforts, we fail to fired any reversible

error committed by the trial Court in this case, either in its
appreciation of the evidence on questions of facts or on the
interpretation and application of laws government quasi-delicts
and liabilities emanating therefrom. The inevitable conclusion is
that no error amounting to grave abuse of discretion was
committed and the decision must be left untouched.

WHEREFORE, the decision of respondent Court dated June 27,

1974 is affirmed.

Costs against petitioner.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-68138             May 13, 1991
AGUSTIN Y. GO and THE CONSOLIDATED BANK AND
TRUST CORPORATION (Solidbank), petitioners, vs.
HONORABLE INTERMEDIATE APPELLATE COURT and
FLOVERTO JAZMIN, respondents.
C.M. De los Reyes & Associates for petitioners.
Millora & Maningding Law Offices for private respondent.
FERNAN, C.J.:
The instant petition for review on certiorari questions the propriety
of the respondent appellate court's award of nominal damages
and attorney's fees to private respondent whose name was used
by a syndicate in encashing two U.S. treasury checks at petitioner
bank.
Floverto Jazmin is an American citizen and retired employee of
the United States Federal Government. He had been a visitor in
the Philippines since 1972 residing at 34 Maravilla Street,
Mangatarem, Pangasinan. As pensionado of the U.S.
government, he received annuity checks in the amounts of $
67.00 for disability and $ 620.00 for retirement through the
Mangatarem post office. He used to encash the checks at the
Prudential Bank branch at Clark Air Base, Pampanga.
In January, 1975, Jazmin failed to receive one of the checks on
time thus prompting him to inquire from the post offices at
Mangatarem and Dagupan City. As the result of his inquiries
proved unsatisfactory, on March 4, 1975, Jazmin wrote the U.S.
Civil Service Commission, Bureau of Retirement at Washington,
D.C. complaining about the delay in receiving his check.
Thereafter, he received a substitute check which he encashed at
the Prudential Bank at Clark Air Base.
Meanwhile, on April 22, 1975, Agustin Go, in his capacity as
branch manager of the then Solidbank (which later became the
Consolidated Bank and Trust Corporation) in Baguio City, allowed
a person named "Floverto Jazmin" to open Savings Account No.
BG 5206 by depositing two (2) U. S. treasury checks Nos. 5-449-
076 and 5-448-890 in the respective amounts of $1810.00 and
$913.40  equivalent to the total amount of P 20,565.69, both
1
payable to the order of Floverto Jasmin of Maranilla St.,
Mangatarem, Pangasinan and drawn on the First National City
Bank, Manila.
The savings account was opened in the ordinary course of
business. Thus, the bank, through its manager Go, required the
depositor to fill up the information sheet for new accounts to
reflect his personal circumstances. The depositor indicated
therein that he was Floverto Jazmin with mailing address at
Mangatarem, Pangasinan and home address at Maravilla St.,
Mangatarem, Pangasinan; that he was a Filipino citizen and a
security officer of the US Army with the rank of a sergeant
bearing AFUS Car No. H-2711659; that he was married to
Milagros Bautista; and that his initial deposit was P3,565.35. He
wrote CSA No. 138134 under remarks or instructions and left
blank the spaces under telephone number, residence
certificate/alien certificate of registration/passport, bank and trade
performance and as to who introduced him to the bank.  The 2
depositor's signature specimens were also taken.
Thereafter, the deposited checks were sent to the drawee bank
for clearance. Inasmuch as Solidbank did not receive any word
from the drawee bank, after three (3) weeks, it allowed the
depositor to withdraw the amount indicated in the checks.
On June 29, 1976 or more than a year later, the two dollar cheeks
were returned to Solidbank with the notation that the amounts
were altered.  Consequently, Go reported the matter to the
3
Philippine Constabulary in Baguio City.
On August 3, 1976, Jazmin received radio messages requiring
him to appear before the Philippine Constabulary headquarters in
Benguet on September 7, 1976 for investigation regarding the
complaint filed by Go against him for estafa by passing altered
dollar checks. Initially, Jazmin was investigated by constabulary
officers in Lingayen, Pangasinan and later, at Camp Holmes, La
Trinidad, Benguet. He was shown xerox copies of U.S.
Government checks Nos. 5-449-076 and 5-448-890 payable to
the order of Floverto Jasmin in the respective amounts of
$1,810.00 and $913.40. The latter amount was actually for only
$13.40; while the records do not show the unaltered amount of
the other treasury check.
Jazmin denied that he was the person whose name appeared on
the checks; that he received the same and that the signature on
the indorsement was his. He likewise denied that he opened an
account with Solidbank or that he deposited and encashed
therein the said checks. Eventually, the investigators found that
the person named "Floverto Jazmin" who made the deposit and
withdrawal with Solidbank was an impostor.
On September 24, 1976, Jazmin filed with the then Court of First
Instance of Pangasinan, Branch II at Lingayen a complaint
against Agustin Y. Go and the Consolidated Bank and Trust
Corporation for moral and exemplary damages in the total
amount of P90,000 plus attorney's fees of P5,000. He alleged
therein that Go allowed the deposit of the dollar checks and the
withdrawal of their peso equivalent "without ascertaining the
identity of the depositor considering the highly suspicious
circumstances under which said deposit was made; that instead
of taking steps to establish the correct identity of the depositor,
Go "immediately and recklessly filed (the) complaint for estafa
through alteration of dollar check" against him; that Go's
complaint was "an act of vicious and wanton recklessness and
clearly intended for no other purpose than to harass and coerce
the plaintiff into paying the peso equivalent of said dollar checks
to the CBTC branch office in Baguio City" so that Go would not
be "disciplined by his employer;" that by reason of said complaint,
he was "compelled to present and submit himself" to
investigations by the constabulary authorities; and that he
suffered humiliation and embarrassment as a result of the filing of
the complaint against him as well as "great inconvenience" on
account of his age (he was a septuagenarian) and the distance
between his residence and the constabulary headquarters. He
averred that his peace of mind and mental and emotional
tranquility as a respected citizen of the community would not have
suffered had Go exercised "a little prudence" in ascertaining the
identity of the depositor and, for the "grossly negligent and
reckless act" of its employee, the defendant CBTC should also be
held responsible.4
In their answer, the defendants contended that the plaintiff had no
cause of action against them because they acted in good faith in
seeking the "investigative assistance" of the Philippine
Constabulary on the swindling operations against banks by a
syndicate which specialized in the theft, alteration and
encashment of dollar checks. They contended that contrary to
plaintiff s allegations, they verified the signature of the depositor
and their tellers conducted an Identity check. As counterclaim,
they prayed for the award of P100,000 as compensatory and
moral damages; P20,000 as exemplary damages; P20,000 as
attorney's fees and P5,000 as litigation, incidental expenses and
costs.5
In its decision of March 27, 1978  the lower court found that Go
6
was negligent in failing to exercise "more care, caution and
vigilance" in accepting the checks for deposit and encashment. It
noted that the checks were payable to the order of
Floverto Jasmin, Maranilla St., Mangatarem, Pangasinan and not
to Floverto Jazmin, Maravilla St., Mangatarem, Pangasinan and
that the differences in name and address should have put Go on
guard. It held that more care should have been exercised by Go
in the encashment of the U.S. treasury checks as there was no
time limit for returning them for clearing unlike in ordinary checks
wherein a two to three-week limit is allowed.
Emphasizing that the main thrust of the complaint was "the failure
of the defendants to take steps to ascertain the identity of the
depositor," the court noted that the depositor was allegedly a
security officer while the plaintiff was a retiree-pensioner. It
considered as "reckless" the defendants' filing of the complaint
with the Philippine Constabulary noting that since the article on a
fake dollar check ring appeared on July 18, 1976 in the Baguio
Midland Courier, it was only on August 24, 1976 or more than a
month after the bank had learned of the altered checks that it filed
the complaint and therefore, it had sufficient time to ascertain the
identity of the depositor.
The court also noted that instead of complying with the Central
Bank Circular Letter of January 17, 1973 requesting all banking
institutions to report to the Central Bank all crimes involving their
property within 48 hours from knowledge of the crime, the bank
reported the matter to the Philippine Constabulary.
Finding that the plaintiff had sufficiently shown that prejudice had
been caused to him in the form of mental anguish, moral shock
and social humiliation on account of the defendants' gross
negligence, the court, invoking Articles 2176, 2217 and 2219 (10)
in conjunction with Article 21 of the Civil Code, ruled in favor of
the plaintiff. The dispositive portion of the decision states:
WHEREFORE, this Court finds for plaintiff and that he is entitled
to the reliefs prayed for in the following manner: Defendant
Agustin Y. Co and the CONSOLIDATED BANK AND TRUST
CORPORATION are hereby ordered to pay, jointly and severally,
to the plaintiff the amount of SIX THOUSAND PESOS
(P6,000.00) as moral damages; ONE THOUSAND PESOS
(P1,000.00) as attorney's fees and costs of litigation and to pay
the costs and defendant AGUSTIN Y. Go in addition thereto in his
sole and personal capacity to pay the plaintiff the amount of
THREE THOUSAND PESOS (P3,000.00) as exemplary
damages, all with interest at six (6) percent per annum until fully
paid.
SO ORDERED.
The defendants appealed to the Court of Appeals. On January
24, 1984, said court (then named Intermediate Appellate Court)
rendered a decision  finding as evident negligence Go's failure to
7
notice the substantial difference in the identity of the depositor
and the payee in the check, concluded that Go's negligence in
the performance of his duties was "the proximate cause why
appellant bank was swindled" and that denouncing the crime to
the constabulary authorities "merely aggravated the situation." It
ruled that there was a cause of action against the defendants
although Jazmin had nothing to do with the alteration of the
checks, because he suffered damages due to the negligence of
Go. Hence, under Article 2180 of the Civil Code, the bank shall
be held liable for its manager's negligence.
The appellate court, however, disallowed the award of moral and
exemplary damages and granted nominal damages instead. It
explained thus:
While it is true that denouncing a crime is not negligence under
which a claim for moral damages is available, still appellants are
liable under the law for nominal damages. The fact that appellee
did not suffer from any loss is of no moment for nominal
damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, maybe
vindicated or recognized and not for the purpose of indemnifying
the plaintiff for any loss suffered by him (Article 2221, New Civil
Code). These are damages recoverable where a legal right is
technically violated and must be vindicated against an invasion
that has produced no actual present loss of any kind, or where
there has been a breach of contract and no substantial injury or
actual damages whatsoever have been or can be shown (Elgara
 vs. Sandijas, 27 Phil. 284). They are not intended for
indemnification of loss suffered but for the vindication or
recognition of a right violated or invaded (Ventanilla vs. Centeno,
L-14333, January 28, 1961). And, where the plaintiff as in the
case at bar, the herein appellee has established a cause of
action, but was not able to adduce evidence showing actual
damages then nominal damages may be recovered (Sia vs.
Espenilla CA-G.R. Nos. 45200-45201-R, April 21, 1975).
Consequently, since appellee has no right to claim for moral
damages, then he may not likewise be entitled to exemplary
damages (Estopa vs. Piansay, No. L-14503, September 30,
1960). Considering that he had to defend himself in the criminal
charges filed against him, and that he was constrained to file the
instant case, the attorney's fees to be amended (sic) to plaintiff
should be increased to P3,000.00.
Accordingly, the appellate court ordered Go and Consolidated
Bank and Trust Corporation to pay jointly and severally Floverto
Jazmin only NOMINAL DAMAGES in the sum of Three Thousand
Pesos (P 3,000.00) with interest at six (6%) percent per
annum until fully paid and One Thousand Pesos (P 1,000.00) as
attorney's fees and costs of litigation.
Go and the bank filed a motion for the reconsideration of said
decision contending that in view of the finding of the appellate
court that "denouncing a crime is not negligence under which a
claim for moral damages is available," the award of nominal
damages is unjustified as they did not violate or invade Jazmin's
rights. Corollarily, there being no negligence on the part of Go, his
employer may not be held liable for nominal damages.
The motion for reconsideration having been denied, Go and the
bank interposed the instant petition for review
on certiorari arguing primarily that the employer bank may not be
held "co-equally liable" to pay nominal damages in the absence of
proof that it was negligent in the selection of and supervision over
its employee.8
The facts of this case reveal that damages in the form of mental
anguish, moral shock and social humiliation were suffered by
private respondent only after the filing of the petitioners' complaint
with the Philippine Constabulary. It was only then that he had to
bear the inconvenience of travelling to Benguet and Lingayen for
the investigations as it was only then that he was subjected to
embarrassment for being a suspect in the unauthorized alteration
of the treasury checks. Hence, it is understandable why
petitioners appear to have overlooked the facts antecedent to the
filing of the complaint to the constabulary authorities and to have
put undue emphasis on the appellate court's statement that
"denouncing a crime is not negligence."
Although this Court has consistently held that there should be no
penalty on the right to litigate and that error alone in the filing of a
case be it before the courts or the proper police authorities, is not
a ground for moral damages,  we hold that under the peculiar
9
circumstances of this case, private respondent is entitled to an
award of damages.
Indeed, it would be unjust to overlook the fact that petitioners'
negligence was the root of all the inconvenience and
embarrassment experienced by the private respondent albeit they
happened after the filing of the complaint with the constabulary
authorities. Petitioner Go's negligence in fact led to the swindling
of his employer. Had Go exercised the diligence expected of him
as a bank officer and employee, he would have noticed the
glaring disparity between the payee's name and address on the
treasury checks involved and the name and address of the
depositor appearing in the bank's records. The situation would
have been different if the treasury checks were tampered with
only as to their amounts because the alteration would have been
unnoticeable and hard to detect as the herein altered check
bearing the amount of $ 913.40 shows. But the error in the name
and address of the payee was very patent and could not have
escaped the trained eyes of bank officers and employees. There
is therefore, no other conclusion than that the bank through its
employees (including the tellers who allegedly conducted an
identification check on the depositor) was grossly negligent in
handling the business transaction herein involved. 1âwphi1

While at that stage of events private respondent was still out of

the picture, it definitely was the start of his consequent
involvement as his name was illegally used in the illicit
transaction. Again, knowing that its viability depended on the
confidence reposed upon it by the public, the bank through its
employees should have exercised the caution expected of it.

