Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 116123 March 13, 1997

SERGIO F. NAGUIAT, doing business under the name and style SERGIO F. NAGUIAT ENT., INC., & CLARK FIELD TAXI,
INC., petitioners,

vs.

NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), NATIONAL ORGANIZATION OF WORKINGMEN and its
members, LEONARDO T. GALANG, et al., respondents.

PANGANIBAN, J.:

Are private respondent-employees of petitioner Clark Field Taxi, Inc., who were separated from service due the closure of Clark
Air Base, entitled to separation pay and, if so, in what amount? Are officers of corporations ipso facto liable jointly and severally
with the companies they represent for the payment of separation pay?

These questions are answered by the Court in resolving this petition for certiorari under Rule 65 of the Rules of Court assailing the
Resolutions of the National Labor Relations Commission (Third Division) 1promulgated on February 28, 1994, 2and May 31, 1994.
3The February 28, 1994 Resolution affirmed with modifications the decision 4of Labor Arbiter Ariel C. Santos in NLRC Case No.
RAB-III-12-2477-91. The second Resolution denied the motion for reconsideration of herein petitioners.

The NLRC modified the decision of the labor arbiter by granting separation pay to herein individual respondents in the increased
amount of US$120.00 for every year of service or its peso equivalent, and holding Sergio F. Naguiat Enterprises, Inc., Sergio F.
Naguiat and Antolin T. Naguiat, jointly and severally liable with Clark Field Taxi, Inc. ("CFTI").

The Facts
The following facts are derived from the records of the case:

Petitioner CFTI held a concessionaire's contract with the Army Air Force Exchange Services ("AAFES") for the operation of taxi
services within Clark Air Base. Sergio F. Naguiat was CFTI's president, while Antolin T. Naguiat was its vice-president. Like Sergio
F. Naguiat Enterprises, Incorporated ("Naguiat Enterprises"), a trading firm, it was a family-owned corporation.

Individual respondents were previously employed by CFTI as taxicab drivers. During their employment, they were required to pay
a daily "boundary fee" in the amount of US$26.50 for those working from 1:00 a.m. to 12:00 noon, and US$27.00 for those working
from 12:00 noon to 12:00 midnight. All incidental expenses for the maintenance of the vehicles they were driving were accounted
against them, including gasoline expenses.

The drivers worked at least three to four times a week, depending on the availability of taxicabs. They earned not less than
US$15.00 daily.

In excess of that amount, however, they were required to make cash deposits to the company, which they could later withdraw
every fifteen days.

Due to the phase-out of the US military bases in the Philippines, from which Clark Air Base was not spared, the AAFES was
dissolved, and the services of individual respondents were officially terminated on November 26, 1991.

The AAFES Taxi Drivers Association ("drivers' union"), through its local president, Eduardo Castillo, and CFTI held negotiations
as regards separation benefits that should be awarded in favor of the drivers. They arrived at an agreement that the separated
drivers will be given P500.00 for every year of service as severance pay. Most of the drivers accepted said amount in December
1991 and January 1992. However, individual respondents herein refused to accept theirs.

Instead, after disaffiliating themselves from the drivers' union, individual respondents, through the National Organization of
Workingmen ("NOWM"), a labor organization which they subsequently joined, filed a complaint 5against "Sergio F. Naguiat doing
business under the name and style Sergio F. Naguiat Enterprises, Inc., Army-Air Force Exchange Services (AAFES) with Mark
Hooper as Area Service Manager, Pacific Region, and AAFES Taxi Drivers Association with Eduardo Castillo as President," for
payment of separation pay due to termination/phase-out. Said complaint was later amended 6to include additional taxi drivers who
were similarly situated as complainants, and CFTI with Antolin T. Naguiat as vice president and general manager, as party
respondent.

In their complaint, herein private respondents alleged that they were regular employees of Naguiat Enterprises, although their
individual applications for employment were approved by CFTI. They claimed to have been assigned to Naguiat Enterprises after
having been hired by CFTI, and that the former thence managed, controlled and supervised their employment. They averred further
that they were entitled to separation pay based on their latest daily earnings of US$15.00 for working sixteen (16) days a month.
In their position paper submitted to the labor arbiter, herein petitioners claimed that the cessation of business of CFTI on November
26, 1991, was due to "great financial losses and lost business opportunity" resulting from the phase-out of Clark Air Base brought
about by the Mt. Pinatubo eruption and the expiration of the RP-US military bases agreement. They admitted that CFTI had agreed
with the drivers' union, through its President Eduardo Castillo who claimed to have had blanket authority to negotiate with CFTI in
behalf of union members, to grant its taxi driver-employees separation pay equivalent to P500.00 for every year of service.

The labor arbiter, finding the individual complainants to be regular workers of CFTI, ordered the latter to pay them P1,200.00 for
every year of service "for humanitarian consideration," setting aside the earlier agreement between CFTI and the drivers' union of
P500.00 for every year of service. The labor arbiter rejected the allegation of CFTI that it was forced to close business due to "great
financial losses and lost business opportunity" since, at the time it ceased operations, CFTI was profitably earning and the cessation
of its business was due to the untimely closure of Clark Air Base. In not awarding separation pay in accordance with the Labor
Code, the labor arbiter explained:

To allow respondents exemption from its (sic) obligation to pay separation pay would be inhuman to complainants but to impose a
monetary obligation to an employer whose profitable business was abruptly shot (sic) down by force majeure would be unfair and
unjust to say the least. 7

and thus, simply awarded an amount for "humanitarian consideration."

Herein individual private respondents appealed to the NLRC. In its Resolution, the NLRC modified the decision of the labor arbiter
by granting separation pay to the private respondents. The concluding paragraphs of the NLRC Resolution read:

The contention of complainant is partly correct. One-half month salary should be US$120.00 but this amount can not be paid to
the complainant in U.S. Dollar which is not the legal tender in the Philippines. Paras, in commenting on Art. 1249 of the New Civil
Code, defines legal tender as "that which a debtor may compel a creditor to accept in payment of the debt. The complainants who
are the creditors in this instance can be compelled to accept the Philippine peso which is the legal tender, in which case, the table
of conversion (exchange rate) at the time of payment or satisfaction of the judgment should be used. However, since the choice is
left to the debtor, (respondents) they may choose to pay in US dollar." (Phoenix Assurance Co. vs. Macondray & Co. Inc., L-25048,
May 13, 1975)

In discharging the above obligations, Sergio F. Naguiat Enterprises, which is headed by Sergio F. Naguiat and Antolin Naguiat,
father and son at the same time the President and Vice-President and General Manager, respectively, should be joined as
indispensable party whose liability is joint and several. (Sec. 7, Rule 3, Rules of Court) 8

As mentioned earlier, the motion for reconsideration of herein petitioners was denied by the NLRC. Hence, this petition with prayer
for issuance of a temporary restraining order. Upon posting by the petitioners of a surety bond, a temporary restraining order 9was
issued by this Court enjoining execution of the assailed Resolutions.
 Issues

The petitioners raise the following issues before this Court for resolution:

I. Whether or not public respondent NLRC (3rd Div.) committed grave abuse of discretion amounting to lack of jurisdiction in issuing
the appealed resolution;

II. Whether or not Messrs. Teofilo Rafols and Romeo N. Lopez could validly represent herein private respondents; and,

III. Whether or not the resolution issued by public respondent is contrary to law. 10

Petitioners also submit two additional issues by way of a supplement 11 to their petition, to wit: that Petitioners Sergio F. Naguiat
and Antolin Naguiat were denied due process; and that petitioners were not furnished copies of private respondents' appeal to the
NLRC. As to the procedural lapse of insufficient copies of the appeal, the proper forum before which petitioners should have raised
it is the NLRC. They, however, failed to question this in their motion for reconsideration. As a consequence, they are deemed to
have waived the same and voluntarily submitted themselves to the jurisdiction of the appellate body.

Anent the first issue raised in their original petition, petitioners contend that NLRC committed grave abuse of discretion amounting
to lack or excess of jurisdiction in unilaterally increasing the amount of severance pay granted by the labor arbiter. They claim that
this was not supported by substantial evidence since it was based simply on the self-serving allegation of respondents that their
monthly take-home pay was not lower than $240.00.

On the second issue, petitioners aver that NOWM cannot make legal representations in behalf of individual respondents who
should, instead, be bound by the decision of the union (AAFES Taxi Drivers Association) of which they were members.

As to the third issue, petitioners incessantly insist that Sergio F. Naguiat Enterprises, Inc. is a separate and distinct juridical entity
which cannot be held jointly and severally liable for the obligations of CFTI. And similarly, Sergio F. Naguiat and Antolin Naguiat
were merely officers and stockholders of CFTI and, thus, could not be held personally accountable for corporate debts.

Lastly, Sergio and Antolin Naguiat assail the Resolution of NLRC holding them solidarily liable despite not having been impleaded
as parties to the complaint.

Individual respondents filed a comment separate from that of NOWM. In sum, both aver that petitioners had the opportunity but
failed to refute, the taxi drivers' claim of having an average monthly earning of $240.00; that individual respondents became
members of NOWM after disaffiliating themselves from the AAFES Taxi Drivers Association which, through the manipulations of
its President Eduardo Castillo, unconscionably compromised their separation pay; and that Naguiat Enterprises, being their indirect
employer, is solidarily liable under the law for violation of the Labor Code, in this case, for nonpayment of their separation pay.
The Solicitor General unqualifiedly supports the allegations of private respondents. In addition, he submits that the separate
personalities of respondent corporations and their officers should be disregarded and considered one and the same as these were
used to perpetrate injustice to their employees.

The Court's Ruling

As will be discussed below, the petition is partially meritorious.

First Issue: Amount of Separation Pay

Firmly, we reiterate the rule that in a petition for certiorari filed pursuant to Rule 65 of the Rules of Court, which is the only way a
labor case may reach the Supreme Court, the petitioner/s must clearly show that the NLRC acted without or in excess of jurisdiction
or with grave abuse of discretion. 12

Long-standing and well-settled in Philippine jurisprudence is the judicial dictum that findings of fact of administrative agencies and
quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally
accorded not only great respect but even finality; and are binding upon this Court unless there is a showing of grave abuse of
discretion, or where it is clearly shown that they were arrived at arbitrarily or in disregard of the evidence on record. 13

Nevertheless, this Court carefully perused the records of the instant case if only to determine whether public respondent committed
grave abuse of discretion, amounting to lack of jurisdiction, in granting the clamor of private respondents that their separation pay
should be based on the amount of $240.00, allegedly their minimum monthly earnings as taxi drivers of petitioners.

In their amended complaint before the Regional Arbitration Branch in San Fernando, Pampanga, herein private respondents set
forth in detail the work schedule and financial arrangement they had with their employer. Therefrom they inferred that their monthly
take-home pay amounted to not less than $240.00. Herein petitioners did not bother to refute nor offer any evidence to controvert
said allegations. Remaining undisputed, the labor arbiter adopted such facts in his decision. Petitioners did not even appeal from
the decision of the labor arbiter nor manifest any error in his findings and conclusions. Thus, petitioners are in estoppel for not
having questioned such facts when they had all opportunity to do so. Private respondents, like petitioners, are bound by the factual
findings of Respondent Commission.

Petitioners also claim that the closure of their taxi business was due to great financial losses brought about by the eruption of Mt.
Pinatubo which made the roads practically impassable to their taxicabs. Likewise well-settled is the rule that business losses or
financial reverses, in order to sustain retrenchment of personnel or closure of business and warrant exemption from payment of
separation pay, must be proved with clear and satisfactory evidence. 14The records, however, are devoid of such evidence.
The labor arbiter, as affirmed by NLRC, correctly found that petitioners stopped their taxi business within Clark Air Base because
of the phase-out of U.S. military presence thereat. It was not due to any great financial loss because petitioners' taxi business was
earning profitably at the time of its closure.

With respect to the amount of separation pay that should be granted, Article 283 of the Labor Code provides:

. . . In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking
not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered
one (1) whole year.

Considering the above, we find that NLRC did not commit grave abuse of discretion in ruling that individual respondents were
entitled to separation pay 15in the amount $120.00 (one-half of $240.00 monthly pay) or its peso equivalent for every year of
service.

Second Issue: NOWM's Personality to

Represent Individual Respondents-Employees

On the question of NOWM's authority to represent private respondents, we hold petitioners in estoppel for not having seasonably
raised this issue before the labor arbiter or the NLRC. NOWM was already a party-litigant as the organization representing the taxi
driver-complainants before the labor arbiter. But petitioners who were party-respondents in said complaint did not assail the juridical
personality of NOWM and the validity of its representations in behalf of the complaining taxi drivers before the quasi-judicial bodies.
Therefore, they are now estopped from raising such question before this Court. In any event, petitioners acknowledged before this
Court that the taxi drivers allegedly represented by NOWM, are themselves parties in this case. 16

Third Issue: Liability of Petitioner-

Corporations and Their Respective Officers

The resolution of this issue involves another factual finding that Naguiat Enterprises actually managed, supervised and controlled
employment terms of the taxi drivers, making it their indirect employer. As adverted to earlier, factual findings of quasi-judicial
bodies are binding upon the court in the absence of a showing of grave abuse of discretion.

Unfortunately, the NLRC did not discuss or give any explanation for holding Naguiat Enterprises and its officers jointly and severally
liable in discharging CFTI's liability for payment of separation pay. We again remind those concerned that decisions, however
concisely written, must distinctly and clearly set forth the facts and law upon which they are based. 17This rule applies as well to
dispositions by quasi-judicial and administrative bodies.
Naguiat Enterprise Not Liable

In impleading Naguiat Enterprises as solidarily liable for the obligations of CFTI, respondents rely on Articles 106, 18107 19and
109 20of the Labor Code.

Based on factual submissions of the parties, the labor arbiter, however, found that individual respondents were regular employees
of CFTI who received wages on a boundary or commission basis.

We find no reason to make a contrary finding. Labor-only contracting exists where: (1) the person supplying workers to an employer
does not have substantial capital or investment in the form of tools, equipment, machinery, and work premises, among others; and
(2) the workers recruited and placed by such person are performing activities which are directly related to the principal business of
the employer. 21Independent contractors, meanwhile, are those who exercise independent employment, contracting to do a piece
of work according to their own methods without being subject to control of their employer except as to the result of their Work. 22

From the evidence proffered by both parties, there is no substantial basis to hold that Naguiat Enterprises is an indirect employer
of individual respondents much less a labor only contractor. On the contrary, petitioners submitted documents such as the drivers'
applications for employment with CFTI, 23and social security remittances 24and payroll 25of Naguiat Enterprises showing that
none of the individual respondents were its employees. Moreover, in the contract 26between CFTI and AAFES, the former, as
concessionaire, agreed to purchase from AAFES for a certain amount within a specified period a fleet of vehicles to be "ke(pt) on
the road" by CFTI, pursuant to their concessionaire's contract. This indicates that CFTI became the owner of the taxicabs which
became the principal investment and asset of the company.

Private respondents failed to substantiate their claim that Naguiat Enterprises managed, supervised and controlled their
employment. It appears that they were confused on the personalities of Sergio F. Naguiat as an individual who was the president
of CFTI, and Sergio F. Naguiat Enterprises, Inc., as a separate corporate entity with a separate business. They presumed that
Sergio F. Naguiat, who was at the same time a stockholder and director 27of Sergio F. Naguiat Enterprises, Inc., was managing
and controlling the taxi business on behalf of the latter. A closer scrutiny and analysis of the records, however, evince the truth of
the matter: that Sergio F. Naguiat, in supervising the taxi drivers and determining their employment terms, was rather carrying out
his responsibilities as president of CFTI. Hence, Naguiat Enterprises as a separate corporation does not appear to be involved at
all in the taxi business.

To illustrate further, we refer to the testimony of a driver-claimant on cross examination.

Atty. Suarez

Is it not true that you applied not with Sergio F. Naguiat but with Clark Field Taxi?

Witness
I applied for (sic) Sergio F. Naguiat.

Atty. Suarez

Sergio F. Naguiat as an individual or the corporation?

Witness

Sergio F. Naguiat na tao.

Atty. Suarez

Who is Sergio F. Naguiat?

Witness

He is the one managing the Sergio F. Naguiat Enterprises and he is the one whom we believe as our employer

Atty. Suarez

What is exactly the position of Sergio F. Naguiat with the Sergio F. Naguiat Enterprises?

Witness

He is the owner, sir.

Atty. Suarez

How about with Clark Field Taxi Incorporated what is the position of Mr. Naguiat?

Witness

What I know is that he is a concessionaire.

xxx xxx xxx

Atty. Suarez

But do you also know that Sergio F. Naguiat is the President of Clark Field Taxi, Incorporated?

Witness
Yes, sir.

Atty. Suarez

How about Mr. Antolin Naguiat what is his role in the taxi services, the operation of the Clark Field Taxi, Incorporated?

Witness

He is the vice president. 28

And, although the witness insisted that Naguiat Enterprises was his employer, he could not deny that he received his salary from
the office of CFTI inside the base. 29

Another driver-claimant admitted, upon the prodding of counsel for the corporations, that Naguiat Enterprises was in the trading
business while CFTI was in taxi services. 30

In addition, the Constitution 31of CFTI-AAFES Taxi Drivers Association which, admittedly, was the union of individual respondents
while still working at Clark Air Base, states that members thereof are the employees of CFTI and "(f)or collective bargaining
purposes, the definite employer is the Clark Field Taxi Inc."

From the foregoing, the ineludible conclusion is that CFTI was the actual and direct employer of individual respondents, and that
Naguiat Enterprises was neither their indirect employer nor labor-only contractor. It was not involved at all in the taxi business.

CFTI president

solidarily liable

Petitioner-corporations would likewise want to avoid the solidary liability of their officers. To bolster their position, Sergio F. Naguiat
and Antolin T. Naguiat specifically aver that they were denied due process since they were not parties to the complaint below. 32In
the broader interest of justice, we, however, hold that Sergio F. Naguiat, in his capacity as president of CFTI, cannot be exonerated
from joint and several liability in the payment of separation pay to individual respondents.

A.C. Ransom Labor Union-CCLU vs. NLRC 33is the case in point. A.C. Ransom Corporation was a family corporation, the
stockholders of which were members of the Hernandez family. In 1973, it filed an application for clearance to close or cease
operations, which was duly granted by the Ministry of Labor and Employment, without prejudice to the right of employees to seek
redress of grievance, if any. Backwages of 22 employees, who engaged in a strike prior to the closure, were subsequently
computed at P164,984.00. Up to September 1976, the union filed about ten (10) motions for execution against the corporation, but
none could be implemented, presumably for failure to find leviable assets of said corporation. In its last motion for execution, the
union asked that officers and agents of the company be held personally liable for payment of the backwages. This was granted by
the labor arbiter. In the corporation's appeal to the NLRC, one of the issues raised was: "Is the judgment against a corporation to
reinstate its dismissed employees with backwages, enforceable against its officer and agents, in their individual, private and
personal capacities, who were not parties in the case where the judgment was rendered!" The NLRC answered in the negative,
on the ground that officers of a corporation are not liable personally for official acts unless they exceeded the scope of their
authority.

On certiorari, this Court reversed the NLRC and upheld the labor arbiter. In imposing joint and several liability upon the company
president, the Court, speaking through Mme. Justice Ameurfina Melencio-Herrera, ratiocinated this wise:

(b) How can the foregoing (Articles 265 and 273 of the Labor Code) provisions be implemented when the employer is a corporation?
The answer is found in Article 212(c) of the Labor Code which provides:

(c) "Employer" includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor
organization or any of its officers or agents except when acting as employer.

The foregoing was culled from Section 2 of RA 602, the Minimum Wage Law. Since RANSOM is an artificial person, it must have
an officer who can be presumed to be the employer, being the "person acting in the interest of (the) employer" RANSOM. The
corporation, only in the technical sense, is the employer.

The responsible officer of an employer corporation can be held personally, not to say even criminally, liable for nonpayment of
back wages. That is the policy of the law. . . .

(c) If the policy of the law were otherwise, the corporation employer can have devious ways for evading payment of back wages. . . .

(d) The record does not clearly identify "the officer or officers" of RANSOM directly responsible for failure to pay the back wages
of the 22 strikers. In the absence of definite Proof in that regard, we believe it should be presumed that the responsible officer is
the President of the corporation who can be deemed the chief operation officer thereof. Thus, in RA 602, criminal responsibility is
with the "Manager or in his default, the person acting as such." In RANSOM. the President appears to be the Manager. (Emphasis
supplied.)

Sergio F. Naguiat, admittedly, was the president of CFTI who actively managed the business. Thus, applying the ruling in A.C.
Ransom, he falls within the meaning of an "employer" as contemplated by the Labor Code, who may be held jointly and severally
liable for the obligations of the corporation to its dismissed employees.

Moreover, petitioners also conceded that both CFTI and Naguiat Enterprises were "close family corporations" 34owned by the
Naguiat family. Section 100, paragraph 5, (under Title XII on Close Corporations) of the Corporation Code, states:

(5) To the extent that the stockholders are actively engage(d) in the management or operation of the business and affairs of a
close corporation, the stockholders shall be held to strict fiduciary duties to each other and among themselves. Said stockholders
shall be personally liable for corporate torts unless the corporation has obtained reasonably adequate liability insurance. (emphasis
supplied)

Nothing in the records show whether CFTI obtained "reasonably adequate liability insurance;" thus, what remains is to determine
whether there was corporate tort.

Our jurisprudence is wanting as to the definite scope of "corporate tort." Essentially, "tort" consists in the violation of a right given
or the omission of a duty imposed by law. 35Simply stated, tort is a breach of a legal duty. 36Article 283 of the Labor Code
mandates the employer to grant separation pay to employees in case of closure or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, which is the condition obtaining at bar. CFTI failed to comply
with this law-imposed duty or obligation. Consequently, its stockholder who was actively engaged in the management or operation
of the business should be held personally liable.

Furthermore, in MAM Realty Development vs. NLRC, 37the Court recognized that a director or officer may still be held solidarily
liable with a corporation by specific provision of law. Thus:

. . . A corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations incurred by them,
acting as such corporate agents, are not theirs but the direct accountabilities of the corporation they represent. True, solidary
liabilities may at times be incurred but only when exceptional circumstances warrant such as, generally, in the following cases:

xxx xxx xxx

4. When a director, trustee or officer is made, by specific provision of law, personally liable for his corporate action. (footnotes
omitted)

As pointed out earlier, the fifth paragraph of Section 100 of the Corporation Code specifically imposes personal liability upon the
stockholder actively managing or operating the business and affairs of the close corporation.

In fact, in posting the surety bond required by this Court for the issuance of a temporary restraining order enjoining the execution
of the assailed NLRC Resolutions, only Sergio F. Naguiat, in his individual and personal capacity, principally bound himself to
comply with the obligation thereunder, i.e., "to guarantee the payment to private respondents of any damages which they may
incur by reason of the issuance of a temporary restraining order sought, if it should be finally adjudged that said principals were
not entitled thereto. 38

The Court here finds no application to the rule that a corporate officer cannot be held solidarily liable with a corporation in the
absence of evidence that he had acted in bad faith or with malice. 39 In the present case, Sergio Naguiat is held solidarily liable
for corporate tort because he had actively engaged in the management and operation of CFTI, a close corporation.

Antolin Naguiat not personally liable

Antolin T. Naguiat was the vice president of the CFTI. Although he carried the title of "general manager" as well, it had not been
shown that he had acted in such capacity. Furthermore, no evidence on the extent of his participation in the management or
operation of the business was preferred. In this light, he cannot be held solidarily liable for the obligations of CFTI and Sergio
Naguiat to the private respondents.

Fourth Issue: No Denial of Due Process

Lastly, in petitioners' Supplement to their original petition, they assail the NLRC Resolution holding Sergio F. Naguiat and Antolin
T. Naguiat jointly and severally liable with petitioner-corporations in the payment of separation pay, averring denial of due process
since the individual Naguiats were not impleaded as parties to the complaint.

We advert to the case of A.C. Ransom once more. The officers of the corporation were not parties to the case when the judgment
in favor of the employees was rendered. The corporate officers raised this issue when the labor arbiter granted the motion of the
employees to enforce the judgment against them. In spite of this, the Court held the corporation president solidarily liable with the
corporation.

Furthermore, Sergio and Antolin Naguiat voluntarily submitted themselves to the jurisdiction of the labor arbiter when they, in their
individual capacities, filed a position paper 40 together with CFTI, before the arbiter. They cannot now claim to have been denied
due process since they availed of the opportunity to present their positions.

WHEREFORE, the foregoing premises considered, the petition is PARTLY GRANTED. The assailed February 28, 1994 Resolution
of the NLRC is hereby MODIFIED as follows:

(1) Petitioner Clark Field Taxi, Incorporated, and Sergio F. Naguiat, president and co-owner thereof, are ORDERED to pay, jointly
and severally, the individual respondents their separation pay computed at US$120.00 for every year of service, or its peso
equivalent at the time of payment or satisfaction of the judgment;

(2) Petitioner Sergio F. Naguiat Enterprises, Incorporated, and Antolin T. Naguiat are ABSOLVED from liability in the payment of
separation pay to individual respondents.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
 Manila

THIRD DIVISION

G.R. No. 97336 February 19, 1993

GASHEM SHOOKAT BAKSH, petitioner,

vs.

HON. COURT OF APPEALS and MARILOU T. GONZALES, respondents.

Public Attorney's Office for petitioner.

Corleto R. Castro for private respondent.

DAVIDE, JR., J.:

This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to review and set aside the Decision 1of the respondent
Court of Appeals in CA-G.R. CV No. 24256 which affirmed in toto the 16 October 1939 Decision of Branch 38 (Lingayen) of the
Regional Trial Court (RTC) of Pangasinan in Civil Case No. 16503. Presented is the issue of whether or not damages may be
recovered for a breach of promise to marry on the basis of Article 21 of the Civil Code of the Philippines.

The antecedents of this case are not complicated:

On 27 October 1987, private respondent, without the assistance of counsel, filed with the aforesaid trial court a complaint 2for
damages against the petitioner for the alleged violation of their agreement to get married. She alleges in said complaint that: she
is twenty-two (22) years old, single, Filipino and a pretty lass of good moral character and reputation duly respected in her
community; petitioner, on the other hand, is an Iranian citizen residing at the Lozano Apartments, Guilig, Dagupan City, and is an
exchange student taking a medical course at the Lyceum Northwestern Colleges in Dagupan City; before 20 August 1987, the
latter courted and proposed to marry her; she accepted his love on the condition that they would get married; they therefore agreed
to get married after the end of the school semester, which was in October of that year; petitioner then visited the private
respondent's parents in Bañaga, Bugallon, Pangasinan to secure their approval to the marriage; sometime in 20 August 1987, the
petitioner forced her to live with him in the Lozano Apartments; she was a virgin before she began living with him; a week before
the filing of the complaint, petitioner's attitude towards her started to change; he maltreated and threatened to kill her; as a result
of such maltreatment, she sustained injuries; during a confrontation with a representative of the barangay captain of Guilig a day
before the filing of the complaint, petitioner repudiated their marriage agreement and asked her not to live with him anymore and;
the petitioner is already married to someone living in Bacolod City. Private respondent then prayed for judgment ordering the
petitioner to pay her damages in the amount of not less than P45,000.00, reimbursement for actual expenses amounting to
P600.00, attorney's fees and costs, and granting her such other relief and remedies as may be just and equitable. The complaint
was docketed as Civil Case No. 16503.

In his Answer with Counterclaim, 3petitioner admitted only the personal circumstances of the parties as averred in the complaint
and denied the rest of the allegations either for lack of knowledge or information sufficient to form a belief as to the truth thereof or
because the true facts are those alleged as his Special and Affirmative Defenses. He thus claimed that he never proposed marriage
to or agreed to be married with the private respondent; he neither sought the consent and approval of her parents nor forced her
to live in his apartment; he did not maltreat her, but only told her to stop coming to his place because he discovered that she had
deceived him by stealing his money and passport; and finally, no confrontation took place with a representative of the barangay
captain. Insisting, in his Counterclaim, that the complaint is baseless and unfounded and that as a result thereof, he was
unnecessarily dragged into court and compelled to incur expenses, and has suffered mental anxiety and a besmirched reputation,
he prayed for an award of P5,000.00 for miscellaneous expenses and P25,000.00 as moral damages.