In crimes and quasi-delicts, the defendant shall be liable for all

damages which are the natural and probable consequences of
the act or omission complained of. It is not necessary that such
damages have been foreseen or could have reasonably been
foreseen by the defendant.  As Go's negligence was the root
10

cause of the complained inconvenience, humiliation and

embarrassment, Go is liable to private respondents for damages.

Anent petitioner bank's claim that it is not "co-equally liable" with

Go for damages, under the fifth paragraph of Article 2180 of the
Civil Code, "(E)mployers shall be liable for the damages caused
by their employees . . . acting within the scope of their assigned
tasks." Pursuant to this provision, the bank is responsible for the
acts of its employee unless there is proof that it exercised the
diligence of a good father of a family to prevent the
damage. Hence, the burden of proof lies upon the bank and it
11

cannot now disclaim liability in view of its own failure to prove not
only that it exercised due diligence to prevent damage but that it
was not negligent in the selection and supervision of its
employees.

WHEREFORE, the decision of the respondent appellate court is

hereby affirmed. Costs against the petitioners.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-12986             March 31, 1966
THE SPOUSES BERNABE AFRICA and SOLEDAD C.
AFRICA, and the HEIRS OF DOMINGA ONG, petitioners-
appellants, vs. CALTEX (PHIL.), INC., MATEO BOQUIREN and
THE COURT OF APPEALS, respondents-appellees.
Ross, Selph, Carrascoso and Janda for the respondents.
Bernabe Africa, etc. for the petitioners.
MAKALINTAL., J.:
This case is before us on a petition for review of the decision of
the Court of Appeals, which affirmed that of the Court of First
Instance of Manila dismissing petitioners' second amended
complaint against respondents.
The action is for damages under Articles 1902 and 1903 of the
old Civil Code. It appears that in the afternoon of March 18, 1948
a fire broke out at the Caltex service station at the corner of
Antipolo street and Rizal Avenue, Manila. It started while gasoline
was being hosed from a tank truck into the underground storage,
right at the opening of the receiving tank where the nozzle of the
hose was inserted. The fire spread to and burned several
neighboring houses, including the personal properties and effects
inside them. Their owners, among them petitioners here, sued
respondents Caltex (Phil.), Inc. and Mateo Boquiren, the first as
alleged owner of the station and the second as its agent in charge
of operation. Negligence on the part of both of them was
attributed as the cause of the fire.
The trial court and the Court of Appeals found that petitioners
failed to prove negligence and that respondents had exercised
due care in the premises and with respect to the supervision of
their employees.
The first question before Us refers to the admissibility of certain
reports on the fire prepared by the Manila Police and Fire
Departments and by a certain Captain Tinio of the Armed Forces
of the Philippines. Portions of the first two reports are as follows:
1. Police Department report: —
Investigation disclosed that at about 4:00 P.M. March 18, 1948,
while Leandro Flores was transferring gasoline from a tank truck,
plate No. T-5292 into the underground tank of the Caltex
Gasoline Station located at the corner of Rizal Avenue and
Antipolo Street, this City, an unknown Filipino lighted a cigarette
and threw the burning match stick near the main valve of the said
underground tank. Due to the gasoline fumes, fire suddenly
blazed. Quick action of Leandro Flores in pulling off the gasoline
hose connecting the truck with the underground tank prevented a
terrific explosion. However, the flames scattered due to the hose
from which the gasoline was spouting. It burned the truck and the
following accessorias and residences.
2. The Fire Department report: —
In connection with their allegation that the premises was (sic)
subleased for the installation of a coca-cola and cigarette stand,
the complainants furnished this Office a copy of a photograph
taken during the fire and which is submitted herewith. it appears
in this picture that there are in the premises a coca-cola cooler
and a rack which according to information gathered in the
neighborhood contained cigarettes and matches, installed
between the gasoline pumps and the underground tanks.
The report of Captain Tinio reproduced information given by a
certain Benito Morales regarding the history of the gasoline
station and what the chief of the fire department had told him on
the same subject.
The foregoing reports were ruled out as "double hearsay" by the
Court of Appeals and hence inadmissible. This ruling is now
assigned as error. It is contended: first, that said reports were
admitted by the trial court without objection on the part of
respondents; secondly, that with respect to the police report
(Exhibit V-Africa) which appears signed by a Detective Zapanta
allegedly "for Salvador Capacillo," the latter was presented as
witness but respondents waived their right to cross-examine him
although they had the opportunity to do so; and thirdly, that in any
event the said reports are admissible as an exception to the
hearsay rule under section 35 of Rule 123, now Rule 130.
The first contention is not borne out by the record. The transcript
of the hearing of September 17, 1953 (pp. 167-170) shows that
the reports in question, when offered as evidence, were objected
to by counsel for each of respondents on the ground that they
were hearsay and that they were "irrelevant, immaterial and
impertinent." Indeed, in the court's resolution only Exhibits J, K,
K-5 and X-6 were admitted without objection; the admission of the
others, including the disputed ones, carried no such explanation.
On the second point, although Detective Capacillo did take the
witness stand, he was not examined and he did not testify as to
the facts mentioned in his alleged report (signed by Detective
Zapanta). All he said was that he was one of those who
investigated "the location of the fire and, if possible, gather
witnesses as to the occurrence, and that he brought the report
with him. There was nothing, therefore, on which he need be
cross-examined; and the contents of the report, as to which he
did not testify, did not thereby become competent evidence. And
even if he had testified, his testimony would still have been
objectionable as far as information gathered by him from third
persons was concerned.
Petitioners maintain, however, that the reports in themselves, that
is, without further testimonial evidence on their contents, fall
within the scope of section 35, Rule 123, which provides that
"entries in official records made in the performance of his duty by
a public officer of the Philippines, or by a person in the
performance of a duty specially enjoined by law, are prima
facie evidence of the facts therein stated."
There are three requisites for admissibility under the rule just
mentioned: (a) that the entry was made by a public officer, or by
another person specially enjoined by law to do so; (b) that it was
made by the public officer in the performance of his duties, or by
such other person in the performance of a duty specially enjoined
by law; and (c) that the public officer or other person had
sufficient knowledge of the facts by him stated, which must have
been acquired by him personally or through official information
(Moran, Comments on the Rules of Court, Vol. 3 [1957] p. 398).
Of the three requisites just stated, only the last need be
considered here. Obviously the material facts recited in the
reports as to the cause and circumstances of the fire were not
within the personal knowledge of the officers who conducted the
investigation. Was knowledge of such facts, however, acquired by
them through official information? As to some facts the sources
thereof are not even identified. Others are attributed to Leopoldo
Medina, referred to as an employee at the gas station were the
fire occurred; to Leandro Flores, driver of the tank truck from
which gasoline was being transferred at the time to the
underground tank of the station; and to respondent Mateo
Boquiren, who could not, according to Exhibit V-Africa, give any
reason as to the origin of the fire. To qualify their statements as
"official information" acquired by the officers who prepared the
reports, the persons who made the statements not only must
have personal knowledge of the facts stated but must have the
duty to give such statements for record.1
The reports in question do not constitute an exception to the
hearsay rule; the facts stated therein were not acquired by the
reporting officers through official information, not having been
given by the informants pursuant to any duty to do so.
The next question is whether or not, without proof as to the cause
and origin of the fire, the doctrine of res ipsa loquitur should apply
so as to presume negligence on the part of appellees. Both the
trial court and the appellate court refused to apply the doctrine in
the instant case on the grounds that "as to (its) applicability ... in
the Philippines, there seems to he nothing definite," and that
while the rules do not prohibit its adoption in appropriate cases,
"in the case at bar, however, we find no practical use for such
doctrine." The question deserves more than such summary
dismissal. The doctrine has actually been applied in this
jurisdiction, in the case of Espiritu vs. Philippine Power and
Development Co. (CA-G.R. No. 3240-R, September 20, 1949),
wherein the decision of the Court of Appeals was penned by Mr.
Justice J.B.L. Reyes now a member of the Supreme Court.
The facts of that case are stated in the decision as follows:
In the afternoon of May 5, 1946, while the plaintiff-appellee and
other companions were loading grass between the municipalities
of Bay and Calauan, in the province of Laguna, with clear
weather and without any wind blowing, an electric transmission
wire, installed and maintained by the defendant Philippine Power
and Development Co., Inc. alongside the road, suddenly parted,
and one of the broken ends hit the head of the plaintiff as he was
about to board the truck. As a result, plaintiff received the full
shock of 4,400 volts carried by the wire and was knocked
unconscious to the ground. The electric charge coursed through
his body and caused extensive and serious multiple burns from
skull to legs, leaving the bone exposed in some parts and causing
intense pain and wounds that were not completely healed when
the case was tried on June 18, 1947, over one year after the
mishap.
The defendant therein disclaimed liability on the ground that the
plaintiff had failed to show any specific act of negligence, but the
appellate court overruled the defense under the doctrine of res
ipsa loquitur. The court said:
The first point is directed against the sufficiency of plaintiff's
evidence to place appellant on its defense. While it is the rule, as
contended by the appellant, that in case of noncontractual
negligence, or culpa aquiliana, the burden of proof is on the
plaintiff to establish that the proximate cause of his injury was the
negligence of the defendant, it is also a recognized principal that
"where the thing which caused injury, without fault of the injured
person, is under the exclusive control of the defendant and the
injury is such as in the ordinary course of things does not occur if
he having such control use proper care, it affords reasonable
evidence, in the absence of the explanation, that the injury arose
from defendant's want of care."
And the burden of evidence is shifted to him to establish that he
has observed due care and diligence. (San Juan Light & Transit
Co. v. Requena, 244, U.S. 89, 56 L. ed. 680.) This rule is known
by the name of res ipsa loquitur (the transaction speaks for itself),
and is peculiarly applicable to the case at bar, where it is
unquestioned that the plaintiff had every right to be on the
highway, and the electric wire was under the sole control of
defendant company. In the ordinary course of events, electric
wires do not part suddenly in fair weather and injure people,
unless they are subjected to unusual strain and stress or there
are defects in their installation, maintenance and supervision; just
as barrels do not ordinarily roll out of the warehouse windows to
injure passersby, unless some one was negligent. (Byrne v.
Boadle, 2 H & Co. 722; 159 Eng. Reprint 299, the leading case
that established that rule). Consequently, in the absence of
contributory negligence (which is admittedly not present), the fact
that the wire snapped suffices to raise a reasonable presumption
of negligence in its installation, care and maintenance.
Thereafter, as observed by Chief Baron Pollock, "if there are any
facts inconsistent with negligence, it is for the defendant to
prove."
It is true of course that decisions of the Court of Appeals do not
lay down doctrines binding on the Supreme Court, but we do not
consider this a reason for not applying the particular doctrine
of res ipsa loquitur in the case at bar. Gasoline is a highly
combustible material, in the storage and sale of which extreme
care must be taken. On the other hand, fire is not considered a
fortuitous event, as it arises almost invariably from some act of
man. A case strikingly similar to the one before Us is Jones vs.
Shell Petroleum Corporation, et al., 171 So. 447:
Arthur O. Jones is the owner of a building in the city of Hammon
which in the year 1934 was leased to the Shell Petroleum
Corporation for a gasoline filling station. On October 8, 1934,
during the term of the lease, while gasoline was being transferred
from the tank wagon, also operated by the Shell Petroleum
Corporation, to the underground tank of the station, a fire started
with resulting damages to the building owned by Jones. Alleging
that the damages to his building amounted to $516.95, Jones
sued the Shell Petroleum Corporation for the recovery of that
amount. The judge of the district court, after hearing the
testimony, concluded that plaintiff was entitled to a recovery and
rendered judgment in his favor for $427.82. The Court of Appeals
for the First Circuit reversed this judgment, on the ground the
testimony failed to show with reasonable certainty any negligence
on the part of the Shell Petroleum Corporation or any of its agents
or employees. Plaintiff applied to this Court for a Writ of Review
which was granted, and the case is now before us for decision. 1äwphï1.ñët
In resolving the issue of negligence, the Supreme Court of
Louisiana held:
Plaintiff's petition contains two distinct charges of negligence —
one relating to the cause of the fire and the other relating to the
spreading of the gasoline about the filling station.
Other than an expert to assess the damages caused plaintiff's
building by the fire, no witnesses were placed on the stand by the
defendant.
Taking up plaintiff's charge of negligence relating to the cause of
the fire, we find it established by the record that the filling station
and the tank truck were under the control of the defendant and
operated by its agents or employees. We further find from the
uncontradicted testimony of plaintiff's witnesses that fire started in
the underground tank attached to the filling station while it was
being filled from the tank truck and while both the tank and the
truck were in charge of and being operated by the agents or
employees of the defendant, extended to the hose and tank truck,
and was communicated from the burning hose, tank truck, and
escaping gasoline to the building owned by the plaintiff.
Predicated on these circumstances and the further circumstance
of defendant's failure to explain the cause of the fire or to show its
lack of knowledge of the cause, plaintiff has evoked the doctrine
of res ipsa loquitur. There are many cases in which the doctrine
may be successfully invoked and this, we think, is one of them.
Where the thing which caused the injury complained of is shown
to be under the management of defendant or his servants and the
accident is such as in the ordinary course of things does not
happen if those who have its management or control use proper
care, it affords reasonable evidence, in absence of explanation by
defendant, that the accident arose from want of care. (45 C.J.
#768, p. 1193).
This statement of the rule of res ipsa loquitur has been widely
approved and adopted by the courts of last resort. Some of the
cases in this jurisdiction in which the doctrine has been applied
are the following, viz.: Maus v. Broderick, 51 La. Ann. 1153, 25
So. 977; Hebert v. Lake Charles Ice, etc., Co., 111 La. 522, 35
So. 731, 64 L.R.A. 101, 100 Am. St. Rep. 505; Willis v. Vicksburg,
etc., R. Co., 115 La. 63, 38 So. 892; Bents v. Page, 115 La. 560,
39 So. 599.
The principle enunciated in the aforequoted case applies with
equal force here. The gasoline station, with all its appliances,
equipment and employees, was under the control of appellees. A
fire occurred therein and spread to and burned the neighboring
houses. The persons who knew or could have known how the fire
started were appellees and their employees, but they gave no
explanation thereof whatsoever. It is a fair and reasonable
inference that the incident happened because of want of care.
In the report submitted by Captain Leoncio Mariano of the Manila
Police Department (Exh. X-1 Africa) the following appears:
Investigation of the basic complaint disclosed that the Caltex
Gasoline Station complained of occupies a lot approximately 10
m x 10 m at the southwest corner of Rizal Avenue and Antipolo.
The location is within a very busy business district near the
Obrero Market, a railroad crossing and very thickly populated
neighborhood where a great number of people mill around until
gasoline whatever be the activities of these people or lighting a
cigarette cannot be excluded and this constitute a secondary
hazard to its operation which in turn endangers the entire
neighborhood to conflagration.
Furthermore, aside from precautions already taken by its operator
the concrete walls south and west adjoining the neighborhood are
only 2-1/2 meters high at most and cannot avoid the flames from
leaping over it in case of fire.
Records show that there have been two cases of fire which
caused not only material damages but desperation and also panic
in the neighborhood.
Although the soft drinks stand had been eliminated, this gasoline
service station is also used by its operator as a garage and repair
shop for his fleet of taxicabs numbering ten or more, adding
another risk to the possible outbreak of fire at this already small
but crowded gasoline station.
The foregoing report, having been submitted by a police officer in
the performance of his duties on the basis of his own personal
observation of the facts reported, may properly be considered as
an exception to the hearsay rule. These facts, descriptive of the
location and objective circumstances surrounding the operation of
the gasoline station in question, strengthen the presumption of
negligence under the doctrine of res ipsa loquitur, since on their
face they called for more stringent measures of caution than
those which would satisfy the standard of due diligence under
ordinary circumstances. There is no more eloquent demonstration
of this than the statement of Leandro Flores before the police
investigator. Flores was the driver of the gasoline tank wagon
who, alone and without assistance, was transferring the contents
thereof into the underground storage when the fire broke out. He
said: "Before loading the underground tank there were no people,
but while the loading was going on, there were people who went
to drink coca-cola (at the coca-cola stand) which is about a meter
from the hole leading to the underground tank." He added that
when the tank was almost filled he went to the tank truck to close
the valve, and while he had his back turned to the "manhole" he,
heard someone shout "fire."
Even then the fire possibly would not have spread to the
neighboring houses were it not for another negligent omission on
the part of defendants, namely, their failure to provide a concrete
wall high enough to prevent the flames from leaping over it. As it
was the concrete wall was only 2-1/2 meters high, and beyond
that height it consisted merely of galvanized iron sheets, which
would predictably crumple and melt when subjected to intense
heat. Defendants' negligence, therefore, was not only with
respect to the cause of the fire but also with respect to the spread
thereof to the neighboring houses.
There is an admission on the part of Boquiren in his amended
answer to the second amended complaint that "the fire was
caused through the acts of a stranger who, without authority, or
permission of answering defendant, passed through the gasoline
station and negligently threw a lighted match in the premises." No
evidence on this point was adduced, but assuming the allegation
to be true — certainly any unfavorable inference from the
admission may be taken against Boquiren — it does not
extenuate his negligence. A decision of the Supreme Court of
Texas, upon facts analogous to those of the present case, states
the rule which we find acceptable here. "It is the rule that those
who distribute a dangerous article or agent, owe a degree of
protection to the public proportionate to and commensurate with a
danger involved ... we think it is the generally accepted rule as
applied to torts that 'if the effects of the actor's negligent conduct
actively and continuously operate to bring about harm to another,
the fact that the active and substantially simultaneous operation
of the effects of a third person's innocent, tortious or criminal act
is also a substantial factor in bringing about the harm, does not
protect the actor from liability.' (Restatement of the Law of Torts,
vol. 2, p. 1184, #439). Stated in another way, "The intention of an
unforeseen and unexpected cause, is not sufficient to relieve a
wrongdoer from consequences of negligence, if such negligence
directly and proximately cooperates with the independent cause
in the resulting injury." (MacAfee, et al. vs. Traver's Gas
Corporation, 153 S.W. 2nd 442.)
The next issue is whether Caltex should be held liable for the
damages caused to appellants. This issue depends on whether
Boquiren was an independent contractor, as held by the Court of
Appeals, or an agent of Caltex. This question, in the light of the
facts not controverted, is one of law and hence may be passed
upon by this Court. These facts are: (1) Boquiren made an
admission that he was an agent of Caltex; (2) at the time of the
fire Caltex owned the gasoline station and all the equipment
therein; (3) Caltex exercised control over Boquiren in the
management of the state; (4) the delivery truck used in delivering
gasoline to the station had the name of CALTEX painted on it;
and (5) the license to store gasoline at the station was in the
name of Caltex, which paid the license fees. (Exhibit T-Africa;
Exhibit U-Africa; Exhibit X-5 Africa; Exhibit X-6 Africa; Exhibit Y-
Africa).
In Boquiren's amended answer to the second amended
complaint, he denied that he directed one of his drivers to remove
gasoline from the truck into the tank and alleged that the "alleged
driver, if one there was, was not in his employ, the driver being an
employee of the Caltex (Phil.) Inc. and/or the owners of the
gasoline station." It is true that Boquiren later on amended his
answer, and that among the changes was one to the effect that
he was not acting as agent of Caltex. But then again, in his
motion to dismiss appellants' second amended complaint the
ground alleged was that it stated no cause of action since under
the allegations thereof he was merely acting as agent of Caltex,
such that he could not have incurred personal liability. A motion to
dismiss on this ground is deemed to be an admission of the facts
alleged in the complaint.
Caltex admits that it owned the gasoline station as well as the
equipment therein, but claims that the business conducted at the
service station in question was owned and operated by Boquiren.
But Caltex did not present any contract with Boquiren that would
reveal the nature of their relationship at the time of the fire. There
must have been one in existence at that time. Instead, what was
presented was a license agreement manifestly tailored for
purposes of this case, since it was entered into shortly before the
expiration of the one-year period it was intended to operate. This
so-called license agreement (Exhibit 5-Caltex) was executed on
November 29, 1948, but made effective as of January 1, 1948 so
as to cover the date of the fire, namely, March 18, 1948. This
retroactivity provision is quite significant, and gives rise to the
conclusion that it was designed precisely to free Caltex from any
responsibility with respect to the fire, as shown by the clause that
Caltex "shall not be liable for any injury to person or property
while in the property herein licensed, it being understood and
agreed that LICENSEE (Boquiren) is not an employee,
representative or agent of LICENSOR (Caltex)."
But even if the license agreement were to govern, Boquiren can
hardly be considered an independent contractor. Under that
agreement Boquiren would pay Caltex the purely nominal sum of
P1.00 for the use of the premises and all the equipment therein.
He could sell only Caltex Products. Maintenance of the station
and its equipment was subject to the approval, in other words
control, of Caltex. Boquiren could not assign or transfer his rights
as licensee without the consent of Caltex. The license agreement
was supposed to be from January 1, 1948 to December 31, 1948,
and thereafter until terminated by Caltex upon two days prior
written notice. Caltex could at any time cancel and terminate the
agreement in case Boquiren ceased to sell Caltex products, or
did not conduct the business with due diligence, in the judgment
of Caltex. Termination of the contract was therefore a right
granted only to Caltex but not to Boquiren. These provisions of
the contract show the extent of the control of Caltex over
Boquiren. The control was such that the latter was virtually an
employee of the former.
Taking into consideration the fact that the operator owed his
position to the company and the latter could remove him or
terminate his services at will; that the service station belonged
to the company and bore its tradename and the operator sold
only the products of the company; that the equipment used by
the operator belonged to the company and were just loaned to
the operator and the company took charge of their repair and
maintenance; that an employee of the company supervised the
operator and conducted periodic inspection of the company's
gasoline and service station; that the price of the products sold
by the operator was fixed by the company and not by the
operator; and that the receipts signed by the operator indicated
that he was a mere agent, the finding of the Court of Appeals
that the operator was an agent of the company and not an
independent contractor should not be disturbed.
To determine the nature of a contract courts do not have or are
not bound to rely upon the name or title given it by the
contracting parties, should thereby a controversy as to what
they really had intended to enter into, but the way the
contracting parties do or perform their respective obligations
stipulated or agreed upon may be shown and inquired into, and
should such performance conflict with the name or title given
the contract by the parties, the former must prevail over the
latter. (Shell Company of the Philippines, Ltd. vs. Firemens'
Insurance Company of Newark, New Jersey, 100 Phil. 757).
The written contract was apparently drawn for the purpose of
creating the apparent relationship of employer and independent
contractor, and of avoiding liability for the negligence of the
employees about the station; but the company was not satisfied
to allow such relationship to exist. The evidence shows that it
immediately assumed control, and proceeded to direct the
method by which the work contracted for should be performed. By
reserving the right to terminate the contract at will, it retained the
means of compelling submission to its orders. Having elected to
assume control and to direct the means and methods by which
the work has to be performed, it must be held liable for the
negligence of those performing service under its direction. We
think the evidence was sufficient to sustain the verdict of the jury.
(Gulf Refining Company v. Rogers, 57 S.W. 2d, 183).
Caltex further argues that the gasoline stored in the station
belonged to Boquiren. But no cash invoices were presented to
show that Boquiren had bought said gasoline from Caltex. Neither
was there a sales contract to prove the same.
As found by the trial court the Africas sustained a loss of
P9,005.80, after deducting the amount of P2,000.00 collected by
them on the insurance of the house. The deduction is now
challenged as erroneous on the ground that Article 2207 of the
New Civil Code, which provides for the subrogation of the insurer
to the rights of the insured, was not yet in effect when the loss
took place. However, regardless of the silence of the law on this
point at that time, the amount that should be recovered be
measured by the damages actually suffered, otherwise the
principle prohibiting unjust enrichment would be violated. With
respect to the claim of the heirs of Ong P7,500.00 was adjudged
by the lower court on the basis of the assessed value of the
property destroyed, namely, P1,500.00, disregarding the
testimony of one of the Ong children that said property was worth
P4,000.00. We agree that the court erred, since it is of common
knowledge that the assessment for taxation purposes is not an
accurate gauge of fair market value, and in this case should not
prevail over positive evidence of such value. The heirs of Ong are
therefore entitled to P10,000.00.