After conducting a pre-trial on 25 January 1988, the trial court issued a Pre-Trial Order 4embodying the stipulated facts which the
parties had agreed upon, to wit:

1. That the plaintiff is single and resident (sic) of Bañaga, Bugallon, Pangasinan, while the defendant is single, Iranian citizen and
resident (sic) of Lozano Apartment, Guilig, Dagupan City since September 1, 1987 up to the present;

2. That the defendant is presently studying at Lyceum Northwestern, Dagupan City, College of Medicine, second year medicine
proper;

3. That the plaintiff is (sic) an employee at Mabuhay Luncheonette , Fernandez Avenue, Dagupan City since July, 1986 up to the
present and a (sic) high school graduate;

4. That the parties happened to know each other when the manager of the Mabuhay Luncheonette, Johhny Rabino introduced the
defendant to the plaintiff on August 3, 1986.

After trial on the merits, the lower court, applying Article 21 of the Civil Code, rendered on 16 October 1989 a decision 5favoring
the private respondent. The petitioner was thus ordered to pay the latter damages and attorney's fees; the dispositive portion of
the decision reads:

IN THE LIGHT of the foregoing consideration, judgment is hereby rendered in favor of the plaintiff and against the defendant.

1. Condemning (sic) the defendant to pay the plaintiff the sum of twenty thousand (P20,000.00) pesos as moral damages.
2. Condemning further the defendant to play the plaintiff the sum of three thousand (P3,000.00) pesos as atty's fees and two
thousand (P2,000.00) pesos at (sic) litigation expenses and to pay the costs.

3. All other claims are denied. 6

The decision is anchored on the trial court's findings and conclusions that (a) petitioner and private respondent were lovers, (b)
private respondent is not a woman of loose morals or questionable virtue who readily submits to sexual advances, (c) petitioner,
through machinations, deceit and false pretenses, promised to marry private respondent, d) because of his persuasive promise to
marry her, she allowed herself to be deflowered by him, (e) by reason of that deceitful promise, private respondent and her parents
— in accordance with Filipino customs and traditions — made some preparations for the wedding that was to be held at the end
of October 1987 by looking for pigs and chickens, inviting friends and relatives and contracting sponsors, (f) petitioner did not fulfill
his promise to marry her and (g) such acts of the petitioner, who is a foreigner and who has abused Philippine hospitality, have
offended our sense of morality, good customs, culture and traditions. The trial court gave full credit to the private respondent's
testimony because, inter alia, she would not have had the temerity and courage to come to court and expose her honor and
reputation to public scrutiny and ridicule if her claim was false. 7

The above findings and conclusions were culled from the detailed summary of the evidence for the private respondent in the
foregoing decision, digested by the respondent Court as follows:

According to plaintiff, who claimed that she was a virgin at the time and that she never had a boyfriend before, defendant started
courting her just a few days after they first met. He later proposed marriage to her several times and she accepted his love as well
as his proposal of marriage on August 20, 1987, on which same day he went with her to her hometown of Bañaga, Bugallon,
Pangasinan, as he wanted to meet her parents and inform them of their relationship and their intention to get married. The
photographs Exhs. "A" to "E" (and their submarkings) of defendant with members of plaintiff's family or with plaintiff, were taken
that day. Also on that occasion, defendant told plaintiffs parents and brothers and sisters that he intended to marry her during the
semestral break in October, 1987, and because plaintiff's parents thought he was good and trusted him, they agreed to his proposal
for him to marry their daughter, and they likewise allowed him to stay in their house and sleep with plaintiff during the few days that
they were in Bugallon. When plaintiff and defendant later returned to Dagupan City, they continued to live together in defendant's
apartment. However, in the early days of October, 1987, defendant would tie plaintiff's hands and feet while he went to school, and
he even gave her medicine at 4 o'clock in the morning that made her sleep the whole day and night until the following day. As a
result of this live-in relationship, plaintiff became pregnant, but defendant gave her some medicine to abort the fetus. Still plaintiff
continued to live with defendant and kept reminding him of his promise to marry her until he told her that he could not do so because
he was already married to a girl in Bacolod City. That was the time plaintiff left defendant, went home to her parents, and thereafter
consulted a lawyer who accompanied her to the barangay captain in Dagupan City. Plaintiff, her lawyer, her godmother, and a
barangay tanod sent by the barangay captain went to talk to defendant to still convince him to marry plaintiff, but defendant insisted
that he could not do so because he was already married to a girl in Bacolod City, although the truth, as stipulated by the parties at
the pre-trial, is that defendant is still single.
Plaintiff's father, a tricycle driver, also claimed that after defendant had informed them of his desire to marry Marilou, he already
looked for sponsors for the wedding, started preparing for the reception by looking for pigs and chickens, and even already invited
many relatives and friends to the forthcoming wedding. 8

Petitioner appealed the trial court's decision to the respondent Court of Appeals which docketed the case as CA-G.R. CV No.
24256. In his Brief, 9he contended that the trial court erred (a) in not dismissing the case for lack of factual and legal basis and (b)
in ordering him to pay moral damages, attorney's fees, litigation expenses and costs.

On 18 February 1991, respondent Court promulgated the challenged decision 10affirming in toto the trial court's ruling of 16
October 1989. In sustaining the trial court's findings of fact, respondent Court made the following analysis:

First of all, plaintiff, then only 21 years old when she met defendant who was already 29 years old at the time, does not appear to
be a girl of loose morals. It is uncontradicted that she was a virgin prior to her unfortunate experience with defendant and never
had boyfriend. She is, as described by the lower court, a barrio lass "not used and accustomed to trend of modern urban life", and
certainly would (sic) not have allowed

"herself to be deflowered by the defendant if there was no persuasive promise made by the defendant to marry her." In fact, we
agree with the lower court that plaintiff and defendant must have been sweethearts or so the plaintiff must have thought because
of the deception of defendant, for otherwise, she would not have allowed herself to be photographed with defendant in public in so
(sic) loving and tender poses as those depicted in the pictures Exhs. "D" and "E". We cannot believe, therefore, defendant's
pretense that plaintiff was a nobody to him except a waitress at the restaurant where he usually ate. Defendant in fact admitted
that he went to plaintiff's hometown of Bañaga, Bugallon, Pangasinan, at least thrice; at (sic) the town fiesta on February 27, 1987
(p. 54, tsn May 18, 1988), at (sic) a beach party together with the manager and employees of the Mabuhay Luncheonette on March
3, 1987 (p. 50, tsn id.), and on April 1, 1987 when he allegedly talked to plaintiff's mother who told him to marry her daughter (pp.
55-56, tsn id.). Would defendant have left Dagupan City where he was involved in the serious study of medicine to go to plaintiff's
hometown in Bañaga, Bugallon, unless there was (sic) some kind of special relationship between them? And this special
relationship must indeed have led to defendant's insincere proposal of marriage to plaintiff, communicated not only to her but also
to her parents, and (sic) Marites Rabino, the owner of the restaurant where plaintiff was working and where defendant first proposed
marriage to her, also knew of this love affair and defendant's proposal of marriage to plaintiff, which she declared was the reason
why plaintiff resigned from her job at the restaurant after she had accepted defendant's proposal (pp. 6-7, tsn March 7, 1988).

Upon the other hand, appellant does not appear to be a man of good moral character and must think so low and have so little
respect and regard for Filipino women that he openly admitted that when he studied in Bacolod City for several years where he
finished his B.S. Biology before he came to Dagupan City to study medicine, he had a common-law wife in Bacolod City. In other
words, he also lived with another woman in Bacolod City but did not marry that woman, just like what he did to plaintiff. It is not
surprising, then, that he felt so little compunction or remorse in pretending to love and promising to marry plaintiff, a young, innocent,
trustful country girl, in order to satisfy his lust on her. 11
and then concluded:

In sum, we are strongly convinced and so hold that it was defendant-appellant's fraudulent and deceptive protestations of love for
and promise to marry plaintiff that made her surrender her virtue and womanhood to him and to live with him on the honest and
sincere belief that he would keep said promise, and it was likewise these (sic) fraud and deception on appellant's part that made
plaintiff's parents agree to their daughter's living-in with him preparatory to their supposed marriage. And as these acts of appellant
are palpably and undoubtedly against morals, good customs, and public policy, and are even gravely and deeply derogatory and
insulting to our women, coming as they do from a foreigner who has been enjoying the hospitality of our people and taking
advantage of the opportunity to study in one of our institutions of learning, defendant-appellant should indeed be made, under Art.
21 of the Civil Code of the Philippines, to compensate for the moral damages and injury that he had caused plaintiff, as the lower
court ordered him to do in its decision in this case. 12

Unfazed by his second defeat, petitioner filed the instant petition on 26 March 1991; he raises therein the single issue of whether
or not Article 21 of the Civil Code applies to the case at bar. 13

It is petitioner's thesis that said Article 21 is not applicable because he had not committed any moral wrong or injury or violated
any good custom or public policy; he has not professed love or proposed marriage to the private respondent; and he has never
maltreated her. He criticizes the trial court for liberally invoking Filipino customs, traditions and culture, and ignoring the fact that
since he is a foreigner, he is not conversant with such Filipino customs, traditions and culture. As an Iranian Moslem, he is not
familiar with Catholic and Christian ways. He stresses that even if he had made a promise to marry, the subsequent failure to fulfill
the same is excusable or tolerable because of his Moslem upbringing; he then alludes to the Muslim Code which purportedly allows
a Muslim to take four (4) wives and concludes that on the basis thereof, the trial court erred in ruling that he does not posses good
moral character. Moreover, his controversial "common law life" is now his legal wife as their marriage had been solemnized in civil
ceremonies in the Iranian Embassy. As to his unlawful cohabitation with the private respondent, petitioner claims that even if
responsibility could be pinned on him for the live-in relationship, the private respondent should also be faulted for consenting to an
illicit arrangement. Finally, petitioner asseverates that even if it was to be assumed arguendo that he had professed his love to the
private respondent and had also promised to marry her, such acts would not be actionable in view of the special circumstances of
the case. The mere breach of promise is not actionable. 14

On 26 August 1991, after the private respondent had filed her Comment to the petition and the petitioner had filed his Reply thereto,
this Court gave due course to the petition and required the parties to submit their respective Memoranda, which they subsequently
complied with.

As may be gleaned from the foregoing summation of the petitioner's arguments in support of his thesis, it is clear that questions of
fact, which boil down to the issue of the credibility of witnesses, are also raised. It is the rule in this jurisdiction that appellate courts
will not disturb the trial court's findings as to the credibility of witnesses, the latter court having heard the witnesses and having had
the opportunity to observe closely their deportment and manner of testifying, unless the trial court had plainly overlooked facts of
substance or value which, if considered, might affect the result of the case. 15

Petitioner has miserably failed to convince Us that both the appellate and trial courts had overlooked any fact of substance or
values which could alter the result of the case.

Equally settled is the rule that only questions of law may be raised in a petition for review on certiorari under Rule 45 of the Rules
of Court. It is not the function of this Court to analyze or weigh all over again the evidence introduced by the parties before the
lower court. There are, however, recognized exceptions to this rule. Thus, in Medina vs. Asistio, Jr., 16this Court took the time,
again, to enumerate these exceptions:

xxx xxx xxx

(1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures (Joaquin v. Navarro, 93 Phil. 257
[1953]); (2) When the inference made is manifestly mistaken, absurb or impossible (Luna v. Linatok, 74 Phil. 15 [1942]); (3) Where
there is a grave abuse of discretion (Buyco v. People, 95 Phil. 453 [1955]); (4) When the judgment is based on a misapprehension
of facts (Cruz v. Sosing,

L-4875, Nov. 27, 1953); (5) When the findings of fact are conflicting (Casica v. Villaseca, L-9590 Ap. 30, 1957; unrep.) (6) When
the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both
appellate and appellee (Evangelista v. Alto Surety and Insurance Co., 103 Phil. 401 [1958]);

(7) The findings of the Court of Appeals are contrary to those of the trial court (Garcia v. Court of Appeals, 33 SCRA 622 [1970];
Sacay v. Sandiganbayan, 142 SCRA 593 [1986]); (8) When the findings of fact are conclusions without citation of specific evidence
on which they are based (Ibid.,); (9) When the facts set forth in the petition as well as in the petitioners main and reply briefs are
not disputed by the respondents (Ibid.,); and (10) The finding of fact of the Court of Appeals is premised on the supposed absence
of evidence and is contradicted by the evidence on record (Salazar v. Gutierrez, 33 SCRA 242 [1970]).

Petitioner has not endeavored to joint out to Us the existence of any of the above quoted exceptions in this case. Consequently,
the factual findings of the trial and appellate courts must be respected.

And now to the legal issue.

The existing rule is that a breach of promise to marry per se is not an actionable wrong. 17Congress deliberately eliminated from
the draft of the New Civil Code the provisions that would have made it so. The reason therefor is set forth in the report of the
Senate Committees on the Proposed Civil Code, from which We quote:

The elimination of this chapter is proposed. That breach of promise to marry is not actionable has been definitely decided in the
case of De Jesus vs. Syquia. 18 The history of breach of promise suits in the United States and in England has shown that no
other action lends itself more readily to abuse by designing women and unscrupulous men. It is this experience which has led to
the abolition of rights of action in the so-called Heart Balm suits in many of the American states. . . . 19

This notwithstanding, the said Code contains a provision, Article 21, which is designed to expand the concept of torts or quasi-
delict in this jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human
foresight to specifically enumerate and punish in the statute books. 20

As the Code Commission itself stated in its Report:

But the Code Commission had gone farther than the sphere of wrongs defined or determined by positive law. Fully sensible that
there are countless gaps in the statutes, which leave so many victims of moral wrongs helpless, even though they have actually
suffered material and moral injury, the Commission has deemed it necessary, in the interest of justice, to incorporate in the
proposed Civil Code the following rule:

Art. 23. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public
policy shall compensate the latter for the damage.

An example will illustrate the purview of the foregoing norm: "A" seduces the nineteen-year old daughter of "X". A promise of
marriage either has not been made, or can not be proved. The girl becomes pregnant. Under the present laws, there is no crime,
as the girl is above nineteen years of age. Neither can any civil action for breach of promise of marriage be filed. Therefore, though
the grievous moral wrong has been committed, and though the girl and family have suffered incalculable moral damage, she and
her parents cannot bring action for damages. But under the proposed article, she and her parents would have such a right of action.

Thus at one stroke, the legislator, if the forgoing rule is approved, would vouchsafe adequate legal remedy for that untold number
of moral wrongs which it is impossible for human foresight to provide for specifically in the statutes. 21

Article 2176 of the Civil Code, which defines a quasi-delict thus:

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.

is limited to negligent acts or omissions and excludes the notion of willfulness or intent. Quasi-delict, known in Spanish legal
treatises as culpa aquiliana, is a civil law concept while torts is an Anglo-American or common law concept. Torts is much broader
than culpa aquiliana because it includes not only negligence, but international criminal acts as well such as assault and battery,
false imprisonment and deceit. In the general scheme of the Philippine legal system envisioned by the Commission responsible
for drafting the New Civil Code, intentional and malicious acts, with certain exceptions, are to be governed by the Revised Penal
Code while negligent acts or omissions are to be covered by Article 2176 of the Civil Code. 22In between these opposite spectrums
are injurious acts which, in the absence of Article 21, would have been beyond redress. Thus, Article 21 fills that vacuum. It is even
postulated that together with Articles 19 and 20 of the Civil Code, Article 21 has greatly broadened the scope of the law on civil
wrongs; it has become much more supple and adaptable than the Anglo-American law on torts. 23

In the light of the above laudable purpose of Article 21, We are of the opinion, and so hold, that where a man's promise to marry
is in fact the proximate cause of the acceptance of his love by a woman and his representation to fulfill that promise thereafter
becomes the proximate cause of the giving of herself unto him in a sexual congress, proof that he had, in reality, no intention of
marrying her and that the promise was only a subtle scheme or deceptive device to entice or inveigle her to accept him and to
obtain her consent to the sexual act, could justify the award of damages pursuant to Article 21 not because of such promise to
marry but because of the fraud and deceit behind it and the willful injury to her honor and reputation which followed thereafter. It is
essential, however, that such injury should have been committed in a manner contrary to morals, good customs or public policy.

In the instant case, respondent Court found that it was the petitioner's "fraudulent and deceptive protestations of love for and
promise to marry plaintiff that made her surrender her virtue and womanhood to him and to live with him on the honest and sincere
belief that he would keep said promise, and it was likewise these fraud and deception on appellant's part that made plaintiff's
parents agree to their daughter's living-in with him preparatory to their supposed marriage." 24In short, the private respondent
surrendered her virginity, the cherished possession of every single Filipina, not because of lust but because of moral seduction —
the kind illustrated by the Code Commission in its example earlier adverted to. The petitioner could not be held liable for criminal
seduction punished under either Article 337 or Article 338 of the Revised Penal Code because the private respondent was above
eighteen (18) years of age at the time of the seduction.

Prior decisions of this Court clearly suggest that Article 21 may be applied in a breach of promise to marry where the woman is a
victim of moral seduction. Thus, in Hermosisima vs. Court of Appeals, 25 this Court denied recovery of damages to the woman
because:

. . . we find ourselves unable to say that petitioner is morally guilty of seduction, not only because he is approximately ten (10)
years younger than the complainant — who was around thirty-six (36) years of age, and as highly enlightened as a former high
school teacher and a life insurance agent are supposed to be — when she became intimate with petitioner, then a mere apprentice
pilot, but, also, because the court of first instance found that, complainant "surrendered herself" to petitioner because,
"overwhelmed by her love" for him, she "wanted to bind" him by having a fruit of their engagement even before they had the benefit
of clergy.

In Tanjanco vs. Court of Appeals, 26while this Court likewise hinted at possible recovery if there had been moral seduction,
recovery was eventually denied because We were not convinced that such seduction existed. The following enlightening
disquisition and conclusion were made in the said case:
The Court of Appeals seem to have overlooked that the example set forth in the Code Commission's memorandum refers to a tort
upon a minor who had been seduced. The essential feature is seduction, that in law is more than mere sexual intercourse, or a
breach of a promise of marriage; it connotes essentially the idea of deceit, enticement, superior power or abuse of confidence on
the part of the seducer to which the woman has yielded (U.S. vs. Buenaventura, 27 Phil. 121; U.S. vs. Arlante, 9 Phil. 595).

It has been ruled in the Buenaventura case (supra) that —

To constitute seduction there must in all cases be some sufficient promise or inducement and the woman must yield because of
the promise or other inducement. If she consents merely from carnal lust and the intercourse is from mutual desire, there is no
seduction (43 Cent. Dig. tit. Seduction, par. 56) She must be induced to depart from the path of virtue by the use of some species
of arts, persuasions and wiles, which are calculated to have and do have that effect, and which result in her person to ultimately
submitting her person to the sexual embraces of her seducer (27 Phil. 123).

And in American Jurisprudence we find:

On the other hand, in an action by the woman, the enticement, persuasion or deception is the essence of the injury; and a mere
proof of intercourse is insufficient to warrant a recovery.

Accordingly it is not seduction where the willingness arises out of sexual desire of curiosity of the female, and the defendant merely
affords her the needed opportunity for the commission of the act. It has been emphasized that to allow a recovery in all such cases
would tend to the demoralization of the female sex, and would be a reward for unchastity by which a class of adventuresses would
be swift to profit. (47 Am. Jur. 662)

xxx xxx xxx

Over and above the partisan allegations, the fact stand out that for one whole year, from 1958 to 1959, the plaintiff-appellee, a
woman of adult age, maintain intimate sexual relations with appellant, with repeated acts of intercourse. Such conduct is
incompatible with the idea of seduction. Plainly there is here voluntariness and mutual passion; for had the appellant been deceived,
had she surrendered exclusively because of the deceit, artful persuasions and wiles of the defendant, she would not have again
yielded to his embraces, much less for one year, without exacting early fulfillment of the alleged promises of marriage, and would
have cut short all sexual relations upon finding that defendant did not intend to fulfill his defendant did not intend to fulfill his
promise. Hence, we conclude that no case is made under article 21 of the Civil Code, and no other cause of action being alleged,
no error was committed by the Court of First Instance in dismissing the complaint. 27

In his annotations on the Civil Code, 28Associate Justice Edgardo L. Paras, who recently retired from this Court, opined that in a
breach of promise to marry where there had been carnal knowledge, moral damages may be recovered:

. . . if there be criminal or moral seduction, but not if the intercourse was due to mutual lust. (Hermosisima vs. Court of Appeals,
L-14628, Sept. 30, 1960; Estopa vs. Piansay, Jr., L-14733, Sept. 30, 1960; Batarra vs. Marcos, 7 Phil. 56 (sic); Beatriz Galang vs.
Court of Appeals, et al., L-17248, Jan. 29, 1962). (In other words, if the CAUSE be the promise to marry, and the EFFECT be the
carnal knowledge, there is a chance that there was criminal or moral seduction, hence recovery of moral damages will prosper. If
it be the other way around, there can be no recovery of moral damages, because here mutual lust has intervened). . . .

together with "ACTUAL damages, should there be any, such as the expenses for the wedding presentations (See Domalagon v.
Bolifer, 33 Phil. 471).

Senator Arturo M. Tolentino 29is also of the same persuasion:

It is submitted that the rule in Batarra vs. Marcos, 30 still subsists, notwithstanding the incorporation of the present article 31 in the
Code. The example given by the Code Commission is correct, if there was seduction, not necessarily in the legal sense, but in the
vulgar sense of deception. But when the sexual act is accomplished without any deceit or qualifying circumstance of abuse of
authority or influence, but the woman, already of age, has knowingly given herself to a man, it cannot be said that there is an injury
which can be the basis for indemnity.

But so long as there is fraud, which is characterized by willfulness (sic), the action lies. The court, however, must weigh the degree
of fraud, if it is sufficient to deceive the woman under the circumstances, because an act which would deceive a girl sixteen years
of age may not constitute deceit as to an experienced woman thirty years of age. But so long as there is a wrongful act and a
resulting injury, there should be civil liability, even if the act is not punishable under the criminal law and there should have been
an acquittal or dismissal of the criminal case for that reason.

We are unable to agree with the petitioner's alternative proposition to the effect that granting, for argument's sake, that he did
promise to marry the private respondent, the latter is nevertheless also at fault. According to him, both parties are in pari delicto;
hence, pursuant to Article 1412(1) of the Civil Code and the doctrine laid down in Batarra vs. Marcos, 32the private respondent
cannot recover damages from the petitioner. The latter even goes as far as stating that if the private respondent had "sustained
any injury or damage in their relationship, it is primarily because of her own doing, 33for:

. . . She is also interested in the petitioner as the latter will become a doctor sooner or later. Take notice that she is a plain high
school graduate and a mere employee . . . (Annex "C") or a waitress (TSN, p. 51, January 25, 1988) in a luncheonette and without
doubt, is in need of a man who can give her economic security. Her family is in dire need of financial assistance. (TSN, pp. 51-53,
May 18, 1988). And this predicament prompted her to accept a proposition that may have been offered by the petitioner. 34

These statements reveal the true character and motive of the petitioner. It is clear that he harbors a condescending, if not sarcastic,
regard for the private respondent on account of the latter's ignoble birth, inferior educational background, poverty and, as perceived
by him, dishonorable employment. Obviously then, from the very beginning, he was not at all moved by good faith and an honest
motive. Marrying with a woman so circumstances could not have even remotely occurred to him. Thus, his profession of love and
promise to marry were empty words directly intended to fool, dupe, entice, beguile and deceive the poor woman into believing that
indeed, he loved her and would want her to be his life's partner. His was nothing but pure lust which he wanted satisfied by a
Filipina who honestly believed that by accepting his proffer of love and proposal of marriage, she would be able to enjoy a life of
ease and security. Petitioner clearly violated the Filipino's concept of morality and brazenly defied the traditional respect Filipinos
have for their women. It can even be said that the petitioner committed such deplorable acts in blatant disregard of Article 19 of
the Civil Code which directs every person to act with justice, give everyone his due and observe honesty and good faith in the
exercise of his rights and in the performance of his obligations.

No foreigner must be allowed to make a mockery of our laws, customs and traditions.

The pari delicto rule does not apply in this case for while indeed, the private respondent may not have been impelled by the purest
of intentions, she eventually submitted to the petitioner in sexual congress not out of lust, but because of moral seduction. In fact,
it is apparent that she had qualms of conscience about the entire episode for as soon as she found out that the petitioner was not
going to marry her after all, she left him. She is not, therefore, in pari delicto with the petitioner. Pari delicto means "in equal fault;
in a similar offense or crime; equal in guilt or in legal fault." 35At most, it could be conceded that she is merely in delicto.

Equity often interferes for the relief of the less guilty of the parties, where his transgression has been brought about by the imposition
of undue influence of the party on whom the burden of the original wrong principally rests, or where his consent to the transaction
was itself procured by

fraud. 36

In Mangayao vs. Lasud, 37We declared:

Appellants likewise stress that both parties being at fault, there should be no action by one against the other (Art. 1412, New Civil
Code). This rule, however, has been interpreted as applicable only where the fault on both sides is, more or less, equivalent. It
does not apply where one party is literate or intelligent and the other one is not. (c.f. Bough vs. Cantiveros, 40 Phil. 209).

We should stress, however, that while We find for the private respondent, let it not be said that this Court condones the deplorable
behavior of her parents in letting her and the petitioner stay together in the same room in their house after giving approval to their
marriage. It is the solemn duty of parents to protect the honor of their daughters and infuse upon them the higher values of morality
and dignity.

WHEREFORE, finding no reversible error in the challenged decision, the instant petition is hereby DENIED, with costs against the
petitioner.

SO ORDERED.
 Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-29041 March 24, 1981

BACOLOD-MURCIA MILLING CO., INC., plaintiff-appellant,

vs.

FIRST FARMERS MILLING CO., INC., ETC.; RAMON NOLAN in his capacity as Administrator of the Sugar Quota
Administration, ET AL., defendants; PHILIPPINE NATIONAL BANK and NATIONAL INVESTMENT AND DEVELOPMENT
CORPORATION, defendants-appellees.
MELENCIO-HERRERA, J.:

This is an appeal taken by Bacolod-Murcia Milling Co., Inc. from the Order dated November 28, 1967 issued by the Court of First
Instance of Rizal, Branch VI (Pasig), in Civil Case No. 9185, as well as the Order dated March 5, 1968 denying the Motion for its
reconsideration. The Order had dismissed, after a preliminary hearing, on the ground of lack of cause of action, the Amended and
Supplemental Complaint against the defendants Philippine National Bank (PNB) and National Investment and Development
Corporation (NIDC).

Plaintiff-appellant had commenced, on March 18, 1966, an action for Injunction and Prohibition with Damages against defendants
First Farmers Milling Co., Inc. (FFMC), various named planters including those similarly situated, and Ramon Nolan in his capacity
as Administrator of the Sugar Quota Administration. It was alleged,

9. That in the year 1964 the defendant First Farmers Milling Co., Inc., established and operated a sugar central known as the First
Farmers Sugar Central and for the crop years 1964-65 and 1965-66, the defendants transferred their quota "A" allotments to their
co-defendant First Farmers Milling Co., Inc. and are actually milling their sugar with the said First Farmers Milling Co., Inc., which
illegal transfer has been made over the vigorous protest and objections of the plaintiff, but with the unwarranted, unjustified and
likewise illegal approval of their co-defendant the Sugar Quota Administration;" 1

After the defendants FFMC, the adhering planters, and the Sugar Quota Administrator had filed their respective Answers, plaintiff-
appellant filed, on May 2, 1967, a Motion to admit Amended and Supplemental Complaint. As amended, PNB and NIDC were
included as new defendants in view of the FFMC allegation in its Answer that the non-inclusion of PNB and NIDC as party
defendants, "who became creditors of defendant FFMC central prior to the institution of the instant case, and who therefore are
necessary parties, is fatal to the complaint. " It was alleged this time,

20. That defendants NIDC and PNB have extended loans to defendant sugar mill in the amount of P12,210,000.00 on June 18,
1965, and P4,000,000.00 on Dec. 14, 1966, respectively, to assist in the illegal creation and operation of said mill, hence, a joint
tortfeasor in the trespass of plaintiff's rights, aggravated by the fact that defendant mill has only a paid up capital stock of
P500,000.00, hence, said loans are far beyond the limits fixed by law; 2

It was then prayed that defendants be ordered

... jointly and severally to pay plaintiff actual and exemplary damages of not less than Fl million pesos and attorney's fees in the
amount of 101-C of said damages, plus legal interest from the filing of the original complaint, plus costs.