Wherefore, the decision appealed from is reversed and

respondents-appellees are held liable solidarily to appellants, and
ordered to pay them the aforesaid sum of P9,005.80 and
P10,000.00, respectively, with interest from the filing of the
complaint, and costs.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L.,

Barrera, Regala, Bengzon, J.P., Zaldivar and Sanchez, JJ.,
concur.
Dizon, J., took no part.

Footnotes

1
Thus, for instance, the record of a justice of the peace of
marriage certificates transmitted to him by the
corresponding priest is admissible. The justice of the
peace has no personal knowledge of the marriage, but it
was reported to him by a priest whose duty it was, under
the law, to make the report for record purposes. Similarly,
the tax records of a provincial assessor are admissible
even if the assessments were made by subordinates. So
also are entries of marriages made by a municipal
treasurer in his official record, because he acquires
knowledge thereof by virtue of a statutory duty on the part
of those authorized to solemnize marriages to send a
copy of each marriage contract solemnized by them to the
local civil registrar. (See Moran, Comments on the Rules
of Court, Vol. 3 [1957] pp. 389-395.)
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 71137 October 5, 1989
SPOUSES FEDERICO FRANCO and FELICISIMA R.
FRANCO, petitioners,vs. INTERMEDIATE APPELLATE COURT,
ANTONIO REYES, MRS. SUSAN CHUAY and LOLITA
LUGUE respondents.
FERNAN, C.J.:
The instant petition for review of a decision of the Court of
Appeals deals mainly with the nature of an employer's liability for
his employee's negligent act.
At about 7:30 in the evening of October 18, 1974, Macario Yuro
swerved the northbound Franco Bus with Plate No. XY320-PUB
he was driving to the left to avoid hitting a truck with a trailer
parked facing north along the cemented pavement of the
MacArthur Highway at Barrio Talaga, Capas Tarlac, thereby
taking the lane of an incoming Isuzu Mini Bus bearing Plate No.
YL-735 being driven by one Magdaleno Lugue and making a
collision between the two (2) vehicles an unavoidable and
disastrous eventuality.
Dragged fifteen (15) meters from the point of impact (midway the
length of the parked truck with trailer), the mini bus landed right
side down facing south in the canal of the highway, a total wreck.
The Franco Bus was also damaged but not as severely. The
collision resulted in the deaths of the two (2) drivers, Macario
Yuro and Magdaleno Lugue, and two (2) passengers of the mini
bus, Romeo Bue and Fernando Chuay.
Consequently, Antonio Reyes, the registered owner of the Isuzu
Mini Bus, Mrs. Susan Chuay, the wife of victim Fernando Chuay,
and Mrs. Lolita Lugue, the wife of driver-victim Magdaleno Lugue,
filed an action for damages through reckless imprudence before
the Court of First Instance of Pampanga in Angeles City, Branch
IV, docketed as Civil Case No. 2154 against Mr. & Mrs. Federico
Franco, the owners and operators of the Franco Transportation
Company. The complaint alleged that: (a) the recklessness and
imprudence of the Franco Bus driver caused the collision which
resulted in his own death and that of the mini bus driver and two
(2) other passengers thereof; (b) that as a consequence of the
vehicular mishap, the Isuzu Mini Bus became a total wreck
resulting in actual damages amounting to P50,000.00 and the
loss of an average net income of P120.00 daily or P3,600.00
monthly multiplied by a minimum of one more year of
serviceability of said mini bus or P40,200.00; and, (c) that in view
of the death of the three (3) passengers aforementioned, the
heirs of each should be awarded a minimum of P12,000.00 and
the expected average income of P6,000.00 each of the driver and
one of the passengers and P12,000.00 of the Chinese
businessman passenger.
In answer to the complaint, defendants set up, among others, the
affirmative defense that as owners and operators of the Franco
Transportation Company, they exercised due diligence in the
selection and supervision of all their employees, including the
deceased driver Macario Yuro.
Said defense was, however, rejected by the trial court in its
decision   dated May 17, 1978, for the reason that the act of the
1
Franco Bus driver was a negligent act punishable by law resulting
in a civil obligation arising from Article 103 of the Revised Penal
Code and not from Article 2180 of the Civil Code. It said: "This is
a case of criminal negligence out of which civil liability arises, and
not a case of civil negligence and the defense of having acted like
a good father of a family or having trained or selected the drivers
of his truck is no defense to avoid civil liability."   On this premise,
2
the trial court ruled as follows:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiffs, Antonio Reyes, Lolita Lugue,
and Susan Chuay, and against the defendants Mr. and Mrs.
Federico Franco, ordering the latter:
(1) To pay Antonio Reyes, actual and compensatory damages
in the amount of P90,000.00 for the Isuzu Mini Bus;
(2) To pay Lolita Lugue, the widow of Magdaleno Lugue, actual
and compensatory damages in the total sum of P18,000.00;
(3) To pay Susan Chuay, the widow of Fernando Chuay, actual
and compensatory damages in the total sum of P24,000.00;
and
(4) To pay attorney's fee in the amount of P5.000.00;
All with legal interests from the filing of this suit on November
11, 1974 until paid; and the costs of this suit.
SO ORDERED.  3
On appeal by herein petitioners as defendants-appellants,
respondent appellate court, agreeing with the lower court, held
that defendants-appellants' driver who died instantly in the
vehicular collision, was guilty of reckless or criminal imprudence
punishable by law in driving appellants' bus; that the civil
obligation of the appellants arises from Article 103 of the Revised
Penal Code resulting in the subsidiary liability of the appellants
under the said provisions,   that the case subject of appeal is one
4 Amended Complaint   of herein private respondents as plaintiffs in
involving culpable negligence out of which civil liability arises and
is not one of civil negligence;   and that there is nothing in Articles
5 employers of Macario Yuro, the driver of the Franco Bus who
102 and 103 of the Revised Penal Code which requires a prior
judgment of conviction of the erring vehicle driver and his
obligation to pay his civil liability before the said provisions can be
applied.   Respondent appellate court increased the award of
6
damages granted by the lower court as follows:
WHEREFORE, the decision appealed from is hereby modified
as follows:
1. To pay Susan Chuay, widow of Fernando Chuay, the sum of
P30,000.00 for the latter's death and P112,000.00 for loss of
earning capacity;
2. To pay Lolita Lugue, widow of Magdaleno Lugue, the sum of
P30,000.00 for the latter's death and P62,000.00 for loss of
earning capacity. The rest of the judgment appealed from is
affirmed. Costs against defendants-appellants.
SO ORDERED.  7
On April 1, 1985, petitioners filed a motion for reconsideration of
the aforesaid respondent appellate court's decision dated
January 2, 1985 but the same was denied on May 13, 1985.
Hence, the instant petition raising two (2) legal questions: first,
whether the action for recovery of damages instituted by herein
private respondents was predicated upon crime or quasi-delict;
and second, whether respondent appellate court in an appeal
filed by the defeated parties, herein petitioners, may properly
increase the award of damages in favor of the private
respondents Chuay and Lugue, prevailing parties in the lower
court, who did not appeal said court's decision.
Petitioners contend that the allegations in paragraph 9 of the
8
Civil Case No. 2154 unequivocally claim that the former as the
caused the vehicular mishap, are jointly and severally liable to the
latter for the damages suffered by them which thus makes Civil
Case No. 2154 an action predicated upon a quasi-delict under the
Civil Code subject to the defense that the employer exercised all
the diligence of a good father of a family in the selection and
supervision of their employees.
We find merit in this contention. Distinction should be made
between the subsidiary liability of the employer under the Revised
Penal Code and the employer's primary liability under the Civil
Code which is quasi-delictual or tortious in character. The first
type of liability is governed by Articles 102 and 103 of the Revised
Penal Code which provide as follows:
Art. 102. Subsidiary civil liability of innkeepers, tavern-keepers
and proprietors of establishments. — In default of the persons
criminally liable, innkeepers, tavern-keepers, and any other
persons or corporations shall be civilly liable for crimes
committed in their establishments, in all cases where a violation
of municipal ordinances or some general or special police
regulations shall have been committed by them or their
employees.
Innkeepers are also subsidiarily liable for the restitution of
goods taken by robbery or theft within their houses from guests
lodging therein, or for the payment of the value thereof,
provided that such guests shall have notified in advance the
innkeeper himself, or the person representing him, of the
deposits of such goods within the inn; and shall furthermore
have followed the directions which such innkeeper or his
representative may have given them with respect to the care
and vigilance over such goods. No liability shall attach in case
of robbery with violence against or intimidation of persons
unless committed by the innkeeper's employees.
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 the servants, pupils, workmen, apprentices, or
employees in the discharge of their duties;
while the second kind is governed by the following provisions of
the Civil Code:
Art. 2176. Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for
the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties is called a
quasi-delict and is governed by the provisions of this Chapter.
Art. 2177. Responsibility for fault or negligence under the
preceding article is entirely separate and distinct from the civil
liability arising from negligence under the Penal Code. But the
plaintiff cannot recover damages twice for the same act or
omission of the defendant.
Art. 2180. The obligations 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 xxx xxx
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,
xxx xxx xxx
The responsibility treated of in this article shall cease when the
persons herein mentioned prove that they observed all the
diligence of a good father of a family to prevent damage.
Under Article 103 of the Revised Penal Code, liability originates
from a delict committed by the employee who is primarily liable
therefor and upon whose primary liability his employer's
subsidiary liability is to be based. Before the employer's
subsidiary liability may be proceeded against, it is imperative that
there should be a criminal action whereby the employee's
criminal negligence or delict and corresponding liability therefor
are proved. If no criminal action was instituted, the employer's
liability would not be predicated under Article 103. 
9
In the case at bar, no criminal action was instituted because the
person who should stand as the accused and the party supposed
to be primarily liable for the damages suffered by private
respondents as a consequence of the vehicular mishap died.
Thus, petitioners' subsidiary liability has no leg to stand on
considering that their liability is merely secondary to their
employee's primary liability. Logically therefore, recourse under
this remedy is not possible.
On the other hand, under Articles 2176 and 2180 of the Civil
Code, liability is based on culpa aquiliana which holds the
employer primarily liable for tortious acts of its employees subject,
however, to the defense that the former exercised all the
diligence of a good father of a family in the selection and
supervision of his employees.
Respondent appellate court relies on the case of Arambulo,
supra, where it was held that the defense of observance of due
diligence of a good father of a family in the selection and
supervision of employees is not applicable to the subsidiary
liability provided in Article 20 of the Penal Code (now Article 103
of the Revised Penal Code). By such reliance, it would seem that
respondent appellate court seeks to enforce the subsidiary civil
liability of the employer without a criminal conviction of the party
primarily liable therefor. This is not only erroneous and absurd but
is also fraught with dangerous consequences. It is erroneous
because the conviction of the employee primarily liable is a
condition sine qua non for the employer's subsidiary
liability   and, at the same time, absurd because we will be faced
10
with a situation where the employer is held subsidiarily liable even
without a primary liability being previously established. It is
likewise dangerous because, in effect, the employer's subsidiary
liability would partake of a solidary obligation resulting in the law's
amendment without legislative sanction.
The Court in the aforecited M.D. Transit case went further to say
that there can be no automatic subsidiary liability of defendant
employer under Article 103 of the Revised Penal Code where his
employee has not been previously criminally convicted.
Having thus established that Civil Case No. 2154 is a civil action
to impose the primary liability of the employer as a result of the
tortious act of its alleged reckless driver, we confront ourselves
with the plausibility of defendants-petitioners' defense that they
observed due diligence of a good father of a family in the
selection and supervision of their employees.
On this point, the appellate court has unequivocally spoken in
affirmation of the lower court's findings, to wit:
Anyway, a perusal of the record shows that the appellants were
not able to establish the defense of a good father of a family in
the supervision of their bus driver. The evidence presented by the
appellants in this regard is purely self-serving. No independent
evidence was presented as to the alleged supervision of
appellants' bus drivers, especially with regard to driving habits
and reaction to actual traffic conditions. The appellants in fact
admitted that the only kind of supervision given the drivers
referred to the running time between the terminal points of the
line (t.s.n., September 16, 1976, p. 21). Moreover, the appellants
who ran a fleet of 12 buses plying the Manila-Laoag line, have
only two inspectors whose duties were only ticket inspection.
There is no evidence that they are really safety inspectors.  11
Basically, the Court finds that these determinations are factual in
nature. As a painstaking review of the evidence presented in the
case at bar fails to disclose any evidence or circumstance of note
sufficient to overrule said factual findings and conclusions, the
Court is inclined to likewise reject petitioners' affirmative defense
of due diligence. The wisdom of this stance is made more
apparent by the fact that the appellate court's conclusions are
based on the findings of the lower court which is in a better
position to evaluate the testimonies of the witnesses during trial.
As a rule, this Court respects the factual findings of the appellate
and trial courts and accord them a certain measure of
finality.   Consequently, therefore, we find petitioners liable for the
12
WHEREFORE, the decision of the Court of Appeals is hereby
modified decreasing the award to private respondents of actual
and compensatory damages for loss of average income for the
period of one year to P6,000.00 for the deceased Magdaleno
Lugue and P12,000.00 for the deceased Fernando Chuay. The
rest of the judgment appealed from is hereby affirmed. Costs
against the private respondents. This decision is immediately
executory.

damages claimed pursuant to their primary liability under the Civil SO ORDERED.
Code.

On the second legal issue raised in the instant petition, we agree

with petitioners' contention that the Intermediate Appellate Court
(later Court of Appeals) is without jurisdiction to increase the
amount of damages awarded to private respondents Chuay and
Lugue, neither of whom appealed the decision of the lower court.
While an appellee who is not also an appellant may assign error
in his brief if his purpose is to maintain the judgment on other
grounds, he cannot ask for modification or reversal of the
judgment or affirmative relief unless he has also appealed.   For 13

failure of plaintiffs-appellees, herein private respondents, to

appeal the lower court's judgment, the amount of actual damages
cannot exceed that awarded by it.  14

Furthermore, the records   show

15
that plaintiffs-private
respondents limited their claim for actual and compensatory
damages to the supposed average income for a period of one (1)
year of P6,000.00 for the driver Magdaleno Lugue and
P12,000.00 for the Chinese businessman Fernando Chuay. We
feel that our award should not exceed the said amounts . 16

However, the increase in awards for indemnity arising from death

to P30,000.00 each remains, the same having been made in
accordance with prevailing jurisprudence decreeing such
increase in view of the depreciated Philippine currency.  17
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-33722 July 29, 1988
FEDERICO YLARDE and ADELAIDA DORONIO petitioners,  work was left unfinished. The following day, also after classes,
vs. EDGARDO AQUINO, MAURO SORIANO and COURT OF
APPEALS, respondents.
Buenaventura C. Evangelista for petitioners.
Modesto V. Cabanela for respondent Edgardo Aquino.
Manuel P. Pastor for respondent Mauro Soriano.
GANCAYCO, J.:
In this petition for review on certiorari seeking the reversal of the decision of the Court of
Appeals in CA-G.R. No. 36390-R entitled "Federico Ylarde, et al. vs. Edgardo Aquino, et
al.," a case which originated from the Court of First Instance of Pangasinan, We are again
caned upon determine the responsibility of the principals and teachers towards their
students or pupils.
In 1963, private respondent Mariano Soriano was the principal of
the Gabaldon Primary School, a public educational institution
located in Tayug, Pangasinan-Private respondent Edgardo
Aquino was a teacher therein. At that time, the school was fittered
with several concrete blocks which were remnants of the old
school shop that was destroyed in World War II. Realizing that
the huge stones were serious hazards to the schoolchildren,
another teacher by the name of Sergio Banez started burying
them one by one as early as 1962. In fact, he was able to bury
ten of these blocks all by himself.
Deciding to help his colleague, private respondent Edgardo
Aquino gathered eighteen of his male pupils, aged ten to eleven,
after class dismissal on October 7, 1963. Being their teacher-in-
charge, he ordered them to dig beside a one-ton concrete block
in order to make a hole wherein the stone can be buried. The
private respondent Aquino called four of the original eighteen
pupils to continue the digging. These four pupils — Reynaldo
Alonso, Francisco Alcantara, Ismael Abaga and Novelito Ylarde,
dug until the excavation was one meter and forty centimeters
deep. At this point, private respondent Aquino alone continued
digging while the pupils remained inside the pit throwing out the
loose soil that was brought about by the digging.
When the depth was right enough to accommodate the concrete
block, private respondent Aquino and his four pupils got out of the
hole. Then, said private respondent left the children to level the
loose soil around the open hole while he went to see Banez who
was about thirty meters away. Private respondent wanted to
borrow from Banez the key to the school workroom where he
could get some rope. Before leaving. , private respondent Aquino
allegedly told the children "not to touch the stone."
A few minutes after private respondent Aquino left, three of the
four kids, Alonso, Alcantara and Ylarde, playfully jumped into the
pit. Then, without any warning at all, the remaining Abaga jumped
on top of the concrete block causing it to slide down towards the
opening. Alonso and Alcantara were able to scramble out of the
excavation on time but unfortunately fo Ylarde, the concrete block
caught him before he could get out, pinning him to the wall in a
standing position. As a result thereof, Ylarde sustained the
following injuries:
1. Contusion with hematoma, left inguinal region and suprapubic
region.
2. Contusion with ecchymosis entire scrotal region.
3. Lacerated wound, left lateral aspect of penile skin with
phimosis
4. Abrasion, gluteal region, bilateral.
5. Intraperitoneal and extrapertitoneal extravasation of blood and
urine about 2 liters.
6. Fracture, simple, symphesis pubis
7. Ruptured (macerated) urinary bladder with body of bladder
almost entirely separated from its neck.
REMARKS:
1. Above were incurred by crushing injury.
2. Prognosis very poor.
Three days later, Novelito Ylarde died.
Ylarde's parents, petitioners in this case, filed a suit for damages
against both private respondents Aquino and Soriano. The lower
court dismissed the complaint on the following grounds: (1) that
the digging done by the pupils is in line with their course called
Work Education; (2) that Aquino exercised the utmost diligence of
a very cautious person; and (3) that the demise of Ylarde was
due to his own reckless imprudence.  2
On appeal, the Court of Appeals affirmed the Decision of the
lower court.
Petitioners base their action against private respondent Aquino
on Article 2176 of the Civil Code for his alleged negligence that
caused their son's death while the complaint against respondent
Soriano as the head of school is founded on Article 2180 of the
same Code.
Article 2176 of the Civil Code provides:
Art. 2176. Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre- existing
contractual relation between the parties, is called a quasi-delict
and is governed by the provisions of this Chapter.
On the other hand, the applicable provision of Article 2180 states:
Art. 2180. x x x
xxx xxx xxx
Lastly, teachers or heads of establishments of arts and trades
shall be liable for damages caused by their pupils and students or
apprentices, so long as they remain in their custody. 3
The issue to be resolved is whether or not under the cited
provisions, both private respondents can be held liable for
damages.
As regards the principal, We hold that he cannot be made
responsible for the death of the child Ylarde, he being the head of
an academic school and not a school of arts and trades. This is in
line with Our ruling in Amadora vs. Court of Appeals,   wherein
4
this Court thoroughly discussed the doctrine that under Article
2180 of the Civil Code, it is only the teacher and not the head of
an academic school who should be answerable for torts
committed by their students. This Court went on to say that in a
school of arts and trades, it is only the head of the school who
can be held liable. In the same case, We explained:
After an exhaustive examination of the problem, the Court has
come to the conclusion that the provision in question should apply
to all schools, academic as well as non-academic. Where the
school is academic rather than technical or vocational in nature,
responsibility for the tort committed by the student will attach to
the teacher in charge of such student, following the first part of
the provision. This is the general rule. In the case of
establishments of arts and trades, it is the head thereof, and only
he, who shall be held liable as an exception to the general rule. In
other words, teachers in general shall be liable for the acts of
their students except where the school is technical in nature, in
which case it is the head thereof who shall be answerable.
Following the canon of reddendo singula sinquilis 'teachers'
should apply to the words "pupils and students' and 'heads of
establishments of arts and trades to the word "apprentices."
Hence, applying the said doctrine to this case, We rule that
private respondent Soriano, as principal, cannot be held liable for
the reason that the school he heads is an academic school and
not a school of arts and trades. Besides, as clearly admitted by
private respondent Aquino, private respondent Soriano did not
give any instruction regarding the digging.
From the foregoing, it can be easily seen that private respondent
Aquino can be held liable under Article 2180 of the Civil Code as
the teacher-in-charge of the children for being negligent in his
supervision over them and his failure to take the necessary
precautions to prevent any injury on their persons. However, as
earlier pointed out, petitioners base the alleged liability of private
respondent Aquino on Article 2176 which is separate and distinct
from that provided for in Article 2180.
With this in mind, the question We need to answer is this: Were
there acts and omissions on the part of private respondent
Aquino amounting to fault or negligence which have direct causal
relation to the death of his pupil Ylarde? Our answer is in the
affirmative. He is liable for damages.
From a review of the record of this case, it is very clear that
private respondent Aquino acted with fault and gross negligence
when he: (1) failed to avail himself of services of adult manual
laborers and instead utilized his pupils aged ten to eleven to
make an excavation near the one-ton concrete stone which he
knew to be a very hazardous task; (2) required the children to
remain inside the pit even after they had finished digging,
knowing that the huge block was lying nearby and could be easily
pushed or kicked aside by any pupil who by chance may go to the
perilous area; (3) ordered them to level the soil around the
excavation when it was so apparent that the huge stone was at
the brink of falling; (4) went to a place where he would not be able
to check on the children's safety; and (5) left the children close to
the excavation, an obviously attractive nuisance.
The negligent act of private respondent Aquino in leaving his
pupils in such a dangerous site has a direct causal connection to
the death of the child Ylarde. Left by themselves, it was but
natural for the children to play around. Tired from the strenuous
digging, they just had to amuse themselves with whatever they
found. Driven by their playful and adventurous instincts and not
knowing the risk they were facing three of them jumped into the
hole while the other one jumped on the stone. Since the stone
was so heavy and the soil was loose from the digging, it was also
a natural consequence that the stone would fall into the hole
beside it, causing injury on the unfortunate child caught by its
heavy weight. Everything that occurred was the natural and
probable effect of the negligent acts of private respondent
Aquino. Needless to say, the child Ylarde would not have died
were it not for the unsafe situation created by private respondent
Aquino which exposed the lives of all the pupils concerned to real
danger.
We cannot agree with the finding of the lower court that the
injuries which resulted in the death of the child Ylarde were
caused by his own reckless imprudence, It should be
remembered that he was only ten years old at the time of the
incident, As such, he is expected to be playful and daring. His
actuations were natural to a boy his age. Going back to the facts,
it was not only him but the three of them who jumped into the hole
while the remaining boy jumped on the block. From this, it is clear
that he only did what any other ten-year old child would do in the
same situation.
In ruling that the child Ylarde was imprudent, it is evident that the
lower court did not consider his age and maturity. This should not
be the case. The degree of care required to be exercised must
vary with the capacity of the person endangered to care for
himself. A minor should not be held to the same degree of care
as an adult, but his conduct should be judged according to the
average conduct of persons of his age and experience.   The 5
standard of conduct to which a child must conform for his own
protection is that degree of care ordinarily exercised by children
of the same age, capacity, discretion, knowledge and experience
under the same or similar circumstances.   Bearing this in mind,
6
We cannot charge the child Ylarde with reckless imprudence.
The court is not persuaded that the digging done by the pupils
can pass as part of their Work Education. A single glance at the
picture showing the excavation and the huge concrete
block   would reveal a dangerous site requiring the attendance of
7
strong, mature laborers and not ten-year old grade-four pupils.
We cannot comprehend why the lower court saw it otherwise
when private respondent Aquino himself admitted that there were
no instructions from the principal requiring what the pupils were
told to do. Nor was there any showing that it was included in the
lesson plan for their Work Education. Even the Court of Appeals
made mention of the fact that respondent Aquino decided all by
himself to help his co-teacher Banez bury the concrete remnants
of the old school shop.   Furthermore, the excavation should not
8
be placed in the category of school gardening, planting trees, and
the like as these undertakings do not expose the children to any
risk that could result in death or physical injuries.
The contention that private respondent Aquino exercised the
utmost diligence of a very cautious person is certainly without
cogent basis. A reasonably prudent person would have foreseen
that bringing children to an excavation site, and more so, leaving
them there all by themselves, may result in an accident. An
ordinarily careful human being would not assume that a simple
warning "not to touch the stone" is sufficient to cast away all the
serious danger that a huge concrete block adjacent to an
excavation would present to the children. Moreover, a teacher
who stands in loco parentis to his pupils would have made sure
that the children are protected from all harm in his company.
We close by categorically stating that a truly careful and cautious
person would have acted in all contrast to the way private
respondent Aquino did. Were it not for his gross negligence, the
unfortunate incident would not have occurred and the child Ylarde
would probably be alive today, a grown- man of thirty-five. Due to
his failure to take the necessary precautions to avoid the hazard,
Ylarde's parents suffered great anguish all these years.
WHEREFORE, in view of the foregoing, the petition is hereby
GRANTED and the questioned judgment of the respondent court
is REVERSED and SET ASIDE and another judgment is hereby
rendered ordering private respondent Edagardo Aquino to pay
petitioners the following:
(1) Indemnity for the death of Child Ylarde P30,000.00
(2) Exemplary damages 10,000.00
(3) Moral damages 20,000.00
SO ORDERED.

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 71049 May 29, 1987
BERNARDINO JIMENEZ, petitioner, vs. CITY OF MANILA and
INTERMEDIATE APPELLATE COURT, respondents.
PARAS, J.:
This is a petition for review on certiorari of: (1) the decision * of the
Intermediate Appellate Court in AC-G.R. No. 013887-CV Bernardino Jimenez v. Asiatic
Integrated Corporation and City of Manila, reversing the decision ** of the Court of First
Instance of Manila, Branch XXII in Civil Case No. 96390 between the same parties, but only
insofar as holding Asiatic Integrated Corporation solely liable for damages and attorney's
fees instead of making the City of Manila jointly and solidarily liable with it as prayed for by
the petitioner and (2) the resolution of the same Appellate Court denying his Partial Motion
for Reconsideration (Rollo, p. 2).
The dispositive portion of the Intermediate Appellate Court's
decision is as follows:
WHEREFORE, the decision appealed from is hereby
REVERSED. A new one is hereby entered ordering the
defendant Asiatic Integrated Corporation to pay the plaintiff
P221.90 actual medical expenses, P900.00 for the amount paid
for the operation and management of a school bus, P20,000.00
as moral damages due to pains, sufferings and sleepless nights
and P l0,000.00 as attorney's fees.
SO ORDERED. (p. 20, Rollo)
The findings of respondent Appellate Court are as follows:
The evidence of the plaintiff (petitioner herein) shows that in the
morning of August 15, 1974 he, together with his neighbors, went
to Sta. Ana public market to buy "bagoong" at the time when the
public market was flooded with ankle deep rainwater. After
purchasing the "bagoong" he turned around to return home but
he stepped on an uncovered opening which could not be seen
because of the dirty rainwater, causing a dirty and rusty four- inch
nail, stuck inside the uncovered opening, to pierce the left leg of
plaintiff-petitioner penetrating to a depth of about one and a half
inches. After administering first aid treatment at a nearby
drugstore, his companions helped him hobble home. He felt ill
and developed fever and he had to be carried to Dr. Juanita
Mascardo. Despite the medicine administered to him by the latter,
his left leg swelled with great pain. He was then rushed to the
Veterans Memorial Hospital where he had to be confined for
twenty (20) days due to high fever and severe pain.
Upon his discharge from the hospital, he had to walk around with
crutches for fifteen (15) days. His injury prevented him from
attending to the school buses he is operating. As a result, he had
to engage the services of one Bienvenido Valdez to supervise his
business for an aggregate compensation of nine hundred pesos
(P900.00). (Decision, AC-G.R. CV No. 01387, Rollo, pp. 13-20).
Petitioner sued for damages the City of Manila and the Asiatic
Integrated Corporation under whose administration the Sta. Ana
Public Market had been placed by virtue of a Management and
Operating Contract (Rollo, p. 47).
The lower court decided in favor of respondents, the dispositive
portion of the decision reading:
WHEREFORE, judgment is hereby rendered in favor of the
defendants and against the plaintiff dismissing the complaint
with costs against the plaintiff. For lack of sufficient evidence, the
 counterclaims of the defendants are likewise dismissed.
(Decision, Civil Case No. 96390, Rollo, p. 42).
As above stated, on appeal, the Intermediate Appellate Court
held the Asiatic Integrated Corporation liable for damages but
absolved respondent City of Manila.
Hence this petition.
The lone assignment of error raised in this petition is on whether
or not the Intermediate Appellate Court erred in not ruling that
respondent City of Manila should be jointly and severally liable
with Asiatic Integrated Corporation for the injuries petitioner
suffered.
In compliance with the resolution of July 1, 1985 of the First
Division of this Court (Rollo, p. 29) respondent City of Manila filed
its comment on August 13, 1985 (Rollo, p. 34) while petitioner
filed its reply on August 21, 1985 (Reno, p. 51).
Thereafter, the Court in the resolution of September 11, 1985
(Rollo, p. 62) gave due course to the petition and required both
parties to submit simultaneous memoranda
Petitioner filed his memorandum on October 1, 1985 (Rollo, p.
65) while respondent filed its memorandum on October 24, 1985
(Rollo, p. 82).
In the resolution of October 13, 1986, this case was transferred to
the Second Division of this Court, the same having been
assigned to a member of said Division (Rollo, p. 92).
The petition is impressed with merit.
As correctly found by the Intermediate Appellate Court, there is
no doubt that the plaintiff suffered injuries when he fell into a
drainage opening without any cover in the Sta. Ana Public
Market. Defendants do not deny that plaintiff was in fact injured
although the Asiatic Integrated Corporation tries to minimize the
extent of the injuries, claiming that it was only a small puncture
and that as a war veteran, plaintiff's hospitalization at the War
Veteran's Hospital was free. (Decision, AC-G.R. CV No. 01387,
Rollo, p. 6).
Respondent City of Manila maintains that it cannot be held liable
for the injuries sustained by the petitioner because under the
Management and Operating Contract, Asiatic Integrated
Corporation assumed all responsibility for damages which may be
suffered by third persons for any cause attributable to it.
It has also been argued that the City of Manila cannot be held
liable under Article 1, Section 4 of Republic Act No. 409 as
amended (Revised Charter of Manila) which provides:
The City shall not be liable or held for damages or injuries to
persons or property arising from the failure of the Mayor, the
Municipal Board, or any other City Officer, to enforce the
provisions of this chapter, or any other law or ordinance, or
from negligence of said Mayor, Municipal Board, or any other
officers while enforcing or attempting to enforce said provisions.
This issue has been laid to rest in the case of City of Manila v.
Teotico (22 SCRA 269-272 [1968]) where the Supreme Court
squarely ruled that Republic Act No. 409 establishes a general
rule regulating the liability of the City of Manila for "damages or
injury to persons or property arising from the failure of city
officers" to enforce the provisions of said Act, "or any other law or
ordinance or from negligence" of the City "Mayor, Municipal
Board, or other officers while enforcing or attempting to enforce
said provisions."
Upon the other hand, Article 2189 of the Civil Code of the
Philippines which provides that:
Provinces, cities and municipalities shall be liable for damages for
the death of, or injuries suffered by any person by reason of
defective conditions of roads, streets, bridges, public buildings
and other public works under their control or supervision.
constitutes a particular prescription making "provinces, cities and
municipalities ... liable for damages for the death of, or injury
suffered by any person by reason" — specifically — "of the
defective condition of roads, streets, bridges, public buildings,
and other public works under their control or supervision." In
other words, Art. 1, sec. 4, R.A. No. 409 refers to liability arising
from negligence, in general, regardless of the object, thereof,
while Article 2189 of the Civil Code governs liability due to
"defective streets, public buildings and other public works" in
particular and is therefore decisive on this specific case.
In the same suit, the Supreme Court clarified further that under
Article 2189 of the Civil Code, it is not necessary for the liability
therein established to attach, that the defective public works
belong to the province, city or municipality from which
responsibility is exacted. What said article requires is that the
province, city or municipality has either "control or supervision"
over the public building in question.
In the case at bar, there is no question that the Sta. Ana Public
Market, despite the Management and Operating Contract
between respondent City and Asiatic Integrated Corporation
remained under the control of the former.
For one thing, said contract is explicit in this regard, when it
provides:
II. That immediately after the execution of this contract, the
SECOND PARTY shall start the painting, cleaning, sanitizing
and repair of the public markets and talipapas and within ninety
(90) days thereof, the SECOND PARTY shall submit a program
of improvement, development, rehabilitation and reconstruction
of the city public markets and talipapas subject to prior approval
of the FIRST PARTY. (Rollo, p. 44)
xxx xxx xxx
VI
That all present personnel of the City public markets and
talipapas shall be retained by the SECOND PARTY as long as
their services remain satisfactory and they shall be extended
the same rights and privileges as heretofore enjoyed by them.
Provided, however, that the SECOND PARTY shall have the
right, subject to prior approval of the FIRST PARTY to
discharge any of the present employees for cause. (Rollo, p.
45).
VII
That the SECOND PARTY may from time to time be required
by the FIRST PARTY, or his duly authorized representative or
representatives, to report, on the activities and operation of the
City public markets and talipapas and the facilities and
conveniences installed therein, particularly as to their cost of
construction, operation and maintenance in connection with the
stipulations contained in this Contract. (lbid)
The fact of supervision and control of the City over subject public
market was admitted by Mayor Ramon Bagatsing in his letter to
Secretary of Finance Cesar Virata which reads:
These cases arose from the controversy over the Management
and Operating Contract entered into on December 28, 1972 by
and between the City of Manila and the Asiatic Integrated
Corporation, whereby in consideration of a fixed service fee, the
City hired the services of the said corporation to undertake the
physical management, maintenance, rehabilitation and
 development of the City's public markets and' Talipapas'
subject to the control and supervision of the City.
xxx xxx xxx
It is believed that there is nothing incongruous in the exercise of
these powers vis-a-vis the existence of the contract, inasmuch
as the City retains the power of supervision and control over its
public markets and talipapas under the terms of the contract.
(Exhibit "7-A") (Emphasis supplied.) (Rollo, p. 75).
In fact, the City of Manila employed a market master for the Sta.
Ana Public Market whose primary duty is to take direct
supervision and control of that particular market, more
specifically, to check the safety of the place for the public.
Thus the Asst. Chief of the Market Division and Deputy Market
Administrator of the City of Manila testified as follows:
Court This market master is an employee of the City of Manila?
Mr. Ymson Yes, Your Honor.
Q What are his functions?
A Direct supervision and control over the market area assigned
to him."(T.s.n.,pp. 41-42, Hearing of May 20, 1977.)
xxx xxx xxx
Court As far as you know there is or is there any specific
employee assigned with the task of seeing to it that the Sta.
Ana Market is safe for the public?
Mr. Ymson Actually, as I stated, Your Honor, that the Sta. Ana
has its own market master. The primary duty of that market
master is to make the direct supervision and control of that
particular market, the check or verifying whether the place is
safe for public safety is vested in the market master. (T.s.n., pp.
2425, Hearing of July 27, 1977.) (Emphasis supplied.) (Rollo, p.
76).
Finally, Section 30 (g) of the Local Tax Code as amended,
provides:
The treasurer shall exercise direct and immediate supervision
administration and control over public markets and the
personnel thereof, including those whose duties concern the
maintenance and upkeep of the market and ordinances and
other pertinent rules and regulations. (Emphasis supplied.)
(Rollo, p. 76)
The contention of respondent City of Manila that petitioner should
not have ventured to go to Sta. Ana Public Market during a
stormy weather is indeed untenable. As observed by respondent
Court of Appeals, it is an error for the trial court to attribute the
negligence to herein petitioner. More specifically stated, the
findings of appellate court are as follows:
... The trial court even chastised the plaintiff for going to market
on a rainy day just to buy bagoong. A customer in a store has
the right to assume that the owner will comply with his duty to
keep the premises safe for customers. If he ventures to the
store on the basis of such assumption and is injured because
the owner did not comply with his duty, no negligence can be
imputed to the customer. (Decision, AC-G. R. CV No. 01387,
Rollo, p. 19).
As a defense against liability on the basis of a quasi-delict, one
must have exercised the diligence of a good father of a family.
(Art. 1173 of the Civil Code).
There is no argument that it is the duty of the City of Manila to Respondent City of Manila and Asiatic Integrated Corporation
exercise reasonable care to keep the public market reasonably being joint tort-feasors are solidarily liable under Article 2194 of
safe for people frequenting the place for their marketing needs. the Civil Code.