The defendants. except the Sugar Quota Administrator, filed their respective Answer to the Amended and Supplemental Complaint.
For their part, PNB and NIDC followed this with a Motion to Set for Preliminary Bearing their special and affirmative defenses,
which were also grounds for dismissal. Opposition, reply memoranda, rejoinder, and supplementary reply memoranda on the
Motion were submitted by the contending parties.
In their Answer, the PNB and NIDC had contended:

xxx xxx xxx

5. That both the defendants PNB and NIDC have no participation whatsoever either directly or indirectly on the alleged illegal
(transaction) transfers of the defendant planters from the plaintiff to the defendant mill, and therefore, the defendants PNB and
NIDC could not be held liable for any damage that the plaintiffs alleged to have suffered from the said particular act complained of;

6. That the granting of loans by the defendants PNB and NIDC in favor of the defendant mill to finance the construction of a sugar
central did not violate any rights of the plaintiff in view of the fact that the said loans were extended in the ordinary and usual course
of business, as specifically authorized-under the respective Charter of the defendants PNB and NIDC, hence, the latter defendants
did not commit any tortious action against the plaintiffs and, consequently, the plaintiffs have no cause of action against the
defendants PNB and NIDC. 3

As stated at the outset, the trial Court dismissed the Amended and Supplemental Complaint against the PNB and the NIDC after
a preliminary hearing on the ground of lack of cause of action.

The only issue then is whether or not the allegations of the Amended and Supplemental Complaint constituted a sufficient cause
of action against the PNB and NIDC.

A negative finding is called for.

It is basic that the Complaint must contain a concise statement of the ultimate facts constituting the plaintiff's cause of action.
"Ultimate facts" are the important and substantial facts which either directly form and basis of the plaintiff's primary right and duty,
or directly make up the wrongful acts or omissions by the defendant. 4

When the ground for dismissal is that the Complaint states no cause of action, the rule is that its sufficiency can only be determined
by considering the facts alleged in the Complaint and no other. 5 The court may not consider other matters outside of the Complaint.
6 Defenses averred by the defendant are not to be taken into consideration in ruling on the motion. 7 The allegations in the
Complaint must be accepted as true and it is not permissible to go beyond and outside of them for date or facts. 8 And the test of
sufficiency of the facts alleged is whether or not the Court could render a valid judgment as prayed for accepting as true the
exclusive facts set forth in the Complaint. 9

The subject Amended and Supplemental Complaint fails to meet the test. It should be noted that it charges PNB and NIDC with
having assisted in the illegal creation and operation of defendant sugar mill. Granting, for the sake of argument, that, indeed,
assistance in the "illegal" act was rendered, the same, however, is not supported by well-pleaded averments of facts. Nowhere is
it alleged that defendants-appellees had notice, information or knowledge of any flaw, much less any illegality, in their co-
defendants' actuations, assuming that there was such a flaw or illegality. This absence is fatal and buoy-up instead the PNB-
NIDC's position of lack of cause of action.

Although it is averred that the defendants' acts were done in bad faith, 10 the Complaint does not contain any averment of facts
showing that the acts were done in the manner alleged. Such a bare statement neither establishes any right or cause of action on
the part of the plaintiff-appellant. It is a mere conclusion of law not sustained by declarations of facts, much less admitted by
defendants-appellees. It does not, therefore, aid in any wise the complaint in setting forth a cause of action. 11 Defendants-
appellees are not fairly apprised of the act or acts complained of.

Besides, bad faith is never presumed (Civil Code, Art. 527). And, it has been held that "to support a judgment for damages, facts
which justify the inference of a lack or absence of good faith must be alleged and proven." 12

While it is a settled rule that a defective complaint may be cured by the introduction of sufficient evidence so as to constitute the
cause of action which the plaintiff intended to set forth in the complaint, the same merits the Court's blessings only and unless
there is no objection or opposition from the side of the defendant. It is obvious that the defendants-appellees, in the case at bar,
were vigilant of their right and were on their guard from the very initiation of the complaint against them.

Plaintiff-appellant's allegation "that defendants NIDC and PNB have extended loans to defendant sugar mill ..., to assist in the
illegal creation and operation of said mill, hence, a joint tortfeasor in the trespass of plaintiff's rights. ..." is, therefore, a mere
conclusion not warranted by sufficient facts. What appears from the record is that PNB and NIDC came into the picture in the
ordinary and usual course of its business after the borrowing entity had established itself as capable of being treated as a new
milling district (FFMC is officially designated as Mill District No. 49) because it could already operate and had its array of adhering
planters. "The doing of an act which is in itself perfectly lawful win not render one liable as for a tort, simply because the unintended
effect of such act is to enable or assist another person to do or accomplish a wrong," 13 assuming, of course, that there was such
a wrong.

WHEREFORE, without resolving the issue in the main case regarding the alleged illegal creation and operation of First Farmers
Milling, Co., Inc., there having been no presentation of evidence as yet in the lower Court, the challenged Order dismissing the
Amended and Supplemental Complaint against defendants-appellees as well as the Order denying reconsideration thereof, is
hereby affirmed, and the appeal dismissed. Costs against plaintiff-appellant.

SO ORDERED.
 Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-33171 May 31, 1979

PORFIRIO P. CINCO, petitioner-appellant,

vs.

HON. MATEO CANONOY, Presiding Judge of the Third Branch of the Court of First Instance of Cebu, HON. LORENZO B.
BARRIA City Judge of Mandaue City, Second Branch ROMEO HILOT, VALERIANA PEPITO and CARLOS PEPITO,
respondents-appellees.

Eriberto Seno for appellant.

Jose M. Mesina for appellees.

MELENCIO-HERRERA, J.:

This is a Petition for Review on certiorari of the Decision of the Court of First Instance of Cebu rendered on November 5, 1970.

The background facts to the controversy may be set forth as follows:

Petitioner herein filed, on February 25, 1970, a Complaint in the City Court of Mandaue City, Cebu, Branch II, for the recovery of
damages on account of a vehicular accident involving his automobile and a jeepney driven by Romeo Hilot and operated by
Valeriana Pepito and Carlos Pepito, the last three being the private respondents in this suit. Subsequent thereto, a criminal case
was filed against the driver, Romeo Hilot, arising from the same accident. At the pre-trial in the civil case, counsel for private
respondents moved to suspend the civil action pending the final determination of the criminal suit, invoking Rule 111, Section 3 (b)
of the Rules of Court, which provides:

(b) After a criminal action has been commenced. no civil action arising from the same offense can be prosecuted, and the same
shall be suspended, in whatever stage it may be found, until final judgment in the criminal proceeding has been rendered;

The City Court of Mandaue City in an Order dated August 11, 1970, ordered the suspension of the civil case. Petitioner's Motion
for Reconsideration thereof, having been denied on August 25, 1970, 1 petitioner elevated the matter on certiorari to the Court of
First Instance of Cebu, respondent Judge presiding, on September 11, 1970, alleging that the City Judge had acted with grave
abuse of discretion in suspending the civil action for being contrary to law and jurisprudence. 2

On November 5, 1970, respondent Judge dismissed the Petition for certiorari on the ground that there was no grave abuse of
discretion on the part of the City Court in suspending the civil action inasmuch as damage to property is not one of the instances
when an independent civil action is proper; that petitioner has another plain, speedy, and adequate remedy under the law, which
is to submit his claim for damages in the criminal case; that the resolution of the City Court is interlocutory and, therefore, certiorari
is improper; and that the Petition is defective inasmuch as what petitioner actually desires is a Writ of mandamus (Annex "R").
Petitioner's Motion for Reconsideration was denied by respondent Judge in an Order dated November 14,1970 (Annex "S" and
Annex "U").

Hence, this Petition for Review before this Tribunal, to which we gave due course on February 25, 1971. 3

Petitioner makes these:

ASSIGNMENTS OF ERROR

1. THE TRIAL COURT, RESPONDENT JUDGE MATEO CANONOY, ERRED IN HOLDING THAT THE TRIAL OF THE CIVIL
CASE NO. 189 FILED IN THE CITY COURT OF MANDAUE SHOULD BE SUSPENDED UNTIL AFTER A FINAL JUDGMENT IS
RENDERED IN THE CRIMINAL CASE.

2. THAT THE COURT ERRED IN HOLDING THAT IN ORDER TO AVOID DELAY THE OFFENDED PARTY MAY SUBMIT HIS
CLAIM FOR DAMAGES IN THE CRIMINAL CASE.

3. THAT THE COURT ERRED IN HOLDING THAT THE PETITION FOR certiorari IS NOT PROPER, BECAUSE THE
RESOLUTION IN QUESTION IS INTERLOCUTORY.
4. THAT THE COURT ERRED IN HOLDING THAT THE PETITION IS DEFECTIVE. 4

all of which can be synthesized into one decisive issue: whether or not there can be an independent civil action for damage to
property during the pendency of the criminal action.

From the Complaint filed by petitioner before the City Court of Mandaue City, Cebu, it is evident that the nature and character of
his action was quasi-delictual predicated principally on Articles 2176 and 2180 of the Civil Code, which provide:

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 caned a quasi-delict and is
governed by the provisions of this Chapter. (1902a)

Art. 2180. The obligation imposed by article 2176 is demandable not only for one's own acts or omissions but also for those of
persons for whom one is responsible.

xxx xxx xxx

Employers shall be liable for the damages cause 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. (1903a)

Thus, plaintiff made the essential averments that it was the fault or negligence of the driver, Romeo Hilot, in the operation of the
jeepney owned by the Pepitos which caused the collision between his automobile and said jeepney; that damages were sustained
by petitioner because of the collision; that there was a direct causal connection between the damages he suffered and the fault
and negligence of private respondents.

Similarly, in the Answer, private respondents contended, among others, that defendant, Valeriana Pepito, observed due diligence
in the selection and supervision of her employees, particularly of her co-defendant Romeo Hilot, a defense peculiar to actions
based on quasi-delict. 5

Liability being predicated on quasi-delict the civil case may proceed as a separate and independent civil action, as specifically
provided for in Article 2177 of the Civil Code.
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. (n)

The crucial distinction between criminal negligence and quasi-delict, which is readily discernible from the foregoing codal provision,
has been expounded in Barredo vs.Garcia, et al., 73 Phil. 607, 620-621, 6 thus:

Firstly, the Revised Penal Code in article 365 punishes not only reckless but also simple imprudence. if we were to hold that articles
1902 to 1910 of the Civil Code refer only to fault or negligence not punished by law, according to the literal import of article 1093
of the Civil Code, the legal institution of culpa aquiliana would have very little scope and application in actual life. Death or injury
to persons and damage to property through any degree of negligence — even the slightest would have to be indemnified only
through the principle of civil hability arising from crime. In such a state of affairs, what sphere would remain for quasidelito or culpa
aquiliana We are loath to impute to the lawmaker any intention to bring about a situation so absurd and anomalous. Nor are we, in
the interpretation of the laws, disposed to uphold the letter that killeth rather than the spirit that giveth life. We will not use the literal
meaning of the law to smother and render almost lifeless a principle of such ancient origin and such full-grown development as
culpa aquiliana or quasi-delito, which is conserved and made enduring in articles 1902 to 11910 of the Spanish Civil Code.

Secondly, to find the accused guilty in a criminal case, proof of guilt beyond reasonable doubt is required, while in a civil case,
preponderance of evidence is sufficient to make the defendant pay in damages. There are numerous cases of criminal negligence
which cannot be shown beyond reasonable doubt, but can be proved by a preponderance of evidence. In such cases, the defendant
can and should be made responsible in a civil action under articles 1902 to 1910 of the Civil Code, otherwise, there would be many
instances of unvindicated civil wrongs. Ubi jus ibi remedium.

Thirdly, to hold that there is only one way to make defendants liability effective, and that is, to sue the driver and exhaust his (the
latter's) property first, would be tantamount to compelling the plaintiff to follow a devious and cumbersome method of obtaining a
reliel True, there is such a remedy under our laws, but there is also a more expeditious way, which is based on the primary and
direct responsibility of the defendant under article 1903 of the Civil Code. Our view of the law is more likely to facilitate remedy for
civil wrongs because the procedure indicated by the defendant is wasteful and productive of delay, it being a matter of common
knowledge that professional drivers of taxis and similar public conveyances usually do not have sufficient means with which to pay
damages. Why, then, should the plaintiff be required in all cases to go through this round-about, unnecessary, and probably useless
procedure? In construing the laws, courts have endeavored to shorten and facilitate the pathways of right and justice.

At this juncture, it should be said that the primary and direct responsibility of employers and their presumed negligence are
principles calculated to protect society. Workmen and employees should be carefully chosen and supervised in order to avoid
injury to the public. It is the masters or employers who principally reap the profits resulting from the services of these servants and
employees. It is but right that they should guarantee the latter's careful conduct for the personnel and patrimonial safety of others.
As Theilhard has said, "they should reproach themselves, at least, some for their weakness, others for their poor selection and all
for their negligence." And according to Manresa, "It is much more equitable and just that such responsibility should fail upon the
principal or director who could have chosen a careful and prudent employee, and not upon the such employee because of his
confidence in the principal or director." (Vol. 12, p. 622, 2nd Ed.) Many jurists also base this primary responsibility of the employer
on the principle of representation of the principal by the agent. Thus, Oyuelos says in the work already cited (Vol. 7, p. 747) that
before third persons the employer and employee vienen a ser como una sola personalidad, por refundicion de la del dependiente
en la de quien la emplea y utihza (become as one personality by the merging of the person of the employee in that of him who
employs and utilizes him.) All these observations acquire a peculiar force and significance when it comes to motor accidents, and
there is need of stressing and accentuating the responsibility of owners of motor vehicles.

Fourthly, because of the broad sweep of the provisions of both the Penal Code and the Civil Code on this subject, which has given
rise to overlapping or concurrence of spheres already discussed, and for lack of understanding of the character and efficacy of the
action for culpaaquiliana there has grown up a common practice to seek damages only by virtue of the Civil responsibility arising
from crime, forgetting that there is another remedy, which is by invoking articles 1902-1910 of the Civil Code. Although this habitual
method is allowed by our laws, it has nevertheless rendered practically useless and nugatory the more expeditious and effective
remedy based on culpa aquiliana or culpa extra-contractual. In the present case, we are asked to help perpetuate this usual course.
But we believe it is high time we pointed out to the harm done by such practice and to restore the principle of responsibility for fault
or negligence under articles 1902 et seq. of the Civil Code to its full rigor. It is high time we cause the stream of quasi-delict or
culpa aquiliana to flow on its own natural channel, so that its waters may no longer be diverted into that of a crime under the Penal
Code. This will, it is believed, make for the bet ter safeguarding of private rights because it re-establishes an ancient and additional
remedy, and for the further reason that an independent civil action, not depending on the issues, stations and results of a criminal
prosecution, and entirely directed by the party wronged or his counsel is more likely to secure adequate and efficacious redress.
(Garcia vs. Florida 52 SCRA 420, 424-425, Aug. 31, 1973). (Emphasis supplied)

The separate and independent civil action for a quasi-delict is also clearly recognized in section 2, Rule 111 of the Rules of Court,
reading:

Sec. 2. Independent civil action. — In the cases provided for in Articles 31, 32, 33, 34 and 2177 of the Civil Code of the Philippines,
Are independent civil action entirely separate and distinct from the c action, may be brought by the injured party during the
pendency of the criminal case, provided the right is reserved as required in the preceding section. Such civil action shag proceed
independently of the criminal prosecution, and shall require only a preponderance of evidence.

Significant to note is the fact that the foregoing section categorically lists cases provided for in Article 2177 of the Civil Code, supra,
as allowing of an "independent civil action."

Tested by the hereinabove-quoted legal tenets, it has to be held that the City Court, in surrounding the civil action, erred in placing
reliance on section 3 (b) of Rule 111 of the Rules of Court, supra which refers to "other civil actions arising from cases not included
in the section just cited" (i.e., Section 2, Rule 111 above quoted), in which case 6 once the criminal action has being commenced,
no civil action arising from the same offense can be prosecuted and the same shall be suspended in whatever stage it may be
found, until final judgment in the criminal proceeding has been rendered." Stated otherwise, the civil action referred to in Secs. 3(a)
and 3(b) of Rule 111 of the Rules of Court, which should be suspended after the criminal action has been instituted is that arising
from the criminal offense not the civil action based on quasi-delict

Article 31 of the Civil Code then clearly assumes relevance when it provides:

Art. 31. When the civil action is based on an obligation not arising from the act or omission complained of as a felony, such civil
action may proceed independently of the criminal proceedings and regardless of the result of the latter.

For obviously, the jural concept of a quasi-delict is that of an independent source of obligation "not arising from the act or omission
complained of as a felony." Article 1157 of the Civil Code bolsters this conclusion when it specifically recognizes that:

Art. 1157. Obligations arise from:

(1) Law;

(2) Contracts;

(3) Quasi-contracts;

(4) Acts or omissions punished by law; and

(5) Quasi-delicts. (1089a)

(Emphasis supplied)

It bears emphasizing that petitioner's cause of action is based on quasi-delict. The concept of quasidelica as enunciated in Article
2176 of the Civil Code (supra), is so broad that it includes not only injuries to persons but also damage to property. 7 It makes no
distinction between "damage to persons" on the one hand and "damage to property" on the other. Indeed, the word "damage" is
used in two concepts: the "harm" done and "reparation" for the harm done. And with respect to harm it is plain that it includes both
injuries to person and property since "harm" is not limited to personal but also to property injuries. In fact, examples of quasi-delict
in the law itself include damage to property. An instance is Article 2191(2) of the Civil Code which holds proprietors responsible for
damages caused by excessive smoke which may be harmful to persons or property."

In the light of the foregoing disquisition, we are constrained to hold that respondent Judge gravely abused his discretion in upholding
the Decision of the City Court of Mandaue City, Cebu, suspending the civil action based on a quasi-delict until after the criminal
case is finally terminated. Having arrived at this conclusion, a discussion of the other errors assigned becomes unnecessary.
WHEREFORE, granting the Writ of certiorari prayed for, the Decision of the Court of First Instance of Cebu sought to be reviewed
is hereby set aside, and the City Court of Mandaue City, Cebu, Branch 11, is hereby ordered to proceed with the hearing of Civil
Case No. 189 of that Court.

Without pronouncement as to costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. L-24803 May 26, 1977

PEDRO ELCANO and PATRICIA ELCANO, in their capacity as Ascendants of Agapito Elcano, deceased, plaintiffs-
appellants,

vs.

REGINALD HILL, minor, and MARVIN HILL, as father and Natural Guardian of said minor, defendants-appellees.

Cruz & Avecilla for appellants.

Marvin R. Hill & Associates for appellees.

BARREDO, J.:

Appeal from the order of the Court of First Instance of Quezon City dated January 29, 1965 in Civil Case No. Q-8102, Pedro Elcano
et al. vs. Reginald Hill et al. dismissing, upon motion to dismiss of defendants, the complaint of plaintiffs for recovery of damages
from defendant Reginald Hill, a minor, married at the time of the occurrence, and his father, the defendant Marvin Hill, with whom
he was living and getting subsistence, for the killing by Reginald of the son of the plaintiffs, named Agapito Elcano, of which, when
criminally prosecuted, the said accused was acquitted on the ground that his act was not criminal, because of "lack of intent to kill,
coupled with mistake."

Actually, the motion to dismiss based on the following grounds:

1. The present action is not only against but a violation of section 1, Rule 107, which is now Rule III, of the Revised Rules of Court;

2. The action is barred by a prior judgment which is now final and or in res-adjudicata;

3. The complaint had no cause of action against defendant Marvin Hill, because he was relieved as guardian of the other defendant
through emancipation by marriage.

(P. 23, Record [p. 4, Record on Appeal.])

was first denied by the trial court. It was only upon motion for reconsideration of the defendants of such denial, reiterating the above
grounds that the following order was issued:

Considering the motion for reconsideration filed by the defendants on January 14, 1965 and after thoroughly examining the
arguments therein contained, the Court finds the same to be meritorious and well-founded.
WHEREFORE, the Order of this Court on December 8, 1964 is hereby reconsidered by ordering the dismissal of the above entitled
case.

SO ORDERED.

Quezon City, Philippines, January 29, 1965. (p. 40, Record [p. 21, Record on Appeal.)

Hence, this appeal where plaintiffs-appellants, the spouses Elcano, are presenting for Our resolution the following assignment of
errors:

THE LOWER COURT ERRED IN DISMISSING THE CASE BY UPHOLDING THE CLAIM OF DEFENDANTS THAT -

THE PRESENT ACTION IS NOT ONLY AGAINST BUT ALSO A VIOLATION OF SECTION 1, RULE 107, NOW RULE 111, OF
THE REVISED RULES OF COURT, AND THAT SECTION 3(c) OF RULE 111, RULES OF COURT IS APPLICABLE;

II

THE ACTION IS BARRED BY A PRIOR JUDGMENT WHICH IS NOW FINAL OR RES-ADJUDICTA;

III

THE PRINCIPLES OF QUASI-DELICTS, ARTICLES 2176 TO 2194 OF THE CIVIL CODE, ARE INAPPLICABLE IN THE INSTANT
CASE; and

IV

THAT THE COMPLAINT STATES NO CAUSE OF ACTION AGAINST DEFENDANT MARVIN HILL BECAUSE HE WAS
RELIEVED AS GUARDIAN OF THE OTHER DEFENDANT THROUGH EMANCIPATION BY MARRIAGE. (page 4, Record.)

It appears that for the killing of the son, Agapito, of plaintiffs-appellants, defendant- appellee Reginald Hill was prosecuted criminally
in Criminal Case No. 5102 of the Court of First Instance of Quezon City. After due trial, he was acquitted on the ground that his act
was not criminal because of "lack of intent to kill, coupled with mistake." Parenthetically, none of the parties has favored Us with a
copy of the decision of acquittal, presumably because appellants do not dispute that such indeed was the basis stated in the court's
decision. And so, when appellants filed their complaint against appellees Reginald and his father, Atty. Marvin Hill, on account of
the death of their son, the appellees filed the motion to dismiss above-referred to.

As We view the foregoing background of this case, the two decisive issues presented for Our resolution are:
1. Is the present civil action for damages barred by the acquittal of Reginald in the criminal case wherein the action for civil liability,
was not reversed?

2. May Article 2180 (2nd and last paragraphs) of the Civil Code he applied against Atty. Hill, notwithstanding the undisputed fact
that at the time of the occurrence complained of. Reginald, though a minor, living with and getting subsistenee from his father, was
already legally married?

The first issue presents no more problem than the need for a reiteration and further clarification of the dual character, criminal and
civil, of fault or negligence as a source of obligation which was firmly established in this jurisdiction in Barredo vs. Garcia, 73 Phil.
607. In that case, this Court postulated, on the basis of a scholarly dissertation by Justice Bocobo on the nature of culpa aquiliana
in relation to culpa criminal or delito and mere culpa or fault, with pertinent citation of decisions of the Supreme Court of Spain, the
works of recognized civilians, and earlier jurisprudence of our own, that the same given act can result in civil liability not only under
the Penal Code but also under the Civil Code. Thus, the opinion holds:

The, above case is pertinent because it shows that the same act machinist. come under both the Penal Code and the Civil Code.
In that case, the action of the agent killeth unjustified and fraudulent and therefore could have been the subject of a criminal action.
And yet, it was held to be also a proper subject of a civil action under article 1902 of the Civil Code. It is also to be noted that it was
the employer and not the employee who was being sued. (pp. 615-616, 73 Phil.). 1

It will be noticed that the defendant in the above case could have been prosecuted in a criminal case because his negligence
causing the death of the child was punishable by the Penal Code. Here is therefore a clear instance of the same act of negligence
being a proper subject matter either of a criminal action with its consequent civil liability arising from a crime or of an entirely
separate and independent civil action for fault or negligence under article 1902 of the Civil Code. Thus, in this jurisdiction, the
separate individuality of a cuasi-delito or culpa aquiliana, under the Civil Code has been fully and clearly recognized, even with
regard to a negligent act for which the wrongdoer could have been prosecuted and convicted in a criminal case and for which, after
such a conviction, he could have been sued for this civil liability arising from his crime. (p. 617, 73 Phil.) 2

It is most significant that in the case just cited, this Court specifically applied article 1902 of the Civil Code. It is thus that although
J. V. House could have been criminally prosecuted for reckless or simple negligence and not only punished but also made civilly
liable because of his criminal negligence, nevertheless this Court awarded damages in an independent civil action for fault or
negligence under article 1902 of the Civil Code. (p. 618, 73 Phil.) 3

The legal provisions, authors, and cases already invoked should ordinarily be sufficient to dispose of this case. But inasmuch as
we are announcing doctrines that have been little understood, in the past, it might not he inappropriate to indicate their foundations.

Firstly, the Revised Penal Code in articles 365 punishes not only reckless but also simple negligence. If we were to hold that
articles 1902 to 1910 of the Civil Code refer only to fault or negligence not punished by law, accordingly to the literal import of
article 1093 of the Civil Code, the legal institution of culpa aquiliana would have very little scope and application in actual life. Death
or injury to persons and damage to property- through any degree of negligence - even the slightest - would have to be Idemnified
only through the principle of civil liability arising from a crime. In such a state of affairs, what sphere would remain for cuasi-delito
or culpa aquiliana? We are loath to impute to the lawmaker any intention to bring about a situation so absurd and anomalous. Nor
are we, in the interpretation of the laws, disposed to uphold the letter that killeth rather than the spirit that giveth life. We will not
use the literal meaning of the law to smother and render almost lifeless a principle of such ancient origin and such full-grown
development as culpa aquiliana or cuasi-delito, which is conserved and made enduring in articles 1902 to 1910 of the Spanish
Civil Code.

Secondary, to find the accused guilty in a criminal case, proof of guilt beyond reasonable doubt is required, while in a civil case,
preponderance of evidence is sufficient to make the defendant pay in damages. There are numerous cases of criminal negligence
which can not be shown beyond reasonable doubt, but can be proved by a preponderance of evidence. In such cases, the
defendant can and should be made responsible in a civil action under articles 1902 to 1910 of the Civil Code. Otherwise. there
would be many instances of unvindicated civil wrongs. "Ubi jus Idemnified remedium." (p. 620,73 Phil.)

Fourthly, because of the broad sweep of the provisions of both the Penal Code and the Civil Code on this subject, which has given
rise to the overlapping or concurrence of spheres already discussed, and for lack of understanding of the character and efficacy of
the action for culpa aquiliana, there has grown up a common practice to seek damages only by virtue of the civil responsibility
arising from a crime, forgetting that there is another remedy, which is by invoking articles 1902-1910 of the Civil Code. Although
this habitual method is allowed by, our laws, it has nevertheless rendered practically useless and nugatory the more expeditious
and effective remedy based on culpa aquiliana or culpa extra-contractual. In the present case, we are asked to help perpetuate
this usual course. But we believe it is high time we pointed out to the harms done by such practice and to restore the principle of
responsibility for fault or negligence under articles 1902 et seq. of the Civil Code to its full rigor. It is high time we caused the stream
of quasi-delict or culpa aquiliana to flow on its own natural channel, so that its waters may no longer be diverted into that of a crime
under the Penal Code. This will, it is believed, make for the better safeguarding or private rights because it realtor, an ancient and
additional remedy, and for the further reason that an independent civil action, not depending on the issues, limitations and results
of a criminal prosecution, and entirely directed by the party wronged or his counsel, is more likely to secure adequate and
efficacious redress. (p. 621, 73 Phil.)