While it may be conceded that the fulfillment of such duties is PREMISES CONSIDERED, the decision of the Court of Appeals
extremely difficult during storms and floods, it must however, be is hereby MODIFIED, making the City of Manila and the Asiatic
admitted that ordinary precautions could have been taken during Integrated Corporation solidarily liable to pay the plaintiff P221.90
good weather to minimize the dangers to life and limb under actual medical expenses, P900.00 for the amount paid for the
those difficult circumstances. operation and management of the school bus, P20,000.00 as
moral damages due to pain, sufferings and sleepless nights and
For instance, the drainage hole could have been placed under the P10,000.00 as attorney's fees.
stalls instead of on the passage ways. Even more important is the
fact, that the City should have seen to it that the openings were SO ORDERED.
covered. Sadly, the evidence indicates that long before petitioner
fell into the opening, it was already uncovered, and five (5)
months after the incident happened, the opening was still
uncovered. (Rollo, pp. 57; 59). Moreover, while there are findings
that during floods the vendors remove the iron grills to hasten the
flow of water (Decision, AC-G.R. CV No. 0 1387; Rollo, p. 17),
there is no showing that such practice has ever been prohibited,
much less penalized by the City of Manila. Neither was it shown
that any sign had been placed thereabouts to warn passersby of
the impending danger.

To recapitulate, it appears evident that the City of Manila is

likewise liable for damages under Article 2189 of the Civil Code,
respondent City having retained control and supervision over the
Sta. Ana Public Market and as tort-feasor under Article 2176 of
the Civil Code on quasi-delicts

Petitioner had the right to assume that there were no openings in

the middle of the passageways and if any, that they were
adequately covered. Had the opening been covered, petitioner
could not have fallen into it. Thus the negligence of the City of
Manila is the proximate cause of the injury suffered, the City is
therefore liable for the injury suffered by the peti- 4 petitioner.
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
 
G.R. No. 97995 January 21, 1993
PHILIPPINE NATIONAL BANK, petitioner, vs.
COURT OF APPEALS AND B.P. MATA AND CO.,
INC., respondents.
Roland A. Niedo for petitioner.
Benjamin C. Santos Law Office for respondent.
ROMERO, J.:
Rarely is this Court confronted with a case calling for the
delineation in broad strokes of the distinctions between such
closely allied concepts as the quasi-contract called "solutio
indebiti" under the venerable Spanish Civil Code and the species
of implied trust denominated "constructive trusts," commonly
regarded as of Anglo-American origin. Such a case is the one
presented to us now which has highlighted more of the affinity
and less of the dissimilarity between the two concepts as to lead
the legal scholar into the error of interchanging the two.
Presented below are the factual circumstances that brought into
juxtaposition the twin institutions of the Civil Law quasi-contract
and the Anglo-American trust.
Private Respondent B.P. Mata & Co. Inc. (Mata), is a private
corporation engaged in providing goods and services to shipping
companies. Since 1966, it has acted as a manning or crewing
agent for several foreign firms, one of which is Star Kist Foods,
Inc., USA (Star Kist). As part of their agreement, Mata makes
advances for the crew's medical expenses, National Seaman's
Board fees, Seaman's Welfare fund, and standby fees and for the
crew's basic personal needs. Subsequently, Mata sends monthly
billings to its foreign principal Star Kist, which in turn reimburses
Mata by sending a telegraphic transfer through banks for credit to
the latter's account.
Against this background, on February 21, 1975, Security Pacific
National Bank (SEPAC) of Los Angeles which had an agency
arrangement with Philippine National Bank (PNB), transmitted a
cable message to the International Department of PNB to pay the
amount of US$14,000 to Mata by crediting the latter's account
with the Insular Bank of Asia and America (IBAA), per order of
Star Kist. Upon receipt of this cabled message on February 24,
1975, PNB's International Department noticed an error and sent a
service message to SEPAC Bank. The latter replied with
instructions that the amount of US$14,000 should only be for
US$1,400.
On the basis of the cable message dated February 24, 1975
Cashier's Check No. 269522 in the amount of US$1,400
(P9,772.95) representing reimbursement from Star Kist, was
issued by the Star Kist for the account of Mata on February 25,
1975 through the Insular Bank of Asia and America (IBAA).
However, fourteen days after or on March 11, 1975, PNB effected
another payment through Cashier's Check No. 270271 in the
amount of US$14,000 (P97,878.60) purporting to be another
transmittal of reimbursement from Star Kist, private respondent's
foreign principal.
Six years later, or more specifically, on May 13, 1981, PNB
requested Mata for refund of US$14,000 (P97,878.60) after it
discovered its error in effecting the second payment.
On February 4, 1982, PNB filed a civil case for collection and
refund of US$14,000 against Mata arguing that based on a
constructive trust under Article 1456 of the Civil Code, it has a
right to recover the said amount it erroneously credited to
respondent Mata. 1
After trial, the Regional Trial Court of Manila rendered judgment
dismissing the complaint ruling that the instant case falls squarely
under Article 2154 on solutio indebiti and not under Article 1456
on constructive trust. The lower court ruled out constructive trust,
applying strictly the technical definition of a trust as "a right of
property, real or personal, held by one party for the benefit of
another; that there is a fiduciary relation between a trustee and
a cestui que trust as regards certain property, real, personal,
money or choses in action." 2
In affirming the lower court, the appellate court added in its
opinion that under Article 2154 on solutio indebiti, the person who
makes the payment is the one who commits the mistake vis-a-
vis the recipient who is unaware of such a
mistake.  Consequently, recipient is duty bound to return the
3
amount paid by mistake. But the appellate court concluded that
petitioner's demand for the return of US$14,000 cannot prosper
because its cause of action had already prescribed under Article
1145, paragraph 2 of the Civil Code which states:
The following actions must be commenced within six years:
xxx xxx xxx
(2) Upon a quasi-contract.
This is because petitioner's complaint was filed only on February
4, 1982, almost seven years after March 11, 1975 when petitioner
mistakenly made payment to private respondent.
Hence, the instant petition for certiorari proceeding seeking to
annul the decision of the appellate court on the basis that Mata's
obligation to return US$14,000 is governed, in the alternative, by
either Article 1456 on constructive trust or Article 2154 of the Civil
Code on quasi-contract. 4
Article 1456 of the Civil Code provides:
If property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the
property comes.
On the other hand, Article 2154 states:
If something is received when there is no right to demand it,
and it was unduly delivered through mistake, the obligation to
return it arises.
Petitioner naturally opts for an interpretation under constructive
trust as its action filed on February 4, 1982 can still prosper, as it
is well within the prescriptive period of ten (10) years as provided
by Article 1144, paragraph 2 of the Civil Code. 5
If it is to be construed as a case of payment by mistake or solutio
indebiti, then the prescriptive period for quasi-contracts of six
years applies, as provided by Article 1145. As pointed out by the
appellate court, petitioner's cause of action thereunder shall have
prescribed, having been brought almost seven years after the
cause of action accrued. However, even assuming that the
instant case constitutes a constructive trust and prescription has
not set in, the present action has already been barred by laches.
To recall, trusts are either express or implied. While express
trusts are created by the intention of the trustor or of the parties,
implied trusts come into being by operation of law.  Implied trusts
6
are those which, without being expressed, are deducible from the
nature of the transaction as matters of intent or which are
superinduced on the transaction by operation of law as matters of
equity, independently of the particular intention of the parties.
7
In turn, implied trusts are subdivided into resulting and
constructive trusts.  A resulting trust is a trust raised by
8
implication of law and presumed always to have been
contemplated by the parties, the intention of which is found in the
nature of the transaction, but not expressed in the deed or
instrument of conveyance.  Examples of resulting trusts are found
9
in Articles 1448 to 1455 of the Civil Code.  On the other hand, a
10
constructive trust is one not created by words either expressly or
impliedly, but by construction of equity in order to satisfy the
demands of justice. An example of a constructive trust is Article
1456 quoted above. 11
A deeper analysis of Article 1456 reveals that it is not a trust in
the technical sense   for in a typical trust, confidence is reposed
12
in one person who is named a trustee for the benefit of another
who is called the cestui que trust, respecting property which is
held by the trustee for the benefit of the cestui que trust.  A 13
constructive trust, unlike an express trust, does not emanate
from, or generate a fiduciary relation. While in an express trust, a
beneficiary and a trustee are linked by confidential or fiduciary
relations, in a constructive trust, there is neither a promise nor
any fiduciary relation to speak of and the so-called trustee neither
accepts any trust nor intends holding the property for the
beneficiary.
14
In the case at bar, Mata, in receiving the US$14,000 in its
account through IBAA, had no intent of holding the same for a
supposed beneficiary or cestui que trust, namely PNB. But under
Article 1456, the law construes a trust, namely a constructive
trust, for the benefit of the person from whom the property comes,
in this case PNB, for reasons of justice and equity.
At this juncture, a historical note on the codal provisions on trust
and quasi-contracts is in order.
Originally, under the Spanish Civil Code, there were only two
kinds of quasi contracts: negotiorum gestio and solutio indebiti.
But the Code Commission, mindful of the position of the eminent
Spanish jurist, Manresa, that "the number of quasi contracts may
be indefinite," added Section 3 entitled "Other Quasi-Contracts." 15
Moreover, even as Article 2142 of the Civil Code defines a quasi-
contract, the succeeding article provides that: "The provisions for
quasi-contracts in this Chapter do not exclude other quasi-
contracts which may come within the purview of the preceding
article."
16
Indubitably, the Civil Code does not confine itself exclusively to
the quasi-contracts enumerated from Articles 2144 to 2175 but is
open to the possibility that, absent a pre-existing relationship,
there being neither crime nor quasi-delict, a quasi-contractual
relation may be forced upon the parties to avoid a case of unjust
enrichment.  There being no express consent, in the sense of a
17
meeting of minds between the parties, there is no contract to
speak of. However, in view of the peculiar circumstances or
factual environment, consent is presumed to the end that a
recipient of benefits or favors resulting from lawful, voluntary and
unilateral acts of another may not be unjustly enriched at the
expense of another.
Undoubtedly, the instant case fulfills the indispensable requisites
of solutio indebiti as defined in Article 2154 that something (in this
case money) has been received when there was no right to
demand it and (2) the same was unduly delivered through
mistake. There is a presumption that there was a mistake in the
payment "if something which had never been due or had already
been paid was delivered; but he from whom the return is claimed
may prove that the delivery was made out of liberality or for any
other just cause."18
In the case at bar, a payment in the corrected amount of
US$1,400 through Cashier's Check No. 269522 had already been
made by PNB for the account of Mata on February 25, 1975.
Strangely, however, fourteen days later, PNB effected another
payment through Cashier's Check No. 270271 in the amount of
US$14,000, this time purporting to be another transmittal of
reimbursement from Star Kist, private respondent's foreign
principal.
While the principle of undue enrichment or solutio indebiti, is not
new, having been incorporated in the subject on quasi-contracts
in Title XVI of Book IV of the Spanish Civil Code entitled
"Obligations incurred without contract," the chapter on Trusts is
19
fairly recent, having been introduced by the Code Commission in
1949. Although the concept of trusts is nowhere to be found in the
Spanish Civil Code, the framers of our present Civil Code
incorporated implied trusts, which includes constructive trusts, on
top of quasi-contracts, both of which embody the principle of
equity above strict legalism.20
In analyzing the law on trusts, it would be instructive to refer to
Anglo-American jurisprudence on the subject. Under American
Law, a court of equity does not consider a constructive trustee for
all purposes as though he were in reality a trustee; although it will
force him to return the property, it will not impose upon him the
numerous fiduciary obligations ordinarily demanded from a
trustee of an express trust.  It must be borne in mind that in an
21
express trust, the trustee has active duties of management while
in a constructive trust, the duty is merely to surrender the
property.
Still applying American case law, quasi-contractual obligations
give rise to a personal liability ordinarily enforceable by an action
at law, while constructive trusts are enforceable by a proceeding
in equity to compel the defendant to surrender specific property.
To be sure, the distinction is more procedural than substantive. 22
Further reflection on these concepts reveals that a constructive
"trust" is as much a misnomer as a "quasi-contract," so far
removed are they from trusts and contracts proper, respectively.
In the case of a constructive trust, as in the case of quasi-
contract, a relationship is "forced" by operation of law upon the
parties, not because of any intention on their part but in order to
prevent unjust enrichment, thus giving rise to certain obligations
not within the contemplation of the parties.23
Although we are not quite in accord with the opinion that "the
trusts known to American and English equity jurisprudence are
derived from the fidei commissa of the Roman Law,"  it is safe to
24
state that their roots are firmly grounded on such Civil Law
principles are expressed in the Latin maxim, "Nemo cum alterius
detrimento locupletari potest,"   particularly the concept of
25
constructive trust.
Returning to the instant case, while petitioner may indeed opt to
avail of an action to enforce a constructive trust or the quasi-
contract of solutio indebiti, it has been deprived of a choice, for
prescription has effectively blocked quasi-contract as an
alternative, leaving only constructive trust as the feasible option.
Petitioner argues that the lower and appellate courts cannot
indulge in semantics by holding that in Article 1456 the recipient
commits the mistake while in Article 2154, the recipient commits
no mistake.   On the other hand, private respondent, invoking the
26
appellate court's reasoning, would impress upon us that under
Article 1456, there can be no mutual mistake. Consequently,
private respondent contends that the case at bar is one of solutio
indebiti and not a constructive trust.
We agree with petitioner's stand that under Article 1456, the law
does not make any distinction since mutual mistake is a
possibility on either side — on the side of either the grantor or the
grantee.  Thus, it was error to conclude that in a constructive
27
trust, only the person obtaining the property commits a mistake.
This is because it is also possible that a grantor, like PNB in the
case at hand, may commit the mistake.
Proceeding now to the issue of whether or not petitioner may still
claim the US$14,000 it erroneously paid private respondent under
a constructive trust, we rule in the negative. Although we are
aware that only seven (7) years lapsed after petitioner
erroneously credited private respondent with the said amount and
that under Article 1144, petitioner is well within the prescriptive
period for the enforcement of a constructive or implied trust, we
rule that petitioner's claim cannot prosper since it is already
barred by laches. It is a well-settled rule now that an action to
enforce an implied trust, whether resulting or constructive, may
be barred not only by prescription but also by laches. 28

While prescription is concerned with the fact of delay, laches

deals with the effect of unreasonable delay.  It is amazing that it
29

took petitioner almost seven years before it discovered that it had

erroneously paid private respondent. Petitioner would attribute its
mistake to the heavy volume of international transactions handled
by the Cable and Remittance Division of the International
Department of PNB. Such specious reasoning is not persuasive.
It is unbelievable for a bank, and a government bank at that,
which regularly publishes its balanced financial statements
annually or more frequently, by the quarter, to notice its error only
seven years later. As a universal bank with worldwide operations,
PNB cannot afford to commit such costly mistakes. Moreover, as
between parties where negligence is imputable to one and not to
the other, the former must perforce bear the consequences of its
neglect. Hence, petitioner should bear the cost of its own
negligence.

WHEREFORE, the decision of the Court of Appeals dismissing

petitioner's claim against private respondent is AFFIRMED.

Costs against petitioner.

SO ORDERED.
 Republic of the Philippines In compliance with said agreement, attorney Marcos J. Rotea
SUPREME COURT took the necessary steps to have the Bureau of Lands disapprove
Manila the aforesaid sale made by Francisca Delupio in favor of Fabian
Franco, in which he was successful, and he was able to have
EN BANC certificate of title No. 27823 of the office of the register of deeds
of Rizal issued in the name of Simplicio Birondo's minor
G.R. No. L-45310             April 14, 1939 daughters named Josefina and Sofia.

Guardianship of the minors Josefina and Sofia Birondo.  Moreover, said attorney Marcos J. Rotea prepared the complaint
MARCOS J. ROTEA, petitioner-appellee, vs. FRANCISCA and appeared in civil case No. 6177 of the Court of First Instance
DELUPIO, guardian of the minors Josefina and Sofia of Rizal in the name and representation of Simplicio Birondo and
Birondo, oppositor-appellant. his said minor daughters, as well as in the name of Simplicio
Birondo alone in civil case No. 6191 of the same court.
Antonio A. Gonzales for appellant.
Marcos J. Rotea in his own behalf. On April 25, 1936, the Court of First Instance of Rizal, acceding to
attorney Marcos J. Rotea's petition of April 17, 1936, for the
notation of his right of retention over one third of the aforesaid lot,
VILLA-REAL, J.:
issued an order directing the register of deeds of the province of
Rizal to note said right of retention over one third of the land
On October 15, 1934, Simplicio Birondo, father of the minors pertaining to the guardianship and covered by the original
Josefina and Sofia, surnamed Birondo, entrusted to attorney certificate of title No. 27823 issued by said office.
Marcos J. Rotea, petitioner and appellee herein, the matter of
obtaining the annulment of a sale made on June 6, 1931, by the
On May 9, 1936, Francisca Delupio, as guardian of the persons
mother-in-law of said Simplicio Birondo, named Francisca
and properties of the minors Josefa and Sofia Birondo, filed a
Delupio, in favor of Fabian Franco, and the issuance of a Torrens
motion asking for the reconsideration of the order directing the
certificate of title of a piece of land known as lot No. 1023 of
notation of the right of retention of attorney Marcos J. Rotea, on
the Hacienda Piedad, Baesa, Caloocan, Rizal, the right to buy the
the ground that Simplicio Birondo, father of said minors, was not
same having been inherited by said minors from their deceased
authorized to enter into the agreement with said attorney
mother Beatriz Bartolome and its ownership later acquired by
regarding the properties of the minors.
them from the Government by purchase. for the professional
services to be rendered by said attorney Marcos J. Rotea,
Simplicio Birondo bound himself to convey to the former one third After hearing said motion and the opposition thereto, the Court of
of said land, which would be taken from the uncultivated portion First Instance of Rizal granted the first by order of May 29, 1936,
near the Novaliches-Manila provincial road, all the incidental and set aside the order for notation.
expenses, including those for the issuance of the certificate of title
in the name of said two minors, to be for the account of said
attorney.
On July 7, 1936, the Court of First Instance of Rizal issued certificate of title covering said property to be issued in the name
another order again directing the notation of the right of retention of said minors is considered a negotiorum gestor who is entitled
of attorney Marcos J. Rotea, but without specifying its value. to be indemnified for necessary and useful expenses incurred by
him and the damages suffered in the discharge of his duties and
The administratrix Francisca Delupio excepted to this order and to have his right of retention noted.
interposed the present appeal.
Wherefore, finding no error in the appealed order, we affirm the
The only question submitted for our consideration in the present same in toto, with costs against the appellant. So ordered.
appeal is whether attorney Marcos J. Rotea is entitled to be
compensated for the services rendered by him in favor of
Simplicio Birondo's minor daughters in the annulment of the sale
made by their grandmother of a parcel of land belonging to them
and in having an original certificate of title issued in their names,
by virtue of a contract entered into between said attorney and the
father of said minors.

It is indisputable that Simplicio Birondo by the mere fact that he is

the father of said minors, has no right to enter into a contract with
said attorney binding the properties of his said minor daughters.
But even if there had been no such agreement and attorney
Marcos J. Rotea, voluntarily taking interest in said minors, had
defended their interests against the usurpation of their properties
by their grandmother by taking, as he did, the necessary steps
leading to that end for their benefit and achieving complete
success, he nevertheless has the right, as a negotiorum gestor,
to be indemnified for the necessary and useful expenses he had
incurred and the damages he had suffered in the discharged of
his duties as such gestor, it being immaterial that said minors or
their guardian did not ratify his undertaking, in accordance with
the provisions of article 1893 of the Civil Code and to have his
lien as attorney noted.