Contrary to an immediate impression one might get upon a reading of the foregoing excerpts from the opinion in Garcia that the
concurrence of the Penal Code and the Civil Code therein referred to contemplate only acts of negligence and not intentional
voluntary acts - deeper reflection would reveal that the thrust of the pronouncements therein is not so limited, but that in fact it
actually extends to fault or culpa. This can be seen in the reference made therein to the Sentence of the Supreme Court of Spain
of February 14, 1919, supra, which involved a case of fraud or estafa, not a negligent act. Indeed, Article 1093 of the Civil Code of
Spain, in force here at the time of Garcia, provided textually that obligations "which are derived from acts or omissions in which
fault or negligence, not punishable by law, intervene shall be the subject of Chapter II, Title XV of this book (which refers to quasi-
delicts.)" And it is precisely the underline qualification, "not punishable by law", that Justice Bocobo emphasized could lead to an
ultimo construction or interpretation of the letter of the law that "killeth, rather than the spirit that giveth lift- hence, the ruling that
"(W)e will not use the literal meaning of the law to smother and render almost lifeless a principle of such ancient origin and such
full-grown development as culpa aquiliana or quasi-delito, which is conserved and made enduring in articles 1902 to 1910 of the
Spanish Civil Code." And so, because Justice Bacobo was Chairman of the Code Commission that drafted the original text of the
new Civil Code, it is to be noted that the said Code, which was enacted after the Garcia doctrine, no longer uses the term, 11 not
punishable by law," thereby making it clear that the concept of culpa aquiliana includes acts which are criminal in character or in
violation of the penal law, whether voluntary or matter. Thus, the corresponding provisions to said Article 1093 in the new code,
which is Article 1162, simply says, "Obligations derived from quasi-delicto shall be governed by the provisions of Chapter 2, Title
XVII of this Book, (on quasi-delicts) and by special laws." More precisely, a new provision, Article 2177 of the new code provides:

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.

According to the Code Commission: "The foregoing provision (Article 2177) through 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 extracontractual" or "cuasi-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 Bacobo
about construction that upholds "the spirit that giveth lift- 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 Revised 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 relevant language in Rakes vs. Atlantic. Gulf and
Pacific Co., 7 Phil. 359, to hold, as We do hold, that Article 2176, where it refers to "fault or negligencia covers not only acts "not
punishable by law" but also acts criminal in character, whether intentional and voluntary or negligent. Consequently, a separate
civil action lies against the offender in a criminal act, whether or not he is criminally prosecuted and found guilty or 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 referred to in Par. (e) of Section 3, 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 estinguished even by a declaration in the criminal case that the criminal act charged has not happened or has not been
committed by the accused. Briefly stated, We here hold, in reiteration of Garcia, that culpa aquiliana includes voluntary and
negligent acts which may be punishable by law.4

It results, therefore, that the acquittal of Reginal Hill in the criminal case has not extinguished his liability for quasi-delict, hence
that acquittal is not a bar to the instant action against him.

Coming now to the second issue about the effect of Reginald's emancipation by marriage on the possible civil liability of Atty. Hill,
his father, it is also Our considered opinion that the conclusion of appellees that Atty. Hill is already free from responsibility cannot
be upheld.

While it is true that parental authority is terminated upon emancipation of the child (Article 327, Civil Code), and under Article 397,
emancipation takes place "by the marriage of the minor (child)", it is, however, also clear that pursuant to Article 399, emancipation
by marriage of the minor is not really full or absolute. Thus "(E)mancipation by marriage or by voluntary concession shall terminate
parental authority over the child's person. It shall enable the minor to administer his property as though he were of age, but he
cannot borrow money or alienate or encumber real property without the consent of his father or mother, or guardian. He can sue
and be sued in court only with the assistance of his father, mother or guardian."

Now under Article 2180, "(T)he obligation imposed by article 2176 is demandable not only for one's own acts or omissions, but
also for those of persons for whom one is responsible. The father and, in case of his death or incapacity, the mother, are
responsible. The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the minor
children who live in their company." In the instant case, it is not controverted that Reginald, although married, was living with his
father and getting subsistence from him at the time of the occurrence in question. Factually, therefore, Reginald was still subservient
to and dependent on his father, a situation which is not unusual.

It must be borne in mind that, according to Manresa, the reason behind the joint and solidary liability of presuncion with their
offending child under Article 2180 is that is the obligation of the parent to supervise their minor children in order to prevent them
from causing damage to third persons. 5 On the other hand, the clear implication of Article 399, in providing that a minor
emancipated by marriage may not, nevertheless, sue or be sued without the assistance of the parents, is that such emancipation
does not carry with it freedom to enter into transactions or do any act that can give rise to judicial litigation. (See Manresa, Id., Vol.
II, pp. 766-767, 776.) And surely, killing someone else invites judicial action. Otherwise stated, the marriage of a minor child does
not relieve the parents of the duty to see to it that the child, while still a minor, does not give answerable for the borrowings of
money and alienation or encumbering of real property which cannot be done by their minor married child without their consent.
(Art. 399; Manresa, supra.)
Accordingly, in Our considered view, Article 2180 applies to Atty. Hill notwithstanding the emancipation by marriage of Reginald.
However, inasmuch as it is evident that Reginald is now of age, as a matter of equity, the liability of Atty. Hill has become milling,
subsidiary to that of his son.

WHEREFORE, the order appealed from is reversed and the trial court is ordered to proceed in accordance with the foregoing
opinion. Costs against appellees.

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 165732 December 14, 2006

SAFEGUARD SECURITY AGENCY, INC., and ADMER PAJARILLO, petitioners,

vs.

LAURO TANGCO, VAL TANGCO, VERN LARRY TANGCO, VAN LAURO TANGCO, VON LARRIE TANGCO, VIEN LARI
TANGCO and VIVIEN LAURIZ TANGCO, respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari filed by Safeguard Security Agency, Inc. (Safeguard) and Admer Pajarillo (Pajarillo)
assailing the Decision1 dated July 16, 2004 and the Resolution2 dated October 20, 2004 issued by the Court of Appeals (CA) in
CA-G.R. CV No. 77462.
On November 3, 1997, at about 2:50 p.m., Evangeline Tangco (Evangeline) went to Ecology Bank, Katipunan Branch, Quezon
City, to renew her time deposit per advise of the bank's cashier as she would sign a specimen card. Evangeline, a duly licensed
firearm holder with corresponding permit to carry the same outside her residence, approached security guard Pajarillo, who was
stationed outside the bank, and pulled out her firearm from her bag to deposit the same for safekeeping. Suddenly, Pajarillo shot
Evangeline with his service shotgun hitting her in the abdomen instantly causing her death.

Lauro Tangco, Evangeline's husband, together with his six minor children (respondents) filed with the Regional Trial Court (RTC)
of Quezon City, a criminal case of Homicide against Pajarillo, docketed as Criminal Case No. 0-97-73806 and assigned to Branch
78. Respondents reserved their right to file a separate civil action in the said criminal case. The RTC of Quezon City subsequently
convicted Pajarillo of Homicide in its Decision dated January 19, 2000.3 On appeal to the CA, the RTC decision was affirmed with
modification as to the penalty in a Decision4 dated July 31, 2000. Entry of Judgment was made on August 25, 2001.

Meanwhile, on January 14, 1998, respondents filed with RTC, Branch 273, Marikina City, a complaint5 for damages against
Pajarillo for negligently shooting Evangeline and against Safeguard for failing to observe the diligence of a good father of a family
to prevent the damage committed by its security guard. Respondents prayed for actual, moral and exemplary damages and
attorney's fees.

In their Answer,6 petitioners denied the material allegations in the complaint and alleged that Safeguard exercised the diligence of
a good father of a family in the selection and supervision of Pajarillo; that Evangeline's death was not due to Pajarillo's negligence
as the latter acted only in self-defense. Petitioners set up a compulsory counterclaim for moral damages and attorney's fees.

Trial thereafter ensued. On January 10, 2003, the RTC rendered its Decision,7 the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs, the heirs of Evangeline Tangco, and against defendants
Admer Pajarillo and Safeguard Security Agency, Inc. ordering said defendants to pay the plaintiffs, jointly and severally, the
following:

1. ONE HUNDRED FIFTY SEVEN THOUSAND FOUR HUNDRED THIRTY PESOS (P157,430.00), as actual damages

2. FIFTY THOUSAND PESOS (P50,000.00) as death indemnity;

3. ONE MILLION PESOS (P1,000,000.00), as moral damages;

4. THREE HUNDRED THOUSAND PESOS (P300,000.00), as exemplary damages;

5. THIRTY THOUSAND PESOS (P30,000.00), as attorney's fees; and

6. costs of suit.
For lack of merit, defendants' counterclaim is hereby DISMISSED.

SO ORDERED. 8

The RTC found respondents to be entitled to damages. It rejected Pajarillo's claim that he merely acted in self-defense. It gave no
credence to Pajarillo's bare claim that Evangeline was seen roaming around the area prior to the shooting incident since Pajarillo
had not made such report to the head office and the police authorities. The RTC further ruled that being the guard on duty, the
situation demanded that he should have exercised proper prudence and necessary care by asking Evangeline for him to ascertain
the matter instead of shooting her instantly; that Pajarillo had already been convicted of Homicide in Criminal Case No. 0-97-
73806; and that he also failed to proffer proof negating liability in the instant case.

The RTC also found Safeguard as employer of Pajarillo to be jointly and severally liable with Pajarillo. It ruled that while it may be
conceded that Safeguard had perhaps exercised care in the selection of its employees, particularly of Pajarillo, there was no
sufficient evidence to show that Safeguard exercised the diligence of a good father of a family in the supervision of its employee;
that Safeguard's evidence simply showed that it required its guards to attend trainings and seminars which is not the supervision
contemplated under the law; that supervision includes not only the issuance of regulations and instructions designed for the
protection of persons and property, for the guidance of their servants and employees, but also the duty to see to it that such
regulations and instructions are faithfully complied with.

Petitioners appealed the RTC decision to the CA. On July 16, 2004, the CA issued its assailed Decision, the dispositive portion of
which reads:

IN VIEW OF ALL THE FOREGOING, the appealed decision is hereby AFFIRMED, with the modification that Safeguard Security
Agency, Inc.'s civil liability in this case is only subsidiary under Art. 103 of the Revised Penal Code. No pronouncement as to
costs.9

In finding that Safeguard is only subsidiarily liable, the CA held that the applicable provisions are not Article 2180 in relation to
Article 2176 of the Civil Code, on quasi-delicts, but the provisions on civil liability arising from felonies under the Revised Penal
Code; that since Pajarillo had been found guilty of Homicide in a final and executory judgment and is said to be serving sentence
in Muntinlupa, he must be adjudged civilly liable under the provisions of Article 100 of the Revised Penal Code since the civil
liability recoverable in the criminal action is one solely dependent upon conviction, because said liability arises from the offense
charged and no other; that this is also the civil liability that is deemed extinguished with the extinction of the penal liability with a
pronouncement that the fact from which the civil action might proceed does not exist; that unlike in civil liability arising from quasi-
delict, the defense of diligence of a good father of a family in the employment and supervision of employees is inapplicable and
irrelevant in civil liabilities based on crimes or ex-delicto; that Article 103 of the Revised Penal Code provides that the liability of an
employer for the civil liability of their employees is only subsidiary, not joint or solidary.

Petitioners filed their Motion for Reconsideration which the CA denied in a Resolution dated October 20, 2004.
Hence, the instant Petition for Review on Certiorari with the following assignment of errors, to wit:

The Honorable Court of Appeals gravely erred in finding petitioner Pajarillo liable to respondents for the payment of damages and
other money claims.

The Honorable Court of Appeals gravely erred when it applied Article 103 of the Revised Penal Code in holding petitioner Safeguard
solidarily [sic] liable with petitioner Pajarillo for the payment of damages and other money claims.

The Honorable Court of Appeals gravely erred in failing to find that petitioner Safeguard Security Agency, Inc. exercised due
diligence in the selection and supervision of its employees, hence, should be excused from any liability.10

The issues for resolution are whether (1) Pajarillo is guilty of negligence in shooting Evangeline; and (2) Safeguard should be held
solidarily liable for the damages awarded to respondents.

Safeguard insists that the claim for damages by respondents is based on culpaaquiliana under Article 217611 of the Civil Code, in
which case, its liability is jointly and severally with Pajarillo. However, since it has established that it had exercised due diligence
in the selection and supervision of Pajarillo, it should be exonerated from civil liability.

We will first resolve whether the CA correctly held that respondents, in filing a separate civil action against petitioners are limited
to the recovery of damages arising from a crime or delict, in which case the liability of Safeguard as employer under Articles 102
and 103 of the Revised Penal Code12 is subsidiary and the defense of due diligence in the selection and supervision of employee
is not available to it.

The CA erred in ruling that the liability of Safeguard is only subsidiary.

The law at the time the complaint for damages was filed is Rule 111 of the 1985 Rules on Criminal Procedure, as amended, to wit:

SECTION 1. Institution of criminal and civil actions. - When a criminal action is instituted, the civil action for the recovery of civil
liability is impliedly instituted with the criminal action, unless the offended party waives the civil action, reserves his right to institute
it separately, or institutes the civil action prior to the criminal action.

Such civil action includes recovery of indemnity under the Revised Penal Code, and damages under Articles 32, 33, 34, and 2176
of the Civil Code of the Philippines arising from the same act or omission of the accused.

Respondents reserved the right to file a separate civil action and in fact filed the same on January 14, 1998.

The CA found that the source of damages in the instant case must be the crime of homicide, for which he had already been found
guilty of and serving sentence thereof, thus must be governed by the Revised Penal Code.

We do not agree.
An act or omission causing damage to another may give rise to two separate civil liabilities on the part of the offender, i.e., (1) civil
liability ex delicto, under Article 100 of the Revised Penal Code; and (2) independent civil liabilities, such as those (a) not arising
from an act or omission complained of as a felony, e.g., culpa contractual or obligations arising from law under Article 31 of the
Civil Code, intentional torts under Articles 32 and 34, and culpa aquiliana under Article 2176 of the Civil Code; or (b) where the
injured party is granted a right to file an action independent and distinct from the criminal action under Article 33 of the Civil Code.
Either of these liabilities may be enforced against the offender subject to the caveat under Article 2177 of the Civil Code that the
offended party cannot recover damages twice for the same act or omission or under both causes.13

It is important to determine the nature of respondents' cause of action. The nature of a cause of action is determined by the facts
alleged in the complaint as constituting the cause of action.14 The purpose of an action or suit and the law to govern it is to be
determined not by the claim of the party filing the action, made in his argument or brief, but rather by the complaint itself, its
allegations and prayer for relief.15

The pertinent portions of the complaint read:

7. That Defendant Admer A. Pajarillo was the guard assigned and posted in the Ecology Bank - Katipunan Branch, Quezon City,
who was employed and under employment of Safeguard Security Agency, Inc. hence there is employer-employee relationship
between co-defendants.

The Safeguard Security Agency, Inc. failed to observe the diligence of a good father of a family to prevent damage to herein
plaintiffs.

8. That defendant Admer Pajarillo upon seeing Evangeline Tangco, who brought her firearm out of her bag, suddenly without
exercising necessary caution/care, and in idiotic manner, with the use of his shotgun, fired and burst bullets upon Evangeline M.
Tangco, killing her instantly. x x x

xxxx

16. That defendants, being employer and the employee are jointly and severally liable for the death of Evangeline M. Tangco.16

Thus, a reading of respondents' complaint shows that the latter are invoking their right to recover damages against Safeguard for
their vicarious responsibility for the injury caused by Pajarillo's act of shooting and killing Evangeline under Article 2176, Civil Code
which provides:

ARTICLE 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.

The scope of Article 2176 is not limited to acts or omissions resulting from negligence. In Dulay v. Court of Appeals,17 we held:
x x x Well-entrenched is the doctrine that Article 2176 covers not only acts committed with negligence, but also acts which are
voluntary and intentional. As far back as the definitive case of Elcano v. Hill (77 SCRA 98 [1977]), this Court already held that:

"x x x Article 2176, where it refers to "fault or negligence," covers not only acts "not punishable by law" but also acts
criminal in character, whether intentional and voluntary or negligent. Consequently, a separate civil action lies against the
offender in a criminal act, whether or not he is criminally prosecuted and found guilty or 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
referred to in Par. (e) of Section 3, 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 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. Briefly
stated, We here hold, in reiteration of Garcia, that culpa aquiliana includes voluntary and negligent acts which may be punishable
by law." (Emphasis supplied)

The civil action filed by respondents was not derived from the criminal liability of Pajarillo in the criminal case but one based on
culpa aquiliana or quasi-delict which is separate and distinct from the civil liability arising from crime.18 The source of the obligation
sought to be enforced in the civil case is a quasi-delict not an act or omission punishable by law.

In Bermudez v. Melencio-Herrera,19 where the issue involved was whether the civil action filed by plaintiff-appellants is founded
on crime or on quasi-delict, we held:

x x x The trial court treated the case as an action based on a crime in view of the reservation made by the offended party in the
criminal case (Criminal Case No. 92944), also pending before the court, to file a separate civil action. Said the trial court:

It would appear that plaintiffs instituted this action on the assumption that defendant Pontino's negligence in the accident of May
10, 1969 constituted a quasi-delict. The Court cannot accept the validity of that assumption. In Criminal Case No. 92944 of this
Court, plaintiffs had already appeared as complainants. While that case was pending, the offended parties reserved the right to
institute a separate civil action. If, in a criminal case, the right to file a separate civil action for damages is reserved, such civil action
is to be based on crime and not on tort. That was the ruling in Joaquin vs. Aniceto, L-18719, Oct. 31, 1964.

We do not agree. The doctrine in the case cited by the trial court is inapplicable to the instant case x x x.

xxxx

In cases of negligence, the injured party or his heirs has the choice between an action to enforce the civil liability arising from crime
under Article 100 of the Revised Penal Code and an action for quasi-delict under Article 2176-2194 of the Civil Code. If a party
chooses the latter, he may hold the employer solidarily liable for the negligent act of his employee, subject to the employer's
defense of exercise of the diligence of a good father of the family.
In the case at bar, the action filed by appellant was an action for damages based on quasi-delict. The fact that appellants reserved
their right in the criminal case to file an independent civil action did not preclude them from choosing to file a civil action
for quasi-delict.20 (Emphasis supplied)

Although the judgment in the criminal case finding Pajarillo guilty of Homicide is already final and executory, such judgment has
no relevance or importance to this case.21 It would have been entirely different if respondents' cause of action was for damages
arising from a delict, in which case the CA is correct in finding Safeguard to be only subsidiary liable pursuant to Article 103 of the
Revised Penal Code.22

As clearly shown by the allegations in the complaint, respondents' cause of action is based on quasi-delict. Under Article 2180 of
the Civil Code, when the injury is caused by the negligence of the employee, there instantly arises a presumption of law that there
was negligence on the part of the master or the employer either in the selection of the servant or employee, or in the supervision
over him after selection or both. The liability of the employer under Article 2180 is direct and immediate. Therefore, it is incumbent
upon petitioners to prove that they exercised the diligence of a good father of a family in the selection and supervision of their
employee.

We must first resolve the issue of whether Pajarillo was negligent in shooting Evangeline.

The issue of negligence is factual in nature. Whether a person is negligent or not is a question of fact, which, as a general rule, we
cannot pass upon in a petition for review on certiorari, as our jurisdiction is limited to reviewing errors of law.23 Generally, factual
findings of the trial court, affirmed by the CA, are final and conclusive and may not be reviewed on appeal. The established
exceptions are: (1) when the inference made is manifestly mistaken, absurd or impossible; (2) when there is grave abuse of
discretion; (3) when the findings are grounded entirely on speculations, surmises or conjectures; (4) when the judgment of the CA
is based on misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the CA, in making its findings, went
beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) when the findings of
fact are conclusions without citation of specific evidence on which they are based; (8) when the CA manifestly overlooked certain
relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion; and (9) when the
findings of fact of the CA are premised on the absence of evidence and are contradicted by the evidence on record.[24]

A thorough review of the records of the case fails to show any cogent reason for us to deviate from the factual finding of the trial
court and affirmed by the CA that petitioner Pajarillo was guilty of negligence in shooting Evangeline.

Respondents' evidence established that Evangeline's purpose in going to the bank was to renew her time deposit.25 On the other
hand, Pajarillo claims that Evangeline drew a gun from her bag and aimed the same at him, thus, acting instinctively, he shot her
in self-defense.

Pajarillo testified that when Evangeline aimed the gun at him at a distance of about one meter or one arm's length26 he stepped
backward, loaded the chamber of his gun and shot her.27 It is however unimaginable that petitioner Pajarillo could still make such
movements if indeed the gun was already pointed at him. Any movement could have prompted Evangeline to pull the trigger to
shoot him.

Petitioner Pajarillo would like to justify his action in shooting Evangeline on his mere apprehension that Evangeline will stage a
bank robbery. However, such claim is befuddled by his own testimony. Pajarillo testified that prior to the incident, he saw Evangeline
roaming under the fly over which was about 10 meters away from the bank28 and saw her talking to a man thereat;29 that she left
the man under the fly-over, crossed the street and approached the bank. However, except for the bare testimony of Pajarillo, the
records do not show that indeed Evangeline was seen roaming near the vicinity of the bank and acting suspiciously prior to the
shooting incident. In fact, there is no evidence that Pajarillo called the attention of his head guard or the bank's branch manager
regarding his concerns or that he reported the same to the police authorities whose outpost is just about 15 meters from the bank.

Moreover, if Evangeline was already roaming the vicinity of the bank, she could have already apprised herself that Pajarillo, who
was posted outside the bank, was armed with a shotgun; that there were two guards inside the bank30 manning the entrance door.
Thus, it is quite incredible that if she really had a companion, she would leave him under the fly-over which is 10 meters far from
the bank and stage a bank robbery all by herself without a back-up. In fact, she would have known, after surveying the area, that
aiming her gun at Pajarillo would not ensure entrance to the bank as there were guards manning the entrance door.

Evidence, to be believed, must not only proceed from the mouth of a credible witness, but it must be credible in itself — such as
the common experience and observation of mankind can approve as probable under the circumstances. We have no test of the
truth of human testimony, except its conformity to our knowledge, observation and experience. Whatever is repugnant to these
belongs to the miraculous and is outside judicial cognizance.31

That Evangeline just wanted to deposit her gun before entering the bank and was actually in the act of pulling her gun from her
bag when petitioner Pajarillo recklessly shot her, finds support from the contentions raised in petitioners' petition for review where
they argued that when Evangeline approached the bank, she was seen pulling a gun from inside her bag and petitioner Pajarillo
who was suddenly beset by fear and perceived the act as a dangerous threat, shot and killed the deceased out of pure instinct;32
that the act of drawing a gun is a threatening act, regardless of whether or not the gun was intended to be used against petitioner
Pajarillo;33 that the fear that was created in the mind of petitioner Pajarillo as he saw Evangeline Tangco drawing a gun from her
purse was suddenly very real and the former merely reacted out of pure self-preservation.34

Considering that unlawful aggression on the part of Evangeline is absent, Pajarillo's claim of self-defense cannot be accepted
specially when such claim was uncorroborated by any separate competent evidence other than his testimony which was even
doubtful. Pajarillo's apprehension that Evangeline will shoot him to stage a bank robbery has no basis at all. It is therefore clear
that the alleged threat of bank robbery was just a figment of Pajarillo's imagination which caused such unfounded unlawful
aggression on his part.
Petitioners argue that Evangeline was guilty of contributory negligence. Although she was a licensed firearm holder, she had no
business bringing the gun in such establishment where people would react instinctively upon seeing the gun; that had Evangeline
been prudent, she could have warned Pajarillo before drawing the gun and did not conduct herself with suspicion by roaming
outside the vicinity of the bank; that she should not have held the gun with the nozzle pointed at Pajarillo who mistook the act as
hold up or robbery.

We are not persuaded.

As we have earlier held, Pajarillo failed to substantiate his claim that Evangeline was seen roaming outside the vicinity of the bank
and acting suspiciously prior to the shooting incident. Evangeline's death was merely due to Pajarillo's negligence in shooting her
on his imagined threat that Evangeline will rob the bank.

Safeguard contends that it cannot be jointly held liable since it had adequately shown that it had exercised the diligence required
in the selection and supervision of its employees. It claims that it had required the guards to undergo the necessary training and
to submit the requisite qualifications and credentials which even the RTC found to have been complied with; that the RTC
erroneously found that it did not exercise the diligence required in the supervision of its employee. Safeguard further claims that it
conducts monitoring of the activities of its personnel, wherein supervisors are assigned to routinely check the activities of the
security guards which include among others, whether or not they are in their proper post and with proper equipment, as well as
regular evaluations of the employees' performances; that the fact that Pajarillo loaded his firearm contrary to Safeguard's operating
procedure is not sufficient basis to say that Safeguard had failed its duty of proper supervision; that it was likewise error to say that
Safeguard was negligent in seeing to it that the procedures and policies were not properly implemented by reason of one
unfortunate event.

We are not convinced.

Article 2180 of the Civil Code provides:

Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions, but also for those of
persons for whom one is responsible.

xxxx

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.

xxxx

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.
As the employer of Pajarillo, Safeguard is primarily and solidarily liable for the quasi-delict committed by the former. Safeguard is
presumed to be negligent in the selection and supervision of his employee by operation of law. This presumption may be overcome
only by satisfactorily showing that the employer exercised the care and the diligence of a good father of a family in the selection
and the supervision of its employee.

In the selection of prospective employees, employers are required to examine them as to their qualifications, experience, and
service records.35 On the other hand, due diligence in the supervision of employees includes the formulation of suitable rules and
regulations for the guidance of employees and the issuance of proper instructions intended for the protection of the public and
persons with whom the employer has relations through his or its employees and the imposition of necessary disciplinary measures
upon employees in case of breach or as may be warranted to ensure the performance of acts indispensable to the business of and
beneficial to their employer. To this, we add that actual implementation and monitoring of consistent compliance with said rules
should be the constant concern of the employer, acting through dependable supervisors who should regularly report on their
supervisory functions.36 To establish these factors in a trial involving the issue of vicarious liability, employers must submit concrete
proof, including documentary evidence.

We agree with the RTC's finding that Safeguard had exercised the diligence in the selection of Pajarillo since the record shows
that Pajarillo underwent a psychological and neuro-psychiatric evaluation conducted by the St. Martin de Porres Center where no
psychoses ideations were noted, submitted a certification on the Pre-licensing training course for security guards, as well as police
and NBI clearances.

The RTC did not err in ruling that Safeguard fell short of the diligence required in the supervision of its employee, particularly
Pajarillo. In this case, while Safeguard presented Capt. James Camero, its Director for Operations, who testified on the issuance
of company rules and regulations, such as the Guidelines of Guards Who Will Be Assigned To Banks,37 Weapons Training,38
Safeguard Training Center Marksmanship Training Lesson Plan,39 Disciplinary/Corrective Sanctions,40 it had also been
established during Camero's cross-examination that Pajarillo was not aware of such rules and regulations.41 Notwithstanding
Camero's clarification on his re-direct examination that these company rules and regulations are lesson plans as a basis of
guidelines of the instructors during classroom instructions and not necessary to give students copy of the same,42 the records do
not show that Pajarillo had attended such classroom instructions.

The records also failed to show that there was adequate training and continuous evaluation of the security guard's performance.
Pajarillo had only attended an in-service training on March 1, 1997 conducted by Toyota Sta. Rosa, his first assignment as security
guard of Safeguard, which was in collaboration with Safeguard. It was established that the concept of such training was purely on
security of equipments to be guarded and protection of the life of the employees.43

It had not been established that after Pajarillo's training in Toyota, Safeguard had ever conducted further training of Pajarillo when
he was later assigned to guard a bank which has a different nature of business with that of Toyota. In fact, Pajarillo testified that
being on duty in a bank is different from being on duty in a factory since a bank is a very sensitive area.44
Moreover, considering his reactions to Evangeline's act of just depositing her firearm for safekeeping, i.e., of immediately shooting
her, confirms that there was no training or seminar given on how to handle bank clients and on human psychology.

Furthermore, while Safeguard would like to show that there were inspectors who go around the bank two times a day to see the
daily performance of the security guards assigned therein, there was no record ever presented of such daily inspections. In fact, if
there was really such inspection made, the alleged suspicious act of Evangeline could have been taken noticed and reported.

Turning now to the award of damages, we find that the award of actual damages in the amount P157,430.00 which were the
expenses incurred by respondents in connection with the burial of Evangeline were supported by receipts. The award of P50,000.00
as civil indemnity for the death of Evangeline is likewise in order.

As to the award of moral damages, Article 2206 of the Civil Code provides that the spouse, legitimate children and illegitimate
descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the
deceased. Moral damages are awarded to enable the injured party to obtain means, diversions or amusements that will serve to
alleviate the moral suffering he/she has undergone, by reason of the defendant's culpable action. Its award is aimed at restoration,
as much as possible, of the spiritual status quo ante; thus it must be proportionate to the suffering inflicted.45 The intensity of the
pain experienced by the relatives of the victim is proportionate to the intensity of affection for him and bears no relation whatsoever
with the wealth or means of the offender.46

In this case, respondents testified as to their moral suffering caused by Evangeline's death was so sudden causing respondent
Lauro to lose a wife and a mother to six children who were all minors at the time of her death. In People v. Teehankee, Jr.,47 we
awarded one million pesos as moral damages to the heirs of a seventeen-year-old girl who was murdered. In Metro Manila Transit
Corporation v. Court of Appeals,48 we likewise awarded the amount of one million pesos as moral damages to the parents of a
third year high school student and who was also their youngest child who died in a vehicular accident since the girl's death left a
void in their lives. Hence, we hold that the respondents are also entitled to the amount of one million pesos as Evangeline's death
left a void in the lives of her husband and minor children as they were deprived of her love and care by her untimely demise.

We likewise uphold the award of exemplary damages in the amount of P300,000.00. Under Article 2229 of the Civil Code,
exemplary damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated
or compensatory damages.49 It is awarded as a deterrent to socially deleterious actions. In quasi-delict, exemplary damages may
be granted if the defendant acted with gross negligence.50

Pursuant to Article 2208 of the Civil Code, attorney's fees may be recovered when, as in the instant case, exemplary damages are
awarded. Hence, we affirm the award of attorney's fees in the amount of P30,000.00.

WHEREFORE, the petition for review is DENIED. The Decision dated July 16, 2004 of the Court of Appeals is AFFIRMED with
MODIFICATION that the civil liability of petitioner Safeguard Security Agency, Inc. is SOLIDARY and PRIMARY under Article 2180
of the Civil Code.
SO ORDERED.

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G. R. No. 166876 March 24, 2006

ARTEMIO INIEGO,1Petitioner,

vs.

The HONORABLE JUDGE GUILLERMO G. PURGANAN, in his official capacity as Presiding Judge of the Regional Trial
Court, Branch 42, City of Manila, and FOKKER C. SANTOS, Respondents.

DECISION

CHICO-NAZARIO, J.:

For this Court to grant this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner has to persuade us on
two engaging questions of law. First, he has to convince us that actions for damages based on quasi-delict are actions that are
capable of pecuniary estimation, and therefore would fall under the jurisdiction of the municipal courts if the claim does not exceed
the jurisdictional amount of P400,000.00 in Metro Manila. Second, he has to convince us that the moral and exemplary damages
claimed by the private respondent should be excluded from the computation of the above-mentioned jurisdictional amount because
they arose from a cause of action other than the negligent act of the defendant.

Petitioner urges us to reverse the 28 October 2004 Decision and 26 January 2005 Resolution of the Court of Appeals, Eighth
Division, in CA-G.R. SP No. 76206 denying due course to the petition for certiorari filed by petitioner under Rule 65, elevating the
21 October 2002 Omnibus Order and the 21 January 2003 Order of the Regional Trial Court (RTC), Branch 42, City of Manila. The
dispositive portion of the 28 October 2004 Decision of the Court of Appeals reads:

WHEREFORE, the petition is DENIED DUE COURSE and DISMISSED for lack of merit.2
The factual and procedural antecedents of this case are as follows:

On 1 March 2002, private respondent Fokker Santos filed a complaint for quasi-delict and damages against Jimmy T. Pinion, the
driver of a truck involved in a traffic accident, and against petitioner Artemio Iniego, as owner of the said truck and employer of
Pinion. The complaint stemmed from a vehicular accident that happened on 11 December 1999, when a freight truck allegedly
being driven by Pinion hit private respondent’s jitney which private respondent was driving at the time of the accident.

On 24 August 2002, private respondent filed a Motion to Declare defendant in Default allegedly for failure of the latter to file his
answer within the final extended period. On 28 August 2002, petitioner filed a Motion to Admit and a Motion to Dismiss the complaint
on the ground, among other things, that the RTC has no jurisdiction over the cause of action of the case.

On 21 October 2002, public respondent Judge Guillermo G. Purganan, acting as presiding judge of the RTC, Branch 42, Manila,
issued the assailed Omnibus Order denying the Motion to Dismiss of the petitioner and the Motion to Declare Defendant in Default
of the private respondent. Pertinent portions of the Omnibus Order and the dispositive portion thereof read:

In his opposition to the motion to declare him in default and his Motion to Admit defendant IÑEGO alleged that he never received
the Order dated 12 August 2002. But believing in good faith, without being presumptuous, that his 3rd Motion for additional Time
to file or any appropriate [pleading] would be granted, he filed the aforesaid Motion received by the Court on 23 August 2002.

The explanation of defendant IÑEGO has merit. The order dated 12 August 2002 was sent to a wrong address, thus defendant
IÑEGO did not receive it. Since it was not received, he was not aware that the court would grant no further extension. The Motion
to Admit Motion to Dismiss has to be granted and the Motion to declare Defendant IÑEGO [in default] has to be DENIED.

xxxx

The plaintiff opines that this court has exclusive jurisdiction because the cause of action is the claim for damages, which exceeds
P400,000.00. The complaint prays for actual damages in the amount of P40,000.00, moral damages in the amount of P300,000.00,
and exemplary damages in the amount of P150,000.00. Excluding attorney’s fees in the amount of P50,000.00, the total amount
of damages being claimed is P490,000.00.

Proceeding on the assumption that the cause of action is the claim of (sic) for damages in the total amount of P490,000.00, this
court has jurisdiction. But is the main cause of action the claim for damages?

This court is of the view that the main cause of action is not the claim for damages but quasi-delict. Damages are being claimed
only as a result of the alleged fault or negligence of both defendants under Article 2176 of the Civil Code in the case of defendant
Pinion and under Article 2180 also of the Civil Code in the case of defendant Iniego. But since fault or negligence (quasi-delicts)
could not be the subject of pecuniary estimation, this court has exclusive jurisdiction.

xxxx
WHEREFORE, in view of all the foregoing, the motion to declare defendant Iniego in default and the said defendant’s motion to
dismiss are denied.3

On 7 November 2002, petitioner filed a Motion for Reconsideration of the Omnibus Order of 21 October 2002. On 21 January
2003, public respondent issued an Order denying petitioner’s motion for reconsideration. Pertinent portions of the 21 January 2003
Order are reproduced hereunder:

What this court referred to in its Order sought to be reconsidered as not capable of pecuniary estimation is the CAUSE OF ACTION,
which is quasi-delict and NOT the amount of damage prayed for.

xxxx

WHEREFORE, in view of the foregoing, the motion for reconsideration is DENIED.4

Petitioner elevated the 21 October 2002 and 21 January 2003 Orders of the RTC to the Court of Appeals on petition for certiorari
under Rule 65 of the Rules of Court. On 28 October 2004, the Court of Appeals promulgated the assailed Decision, the dispositive
portion thereof reads:

WHEREFORE, the petition is DENIED DUE COURSE and dismissed for lack of merit.5

On 22 November 2004, petitioner moved for reconsideration, which was denied by the Court of Appeals on 26 January 2005.
Hence, this present petition.

Petitioner claims that actions for damages based on quasi-delict are actions that are capable of pecuniary estimation; hence, the
jurisdiction in such cases falls upon either the municipal courts (the Municipal Trial Courts, Metropolitan Trial Courts, Municipal
Trial Courts In Cities, And Municipal Circuit Trial Courts), or the Regional Trial Courts, depending on the value of the damages
claimed.

Petitioner argues further that should this Court find actions for damages capable of pecuniary estimation, then the total amount of
damages claimed by the private respondent must exceed P400,000.00 in order that it may fall under the jurisdiction of the RTC.
Petitioner asserts, however, that the moral and exemplary damages claimed by private respondent be excluded from the
computation of the total amount of damages for jurisdictional purposes because the said moral and exemplary damages arose,
not from the quasi-delict, but from the petitioner’s refusal to pay the actual damages.

Actions for damages based on quasi-delicts are primarily and effectively actions for the recovery of a sum of money for the damages
suffered because of the defendant’s alleged tortious acts, and are therefore capable of pecuniary estimation.
In a recent case,6 we did affirm the jurisdiction of a Municipal Circuit Trial Court in actions for damages based on quasi-delict,
although the ground used to challenge said jurisdiction was an alleged forum shopping, and not the applicability of Section 19(1)
of Batas Pambansa Blg. 129.

According to respondent Judge, what he referred to in his assailed Order as not capable of pecuniary estimation is the cause of
action, which is a quasi-delict, and not the amount of damage prayed for.7 From this, respondent Judge concluded that since fault
or negligence in quasi-delicts cannot be the subject of pecuniary estimation, the RTC has jurisdiction. The Court of Appeals affirmed
respondent Judge in this respect.8

Respondent Judge’s observation is erroneous. It is crystal clear from B.P. Blg. 129, as amended by Republic Act No. 7691, that
what must be determined to be capable or incapable of pecuniary estimation is not the cause of action, but the subject matter of
the action.9 A cause of action is "the delict or wrongful act or omission committed by the defendant in violation of the primary rights
of the plaintiff."10 On the other hand, the "subject matter of the action" is "the physical facts, the thing real or personal, the money,
lands, chattels, and the like, in relation to which the suit is prosecuted, and not the delict or wrong committed by the defendant."11

The case of Lapitan v. Scandia, Inc., et al.,12 has guided this Court time and again in determining whether the subject matter of
the action is capable of pecuniary estimation. In Lapitan, the Court spoke through the eminent Mr. Justice Jose B.L. Reyes:

In determining whether an action is one the subject matter of which is not capable of pecuniary estimation this Court has adopted
the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of
money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts
of first instance [now Regional Trial Courts] would depend on the amount of the claim. However, where the basic issue is something
other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal
relief sought like suits to have the defendant perform his part of the contract (specific performance) and in actions for support, or
for annulment of a judgment or to foreclose a mortgage, this court has considered such actions as cases where the subject of the
litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance [now Regional Trial
Courts]. x x x.13 (Emphasis supplied.)

Actions for damages based on quasi-delicts are primarily and effectively actions for the recovery of a sum of money for the damages
suffered because of the defendant’s alleged tortious acts. The damages claimed in such actions represent the monetary equivalent
of the injury caused to the plaintiff by the defendant, which are thus sought to be recovered by the plaintiff. This money claim is the
principal relief sought, and is not merely incidental thereto or a consequence thereof. It bears to point out that the complaint filed
by private respondent before the RTC actually bears the caption "for DAMAGES."

Fault or negligence, which the Court of Appeals claims is not capable of pecuniary estimation, is not actionable by itself. For such
fault or negligence to be actionable, there must be a resulting damage to a third person. The relief available to the offended party
in such cases is for the reparation, restitution, or payment of such damage, without which any alleged offended party has no cause
of action or relief. The fault or negligence of the defendant, therefore, is inextricably intertwined with the claim for damages, and
there can be no action based on quasi-delict without a claim for damages.

We therefore rule that the subject matter of actions for damages based on quasi-delict is capable of pecuniary estimation.

II

The amount of damages claimed is within the jurisdiction of the RTC, since it is the claim for all kinds of damages that is t he
basis of determining the jurisdiction of courts, whether the claims for damages arise from the same or from different causes of
action.

Despite our concurrence in petitioner’s claim that actions for damages based on quasi-delict are actions that are capable of
pecuniary estimation, we find that the total amount of damages claimed by the private respondent nevertheless still exceeds the
jurisdictional limit of P400,000.00 and remains under the jurisdiction of the RTC.

Petitioner argues that in actions for damages based on quasi-delict, claims for damages arising from a different cause of action
(i.e., other than the fault or negligence of the defendant) should not be included in the computation of the jurisdictional amount.
According to petitioner, the moral and exemplary damages claimed by the respondents in the case at bar are not direct and
proximate consequences of the alleged negligent act. Petitioner points out that the complaint itself stated that such moral and
exemplary damages arose from the alleged refusal of defendants to honor the demand for damages, and therefore there is no
reasonable cause and effect between the fault or negligence of the defendant and the claim for moral and exemplary damages.14
If the claims for moral and exemplary damages are not included in the computation for purposes of determining jurisdiction, only
the claim for actual damages in the amount of P40,000.00 will be considered, and the MeTC will have jurisdiction.

We cannot give credence to petitioner’s arguments. The distinction he made between damages arising directly from injuries in a
quasi-delict and those arising from a refusal to admit liability for a quasi-delict is more apparent than real, as the damages sought
by respondent originate from the same cause of action: the quasi-delict. The fault or negligence of the employee and the juris
tantum presumption of negligence of his employer in his selection and supervision are the seeds of the damages claimed, without
distinction.

Even assuming, for the sake of argument, that the claims for moral and exemplary damages arose from a cause of action other
than the quasi-delict, their inclusion in the computation of damages for jurisdictional purposes is still proper. All claims for damages
should be considered in determining the jurisdiction of the court regardless of whether they arose from a single cause of action or
several causes of action. Rule 2, Section 5, of the Rules of Court allows a party to assert as many causes of action as he may
have against the opposing party. Subsection (d) of said section provides that where the claims in all such joined causes of action
are principally for recovery of money, the aggregate amount claimed shall be the test of jurisdiction.15
Hence, whether or not the different claims for damages are based on a single cause of action or different causes of action, it is the
total amount thereof which shall govern. Jurisdiction in the case at bar remains with the RTC, considering that the total amount
claimed, inclusive of the moral and exemplary damages claimed, is P490,000.00.

In sum, actions for damages based on quasi-delicts are actions that are capable of pecuniary estimation. As such, they fall within
the jurisdiction of either the RTC or the municipal courts, depending on the amount of damages claimed. In this case, the amount
of damages claimed is within the jurisdiction of the RTC, since it is the claim for all kinds of damages that is the basis of determining
the jurisdiction of courts, whether the claims for damages arise from the same or from different causes of action.

WHEREFORE, the petition for review on certiorari is hereby DENIED for lack of merit. The Decision and Resolution of the Court
of Appeals dated 28 October 2004 and 26 January 2005, respectively, are AFFIRMED insofar as they held that the Regional Trial
Court has jurisdiction. No costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT

SECOND DIVISION

G.R. No. 160283 October 14, 2005

JOHN KAM BIAK Y. CHAN, JR., Petitioner,

vs.

Iglesia Ni Cristo, Inc., Respondent.

DECISION

CHICO-NAZARIO, J.:
Before Us is a petition for review on certiorari1 assailing the Decision2 of the Court of Appeals in CA-G.R. CV No. 65976, dated
25 September 2003. Said Decision denied the petitioner’s appeal from the decision of the Regional Trial Court (RTC), La Union,
Branch 31, in Civil Case No. A-1646.

THE FACTS

The antecedents of the instant case are quite simple.

The Aringay Shell Gasoline Station is owned by the petitioner. It is located in Sta. Rita East, Aringay, La Union, and bounded on
the south by a chapel of the respondent.

The gasoline station supposedly needed additional sewerage and septic tanks for its washrooms. In view of this, the services of
Dioscoro "Ely" Yoro (Yoro), a retired general of the Armed Forces of the Philippines, was procured by petitioner, as the former was
allegedly a construction contractor in the locality.

Petitioner and Yoro executed a Memorandum of Agreement3 (MOA) on 28 February 1995 which is reproduced hereunder:

MEMORANDUM OF AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This MEMORANDUM OF AGREEMENT, executed this 28th day of February, 1995, by and between:

JOHN Y. CHAN, of legal age, single, and a resident of Aringay, La Union, now and hereinafter called the FIRST PARTY;

GEN. ELY E. YORO, Jr., of legal age, married, and a resident of Damortis, Sto. Tomas, La Union, hereinafter referred to as the
SECOND PARTY:

WITNESSETH that:

WHEREAS, the FIRST PARTY is the owner of a parcel of land located at Sta. Rita, Aringay, La Union.

WHEREAS, the FIRST PARTY, desires to dig a septic tank for its perusal in the property bordering Iglesia ni Cristo.

WHEREAS, the SECOND PARTY is willing to contract the intended digging of septic tank for the first party.

WHEREAS, the FIRST PARTY and SECOND PARTY has (sic) agreed verbally as to the compensation of the said digging of
septic tank.
WHEREFORE, for and in consideration of the terms and covenants hereinbelow set forth, the FIRST PARTY hereby AGREES
and ALLOWS the SECOND PARTY to undertake the digging of the parcel of land for the exclusive purpose of having a septic
tank.

TERMS AND COVENANTS

1. The SECOND PARTY shall contract the said digging;

2. The FIRST PARTY shall have complete control over the number of personnel who will be entering the property for said contract;

3. The digging shall be allowed for a period of three (3) weeks only, commencing on March 28, 1995, unless extended by agreement
of the parties;

4. Any damage within or outside the property of the FIRST PARTY incurred during the digging shall be borne by the SECOND
PARTY;

5. In the event that valuable objects are found on the property, the same shall be divided among the parties as follows:

FIRST PARTY - 60%

SECOND PARTY - 40%

6. In the event that valuable objects are found outside the property line during the said digging, the same shall be divided among
the parties as follows:

FIRST PARTY - 35%

SECOND PARTY - 65%

7. In case government or military interference or outside intervention is imminent, the FIRST PARTY hereby reserves the option
to stop the digging at any stage thereof.

IN WITNESS WHEREOF, We have hereunto set our hands on the day and year first above-written at Aringay, La Union.4

Diggings thereafter commenced. After some time, petitioner was informed by the members of the respondent that the digging
traversed and penetrated a portion of the land belonging to the latter. The foundation of the chapel was affected as a tunnel was
dug directly under it to the damage and prejudice of the respondent.
On 18 April 1995, a Complaint5 against petitioner and a certain Teofilo Oller, petitioner’s engineer, was filed by the respondent
before the RTC, La Union, Branch 31, docketed therein as Civil Case No. A-1646. Petitioner and Oller filed an Answer with Third-
Party Complaint6 impleading Yoro as third-party defendant.

Yoro filed an Answer to the Third-Party Complaint7 dated 13 July 1995. An Amended and Supplemental Complaint8 dated 30
August 1995 was later filed by the respondent already naming Yoro as a party-defendant, to which the petitioner and Oller filed an
Answer.9 Yoro filed his own Answer.10

After four years of hearing the case, the trial court promulgated its Decision11 holding that the diggings were not intended for the
construction of sewerage and septic tanks but were made to construct tunnels to find hidden treasure.12 The trial court adjudged
the petitioner and Yoro solidarily liable to the respondent on a 35%-65% basis (the petitioner liable for the 35%), and absolving
Oller from any liability, viz:

WHEREFORE, this Court renders judgment in favor of plaintiff IGLESIA NI CRISTO and against defendants JOHN KAMBIAK
CHAN and DIOSCORO "ELY" YORO, JR. who are respectively solidarily liable to PLAINTIFF on a 35%-65% basis, with JOHN
CHAN taking the 35% tab, Ordering the two (2) aforesaid DEFENDANTS to pay PLAINTIFF the following amounts:

1. SIX HUNDRED THIRTY-THREE THOUSAND FIVE HUNDRED NINETY-FIVE PESOS AND FIFTY CENTAVOS (P633,595.50);
representing ACTUAL DAMAGES;

2. FIVE HUNDRED THOUSAND PESOS (P500,000.00) representing MORAL DAMAGES;

3. TEN MILLION PESOS (P10,000,000.00) as EXEMPLARY DAMAGES;

4. FIFTY THOUSAND PESOS (P50,000.00) as plaintiff’s attorney’s fees; and

5. TWENTY THOUSAND PESOS (P20,000.00) as litigation expenses.

Defendant TEOFILO OLLER is absolved of any civil liability.

Any counterclaim filed against PLAINTIFF IGLESIA NI CRISTO is dismissed.13

Petitioner filed a Notice of Appeal14 dated 18 August 1999. Yoro filed his own Notice of Appeal15 dated 20 August 1999.

In a Resolution16 dated 19 November 1999, the trial court disallowed Yoro’s appeal for failure to pay the appellate court docket
and other lawful fees within the reglementary period for taking an appeal.17 In view of Yoro’s failure to appropriately file an appeal,
an order was issued for the issuance of a Writ of Execution as against him only, the dispositive portion of which reads:

WHEREFORE, premises considered, this Court GRANTS the motion of plaintiff Iglesia ni Cristo for the issuance of a Writ of
Execution as against Dioscoro "Ely" Yoro, Jr. only.18
The petitioner’s appeal to the Court of Appeals, on the other hand, was given due course.19 On 25 September 2003, the Court of
Appeals rendered its Decision denying the appeal. It affirmed the trial court but with modifications. The decretal portion of the
decision states:

WHEREFORE, the appeal is hereby DENIED. The assailed decision in Civil Case No. A-1646 is hereby AFFIRMED with
MODIFICATIONS as follows:

(a) The award of moral damages in the amount of P500,000.00 is hereby deleted.

(b) The award of exemplary damages is hereby reduced to P50,000.00.

(c) The award of attorney’s fees and litigation expenses is hereby reduced to P30,000.00.20

Undeterred, petitioner instituted the instant case before this Court. On 15 December 2004, the instant petition was given due
course.21

ASSIGNMENT OF ERRORS

Petitioner assigns as errors the following:

THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE REGIONAL TRIAL COURT (BRANCH 31, AGOO,
LA UNION) PARTICULARLY IN SAYING THAT THE BASIS OF THE SOLIDARY OBLIGATION OF PETITIONER AND YORO
VIS-À-VIS PLAINTIFF IS BASED NOT ON THE MOA BUT ON TORT

II

THE COURT OF APPEALS ERRED IN NOT GIVING EFFECT TO THE MOA WHICH SHOULD EXONERATE THE
PETITIONER FROM ALL LIABILITIES TO THE PRIVATE RESPONDENT

III

THE COURT OF APPEALS ERRED IN NOT APPRECIATING THE THIRD-PARTY COMPLAINT AS CROSS-CLAIM OF THE
PETITIONER AGAINST YORO.22

ISSUE

Drawn from the above assignment of errors, the solitary issue that needs to be resolved is:
WHETHER OR NOT THE MEMORANDUM OF AGREEMENT ENTERED INTO BY THE PETITIONER AND YORO HAS THE
EFFECT OF MAKING THE LATTER SOLELY RESPONSIBLE FOR DAMAGES TO THE RESPONDENT.

THE RULINGS OF THE COURT

Petitioner avers that no liability should attach to him by laying the blame solely on Yoro. He argues that the MOA executed between
him and Yoro is the law between them and must be given weight by the courts. Since nothing in the MOA goes against the law,
morals, good customs and public policy, it must govern to absolve him from any liability.23 Petitioner relies heavily in Paragraph 4
of the MOA, which is again reproduced hereunder:

4. Any damage within or outside the property of the FIRST PARTY incurred during the digging shall be borne by the SECOND
PARTY.

In answer to this, the respondent asserts that the MOA should not absolve petitioner from any liability. This written contract,
according to the respondent, clearly shows that the intention of the parties therein was to search for hidden treasure. The alleged
digging for a septic tank was just a cover-up of their real intention.24 The aim of the petitioner and Yoro to intrude and surreptitiously
hunt for hidden treasure in the respondent’s premises should make both parties liable.25

At this juncture, it is vital to underscore the findings of the trial court and the Court of Appeals as to what was the real intention of
the petitioner and Yoro in undertaking the excavations. The findings of the trial court and the Court of Appeals on this point are in
complete unison. Petitioner and Yoro were in quest for hidden treasure26 and, undoubtedly, they were partners in this endeavor.

The Court of Appeals, in its Decision, held in part:

The basis of their solidarity is not the Memorandum of Agreement but the fact that they have become joint tortfeasors. There is
solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity.27

We find no compelling reason to disturb this particular conclusion reached by the Court of Appeals. The issue, therefore, must be
ruled in the negative.

Article 2176 of the New 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.

Based on this provision of law, the requisites of quasi-delict are the following:

(a) there must be an act or omission;

(b) such act or omission causes damage to another;

(c) such act or commission is caused by fault or negligence; and

(d) there is no pre-existing contractual relation between the parties.

All the requisites are attendant in the instant case. The tortious act was the excavation which caused damage to the respondent
because it was done surreptitiously within its premises and it may have affected the foundation of the chapel. The excavation on
respondent’s premises was caused by fault. Finally, there was no pre-existing contractual relation between the petitioner and Yoro
on the one hand, and the respondent on the other.

For the damage caused to respondent, petitioner and Yoro are jointly liable as they are joint tortfeasors. Verily, the responsibility
of two or more persons who are liable for a quasi-delict is solidary.28

The heavy reliance of petitioner in paragraph 4 of the MOA cited earlier cannot steer him clear of any liability.

As a general rule, joint tortfeasors are all the persons who command, instigate, promote, encourage, advise, countenance,
cooperate in, aid or abet the commission of a tort, or who approve of it after it is done, if done for their benefit.29

Indubitably, petitioner and Yoro cooperated in committing the tort. They even had provisions in their MOA as to how they would
divide the treasure if any is found within or outside petitioner’s property line. Thus, the MOA, instead of exculpating petitioner from
liability, is the very noose that insures that he be so declared as liable.

Besides, petitioner cannot claim that he did not know that the excavation traversed the respondent’s property. In fact, he had two
(2) of his employees actually observe the diggings, his security guard and his engineer Teofilo Oller.30

Coming now to the matter on damages, the respondent questions the drastic reduction of the exemplary damages awarded to it.
It may be recalled that the trial court awarded exemplary damages in the amount of P10,000,000.00 but same was reduced by the
Court of Appeals to P50,000.00.

Exemplary or corrective damages are imposed by way of example or correction for the public good.31 In quasi-delicts, exemplary
damages may be granted if the defendant acted with gross negligence.32 By gross negligence is meant such entire want of care
as to raise a presumption that the person in fault is conscious of the probable consequences of carelessness, and is indifferent, or
worse, to the danger of injury to person or property of others.33

Surreptitiously digging under the respondent’s chapel which may weaken the foundation thereof, thereby endangering the lives
and limbs of the people in worship, unquestionably amounts to gross negligence. Not to mention the damage that may be caused
to the structure itself. The respondent may indeed be awarded exemplary damages.
For such tortious act done with gross negligence, the Court feels that the amount awarded by the Court of Appeals is inadequate.
The exemplary damages must correspondingly be increased to P100,000.00.

The modification made by this Court to the judgment of the Court of Appeals must operate as against Yoro, for as fittingly held by
the court a quo:

While it is settled that a party who did not appeal from the decision cannot seek any relief other than what is provided in the
judgment appealed from, nevertheless, when the rights and liability of the defendants are so interwoven and dependent as to be
inseparable, in which case, the modification of the appealed judgment in favor of appellant operates as a modification to Gen. Yoro
who did not appeal. In this case, the liabilities of Gen. Yoro and appellant being solidary, the above exception applies.34

WHEREFORE, the Decision of the Court of Appeals dated 25 September 2003 is AFFIRMED with MODIFICATION as to the award
of exemplary damages, which is hereby increased to P100,000.00. Costs against petitioner.

SO ORDERED.
 Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 118889 March 23, 1998

FGU INSURANCE CORPORATION, petitioner,

vs.

COURT OF APPEALS, FILCAR TRANSPORT, INC., and FORTUNE INSURANCE CORPORATION, respondents.

BELLOSILLO, J.:

For damages suffered by a third party, may an action based on quasi-delict prosper against a rent-a-car company and,
consequently, its insurer for fault or negligence of the car lessee in driving the rented vehicle?

This was a two-car collision at dawn. At around 3 o'clock of 21 April 1987, two (2) vehicles, both Mitsubishi Colt Lancers, cruising
northward along Epifanio de los Santos Avenue, Mandaluyong City, figured in a traffic accident. The car bearing Plate No. PDG
435 owned by Lydia F. Soriano was being driven at the outer lane of the highway by Benjamin Jacildone, while the other car, with
Plate No. PCT 792, owned by respondent FILCAR Transport, Inc. (FILCAR), and driven by Peter Dahl-Jensen as lessee, was at
the center lane, left of the other vehicle. Upon approaching the corner of Pioneer Street, the car owned by FILCAR swerved to the
right hitting the left side of the car of Soriano. At that time Dahl-Jensen, a Danish tourist, did not possess a Philippine driver's
license. 1
As a consequence, petitioner FGU Insurance Corporation, in view of its insurance contract with Soriano, paid the latter P25,382.20.
By way of subrogation,2 it sued Dahl-Jensen and respondent FILCAR as well as respondent Fortune Insurance Corporation
(FORTUNE) as insurer of FILCAR for quasi-delict before the Regional Trial Court of Makati City.