In view of the foregoing considerations, we are of the opinion and

so hold that an attorney who, at the request of the father of
certain minors who is not the guardian of the latter's properties,
undertakes to obtain, as he did obtain, the annulment of the sale
of a real property belonging to them fraudulently executed by their
grandmother, and who afterwards also causes an original
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 108052 July 24, 1996
PHILIPPINE NATIONAL BANK, petitioner, vs.THE COURT OF
APPEALS and RAMON LAPEZ,  doing business under the
1
name and style SAPPHIRE SHIPPING, respondents.
PANGANIBAN, J.
Does a local bank, while acting as local correspondent bank,
have the right to intercept funds being coursed through it by
its foreign counterpart for transmittal and deposit to the
account of an individual with another local bank, and apply
the said funds to certain obligations owed to it by the said
individual?
Assailed in this petition is the Decision of respondent Court
of Appeals  in CA-G.R. CV No. 27926 rendered on June 16,
2
1992 affirming the decision of the Regional Trial Court,
Branch 107 of Quezon City, the dispositive portion of which
read:3
WHEREFORE, judgment is hereby rendered:
1) In the main complaint, ordering the defendant (herein
petitioner PNB) to pay the plaintiff (private respondent herein)
the sum of US$2,627.11 or its equivalent in Philippine currency
with interest at the legal rate from January 13, 1987, the date of
judicial demand;
2) The plaintiff's supplemental complaint is hereby dismissed
(sic);
3) The defendant's counterclaims are likewise dismissed.
The Facts
The factual antecedents as quoted by the respondent Court
are reproduced hereinbelow, the same being undisputed by
the parties:4
The body of the decision reads:
After a close scrutiny and analysis of the pleadings as well as
the evidence of both parties, the Court makes the following
conclusions:
(a) The defendant applied/appropriated the amounts of
$2,627.11 and P34,340.38 from remittances of the plaintiff's
principals (sic) abroad. These were admitted by the
defendant, subject to the affirmative defense of compensation
for what is owing to it on the principle of solution (sic) indebiti.
(b) The first remittance was made by the NCB of Jeddah for
the benefit of the plaintiff, to the credited to his account at
Citibank, Greenhills Branch; the second was from Libya, and
was intended to be deposited at the plaintiff's account with
the defendant, No. 830-2410;
(c) The plaintiff made a written demand upon the defendant
for remittance of the equivalent of $2,627.11 by means of a
letter dated December 4, 1986 (Exh. D). This was answered
by the defendant on December 22, 1986 (Exh. 13), inviting
the plaintiff to come for a conference;
(d) There were indeed two instances in the past, one in
November 1980 and the other in January 1981 when the
plaintiff's account No. 830-2410 was doubly credited with the
equivalents of $5,679.23 and $5,885.38, respectively, which
amounted to an aggregate amount of P87,380.44. The
defendant's evidence on this point (Exhs. 1 thru 11, 14 and 15;
see also Annexes C and E to defendant's Answer), were never
refuted nor impugned by the plaintiff. He claims, however, that
plaintiff's claim has prescribed.
(e) Defendant PNB made a demand upon the plaintiff for refund
of the double or duplicated credits erroneously made on
plaintiff's account, by means of a letter (Exh. 12) dated October
23, 1986 or 5 years and 11 months from November 1980, and 5
years and 9 months from January 1981. Such letter was
answered by the plaintiff on December 2, 1986 (Annex C,
Complaint). This plaintiff's letter was likewise replied to by the
defendant through Exh. 13;
(f) The deduction of P34,340.58 was made by the defendant not
without the knowledge and consent of the plaintiff, who was
issued a receipt No. 857576 dated February 18, 1987 (Exh. E)
by the defendant.
There is no question that the two erroneous double payments
made to plaintiff's accounts in 1980 and 1981 created an extra-
contractual obligation on the part of the plaintiff in favor of the
defendant, under the principle of solutio indebiti, as follows:
If something is received when there is no right to demand it, and
it was unduly delivered through (sic) mistake, the obligation to
return it arises. (Article 2154, Civil Code of the Phil.)
Two issues were raised before the trial court, namely, first,
whether the herein petitioner was legally justified in making the
compensation or set-off against the two remittances coursed
through it in favor of private respondent to recover on the double
credits it erroneously made in 1980 and 1981, based on the
principle solutio indebiti, and second, whether or not petitioner's
claim is barred by the statute of limitations. The trial court's
ratiocination, as quoted by the appellate Court, follows:
5
Article 1279 of the Civil Code provides:
In order that compensation may prosper, it is necessary:
(1) That each one of the obligors be bound principally, and that
he be at the same time a principal creditor of the other;
(2) That both debts consists in a sum of money, or if the things
due are consumable, they be of the same kind, and also of the
same quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there by any retention or
controversy, commenced by third persons and communicated in
due time to the debtor.
In the case of the $2,627.11, requisites Nos. 2 through 5 are
apparently present, for both debts consist in a sum of money,
are both due, liquidated and demandable, and over neither of
them is there a retention or controversy commenced by third
persons and communicated in due time to the debtor. The
question, however, is, where both of the obligors bound
principally, and was each one of them a debtor and creditor of
the other at the same time?
Analyzing now the relationship between the parties, it appears
that:
(a) With respect to the plaintiff's being a depositor of the
defendant bank, they are creditor and debtor respectively
(Guingona, et.al. vs. City Fiscal, et. al., 128 SCRA 577);
(b) As to the relationship created by the telexed fund transfers
from abroad: A contract between a foreign bank and local bank
asking the latter to pay an amount to a beneficiary is a
stipulation pourautrui. (Bank of America NT & SA vs. IAC, 145
SCRA 419).
A stipulation pour autrui is a stipulation in favor of a third
person (Florentino vs. Encarnacion, 79 SCRA 193; Bonifacio
Brothers vs. Mora, 20 SCRA 261; Uy Tam vs. Leonard, 30
Phils. 475).
Thus between the defendant bank (as the local correspondent
of the National Commercial Bank of Jeddah) and the plaintiff
as beneficiary, there is created an implied trust pursuant to Art.
1453 of the Civil Code, quoted as follows:
When the property is conveyed to a person in reliance upon
his declared intention to hold it for, or transfer it to another or
the grantor, there is an implied trust in favor of the person
whose benefit is contemplated (sic).
(c) By the principle of solutio indebiti (Art. 2154, Civil Code),
the plaintiff who unduly, received something (sic) by mistake
(i.e., the 2 double credits, although he had no right to demand
it), became obligated to the defendant to return what he unduly
received. Thus, there was created between them a relationship
of obligor and obligee, or of debtor and creditor under a quasi-
contract.
In view of the foregoing, the Court is of the opinion that the
parties are not both principally bound with respect to the
$2,627.11 from Jeddah; neither are they at the same time
principal creditor of the other. Therefore, as matters stand, the
parties' obligations are not subject to compensation or set off
under Art. 1279 of the Civil Code, for the reason that the
defendant is not a principal debtor nor is the plaintiff a principal
creditor insofar as the amount of $2,627.11 is concerned. They
are debtor and creditor only with respect to the double
payments; but are trustee-beneficiary as to the fund transfer of
$2,627.11.
Only the plaintiff is principally bound as a debtor of the
defendant to the extent of the double credits. On the other
hand, the defendant was an implied trustee, who was obliged
to deliver to the Citibank for the benefit of the plaintiff the sum
of $2,627.11.
Thus while it may be concluded that the plaintiff owes the
defendant the equivalent of the sums of $5,179.23 and
$5,885.38 erroneously doubly credited to his account, the
defendant's actuation in intercepting the amount of $2,627.11
supposed to be remitted to another bank is not only improper;
it will also erode the trust and confidence of the international
banking community in the banking system of the country,
something we can ill afford at this time when we need to attract
and invite deposits of foreign currencies.
It would have been different has the telex advice from NCB of
Jeddah been for deposit of $2,627.11 to plaintiff's account No.
830-2410 with the defendant bank. However, the defendant
alleged this for the first time in its Memorandum (Pls. see par.
16, p. 6 of defendant's Memorandum). There was neither any
allegation thereof in its pleadings, nor was there any evidence
to prove such fact. On the contrary, the defendant admitted
that the telex advice was for credit of the amount of $2,627.11
to plaintiff's account with Citibank, Greenhills, San Juan,
Metro-Manila (Pls. see par. of defendant's Answer with
Compulsary Counterclaim, in relation to plaintiff's Complaint).
Hence, it is submitted that the set-off or compensation of
$2,627.11 against the double payments to plaintiff's account is
not in accordance with law.
On this point, the Court finds the plaintiff's theory of agency to
be untenable. For one thing, there was no express contract of
agency. On the other hand, were we to infer that there was an
implied agency, the same would not be between the plaintiff
and defendant, but rather, between the National Commercial
Bank of Jeddah as principal on the one hand, and the
defendant as agent on the other. Thus, in case of violation of
the agency, the cause of action would accrue to the NCB and
not to the plaintiff.
The P34,340.38 subject of the supplemental complaint is quite
another thing. The plaintiff's Exh. "E", which is a receipt issued
to the plaintiff by the defendant for the amount of P34,340.00
in "full settlement of accounts receivables with RICB Fund
Transfer Department, PNB-Escolta base on Legal Department
Memo dated February 28, 1987" seems to uphold the
defendant's theory that the said amount was voluntarily
delivered by the plaintiff to the defendant as alleged in the last
paragraph of defendant's memorandum. The same is in
accordance with the defendant's answer, as follows:
The retention and application of the amount of P34,340.58
was done in a manner consonant with basic due process
considering that plaintiff was not only furnished documented
proof of the cause but was also given the opportunity to
con(tro)vert such proof .
Moreover, plaintiff, through counsel, communicated his
unequivocal and unconditional consent to the retention and
application of the amount in question. (Pls. see paragraphs 8-
9, defendant's Answer with Compulsary Counterclaim to
Plaintiff's Supplemental Complaint).
This conclusion is borne by the fact that the receipt is in the
hands of the plaintiff, indicating that such receipt was
handed over to the plaintiff when he "paid" or allowed the
deduction from the amount of $28,392.38 from Libya.
At any rate, the plaintiff in his Memorandum, stated that the
subsequent fund transfer from Brega Petroleum Marketing
Company of Libya (from where the P34,340.38 was
deducted) was intended for credit and deposit in plaintiff's
account at the defendant's Bank CA No. 830-2410 (per par.
1, page 2, Memorandum for the plaintiff). Such being the
case, the Court believes that insofar as the amount of
P34,340.38 is concerned, all the requirements of Art. 1279 of
the Civil Code are present, and the said amount may
properly be the subject of compensation or set-off. And since
all the requisites of Art. 1279 of the Civil Code are present
(insofar as the amount of P34,392.38 is concerned),
compensation takes place by operation of law (Art.
1286, Ibid.), albeit only partial with respect to plaintiff's
indebtedness of P7,380.44.
Now, on the question of prescription, the Court believes that
Art. 1149 as cited by the plaintiff is not applicable in this
case. Rather, the applicable law is Art. 1145, which fixes the
prescriptive period for actions upon a quasi contract (such as
solution indebiti) at six years.
In the dispositive portion of its decision, the trial court ruled
that the herein petitioner was obligated to pay private
respondent the amount of US$2,627.11 or its peso
equivalent, with interest at the legal rate. The court
dismissed all other claims and counterclaims.
On appeal to the respondent Court, petitioner bank
continued to insist that it validly retained the US$2,627.11 in
payment of the private respondent's indebtedness by way of
compensation or set-off, as provided under Art. 1279 of the
Civil Code.
The respondent Court of Appeals rejected such argument,
saying:
The telegraphic money transfer was sent by the IBN,
plaintiff's principal in Jeddah, Saudi Arabia, thru the National
Commercial Bank of Jeddah, Saudi Arabia (NCB, for short),
for the credit/account of plaintiff with the Citibank, Greenhills
Branch, San Juan, Metro Manila, coursed thru the PNB's
head office, the NCB's corresponden(t) bank in the
Philippines.
The credit account, or simply account means that the
amount stated in the telegraphic money transfer is to be
credited in the account of plaintiff with the Citibank, and, in
that sense, presupposes a creditor-debtor relationship
between the plaintiff, as creditor and the Citibank, as
debtor. Withal the telegraphic money transfer, no such
creditor-debtor relationship could have been created
between the plaintiff and defendant.
The telegraphic money transfer, or simply telegraphic
transfer(,) was purchased by the IBN from the NCB in Saudi
Arabia, and since the PNB is the NCB's corresponden(t)
bank in the Philippines, there is created between the two
banks a sort of communication exchange for the
corresponden(t) bank to transmit and/or remit and/or pay the
value of the telegraphic transfer in accordance with the
dictate of the correspondence exchange. Some such
responsibility of the corresponden(t) bank is akin to section 7
of the Rules and Regulations Implementing E.O. 857, as
amended by E.O. 925, ". . . to take charge of the prompt
payment" of the telegraphic transfer, that is, by transmitting
the telegraphic money transfer to the Citibank so that the
amount can be promptly credited to the account of the
plaintiff with the said bank. That is all that the PNB can do
under the remittance arrangement that it has with the NCB.
With its responsibility as defined as well as by the nature of
its banking business and the responsibility attached to it, and
through which the industry, trade and commerce of all
countries and communities are carried on, the PNB's liability
as corresponden(t) bank continues until it has completely
(sic) performed and discharged it(s) obligation thereunder."
(emphasis ours)
Hence, the respondent Court affirmed the trial court's
holding in toto.
Dissatisfied, petitioner bank comes before this Court
seeking a review of the assailed Decision.
The Issue
Petitioner's arguments revolve around one single issue: 6
WHILE THE RESPONDENT COURT CORRECTLY
FOUND PRIVATE RESPONDENT LEGALLY BOUND
(UNDER THE PRINCIPLE OF SOLUTIO INDEBITI) TO
RETURN TO PNB THE SUM OF US$2,627.11, IT
ERRED IN NOT RULING THAT LEGAL
COMPENSATION HAS TAKEN PLACE WHEN PNB
WAS ORDERED BY THE TRIAL COURT TO RETURN
TO PRIVATE RESPONDENT THE SAME AMOUNT.
SUCH COURSE OF ACTION IS IN CONSONANCE
WITH SPEEDY AND SUBSTANTIAL JUSTICE, AND
WOULD PREVENT THE UNNECESSARY FILING OF
A SUBSEQUENT SUIT BY PNB FOR THE
COLLECTION OF THE SAME AMOUNT FROM
PRIVATE RESPONDENT.
The Court's Ruling
We note that in framing the issue in the manner
aforecited, the petitioner implicity admits the correctness
of the respondent Court's affirmance of the trial court's
ruling finding herein petitioner liable to private respondent
for the sum of US$2,627.11 or its peso equivalent. And it
could not have done otherwise. After a careful scrutiny of
both the decision of the trial court and that of the
appellate court, we find no reversible error whatsoever in We see in this petition a clever ploy to use this Court to
either ruling, and see no need to add to the extensive validate or legalize an improper act of the petitioner bank,
discussions already made regarding the non-existence of with the not impossible intention of using this case as a
all the requisites for legal compensation to take place. precedent for similar acts of interception in the future.
This piratical attitude of the nation's premier bank
But petitioner has adopted a novel theory, contending that deserves a warning that it should not abuse the justice
since respondent Court found that private respondent is system in its collection efforts, particularly since we are
"an obligor of PNB and the latter, as aforesaid, has aware that if the petitioner bank had been in good faith, it
become an obligor of private respondent (resulting in could have easily disposed of this controversy in ten
legal compensation), the (h)onorable respondent court minutes flat by means of an exchange of checks with
should have ordered private respondent to pay PNB what private respondent for the same amount. The litigation
the latter is bound by the trial court's decision to return the could have ended there, but it did not. Instead, this plainly
former."7 unmeritorious case had to clog our docket and take up
the valuable time of this Court.
By this simplistic approach, petitioner in effect seeks to
render nugatory the decisions of the trial court and the WHEREFORE, the instant petition is herewith DENIED
appellate Court, and have this Court validate its original for being plainly unmeritorious, and the assailed Decision
misdeed, thereby making a mockery of the entire judicial is AFFIRMED in toto. Costs against petitioner.
process of this country. What the petitioner bank is
effectively saying is that since the respondent Court of SO ORDERED.
Appeals ruled that petitioner bank could not do a shortcut
and simply intercept funds being coursed through it, for
transmittal to another bank, and eventually to be
deposited to the account of an individual who happens to
owe some amount of money to the petitioner, and
because respondent Court order petitioner bank to return
intercepted amount to said individual, who in turn was
found by the appellate Court to be indebted to petitioner
bank, THEREFORE, there must now be legal
compensation of the amounts each owes the other, and
hence, there is no need for petitioner bank to actually
return the amount, and finally, that petitioner bank ends
up in exactly the same position as when it first took the
improper and unwarranted shortcut by intercepting the
said money transfer, notwithstanding the assailed
Decision saying that this could not be done!