Unfortunately, summons was not served on Dahl-Jensen since he was no longer staying at his given address; in fact, upon motion
of petitioner, he was dropped from the complaint.

On 30 July 1991 the trial court dismissed the case for failure of petitioner to substantiate its claim of subrogation.3

On 31 January 1995 respondent Court of Appeals affirmed the ruling of the trial court although based on another ground, i.e., only
the fault or negligence of Dahl-Jensen was sufficiently proved but not that of respondent FILCAR.4 In other words, petitioner failed
to establish its cause of action for sum of money based on quasi-delict.

In this appeal, petitioner insists that respondents are liable on the strength of the ruling in MYC-Agro-Industrial Corporation v. Vda.
de Caldo5 that the registered owner of a vehicle is liable for damages suffered by third persons although the vehicle is leased to
another.

We find no reversible error committed by respondent court in upholding the dismissal of petitioner's complaint. The pertinent
provision is Art. 2176 of the Civil Code which states: "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 . . . . "

To sustain a claim based thereon, the following requisites must concur: (a) damage suffered by the plaintiff; (b) fault or negligence
of the defendant; and, (c) connection of cause and effect between the fault or negligence of the defendant and the damage incurred
by the plaintiff.6

We agree with respondent court that petitioner failed to prove the existence of the second requisite, i.e., fault or negligence of
defendant FILCAR, because only the fault or negligence of Dahl-Jensen was sufficiently established, not that of FILCAR. It should
be noted that the damage caused on the vehicle of Soriano was brought about by the circumstance that Dahl-Jensen swerved to
the right while the vehicle that he was driving was at the center lane. It is plain that the negligence was solely attributable to Dahl-
Jensen thus making the damage suffered by the other vehicle his personal liability. Respondent FILCAR did not have any
participation therein.

Article 2180 of the same Code which deals also with quasi-delict provides:

The obligation imposed by article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for
whom one is responsible.
The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the minor children who
live in their company.

Guardians are liable for damages caused by the minors or incapacitated persons who are under their authority and live in their
company.

The owners and managers 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 the occasion of their functions.

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.

The State is responsible in like manner when it acts through a special agent; but not when the damage has been caused by the
official to whom the task done properly pertains, in which case what is provided in article 2176 shall be applicable.

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.

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.

The liability imposed by Art. 2180 arises by virtue of a presumption juris tantum of negligence on the part of the persons made
responsible thereunder, derived from their failure to exercise due care and vigilance over the acts of subordinates to prevent them
from causing damage.7 Yet, as correctly observed by respondent court, Art. 2180 is hardly applicable because none of the
circumstances mentioned therein obtains in the case under consideration. Respondent FILCAR being engaged in a rent-a-car
business was only the owner of the car leased to Dahl-Jensen. As such, there was no vinculum juris between them as employer
and employee. Respondent FILCAR cannot in any way be responsible for the negligent act of Dahl-Jensen, the former not being
an employer of the latter.

We now correlate par. 5 of Art. 2180 with Art. 2184 of the same Code which provides: "In motor vehicle mishap, the owner is
solidarily liable with his driver, if the former, who was in the vehicle, could have by the use of due diligence, prevented t he
misfortune . . . . If the owner was not in the motor vehicle, the provisions of article 2180 are applicable." Obviously, this provision
of Art. 2184 is neither applicable because of the absence of master-driver relationship between respondent FILCAR and Dahl-
Jensen. Clearly, petitioner has no cause of action against respondent FILCAR on the basis of quasi-delict; logically, its claim
against respondent FORTUNE can neither prosper.

Petitioner's insistence on MYC-Agro-Industrial Corporation is rooted in a misapprehension of our ruling therein. In that case, the
negligent and reckless operation of the truck owned by petitioner corporation caused injuries to several persons and damage to
property. Intending to exculpate itself from liability, the corporation raised the defense that at the time of the collision it had no more
control over the vehicle as it was leased to another; and, that the driver was not its employee but of the lessee. The trial court was
not persuaded as it found that the true nature of the alleged lease contract was nothing more than a disguise effected by the
corporation to relieve itself of the burdens and responsibilities of an employer. We upheld this finding and affirmed the declaration
of joint and several liability of the corporation with its driver.

WHEREFORE, the petition is DENIED. The decision of respondent Court of Appeals dated 31 January 1995 sustaining the
dismissal of petitioner's complaint by the trial court is AFFIRMED. Costs against petitioner.

SO ORDERED.
 Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 77679 September 30, 1987

VICENTE VERGARA, petitioner,

vs.

THE COURT OF APPEALS and AMADEO AZARCON, respondents.

RESOLUTION

PADILLA, J.:

An action for damages based on quasi-delict (Art. 2176 of the Civil Code) was filed by private respondent against petitioner. The
action arose from a vehicular accident that occurred on 5 August 1979 in Gapan, Nueva Ecija, when Martin Belmonte, while driving
a cargo truck belonging to petitioner, rammed "head-on" the store-residence of the private respondent, causing damages thereto
which were inventoried and assessed at P53,024.22.

In his answer to the complaint, the petitioner alleged principally: "that his driver Martin Belmonte operated said cargo truck in a
very diligent (and) careful manner; that the steering wheel refused to respond to his effort and as a result of a blown-out tire and
despite application of his brakes, the said cargo truck hit the store-residence of plaintiff (private respondent) and that the said
accident was an act of God for which he cannot be held liable." 1

Petitioner also filed a third party complaint against Travellers Insurance and Surety Corporation, alleging that said cargo truck
involved in the vehicular accident, belonging to the petitioner, was insured by the third party defendant insurance company.
Petitioner asked that the latter be ordered to pay him whatever amount he may be ordered by the court to pay to the private
respondent.

The trial court rendered judgment in favor of private respondent. Upon appeal to the Court of Appeals, the latter court affirmed in
toto the decision of the trial court, which ordered Petitioner to pay, jointly and severally with Travellers Insurance and Surety
Corporation, to the private, respondent the following: (a) P53,024.22 as actual damages; (b) P10,000.00 as moral damages; (c)
P10,000.00 as exemplary damages; and (d) the sum of P5,000.00 for attorney's fees and the costs. On the third party complaint,
the insurance company was sentenced to pay to the petitioner the following: (a) P50,000.00 for third party liability under it s
comprehensive accident insurance policy; and (b) P3,000.00 for and as attorney's fees.

Hence, this petition for review on certiorari.

Petitioner's contention that the respondent court erred in finding him guilty of fault or negligence is not tenable. It was established
by competent evidence that the requisites of a quasi-delict are present in the case at bar. These requisites are: (1) damages to the
plaintiff; (2) negligence, by act or omission, of which defendant, or some person for whose acts he must respond, was guilty; and
(3) the connection of cause and effect between such negligence and the damages.

It is undisputed that private respondent suffered damages as a result of an act or omission of petitioner. The issue of whether or
not this act or omission can be considered as a "negligent" act or omission was passed upon by the trial court. The findings of said
court, affirmed by the respondent court, which we are not prepared to now disturb, show that the fact of occurrence of the "vehicular
accident" was sufficiently established by the policy report and the testimony of Patrolman Masiclat. And the fact of negligence may
be deduced from the surrounding circumstances thereof. According to the police report, "the cargo truck was travelling on the right
side of the road going to Manila and then it crossed to the center line and went to the left side of the highway; it then bumped a
tricycle; and then another bicycle; and then said cargo truck rammed the store warehouse of the plaintiff." 2

According to the driver of the cargo truck, he applied the brakes but the latter did not work due to mechanical defect. Contrary to
the claim of the petitioner, a mishap caused by defective brakes can not be consideration as fortuitous in character. Certainly, the
defects were curable and the accident preventable.

Furthermore, the petitioner failed to adduce any evidence to overcome the disputable presumption of negligence on his part in the
selection and supervision of his driver.

Based on the foregoing finding by the respondent Court that there was negligence on the part of the petitioner, the petitioner's
contention that the respondent court erred in awarding private respondent actual, moral and exemplary damages as well as
attorney's fees and costs, is untenable.

ACCORDINGLY, the petition is DENIED.

Republic of the Philippines

SUPREME COURT

THIRD DIVISION

G.R. No. 138550 October 14, 2005

AMERICAN EXPRESS INTERNATIONAL, INC., Petitioner,

vs.

NOEL CORDERO, Defendant.

DECISION

SANDOVAL-GUTIERREZ, J.:

This is a petition for review on certiorari of the Decision1 of the Court of Appeals dated April 30, 1999 in CA-G.R. CV No. 51671,
entitled, "Noel Cordero, Plaintiff-Appellee versus American Express International, Inc., Defendant-Appellant."

Petitioner is a foreign corporation that issues charge cards to its customers, which the latter then use to purchase goods and
services at accredited merchants worldwide. Sometime in 1988, Nilda Cordero, wife of respondent Noel Cordero, applied for and
was issued an American Express charge card with No. 3769-895901-010020. The issuance of the charge card was covered by an
Amex Cardmember Agreement. As cardholder, Nilda, upon signing the back portion of the card, manifested her acceptance of the
terms of the Agreement.

An extension charge card, with No. 3769-895901-01010, was likewise issued to respondent Noel Cordero which he also signed.2

On November 29, 1991, respondent, together with his wife, Nilda, daughter, sisters-in-law and uncle-in-law, went on a three-day
holiday trip to Hong Kong. In the early evening of November 30, 1991, at about 7:00 o’clock, the group went to the Watson’s
Chemist Shop located at 277C Ocean Gallery, Kowloon, Hong Kong. Noel picked up some chocolate candies and handed to the
sales clerk his American Express extension charge card to pay for his purchases. The sales clerk verified the card by making a
telephone call to the American Express Office in Hong Kong. Moments later, Susan Chong, the store manager, emerged from
behind the counter and informed respondent that she had to confiscate the card. Thereupon, she cut respondent’s American
Express card in half with a pair of scissors. This, according to respondent, caused him embarrassment and humiliation considering
that it was done in front of his family and the other customers lined up at the check-out counter. Hence, Nilda had to pay for the
purchases using her own American Express charge card.3

When they returned to the Excelsior Hotel, Nilda called up petitioner’s Office in Hong Kong. She was able to talk to Senior Authorizer
Johnny Chen, who informed her that on November 1, 1991, a person in Hong Kong attempted to use a charge card with the same
number as respondent’s card. The Hong Kong American Express Office called up respondent and after determining that he was
in Manila and not in Hong Kong, placed his card in the "Inspect Airwarn Support System." This is the system utilized by petitioner
as a protection both for the company and the cardholders against the fraudulent use of their charge cards. Once a card suspected
of unauthorized use is placed in the system, the person to whom the card is tendered must verify the identity of the holder. If the
true identity of the card owner is established, the card is honored and the charges are approved. Otherwise, the card is revoked
or confiscated.4

When the Watson’s sales clerk called up petitioner’s Hong Kong Office, its representative said he wants to talk to respondent in
order to verify the latter’s identity, pursuant to the procedure observed under the "Inspect Airwarn Support System." However,
respondent refused. Consequently, petitioner’s representative was unable to establish the identity of the cardholder.5 This led to
the confiscation of respondent’s card.

On March 31, 1992, respondent filed with the Regional Trial Court, Branch V, Manila, a complaint for damages against petitioner,
docketed as Civil Case No. 92-60807. He prayed for the award of moral damages and exemplary damages, as well as attorney’s
fees as a result of the humiliation he suffered.

The trial court found that "the inexcusable failure of defendant (petitioner herein) to inform plaintiff (respondent herein) of the
November 1, 1991 incident despite sufficient time was the proximate cause of the confiscation and cutting of plaintiff’s extension
card which exposed the latter to public humiliation for which defendant should be held liable."6 On February 20, 1995, the trial
court promulgated its Decision, the dispositive portion of which reads:

"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering the latter to pay the former
the following amounts, namely:

a) The sum of P300,000.00 as and by way of moral damages;

b) The sum of P200,000.00 as exemplary damages;

c) The sum of P100,000.00 as and for reasonable attorney’s fees; and

d) The costs of the suit.

SO ORDERED."7

Upon appeal, the Court of Appeals rendered the assailed Decision affirming the trial court’s Decision with modification in the sense
that the amounts of damages awarded were reduced, thus:

"WHEREFORE, in view of the foregoing, the appealed decision dated February 20, 1995 of the Regional Trial Court of Manila,
Branch V, in Civil Case No. 92-60807 is hereby AFFIRMED, subject to modifications with respect to the amount of damages
awarded, which are reduced as follows:

(a) Moral damages from P300,000.00 to P150,000.00; and

(b) Exemplary damages from P200,000.00 to P100,000.00.

No pronouncement as to costs.

SO ORDERED."

Hence, the instant petition raising the following issues:

"A. Whether the lower courts gravely erred in attributing the ‘public humiliation’ allegedly suffered by Cordero to Amex.

B. Whether the lower courts gravely erred in holding Amex liable to Cordero for moral damages, exemplary damages and attorney’s
fees."8

Respondent filed his comment contending in the main that the petition raises questions of fact beyond this Court’s domain.

While it is true that under Rule 45 of the 1997 Rules of Civil Procedure, as amended, this Court may review only errors of law,
however, this rule admits of well-known recognized exceptions, thus:

". . . (1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the inference made is manifestly
mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact
are conflicting; (6) the Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions of both
parties; (7) the findings of fact of the Court of Appeals are contrary to those of the trial court; (8) said findings of fact are conclusions
without citation of specific evidence on which they are based; (9) the facts set forth in the petition are not disputed by the
respondents; and (10) the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and
contradicted by the evidence on record."9

In this case, the inference made by the courts below is manifestly mistaken. Therefore, we are justified in reviewing the records of
this case and rendering judgment based on our own findings.

In his complaint, respondent claimed that he suffered embarrassment and humiliation because his card was unceremoniously
confiscated and cut in half by Susan Chong of Watson’s Chemist Shop.

Respondent anchors his cause of action on the following provision 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."10

In order that an obligation based on quasi-delict may arise, there must be no pre-existing contractual relation between the parties.
But there are exceptions. There may be an action for quasi-delict notwithstanding that there is a subsisting contract between the
parties. A liability for tort may arise even under a contract, where tort is that which breaches the contract. Stated differently, when
an act which constitutes a breach of contract would have itself constituted the source of a quasi-delictual liability, the contract can
be said to have been breached by tort, thereby allowing the rules on tort to apply.11

Furthermore, to constitute quasi-delict, the fault or negligence must be the proximate cause of the damage or injury suffered by
the plaintiff. Proximate cause is that cause which, in natural and continuous sequence, unbroken by any efficient intervening cause,
produces the injury and without which the result would not have occurred. Proximate cause is determined by the facts of each case
upon mixed considerations of logic, common sense, policy and precedent.12

According to the trial court, petitioner should have informed respondent that on November 1, 1991, a person in Hong Kong
attempted to use a charge card bearing similar number to that of respondent’s card; and that petitioner’s inexcusable failure to do
so is the proximate cause of the "confiscation and cutting of [respondent’s] extension card which exposed the latter to public
humiliation for which [petitioner] should be held liable."13

We cannot sustain the trial court’s conclusion.

As explained by respondent himself, he could have used his card upon verification by the sales clerk of Watson that indeed he is
the authorized cardholder. This could have been accomplished had respondent talked to petitioner’s representative, enabling the
latter to determine that respondent is indeed the true holder of the card. Clearly, no negligence which breaches the contract can
be attributed to petitioner. If at all, the cause of respondent’s humiliation and embarrassment was his refusal to talk to petitioner’s
representative.

That respondent refused to talk to petitioner’s representative can be gleaned from the testimony of Mr. Chen Heng Kun a.k.a.
Johnny Chen during the deposition in Hong Kong,14thus:

"Question No 9 : Was AEII required under its existing policies and/or membership agreement with its cardholders to advise said
cardholders of their card have been put under the support INSPECT - Strictly Question (for identification) cardmembers before
approving any charge?

Mr. Johnny Chen : Under the existing policies of AEII, we don’t have to inform the cardholders if they have to pass the INSPECT -
Strictly Questions (for identification).

Question No 10 : If the answer to Q9 is in the negative, please explain why not?

Mr. Johnny Chen : The reason why we don’t have to are because, first, we are not terminating the service to the cardholder.
Second, it doesn’t mean that we are going to limit the service to the cardholder. Third, as long as the cardholder can present an
identification card of his membership, we allow him to use the card. He can show this by telephoning the company or by presenting
us his passport or travel document. When Watson Company called AEII for authorization, AEII representative requested
thathe talk to Mr. Cordero but he refused to talk to any representative of AEII. AEII could not prove then that he is really
the real card holder."

Mr. Chen Heng Kun was briefly cross-examined by respondent’s counsel, thus:

"Question No 10 : Question 9 is objected to since the best evidence would be the membership agreement between plaintiffs and
AEII."

Significantly, paragraph 16 of the Cardmember Agreement signed by respondent provides:

"16. THE CARD REMAINS OUR PROPERTY

"The Card remains our property and we can revoke your right and the right of ay Additional Cardmember to use it at any time, we
can do this with or without giving you notice. If we have revoked the Card without cause, we will refund a proportion of your annual
Card Account fee. We may list revoked Cards in our "Cancellation Bulletin", or otherwise inform Establishments that the Card
issued to you and, if you are the basic Cardmember, any Additional Cards have been revoked or cancelled.

"If we revoke the card or it expires, you must return it to us if we request. Also, if any Establishment asks you to surrender an
expired or revoked Card, you must do so. You may not use the Card after it has expired or after it has been revoked.

"The revocation, repossession or request for the return of the Card is not, and shall not constitute any reflection of your character
or credit-worthiness and we shall not be liable in any way for any statement made by any person requesting the return or surrender
of the Card."15

To be sure, pursuant to the above stipulation, petitioner can revoke respondent’s card without notice, as was done here. It bears
reiterating that the subject card would not have been confiscated and cut had respondent talked to petitioner’s representative and
identified himself as the genuine cardholder. It is thus safe to conclude that there was no negligence on the part of petitioner and
that, therefore, it cannot be held liable to respondent for damages.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. CV No. 51671 is REVERSED.

SO ORDERED.
 SECOND DIVISION

G.R. No. 170631, February 10, 2016

CARAVAN TRAVEL AND TOURS INTERNATIONAL, INC., Petitioner, v. ERMILINDA R. ABEJAR, Respondent.

DECISION

LEONEN, J.:

The plaintiff may first prove the employer's ownership of the vehicle involved in a mishap by presenting the vehicle's registration in
evidence. Thereafter, a disputable presumption that the requirements for an employer's liability under Article 2180 1 of the Civil
Code have been satisfied will arise. The burden of evidence then shifts to the defendant to show that no liability under Article 2180
has ensued. This case, thus, harmonizes the requirements of Article 2180, in relation to Article 2176 2 of the Civil Code, and the
so-called registered-owner rule as established in this court's rulings in Aguilar, Sr. v. Commercial Savings Bank,3Del Carmen, Jr.
v. Bacoy,4Filcar Transport Services v. Espinas,5 and Mendoza v. Spouses Gomez.6

Through this Petition for Review on Certiorari, 7 Caravel Travel and Tours International, Inc. (Caravan) prays that the Decision 8
dated October 3, 2005 and the Resolution9 dated November 29, 2005 of the Court of Appeals Twelfth Division be reversed and
set aside.10

On July 13, 2000, Jesmariane R. Reyes (Reyes) was walking along the west-bound lane of Sampaguita Street, United Parañaque
Subdivision IV, Parañaque City.11 A Mitsubishi L-300 van with plate number PKM 19512 was travelling along the east-bound lane,
opposite Reyes.13 To avoid an incoming vehicle, the van swerved to its left and hit Reyes. 14 Alex Espinosa (Espinosa), a witness
to the accident, went to her aid and loaded her in the back of the van. 15 Espinosa told the driver of the van, Jimmy Bautista
(Bautista), to bring Reyes to the hospital. 16 Instead of doing so, Bautista appeared to have left the van parked inside a nearby
subdivision with Reyes still in the van. 17 Fortunately for Reyes, an unidentified civilian came to help and drove Reyes to the
hospital.18

Upon investigation, it was found that the registered owner of the van was Caravan. 19 Caravan is a corporation engaged in the
business of organizing travels and tours. 20 Bautista was Caravan's employee assigned to drive the van as its service driver. 21

Caravan shouldered the hospitalization expenses of Reyes. 22 Despite medical attendance, Reyes died two (2) days after the
accident.23

Respondent Ermilinda R. Abejar (Abejar), Reyes' paternal aunt and the person who raised her since she was nine (9) years old, 24
filed before the Regional Trial Court of Parañaque a Complaint 25 for damages against Bautista and Caravan. In her Complaint,
Abejar alleged that Bautista was an employee of Caravan and that Caravan is the registered owner of the van that hit Reyes. 26

Summons could not be served on Bautista. 27 Thus, Abejar moved to drop Bautista as a defendant. 28 The Regional Trial Court
granted her Motion.29

After trial, the Regional Trial Court found that Bautista was grossly negligent in driving the vehicle. 30 It awarded damages in favor
of Abejar, as follows:

chanRoblesvirtualLawlibrary

WHEREFORE, considering that the [respondent] was able to provide by preponderance of evidence her cause of
action against the defendants, judgment is hereby rendered ordering defendants JIMMY BAUTISTA and
CARAVAN TRAVEL and TOURS[,] INC., to jointly and solidarity pay the plaintiff, the following, to wit:
chanRoblesvirtualLawlibrary
1. The amount of P35,000.00 representing actual damages;

2. The amount of P300,000.00 as moral damages;

3. The amount of P30,000.00 as exemplary damages;

4. The amount of P50,000.00 as and by way of attorney's fees; and

5. The cost of suit.

SO ORDERED.31ChanRoblesVirtualawlibrary
Caravan's Motion for Reconsideration32 was denied through the October 20, 2003 Order33 of the Regional Trial Court.

The Court of Appeals affirmed with modification the Regional Trial Court's July 31, 2003 Decision and October 20, 2003 Order, as
follows:
chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the instant appeal is DENIED for lack of merit. The assailed Decision dated
31 July 2003 and Order dated 20 October 2003 of the Regional Trial Court, City of Para[ñ]aque, Branch 258, in
Civil Case No. 00-0447 are AFFIRMED with the following MODIFICATIONS:

1. Moral Damages is REDUCED to Php 200,000.00;

2. Death Indemnity of Php 50,000.00 is awarded;

3. The Php 35,000.00 actual damages, Php 200,000.00 moral damages, Php 30,000.00 exemplary
damages and Php 50,000.00 attorney's fees shall earn interest at the rate of 6% per annum computed
from 31 July 2003, the date of the [Regional Trial Court's] decision; and upon finality of this Decision,
all the amounts due shall earn interest at the rate of 12% per annum, in lieu of 6% per annum, until full
payment; and

4. The Php 50,000.00 death indemnity shall earn interest at the rate of 6% per annum computed from the
date of promulgation of this Decision; and upon finality of this Decision, the amount due shall earn
interest at the rate of 12% per annum, in lieu of 6% per annum, until full payment.

Costs against [Caravan].

SO ORDERED.34ChanRoblesVirtualawlibrary
Caravan filed a Motion for Reconsideration, but it was denied in the Court of Appeals' assailed November 29, 2005 Resolution. 35

Hence, this Petition was filed.

Caravan argues that Abejar has no personality to bring this suit because she is not a real party in interest. According to Caravan,
Abejar does not exercise legal or substitute parental authority. She is also not the judicially appointed guardian or the only living
relative of the deceased.36 She is also not "the executor or administrator of the estate of the deceased." 37 According to Caravan,
only the victim herself or her heirs can enforce an action based on culpa aquiliana such as Abejar's action for damages.38

Caravan adds that Abejar offered no documentary or testimonial evidence to prove that Bautista, the driver, acted "within the scope
of his assigned tasks"39 when the accident occurred.40 According to Caravan, Bautista's tasks only pertained to the transport of
company personnel or products, and when the accident occurred, he had not been transporting personnel or delivering products
of and for the company.41

Caravan also argues that "it exercised the diligence of a good father of a family in the selection and supervision of its employees."42

Caravan further claims that Abejar should not have been awarded moral damages, actual damages, death indemnity, exemplary
damages, and attorney's fees.43 It questions the Certificate provided by Abejar as proof of expenses since its signatory, a certain
Julian Peñaloza (Peñaloza), was not presented in court, and Caravan was denied the right to cross-examine him.44 Caravan argues
that the statements in the Certification constitute hearsay. 45 It also contends that based on Article 2206(3)46 of the Civil Code,
Abejar is not entitled to moral damages. 47 It insists that moral and exemplary damages should not have been awarded to Abejar
because Caravan acted in good faith.48 Considering that moral and exemplary damages are unwarranted, Caravan claims that the
award of attorney's fees should have also been removed. 49

Lastly, Caravan argues that it should not be held solidarily liable with Bautista since Bautista was already dropped as a party.50
Abejar counters that Caravan failed to provide proof that it exercised the requisite diligence in the selection and supervision of
Bautista.51 She adds that the Court of Appeals' ruling that Caravan is solidarily liable with Bautista for moral damages, exemplary
damages, civil indemnity ex delicto, and attorney's fees should be upheld. 52 Abejar argues that since Caravan is the registered
owner of the van, it is directly, primarily, and solidarity liable for the tortious acts of its driver. 53

For resolution are the following issues:

First, whether respondent Ermilinda R. Abejar is a real party in interest who may bring an action for damages against petitioner
Caravan Travel and Tours International, Inc. on account of Jesmariane R. Reyes' death; and

Second, whether petitioner should be held liable as an employer, pursuant to Article 2180 of the Civil Code.

We deny the Petition.

Having exercised substitute parental authority, respondent suffered actual loss and is, thus, a real party in interest in this case.

In her Complaint, respondent made allegations that would sustain her action for damages: that she exercised substitute parental
authority over Reyes; that Reyes' death was caused by the negligence of petitioner and its driver; and that Reyes' death caused
her damage.54 Respondent properly filed an action based on quasi-delict. She is a real party in interest.

Rule 3, Section 2 of the 1997 Rules of Civil Procedure defines a real party in interest:
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RULE 3. Parties to Civil Actions

....

SECTION 2. Parties in Interest. — A real party in interest is the party who stands to be benefited or injured by the
judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these
Rules, every action must be prosecuted or defended in the name of the real party in interest.
"To qualify a person to be a real party in interest in whose name an action must be prosecuted, he [or she] must appear to be the
present real owner of the right sought to be enforced."55 Respondent's capacity to file a complaint against petitioner stems from
her having exercised substitute parental authority over Reyes.

Article 216 of the Family Code identifies the persons who exercise substitute parental authority:
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Art. 216. In default of parents or a judicially appointed guardian, the following persons shall exercise substitute
parental authority over the child in the order indicated:

(1) The surviving grandparent, as provided in Art. 214; 56

(2) The oldest brother or sister, over twenty-one years of age, unless unfit or disqualified; and

(3) The child's actual custodian, over twenty-one years of age, unless unfit or disqualified.

Whenever the appointment or a judicial guardian over the property of the child becomes necessary, the same
order of preference shall be observed. (Emphasis supplied)
Article 233 of the Family Code provides for the extent of authority of persons exercising substitute parental authority, that is, the
same as those of actual parents:
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Art. 233. The person exercising substitute parental authority shall have the same authority over the person of the
child as the parents. (Emphasis supplied)
Both of Reyes' parents are already deceased. 57 Reyes' paternal grandparents are also both deceased. 58 The whereabouts of
Reyes' maternal grandparents are unknown.59 There is also no record that Reyes has brothers or sisters. It was under these
circumstances that respondent took custody of Reyes when she was a child, assumed the role of Reyes' parents, and thus,
exercised substitute parental authority over her. 60 As Reyes' custodian, respondent exercised the full extent of the statutorily
recognized rights and duties of a parent. Consistent with Article 220 61 of the Family Code, respondent supported Reyes' education62
and provided for her personal needs.63 To echo respondent's words in her Complaint, she treated Reyes as if she were her own
daughter.64

Respondent's right to proceed against petitioner, therefore, is based on two grounds.

First, respondent suffered actual personal loss. With her affinity for Reyes, it stands to reason that when Reyes died, respondent
suffered the same anguish that a natural parent would have felt upon the loss of one's child. It is for this injury — as authentic and
personal as that of a natural parent — that respondent seeks to be indemnified.

Second, respondent is capacitated to do what Reyes' actual parents would have been capacitated to do.

In Metro Manila Transit Corporation v. Court of Appeals,65Tapdasan, Jr. v. People,66 and Aguilar, Sr. v. Commercial Savings
Bank,67 this court allowed natural parents of victims to recover damages for the death of their children. Inasmuch as persons
exercising substitute parental authority have the full range of competencies of a child's actual parents, nothing prevents persons
exercising substitute parental authority from similarly possessing the right to be indemnified for their ward's death.

We note that Reyes was already 18 years old when she died. Having reached the age of majority, she was already emancipated
upon her death. While parental authority is terminated upon emancipation, 68 respondent continued to support and care for Reyes
even after she turned 18.69 Except for the legal technicality of Reyes' emancipation, her relationship with respondent remained the
same. The anguish and damage caused to respondent by Reyes' death was no different because of Reyes' emancipation.

In any case, the termination of respondent's parental authority is not an insurmountable legal bar that precludes the filing of her
Complaint. In interpreting Article 190270 of the old Civil Code, which is substantially similar to the first sentence of Article 2176 71 of
the Civil Code, this court in The Receiver For North Negros Sugar Company, Inc. v. Ybañez, et al. 72 ruled that brothers and sisters
may recover damages, except moral damages, for the death of their sibling. 73 This court declared that Article 1902 of the old Civil
Code (now Article 2176) is broad enough to accommodate even plaintiffs who are not relatives of the deceased, thus: 74
This Court said: "Article 1902 of the Civil Code declares that any person who by an act or omission, characterized
by fault or negligence, causes damage to another shall be liable for the damage done ... a person is liable for
damage done to another by any culpable act; and by any culpable act is meant any act which is blameworthy
when judged by accepted legal standards. The idea thus expressed is undoubtedly broad enough to include any
rational conception of liability for the tortious acts likely to be developed in any society." The word "damage" in
said article, comprehending as it does all that are embraced in its meaning, includes any and all damages that a
human being may suffer in any and all the manifestations of his life: physical or material, moral or psychological,
mental or spiritual, financial, economic, social, political, and religious.

It is particularly noticeable that Article 1902 stresses the passive subject of the obligation to pay damages caused
by his fault or negligence. The article does not limit or specify the active subjects, much less the relation that must
exist between the victim of the culpa aquiliana and the person who may recover damages, thus warranting the
 inference that, in principle, anybody who suffers any damage from culpa aquiliana, whether a relative or not of
the victim, may recover damages from the person responsible therefor[.]75 (Emphasis supplied, citations omitted)
II

Respondent's Complaint is anchored on an employer's liability for quasi-delict provided in Article 2180, in relation to Article 2176
of the Civil Code. Articles 2176 and 2180 read:
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ARTICLE 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.

.....

ARTICLE 2180. The obligation imposed by article 2176 is demandable not only for one's own acts or omissions,
but also for those of persons for whom one is responsible.

The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the
minor children who live in their company.

Guardians are liable for damages caused by the minors or incapacitated persons who are under their authority
and live in their company.

The owners and managers 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 the occasion of their
functions.

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.

The State is responsible in like manner when it acts through a special agent; but not when the damage has been
caused by the official to whom the task done properly pertains, in which case what is provided in article 2176 shall
be applicable.

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.

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. (Emphasis supplied)
Contrary to petitioner's position, it was not fatal to respondent's cause that she herself did not adduce proof that Bautista acted
within the scope of his authority. It was sufficient that Abejar proved that petitioner was the registered owner of the van that hit
Reyes.

The resolution of this case must consider two (2) rules. First, Article 2180's specification that "[e]mployers shall be liable for the
damages caused by their employees . . . acting within the scope of their assigned tasks[.]" Second, the operation of the registered-
owner rule that registered owners are liable for death or injuries caused by the operation of their vehicles. 76

These rules appear to be in conflict when it comes to cases in which the employer is also the registered owner of a vehicle. Article
2180 requires proof of two things: first, an employment relationship between the driver and the owner; and second, that the driver
acted within the scope of his or her assigned tasks. On the other hand, applying the registered-owner rule only requires the plaintiff
to prove that the defendant-employer is the registered owner of the vehicle.

The registered-owner rule was articulated as early as 1957 in Erezo, et al. v. Jepte,77 where this court explained that the registration
of motor vehicles, as required by Section 5(a)78 of Republic Act No. 4136, the Land Transportation and Traffic Code, was necessary
"not to make said registration the operative act by which ownership in vehicles is transferred, . . . but to permit the use and operation
of the vehicle upon any public highway[.]"79 Its "main aim . . . is to identify the owner so that if any accident happens, or that any
damage or injury is caused by the vehicle on the public highways, responsibility therefor can be fixed on a definite individual, the
registered owner."80

Erezo notwithstanding, Castilex Industrial Corporation v. Vasquez, Jr. 81 relied on Article 2180 of the Civil Code even though the
employer was also the registered owner of the vehicle. 82 The registered-owner rule was not mentioned.

In Castilex, Benjamin Abad (Abad) was a manager of Castilex Industrial Corporation (Castilex). Castilex was also the registered
owner of a Toyota Hi-Lux pick-up truck. While Abad was driving the pick-up truck, it collided with a motorcycle driven by Romeo
Vasquez (Vasquez). Vasquez died a few days after. Vasquez's parents filed a case for damages against Abad and Castilex.83
Castilex denied liability, arguing that Abad was acting in his private capacity at the time of the accident. 84

This court absolved Castilex of liability, reasoning that it was incumbent upon the plaintiff to prove that the negligent employee was
acting within the scope of his assigned tasks.85 Vasquez's parents failed to prove this.86 This court outlined the process necessary
for an employer to be held liable for the acts of its employees and applied the process to the case:
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Under the fifth paragraph of Article 2180, whether or not engaged in any business or industry, an employer is
liable for the torts committed by employees within the scope of his assigned tasks. But it is necessary to establish
the employer-employee relationship; once this is done, the plaintiff must show, to hold the employer liable, that
the employee was acting within the scope of his assigned task when the tort complained of was committed. It is
only then that the employer may find it necessary to interpose the defense of due diligence in the selection and
supervision of the employee.

....

Since there is paucity of evidence that ABAD was acting within the scope of the functions entrusted to him,
petitioner CASTILEX had no duty to show that it exercised the diligence of a good father of a family in providing
ABAD with a service vehicle. Thus, justice and equity require that petitioner be relieved of vicarious liability for the
consequences of the negligence of ABAD in driving its vehicle. (Emphasis supplied, citations
omitted)87ChanRoblesVirtualawlibrary
Aguilar, Sr. v. Commercial Savings Bank recognized the seeming conflict between Article 2180 and the registered-owner rule and
applied the latter.88

In Aguilar, Sr., a Mitsubishi Lancer, registered in the name of Commercial Savings Bank and driven by the bank's assistant vice-
president Ferdinand Borja, hit Conrado Aguilar, Jr. The impact killed Conrado Aguilar, Jr. His father, Conrado Aguilar, Sr. filed a
case for damages against Ferdinand Borja and Commercial Savings Bank. The Regional Trial Court found Commercial Savings
Bank solidarity liable with Ferdinand Borja. 89

However, the Court of Appeals disagreed with the trial court's Decision and dismissed the complaint against the bank. The Court
of Appeals reasoned that Article 2180 requires the plaintiff to prove that at the time of the accident, the employee was acting within
the scope of his or her assigned tasks. The Court of Appeals found no evidence that Ferdinand Borja was acting as the bank's
assistant vice-president at the time of the accident. 90
The Court of Appeals' ruling was reversed by this court. 91Aguilar, Sr. reiterated the following pronouncements made in Erezo in
ruling that the bank, as the registered owner of the vehicle, was primarily liable to the plaintiff: 92
The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or that any
damage or injury is caused by the vehicle on the public highways, responsibility therefor can be fixed on a definite
individual, the registered owner....

....

A victim of recklessness on the public highways is usually without means to discover or identify the person actually
causing the injury or damage. He has no means other than by a recourse to the registration in the Motor Vehicles
Office to determine who is the owner. The protection that the law aims to extend to him would become illusory
were the registered owner given the opportunity to escape liability by disproving his
ownership.93ChanRoblesVirtualawlibrary
Thus, Aguilar, Sr. concluded:
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In our view, respondent bank, as the registered owner of the vehicle, is primarily liable for Aguilar, Jr.'s death. The
Court of Appeals erred when it concluded that the bank was not liable simply because (a) petitioner did not prove
that Borja was acting as the bank's vice president at the time of the accident; and (b) Borja had, according to
respondent bank, already bought the car at the time of the mishap. For as long as the respondent bank remained
the registered owner of the car involved in the vehicular accident, it could not escape primary liability for the death
of petitioner's son.94 (Emphasis supplied)
Preference for the registered-owner rule became more pronounced in Del Carmen, Jr. v. Bacoy:95
Without disputing the factual finding of the [Court of Appeals] that Allan was still his employee at the time of the
accident, a finding which we see no reason to disturb, Oscar Jr. contends that Allan drove the jeep in his private
capacity and thus, an employer's vicarious liability for the employee's fault under Article 2180 of the Civil Code
cannot apply to him.

The contention is no longer novel. In Aguilar Sr. v. Commercial Savings Bank, the car of therein respondent bank
caused the death of Conrado Aguilar, Jr. while being driven by its assistant vice president. Despite Article 2180,
we still held the bank liable for damages for the accident as said provision should defer to the settled doctrine
concerning accidents involving registered motor vehicles, i.e., that the registered owner of any vehicle, even
if not used for public service, would primarily be responsible to the public or to third persons for injuries caused
the latter while the vehicle was being driven on the highways or streets. We have already ratiocinated that:
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The main aim of motor vehicle registration is to identify the owner so that if any accident happens,
or that any damage or injury is caused by the vehicle on the public highways, responsibility
therefor can be fixed on a definite individual, the registered owner. Instances are numerous where
vehicles running on public highways caused accidents or injuries to pedestrians or other vehicles
without positive identification of the owner or drivers, or with very scant means of identification. It
is to forestall these circumstances, so inconvenient or prejudicial to the public, that the motor
vehicle registration is primarily ordained, in the interest of the determination of persons
responsible for damages or injuries caused on public highways. 96 (Emphasis supplied, citations
omitted)
Filcar Transport Services v. Espinas97 stated that the registered owner of a vehicle can no longer use the defenses found in Article
2180:98
Neither can Filcar use the defenses available under Article 2180 of the Civil Code - that the employee acts beyond
the scope of his assigned task or that it exercised the due diligence of a good father of a family to prevent damage
- because the motor vehicle registration law, to a certain extent, modified Article 2180 of the Civil Code by making
these defenses unavailable to the registered owner of the motor vehicle. Thus, for as long as Filcar is the
 registered owner of the car involved in the vehicular accident, it could not escape primary liability for the damages
caused to Espinas.99ChanRoblesVirtualawlibrary
Mendoza v. Spouses Gomez100 reiterated this doctrine.

However, Aguilar, Sr., Del Carmen, Filcar, and Mendoza should not be taken to mean that Article 2180 of the Civil Code should
be completely discarded in cases where the registered-owner rule finds application.

As acknowledged in Filcar, there is no categorical statutory pronouncement in the Land Transportation and Traffic Code stipulating
the liability of a registered owner. 101 The source of a registered owner's liability is not a distinct statutory provision, but remains to
be Articles 2176 and 2180 of the Civil Code:
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While Republic Act No. 4136 or the Land Transportation and Traffic Code does not contain any provision on the
liability of registered owners in case of motor vehicle mishaps, Article 2176, in relation with Article 2180, of the
Civil Code imposes an obligation upon Filcar, as registered owner, to answer for the damages caused to Espinas'
car.102ChanRoblesVirtualawlibrary
Thus, it is imperative to apply the registered-owner rule in a manner that harmonizes it with Articles 2176 and 2180 of the Civil
Code. Rules must be construed in a manner that will harmonize them with other rules so as to form a uniform and consistent
system of jurisprudence.103 In light of this, the words used in Del Carmen are particularly notable. There, this court stated that
Article 2180 "should defer to"104 the registered-owner rule. It never stated that Article 2180 should be totally abandoned.

Therefore, the appropriate approach is that in cases where both the registered-owner rule and Article 2180 apply, the plaintiff must
first establish that the employer is the registered owner of the vehicle in question. Once the plaintiff successfully proves ownership,
there arises a disputable presumption that the requirements of Article 2180 have been proven. As a consequence, the burden of
proof shifts to the defendant to show that no liability under Article 2180 has arisen.

This disputable presumption, insofar as the registered owner of the vehicle in relation to the actual driver is concerned, recognizes
that between the owner and the victim, it is the former that should carry the costs of moving forward with the evidence. The victim
is, in many cases, a hapless pedestrian or motorist with hardly any means to uncover the employment relationship of the owner
and the driver, or any act that the owner may have done in relation to that employment.

The registration of the vehicle, on the other hand, is accessible to the public.

Here, respondent presented a copy of the Certificate of Registration 105 of the van that hit Reyes.106 The Certificate attests to
petitioner's ownership of the van. Petitioner itself did not dispute its ownership of the van. Consistent with the rule we have just
stated, a presumption that the requirements of Article 2180 have been satisfied arises. It is now up to petitioner to establish that it
incurred no liability under Article 2180. This it can do by presenting proof of any of the following: first, that it had no employment
relationship with Bautista; second, that Bautista acted outside the scope of his assigned tasks; or third, that it exercised the
diligence of a good father of a family in the selection and supervision of Bautista. 107

On the first, petitioner admitted that Bautista was its employee at the time of the accident. 108

On the second, petitioner was unable to prove that Bautista was not acting within the scope of his assigned tasks at the time of
the accident. When asked by the court why Bautista was at the place of the accident when it occurred, Sally Bellido, petitioner's
accountant and supervisor,109 testified that she did not "have the personal capacity to answer [the question]" 110 and that she had
no knowledge to answer it:
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COURT : Madam Witness, do you know the reason why your driver, Jimmy Bautista, at around
10:00 o' clock in the morning of July 13, 2000 was in the vicinity of Barangay Marcelo
Green, United Parañaque Subdivision 4?

WITNESS : I don't have the personal capacity to answer that, Sir.

Q : So you don't have any knowledge why he was there?

A : Yes, Sir.111 (Emphasis supplied)

Sally Bellido's testimony does not affect the presumption that Article 2180's requirements have been satisfied. Mere disavowals
are not proof that suffice to overturn a presumption. To this end, evidence must be adduced. However, petitioner presented no
positive evidence to show that Bautista was acting in his private capacity at the time of the incident.

On the third, petitioner likewise failed to prove that it exercised the requisite diligence in the selection and supervision of Bautista.

In its selection of Bautista as a service driver, petitioner contented itself with Bautista's submission of a non-professional driver's
license.112 Hence, in Sally Balledo's cross-examination:
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Q : . . . when he was promoted as service driver, of course, there were certain requirements
and among other else, you made mention about a driver's license.

A : Yes, Sir.
Q : Would you be able to show to this Honorable Court whether indeed this person did submit
a driver's license to your company?

A : Yes, Sir.

....

Q : Do you recall what kind of driver's license is this?

A : The Land Transportation Office.

Q : Is it a professional driver's license or non-proffesional [sic] driver's license?

A : Non-professional.

Q : You are not sure?

COURT : Non professional, professional?

A : It's a non-professional.113 (Emphasis supplied)

Employing a person holding a non-professional driver's license to operate another's motor vehicle violates Section 24 of the Land
Transportation and Traffic Code, which provides:
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SEC. 24. Use of driver's license and badge. — ...

....

No owner of a motor vehicle shall engage, employ, or hire any person to operate such motor vehicle, unless the
person sought to be employed is a duly licensed professional driver.
Evidently, petitioner did not only fail to exercise due diligence when it selected Bautista as service driver; it also committed an
actual violation of law.

To prove that it exercised the required diligence in supervising Bautista, petitioner presented copies of several memoranda and
company rules.114 These, however, are insufficient because petitioner failed to prove actual compliance. Metro Manila Transit
Corporation v. Court of Appeals115 emphasized that to establish diligence in the supervision of employees, the issuance of company
policies must be coupled with proof of compliance:
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Due diligence in the supervision of employees, on the other hand, includes the formulation of suitable rules and
regulations for the guidance of employees and the issuance of proper instructions intended for the protection of
the public and persons with whom the employer has relations through his or its employees and the imposition of
necessary disciplinary measures upon employees in case of breach or as may be warranted to ensure the
performance of acts indispensable to the business of and beneficial to their employer. To this, we add that actual
implementation and monitoring of consistent compliance with said rules should be the constant concern of the
employer, acting through dependable supervisors who should regularly report on their supervisory functions.

In order that the defense of due diligence in the selection and supervision of employees may be deemed sufficient
and plausible, it is not enough to emptily invoke the existence of said company guidelines and policies on
hiring and supervision. As the negligence of the employee gives rise to the presumption of negligence on the
part of the employer, the latter has the burden of proving that it has been diligent not only in the selection of
employees but also in the actual supervision of their work. The mere allegation of the existence of hiring
procedures and supervisory policies, without anything more, is decidedly not sufficient to overcome presumption.

We emphatically reiterate our holding, as a warning to all employers, that "(t)he mere formulation of various
company policies on safety without showing that they were being complied with is not sufficient to exempt
petitioner from liability arising from negligence of its employees. It is incumbent upon petitioner to show that in
recruiting and employing the erring driver the recruitment procedures and company policies on efficiency and
safety were followed." Paying lip-service to these injunctions or merely going through the motions of compliance
therewith will warrant stern sanctions from the Court. 116 (Emphasis supplied, citations omitted)
For failing to overturn the presumption that the requirements of Article 2180 have been satisfied, petitioner must be held liable.

III
Petitioner's argument that it should be excused from liability because Bautista was already dropped as a party is equally
unmeritorious. The liability imposed on the registered owner is direct and primary. 117 It does not depend on the inclusion of the
negligent driver in the action. Agreeing to petitioner's assertion would render impotent the rationale of the motor registration law in
fixing liability on a definite person.

Bautista, the driver, was not an indispensable party under Rule 3, Section 7118 of the 1997 Rules of Civil Procedure. Rather, he
was a necessary party under Rule 3, Section 8. 119 Instead of insisting that Bautista — who was nothing more than a necessary
party — should not have been dropped as a defendant, or that petitioner, along with Bautista, should have been dropped, petitioner
(as a co-defendant insisting that the action must proceed with Bautista as party) could have opted to file a cross-claim against
Bautista as its remedy.

The 1997 Rules of Civil Procedure spell out the rules on joinder of indispensable and necessary parties. These are intended to
afford "a complete determination of all possible issues, not only between the parties themselves but also as regards to other
persons who may be affected by the judgment."120

However, while an exhaustive resolution of disputes is desired in every case, the distinction between indispensable parties and
necessary parties delineates a court's capacity to render effective judgment. As defined by Rule 3, Section 7, indispensable parties
are "[p]arties in interest without whom no final determination can be had of an action[.]" Thus, their non-inclusion is debilitating:
"the presence of indispensable parties is a condition for the exercise of juridical power and when an indispensable party is not
before the court, the action should be dismissed."121

In contrast, a necessary party's presence is not imperative, and his or her absence is not debilitating. Nevertheless, it is preferred
that they be included in order that relief may be complete.

The concept of indispensable parties, as against parties whose inclusion only allows complete relief, was explained in Arcelona v.
Court of Appeals:122
An indispensable party is a party who has such an interest in the controversy or subject matter that a final
adjudication cannot be made, in his absence, without injuring or affecting that interest, a party who has not only
an interest in the subject matter of the controversy, but also has an interest of such nature that a final decree
cannot be made without affecting his interest or leaving the controversy in such a condition that its final
determination may be wholly inconsistent with equity and good conscience. It has also been considered that an
indispensable party is a person in whose absence there cannot be a determination between the parties already
before the court which is effective, complete, or equitable. Further, an indispensable party is one who must be
included in an action before it may properly go forward.

A person is not an indispensable party, however, if his interest in the controversy or subject matter is separable
from the interest of the other parties, so that it will not necessarily be directly or injuriously affected by a decree
which does complete justice between them. Also, a person is not an indispensable party if his presence would
merely permit complete relief between him and those already parties to the action, or if he has no interest in the
subject matter of the action. It is not a sufficient reason to declare a person to be an indispensable party that his
presence will avoid multiple litigation.123ChanRoblesVirtualawlibrary
Petitioner's interest and liability is distinct from that of its driver. Regardless of petitioner's employer-employee relationship with
Bautista, liability attaches to petitioner on account of its being the registered owner of a vehicle that figures in a mishap. This alone
suffices. A determination of its liability as owner can proceed independently of a consideration of how Bautista conducted himself
as a driver. While certainly it is desirable that a determination of Bautista's liability be made alongside that of the owner of the van
he was driving, his non-inclusion in these proceedings does not absolutely hamper a judicious resolution of respondent's plea for
relief.

IV
The Court of Appeals committed no reversible error when it awarded actual damages to respondent. Respondent's claim for actual
damages was based on the Certificate124 issued and signed by a certain Peñaloza showing that respondent paid Peñaloza
P35,000.00 for funeral expenses.

Contrary to petitioner's claim, this Certificate is not hearsay. Evidence is hearsay when its probative value is based on the personal
knowledge of a person other than the person actually testifying. 125 Here, the Certificate sought to establish that respondent herself
paid Peñaloza P35,000.00 as funeral expenses for Reyes' death:126

3. Na ang aking kontrata ay nagkakahalaga ng P35,000-00 [sic] sa lahat ng nagamit na materiales at

labor nito kasama ang lote na ibinayad sa akin ni Gng. ERMILINDA REYES ABEJAR na siyang aking
kakontrata sa pagsasagawa ng naturang paglilibingan.127 (Emphasis supplied)

It was respondent herself who identified the Certificate. She testified that she incurred funeral expenses amounting to P35,000.00,
that she paid this amount to Peñaloza, and that she was present when Peñaloza signed the Certificate:
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[ATTY. LIM] : Did you incur any expenses?

A: Meron po.

Q: How much did you spend for the death of Jesmarian [sic] Reyes?

A: 'Yun pong P35,000.00 na pagpapalibing at saka...

Q: You said that you spent P35,000.00. Do you have any evidence or proof that you spent that
amount?

A: Meron po.
Q: Showing to you this sort of certification. What relation has this...

A: 'Yan po' yung contractor nagumawa.

Q: Contractor of what?

A: 'Yan po' yung mismong binilhan ko ng lupa at nitso.

....

ATTY. LIM : There is a signature at the top of the printed name Julian Penalosa [sic]. Whose signature is
this?

A: 'Yan po' yung mismong contractor.

....
Q: Did you see him sign this?

A: Opo.128 (Emphasis supplied)

Respondent had personal knowledge of the facts sought to be proved by the Certificate, i.e. that she spent P35,000.00 for the
funeral expenses of Reyes. Thus, the Certificate that she identified and testified to is not hearsay. It was not an error to admit this
Certificate as evidence and basis for awarding P35,000.00 as actual damages to respondent.

The Court of Appeals likewise did not err in awarding civil indemnity and exemplary damages.

Article 2206 of the Civil Code provides:

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ARTICLE 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three
thousand pesos, even though there may have been mitigating circumstances[.]
Further, Article 2231 of the Civil Code provides:
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ARTICLE 2231. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross
negligence.
Both the Court of Appeals and the Regional Trial Court found Bautista grossly negligent in driving the van and concluded that
Bautista's gross negligence was the proximate cause of Reyes' death. Negligence and causation are factual issues. 129 Findings of
fact, when established by the trial court and affirmed by the Court of Appeals, are binding on this court unless they are patently
unsupported by evidence or unless the judgment is grounded on a misapprehension of facts. 130 Considering that petitioner has not
presented any evidence disputing the findings of the lower courts regarding Bautista's negligence, these findings cannot be
disturbed in this appeal. The evidentiary bases for the award of civil indemnity and exemplary damages stand. As such, petitioner
must pay the exemplary damages arising from the negligence of its driver. 131 For the same reasons, the award of P50,000.00 by
way of civil indemnity is justified. 132

The award of moral damages is likewise proper.

Article 2206(3) of the Civil Code provides:

chanRoblesvirtualLawlibrary
ARTICLE 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three
thousand pesos, even though there may have been mitigating circumstances. In addition:

....

(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand
moral damages for mental anguish by reason of the death of the deceased. (Emphasis supplied)

For deaths caused by quasi-delict, the recovery of moral damages is limited to the spouse, legitimate and illegitimate descendants,
and ascendants of the deceased.133
Persons exercising substitute parental authority are to be considered ascendants for the purpose of awarding moral damages.
Persons exercising substitute parental authority are intended to stand in place of a child's parents in order to ensure the well-being
and welfare of a child.134 Like natural parents, persons exercising substitute parental authority are required to, among others, keep
their wards in their company, 135 provide for their upbringing, 136 show them love and affection, 137 give them advice and counsel,138
and provide them with companionship and understanding. 139 For their part, wards shall always observe respect and obedience
towards the person exercising parental authority. 140 The law forges a relationship between the ward and the person exercising
substitute parental authority such that the death or injury of one results in the damage or prejudice of the other.

Moral damages are awarded to compensate the claimant for his or her actual injury, and not to penalize the wrongdoer. 141 Moral
damages enable the injured party to alleviate the moral suffering resulting from the defendant's actions.142 It aims to restore — to
the extent possible — "the spiritual status quo ante[.]"143

Given the policy underlying Articles 216 and 220 of the Family Code as well as the purposes for awarding moral damages, a person
exercising substitute parental authority is rightly considered an ascendant of the deceased, within the meaning of Article 2206(3)
of the Civil Code. Hence, respondent is entitled to moral damages.

As exemplary damages have been awarded and as respondent was compelled to litigate in order to protect her interests, she is
rightly entitled to attorney's fees. 144

However, the award of interest should be modified. This modification must be consistent with Nacar v. Gallery Frames,145 in which
we ruled:
chanRoblesvirtualLawlibrary

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on unliquidated claims or damages, except when or
until the demand can be established with reasonable certainty. Accordingly, where the demand is
established with reasonable certainty, the interest shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall begin to run only from the date the
judgment of the court is made (at which time the quantification of damages may be deemed to have
been reasonably ascertained). The actual base for the computation of legal interest shall, in any case,
be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of
legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum
from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to
a forbearance of credit.146 (Emphasis supplied)

WHEREFORE, the Decision of the Court of Appeals dated October 3, 2005 is AFFIRMED with the following MODIFICATIONS:
(a) actual damages in the amount of P35,000.00 shall earn interest at the rate of 6% per annum from the time it was judicially or
extrajudicially demanded from petitioner Caravan Travel and Tours International, Inc. until full satisfaction; (b) moral damages,
exemplary damages, and attorney's fees shall earn interest at the rate of 6% per annum from the date of the Regional Trial Court
Decision until full satisfaction; and (c) civil indemnity shall earn interest at the rate of 6% per annum from the date of the Court of
Appeals Decision until full satisfaction.

SO ORDERED.cralawlawlibr ary
 SECOND DIVISION

G.R. No. 217426, December 04, 2017

ST. MARTIN POLYCLINIC, INC., Petitioner, v. LWV CONSTRUCTION CORPORATION, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated July 11, 2014 and the Resolution3 dated February 27, 2015
of the Court of Appeals (CA) in CA-G.R. SP No. 125451, which affirmed with modification the Decision 4 dated December 15, 2011
and the Order dated May 25, 2012 of the Regional Trial Court of Mandaluyong City, Branch 211 (RTC) in SCA Case No. MC11-
879 (Civil Case No. 21881), and thereby ordered herein petitioner St. Martin Polyclinic, Inc. (petitioner) to pay respondent LWV
Construction Corporation (respondent) temperate damages in the amount of P50,000.00.

The Facts

Respondent is engaged in the business of recruiting Filipino workers for deployment to Saudi Arabia. 5 On the other hand, petitioner
is an accredited member of the Gulf Cooperative Council Approved Medical Centers Association (GAMCA) and as such, authorized
to conduct medical examinations of prospective applicants for overseas employment. 6

On January 10, 2008, respondent referred prospective applicant Jonathan V. Raguindin (Raguindin) to petitioner for a pre-
deployment medical examination in accordance with the instructions from GAMCA. 7 After undergoing the required examinations,
petitioner cleared Raguindin and found him "fit for employment," as evidenced by a Medical Report 8 dated January 11, 2008
(Medical Report).9

Based on the foregoing, respondent deployed Raguindin to Saudi Arabia, allegedly incurring expenses in the amount of
P84,373.41.10 Unfortunately, when Raguindin underwent another medical examination with the General Care Dispensary of Saudi
Arabia (General Care Dispensary) on March 24, 2008, he purportedly tested positive for HCV or the hepatitis C virus. The Ministry
of Health of the Kingdom of Saudi Arabia (Ministry of Health) required a re-examination of Raguindin, which the General Care
Dispensary conducted on April 28, 2008. 11 However, the results of the re-examination remained the same, i.e., Raguindin was
positive for HCV, which results were reflected in a Certification12 dated April 28, 2008 (Certification). An undated HCV Confirmatory
Test Report13 likewise conducted by the Ministry of Health affirmed such finding, thereby leading to Raguindin's repatriation to the
Philippines.14

Claiming that petitioner was reckless in issuing its Medical Report stating that Raguindin is "fit for employment" when a subsequent
finding in Saudi Arabia revealed that he was positive for HCV, respondent filed a Complaint 15 for sum of money and damages
against petitioner before the Metropolitan Trial Court of Mandaluyong City, Branch 60 (MeTC). Respondent essentially averred
that it relied on petitioner's declaration and incurred expenses as a consequence. Thus, respondent prayed for the award of
damages in the amount of P84,373.41 representing the expenses it incurred in deploying Raguindin abroad. 16

In its Answer with compulsory counterclaim, 17 petitioner denied liability and claimed that: first, respondent was not a proper party
in interest for lack of privity of contract between them; second, the MeTC had no jurisdiction over the case as it involves the
interpretation and implementation of a contract of employment; third, the action is premature as Raguindin has yet to undergo a
post-employment medical examination following his repatriation; and fourth, the complaint failed to state a cause of action as the
Medical Report issued by petitioner had already expired on April 11, 2008, or three (3) months after its issuance on January 11,
2008.18

The MeTC Ruling

In a Decision19 dated December 17, 2010, the MeTC rendered judgment in favor of respondent and ordered petitioner to pay the
amount of P84,373.41 as actual damages, P20,000.00 as attorney's fees, and the costs of suit. 20

At the onset, the MeTC held that it had jurisdiction over the case, since respondent was claiming actual damages incurred in the
deployment of Raguindin in the amount of P84,373.41. 21 It further ruled that respondent was a real party in interest, as it would not
have incurred expenses had petitioner not issued the Medical Report certifying that Raguindin was fit to work.

On the merits, the MeTC found that respondent was entitled to be informed accurately of the precise condition of Raguindin before
deploying the latter abroad and consequently, had sustained damage as a result of the erroneous certification. 22 In this relation, it
rejected petitioner's contention that Raguindin may have contracted the disease after his medical examination in the Philippines
up to the time of his deployment, there being no evidence offered to corroborate the same. 23
Aggrieved, petitioner appealed to the RTC, contending, 24 among others, that respondent failed to comply with the requirements on
the authentication and proof of documents under Section 24,25 Rule 132 of the Rules of Court, considering that respondent's
evidence, particularly the April 28, 2008 Certification issued by the General Care Dispensary and the HCV Confirmatory Test
Report issued by the Ministry of Health, are foreign documents issued in Saudi Arabia.

The RTC Ruling

In a Decision26 dated December 15, 2011, the RTC dismissed petitioner's appeal and affirmed the MeTC Decision in its entirety. 27
Additionally, the RTC pointed out that petitioner can no longer change the theory of the case or raise new issues on appeal,
referring to the latter's argument on the authentication of respondent's documentary evidence. 28

Petitioner's motion for reconsideration29 was denied in an Order30 dated May 25, 2012. Dissatisfied, petitioner elevated the case
to the CA.31

The CA Ruling

In a Decision32 dated July 11, 2014, the CA affirmed the RTC Decision, with the modification deleting the award of actual damages
and instead, awarding temperate damages in the amount of P50,000.00. 33

The CA held that petitioner failed to perform its duty to accurately diagnose Raguindin when it issued its Medical Report declaring
the latter "fit for employment", considering that he was subsequently found positive for HCV in Saudi Arabia. 34 Further, the CA
opined that the Certification issued by the General Care Dispensary is not a public document and in such regard, rejected
petitioner's argument that the same is inadmissible in evidence for not having been authenticated. Moreover, it remarked that
petitioner's own Medical Report does not enjoy the presumption of regularity as petitioner is merely an accredited clinic. 35 Finally,
the CA ruled that petitioner could not disclaim liability on the ground that Raguindin tested positive for HCV in Saudi Arabia after
the expiration of the Medical Report on April 11, 2008, noting that the General Care Dispensary issued its Certification on April 28,
2008, or a mere seventeen (17) days from the expiration of petitioner's Medical Report. 36 Hence, the CA concluded that "it is
contrary to human experience that a newly-deployed overseas worker, such as Raguindin, would immediately contract a serious
virus at the very beginning of a deployment."37

However, as the records are bereft of evidence to show that respondent actually incurred the amount of P84,373.41 as expenses
for Raguindin's deployment, the CA deleted the award of actual damages and instead, awarded temperate damages in the amount
of P50,000.00.38

Aggrieved, petitioner filed a motion for partial reconsideration,39 which the CA denied in a Resolution40 dated February 27, 2015;
hence, this petition.

The Issue Before the Court

The essential issue advanced for the Court's resolution is whether or not petitioner was negligent in issuing the Medical Report
declaring Raguindin "fit for employment" and hence, should be held liable for damages.

The Court's Ruling

The petition is granted.

I.

At the outset, it should be pointed out that a re-examination of factual findings cannot be done acting on a petition for review on
certiorari because the Court is not a trier of facts but reviews only questions of law. 41 Thus, in petitions for review on certiorari, only
questions of law may generally be put into issue. This rule, however, admits of certain exceptions, such as "when the inference
made is manifestly mistaken, absurd or impossible"; or "when the findings are conclusions without citation of specific evidence on
which they are based."42 Finding a confluence of certain exceptions in this case, the general rule that only legal issues may be
raised in a petition for review on certiorari under Rule 45 of the Rules of Court would not apply, and the Court retains the authority
to pass upon the evidence presented and draw conclusions therefrom. 43

II.

An action for damages due to the negligence of another may be instituted on the basis of Article 2176 of the Civil Code, which
defines a quasi-delict:

Article 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.

The elements of a quasi-delict are: (1) an act or omission; (2) the presence of fault or negligence in the performance or non-
performance of the act; (3) injury; (4) a causal connection between the negligent act and the injury; and (5) no pre-existing
contractual relation.44

As a general rule, any act or omission coming under the purview of Article 2176 gives rise to a cause of action under quasi-delict.
This, in turn, gives the basis for a claim of damages. 45 Notably, quasi-delict is one among several sources of obligation. Article
1157 of the Civil Code states:

Article 1157. Obligations arise from:

(1) Law;

(2) Contracts;

(3) Quasi-contracts;

(4) Acts or omissions punished by law; and

(5) Quasi-delicts.

However, as explained by Associate Justice Marvic M.V.F. Leonen (Justice Leonen) in his opinion in Alano v. Magud-Logmao46
(Alano), "Article 2176 is not an all-encompassing enumeration of all actionable wrongs which can give rise to the liability
for damages. Under the Civil Code, acts done in violation of Articles 19, 20, and 21 will also give rise to damages."47 These
provisions - which were cited as bases by the MTC, RTC and CA in their respective rulings in this case - read as follows:

Article 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice,
give everyone his due, and observe honesty and good faith.

Article 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify
the latter for the same.

Article 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good
customs, or public policy shall compensate the latter for the damage.

"[Article 19], known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must
be observed not only in the exercise of one's rights, but also in the performance of one's duties." 48 Case law states that "[w]hen a
right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a
legal wrong is thereby committed for which the wrongdoer must be held responsible. But while Article 19 lays down a rule of
conduct for the government of human relations and for the maintenance of social order, it does not provide a remedy for its violation.
Generally, an action for damages under either Article 20 or Article 21 would [then] be proper." 49 Between these two provisions as
worded, it is Article 20 which applies to both willful and negligent acts that are done contrary to law. On the other hand, Article
21 applies only to willful acts done contra bonos mores.50

In the Alano case, Justice Leonen aptly elaborated on the distinctive applications of Articles 19, 20 and 21, which are general
provisions on human relations, vis-a-vis Article 2176, which particularly governs quasi-delicts:

Article 19 is the general rule which governs the conduct of human relations. By itself, it is not the basis of an
actionable tort. Article 19 describes the degree of care required so that an actionable tort may arise when it is
alleged together with Article 20 or Article 21.

Article 20 concerns violations of existing law as basis for an injury. It allows recovery should the act have
been willful or negligent. Willful may refer to the intention to do the act and the desire to achieve the outcome
which is considered by the plaintiff in tort action as injurious. Negligence may refer to a situation where the act
was consciously done but without intending the result which the plaintiff considers as injurious.

Article 21, on the other hand, concerns injuries that may be caused by acts which are not necessarily proscribed
by law. This article requires that the act be willful, that is, that there was an intention to do the act and a desire to
achieve the outcome. In cases under Article 21, the legal issues revolve around whether such outcome should be
considered a legal injury on the part of the plaintiff or whether the commission of the act was done in violation of
the standards of care required in Article 19.

Article 2176 covers situations where an injury happens through an act or omission of the defendant. When it
involves a positive act, the intention to commit the outcome is irrelevant. The act itself must not be a breach of
an existing law or a pre-existing contractual obligation. What will be considered is whether there is "fault or
negligence” attending the commission of the act which necessarily leads to the outcome considered as injurious
by the plaintiff. The required degree of diligence will then be assessed in relation to the circumstances of each
and every case.51 (Emphases and underscoring supplied)

Thus, with respect to negligent acts or omissions, it should therefore be discerned that Article 20 of the Civil Code concerns
"violations of existing law as basis for an injury", whereas Article 2176 applies when the negligent act causing damage
to another does not constitute "a breach of an existing law or a pre-existing contractual obligation."

In this case, the courts a quo erroneously anchored their respective rulings on the provisions of Articles 19, 20, and 21 of the Civil
Code. This is because respondent did not proffer (nor have these courts mentioned) any law as basis for which damages may be
recovered due to petitioner's alleged negligent act. In its amended complaint, respondent mainly avers that had petitioner not issue
a "fit for employment" Medical Report to Raguindin, respondent would not have processed his documents, deployed him to Saudi
Arabia, and later on - in view of the subsequent findings that Raguindin was positive for HCV and hence, unfit to work - suffered
actual damages in the amount of P84,373.41. 52 Thus, as the claimed negligent act of petitioner was not premised on the breach
of any law, and not to mention the incontestable fact that no pre-existing contractual relation was averred to exist between the
parties, Article 2176 - instead of Articles 19, 20 and 21 - of the Civil Code should govern.

III.

Negligence is defined as the failure to observe for the protection of the interests of another person, that degree of care, precaution
and vigilance which the circumstances justly demand, whereby such other person suffers injury. 53
As early as the case of Picart v. Smith,54 the Court elucidated that "the test by which to determine the existence of negligence in a
particular case is: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an
ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence."55 Corollary thereto,
the Court stated that "[t]he question as to what would constitute the conduct of a prudent man in a given situation must of course
be always determined in the light of human experience and in view of the facts involved in the particular case. Abstract
speculation cannot here be of much value x x x: Reasonable men govern their conduct by the circumstances which are before
them or known to them. They are not, and are not supposed to be, omniscient of the future. Hence[,] they can be expected
to take care only when there is something before them to suggest or warn of danger."56

Under our Rules of Evidence, it is disputably presumed that a person takes ordinary care of his concerns and that private
transactions have been fair and regular. 57 In effect, negligence cannot be presumed, and thus, must be proven by him who
alleges it.58 In Huang v. Philippine Hoteliers, Inc.:59

[T]he negligence or fault should be clearly established as it is the basis of her action. The burden of proof is upon
[the plaintiff]. Section 1, Rule 131 of the Rules of Court provides that "burden of proof is the duty of a party to
present evidence on the facts in issue necessary to establish his claim or defense by the amount of evidence
required by law." It is then up for the plaintiff to establish his cause of action or the defendant to establish his
defense. Therefore, if the plaintiff alleged in his complaint that he was damaged because of the negligent
acts of the defendant, he has the burden of proving such negligence. It is even presumed that a person
takes ordinary care of his concerns. The quantum of proof required is preponderance of evidence. 60 (Emphasis
and underscoring supplied)

The records of this case show that the pieces of evidence mainly relied upon by respondent to establish petitioner's negligence
are: (a) the Certification61 dated April 28, 2008; and (b) the HCV Confirmatory Test Report. 62 However, these issuances only
indicate the results of the General Care Dispensary and Ministry of Health's own medical examination of Raguindin finding him to
be positive for HCV. Notably, the examination conducted by the General Care Dispensary, which was later affirmed by the Ministry
of Health, was conducted only on March 24, 2008, or at least two (2) months after petitioner issued its Medical Report on
January 11, 2008. Hence, even assuming that Raguindin's diagnosis for HCV was correct, the fact that he later tested positive for
the same does not convincingly prove that he was already under the same medical state at the time petitioner issued the Medical
Report on January 11, 2008. In this regard, it was therefore incumbent upon respondent to show that there was already
negligence at the time the Medical Report was issued, may it be through evidence that show that standard medical procedures
were not carefully observed or that there were already palpable signs that exhibited Raguindin's unfitness for deployment at that
time. This is hardly the case when respondent only proffered evidence which demonstrate that months after petitioner's Medical
Report was issued, Raguindin, who had already been deployed to Saudi Arabia, tested positive for HCV and as such, was no
longer "fit for employment".

In fact, there is a reasonable possibility that Raguindin became exposed to the HCV only after his medical examination with
petitioner on January 11, 2008. Based on published reports from the World Health Organization, HCV or the hepatitis C virus
causes both acute and chronic infection. Acute HCV infection is usually asymptomatic,63 and is only very rarely associated with
life-threatening diseases. The incubation period64 for HCV is two (2) weeks to six (6) months, and following initial infection,
approximately 80% of people do not exhibit any symptoms. 65 Indisputably, Raguindin was not deployed to Saudi Arabia
immediately after petitioner's medical examination and hence, could have possibly contracted the same only when he arrived
thereat. In light of the foregoing, the CA therefore erred in holding that "[h]ad petitioner more thoroughly and diligently examined
Raguindin, it would likely have discovered the existence of the HCV because it was contrary to human experience that a newly-
deployed overseas worker, such as Raguindin, would immediately have contracted the disease at the beginning of his
deployment"66

While petitioner's Medical Report indicates an expiration of April 11, 2008, the Court finds it fitting to clarify that the same could not
be construed as a certified guarantee coming from petitioner that Raguindin's medical status at the time the report was issued on
January 11, 2008 (i.e., that he was fit for employment) would remain the same up until that date (i.e., April 11, 2008). As earlier
intimated, the intervening period could very well account for a number of variables that could have led to a change in Raguindin's
condition, such as his deployment to a different environment in Saudi Arabia. If at all, the expiration date only means that the
Medical Report is valid - and as such, could be submitted - as a formal requirement for overseas employment up until April 11,
2008; it does not, by any means, create legal basis to hold the issuer accountable for any intervening change of condition from the
time of issuance up until expiration. Truly, petitioner could not be reasonably expected to predict, much less assure, that
Raguindin's medical status of being fit for employment would remain unchanged. Thus, the fact that the Medical Report's expiration
date of April 11, 2008 was only seventeen (17) days away from the issuance of the General Care Dispensary's April 28, 2008
Certification finding Raguindin positive for HCV should not - as it does not - establish petitioner's negligence.

IV.

At any rate, the fact that Raguindin tested positive for HCV could not have been properly established since the courts a quo, in the
first place, erred in admitting and giving probative weight to the Certification of the General Care Dispensary, which was written in
an unofficial language. Section 33, Rule 132 ofthe Rules of Court states that:

Section 33. Documentary evidence in an unofficial language. - Documents written in an unofficial language shall
not be admitted as evidence, unless accompanied with a translation into English or Filipino. To avoid
interruption of proceedings, parties or their attorneys are directed to have such translation prepared before trial. 67

A cursory examination of the subject document would reveal that while it contains English words, the majority of it is in an unofficial
language. Sans any translation in English or Filipino provided by respondent, the same should not have been admitted in evidence;
thus their contents could not be given probative value, and deemed to constitute proof of the facts stated therein.

Moreover, the due execution and authenticity of the said certification were not proven in accordance with Section 20, Rule 132 of
the Rules of Court:

Section 20. Proof of private document. - Before any private document offered as authentic is received in evidence,
its due execution and authenticity must be proved either:

(a) By anyone who saw the document executed or written; or

(b) By evidence of the genuineness of the signature or handwriting of the maker.

(c) Any other private document need only be identified as that which it is claimed to be.

Notably, the foregoing provision applies since the Certification does not fall within the classes of public documents under Section
19, Rule 132 of the Rules of Court 68 - and hence, must be considered as private. It has been settled that an unverified and
unidentified private document cannot be accorded probative value.69 In addition, case law states that "since a medical
certificate involves an opinion of one who must first be established as an expert witness, it cannot be given weight or
credit unless the doctor who issued it is presented in court to show his qualifications. It is precluded because the party
against whom it is presented is deprived of the right and opportunity to cross-examine the person to whom the statements or
writings are attributed. Its executor or author should be presented as a witness to provide the other party to the litigation the
opportunity to question its contents. Being mere hearsay evidence, failure to present the author of the medical certificate renders
its contents suspect and of no probative value,"70 as in this case.

Similarly, the HCV Confirmatory Test Report issued by the Ministry of Health of Saudi Arabia should have also been excluded as
evidence. Although the same may be considered a public document, being an alleged written official act of an official body of a
foreign country,71 the same was not duly authenticated in accordance with Section 24, 72 Rule 132 of the Rules of Court. While
respondent provided a translation73 thereof from the National Commission on Muslim Filipinos, Bureau of External Relations, Office
of the President, the same was not accompanied by a certificate of the secretary of the embassy or legation, consul-general,
consul, vice-consul, or consular agent or any officer in the foreign service of the Philippines stationed in Saudi Arabia, where the
record is kept, and authenticated by the seal of his office. 74

To be sure, petitioner - contrary to respondent's contention75 - has not changed its theory of the case by questioning the foregoing
documents. As petitioner correctly argued, it merely amplified its defense76 that it is not liable for negligence when it further
questioned the validity of the issuances of the General Care Dispensary and Ministry of Health. In Limpangco Sons v. Yangco77,
the Court explained that "[t]here is a difference x x x between a change in the theory of the case and a shifting of the incidence of
the emphasis placed during the trial or in the briefs." "Where x x x the theory of the case as set out in the pleadings remains the
theory throughout the progress of the cause, the change of emphasis from one phase of the case as presented by one set of facts
to another phase made prominent by another set of facts x x x does not result in a change of theory x x x". 78 In any case, petitioner
had already questioned the validity of these documents in its Position Paper79 before the MeTC.80 Hence, there is no change of
theory that would preclude petitioner's arguments on this score.

All told, there being no negligence proven by respondent through credible and admissible evidence, petitioner cannot be held liable
for damages under Article 2176 of the Civil Code as above-discussed.

WHEREFORE, the petition is GRANTED. Accordingly, the Decision dated July 11, 2014 and the Resolution dated February 27,
2015 of the Court of Appeals in CA-G.R. SP No. 125451 are REVERSED and SET ASIDE, and a NEW ONE is entered,
DISMISSING the complaint of respondent LWV Construction Corporation for lack of merit.

SO ORDERED.

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 141910 August 6, 2002

FGU INSURANCE CORPORATION, petitioner,

vs.

G.P. SARMIENTO TRUCKING CORPORATION and LAMBERT M. EROLES, respondents.

VITUG, J.:
G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on 18 June 1994 thirty (30) units of Condura S.D. white
refrigerators aboard one of its Isuzu truck, driven by Lambert Eroles, from the plant site of Concepcion Industries, Inc.,
along South Superhighway in Alabang, Metro Manila, to the Central Luzon Appliances in Dagupan City. While the truck
was traversing the north diversion road along McArthur highway in Barangay Anupol, Bamban, Tarlac, it collided with an
unidentified truck, causing it to fall into a deep canal, resulting in damage to the cargoes.

FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion Industries, Inc., the value of the
covered cargoes in the sum of P204,450.00. FGU, in turn, being the subrogee of the rights and interests of Concepcion
Industries, Inc., sought reimbursement of the amount it had paid to the latter from GPS. Since the trucking company failed
to heed the claim, FGU filed a complaint for damages and breach of contract of carriage against GPS and its driver
Lambert Eroles with the Regional Trial Court, Branch 66, of Makati City. In its answer, respondents asserted that GPS
was the exclusive hauler only of Concepcion Industries, Inc., since 1988, and it was not so engaged in business as a
common carrier. Respondents further claimed that the cause of damage was purely accidental.

The issues having thus been joined, FGU presented its evidence, establishing the extent of damage to the cargoes and
the amount it had paid to the assured. GPS, instead of submitting its evidence, filed with leave of court a motion to
dismiss the complaint by way of demurrer to evidence on the ground that petitioner had failed to prove that it was a
common carrier.

The trial court, in its order of 30 April 1996,1 granted the motion to dismiss, explaining thusly:

"Under Section 1 of Rule 131 of the Rules of Court, it is provided that ‘Each party must prove his own affirmative
allegation, xxx.’

"In the instant case, plaintiff did not present any single evidence that would prove that defendant is a common carrier.

"x x x xxx xxx

"Accordingly, the application of the law on common carriers is not warranted and the presumption of fault or negligence
on the part of a common carrier in case of loss, damage or deterioration of goods during transport under 1735 of the Civil
Code is not availing.

"Thus, the laws governing the contract between the owner of the cargo to whom the plaintiff was subrogated and the
owner of the vehicle which transports the cargo are the laws on obligation and contract of the Civil Code as well as the
law on quasi delicts.

"Under the law on obligation and contract, negligence or fault is not presumed. The law on quasi delict provides for some
presumption of negligence but only upon the attendance of some circumstances. Thus, Article 2185 provides:
‘Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent
if at the time of the mishap, he was violating any traffic regulation.’

"Evidence for the plaintiff shows no proof that defendant was violating any traffic regulation. Hence, the presumption of
negligence is not obtaining.

"Considering that plaintiff failed to adduce evidence that defendant is a common carrier and defendant’s driver was the
one negligent, defendant cannot be made liable for the damages of the subject cargoes."2

The subsequent motion for reconsideration having been denied,3 plaintiff interposed an appeal to the Court of Appeals,
contending that the trial court had erred (a) in holding that the appellee corporation was not a common carrier defined
under the law and existing jurisprudence; and (b) in dismissing the complaint on a demurrer to evidence.

The Court of Appeals rejected the appeal of petitioner and ruled in favor of GPS. The appellate court, in its decision of 10
June 1999,4 discoursed, among other things, that -

"x x x in order for the presumption of negligence provided for under the law governing common carrier (Article 1735, Civil
Code) to arise, the appellant must first prove that the appellee is a common carrier. Should the appellant fail to prove that
the appellee is a common carrier, the presumption would not arise; consequently, the appellant would have to prove that
the carrier was negligent.

"x x x xxx xxx

"Because it is the appellant who insists that the appellees can still be considered as a common carrier, despite its `limited
clientele,’ (assuming it was really a common carrier), it follows that it (appellant) has the burden of proving the same. It
(plaintiff-appellant) `must establish his case by a preponderance of evidence, which means that the evidence as a whole
adduced by one side is superior to that of the other.’ (Summa Insurance Corporation vs. Court of Appeals, 243 SCRA
175). This, unfortunately, the appellant failed to do -- hence, the dismissal of the plaintiff’s complaint by the trial court is
justified.

"x x x xxx xxx

"Based on the foregoing disquisitions and considering the circumstances that the appellee trucking corporation has
been `its exclusive contractor, hauler since 1970, defendant has no choice but to comply with the directive of its principal,’
the inevitable conclusion is that the appellee is a private carrier.

"x x x xxx xxx

"x x x the lower court correctly ruled that 'the application of the law on common carriers is not warranted and the
presumption of fault or negligence on the part of a common carrier in case of loss, damage or deterioration of good[s]
during transport under [article] 1735 of the Civil Code is not availing.' x x x.

"Finally, We advert to the long established rule that conclusions and findings of fact of a trial court are entitled to great
weight on appeal and should not be disturbed unless for strong and valid reasons."5

Petitioner's motion for reconsideration was likewise denied;6 hence, the instant petition,7 raising the following issues:

WHETHER RESPONDENT GPS MAY BE CONSIDERED AS A COMMON CARRIER AS DEFINED UNDER THE LAW AND
EXISTING JURISPRUDENCE.

II

WHETHER RESPONDENT GPS, EITHER AS A COMMON CARRIER OR A PRIVATE CARRIER, MAY BE PRESUMED TO
HAVE BEEN NEGLIGENT WHEN THE GOODS IT UNDERTOOK TO TRANSPORT SAFELY WERE SUBSEQUENTLY
DAMAGED WHILE IN ITS PROTECTIVE CUSTODY AND POSSESSION.

III

WHETHER THE DOCTRINE OF RES IPSA LOQUITUR IS APPLICABLE IN THE INSTANT CASE.

On the first issue, the Court finds the conclusion of the trial court and the Court of Appeals to be amply justified. GPS,
being an exclusive contractor and hauler of Concepcion Industries, Inc., rendering or offering its services to no other
individual or entity, cannot be considered a common carrier. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for
hire or compensation, offering their services to the public,8 whether to the public in general or to a limited clientele in
particular, but never on an exclusive basis.9 The true test of a common carrier is the carriage of passengers or goods,
providing space for those who opt to avail themselves of its transportation service for a fee.10 Given accepted standards,
GPS scarcely falls within the term "common carrier."

The above conclusion nothwithstanding, GPS cannot escape from liability.

In culpa contractual, upon which the action of petitioner rests as being the subrogee of Concepcion Industries, Inc., the
mere proof of the existence of the contract and the failure of its compliance justify, prima facie, a corresponding right of
relief.11 The law, recognizing the obligatory force of contracts,12 will not permit a party to be set free from liability for
any kind of misperformance of the contractual undertaking or a contravention of the tenor thereof.13 A breach upon the
contract confers upon the injured party a valid cause for recovering that which may have been lost or suffered. The
remedy serves to preserve the interests of the promisee that may include his "expectation interest," which is his interest
in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been
performed, or his "reliance interest," which is his interest in being reimbursed for loss caused by reliance on the contract
by being put in as good a position as he would have been in had the contract not been made; or his "restitution interest,"
which is his interest in having restored to him any benefit that he has conferred on the other party.14 Indeed, agreements
can accomplish little, either for their makers or for society, unless they are made the basis for action.15 The effect of
every infraction is to create a new duty, that is, to make recompense to the one who has been injured by the failure of
another to observe his contractual obligation16 unless he can show extenuating circumstances, like proof of his exercise
of due diligence (normally that of the diligence of a good father of a family or, exceptionally by stipulation or by law such
as in the case of common carriers, that of extraordinary diligence) or of the attendance of fortuitous event, to excuse him
from his ensuing liability.

Respondent trucking corporation recognizes the existence of a contract of carriage between it and petitioner’s assured,
and admits that the cargoes it has assumed to deliver have been lost or damaged while in its custody. In such a situation,
a default on, or failure of compliance with, the obligation - in this case, the delivery of the goods in its custody to the
place of destination - gives rise to a presumption of lack of care and corresponding liability on the part of the contractual
obligor the burden being on him to establish otherwise. GPS has failed to do so.

Respondent driver, on the other hand, without concrete proof of his negligence or fault, may not himself be ordered to
pay petitioner. The driver, not being a party to the contract of carriage between petitioner’s principal and defendant, may
not be held liable under the agreement. A contract can only bind the parties who have entered into it or their successors
who have assumed their personality or their juridical position.17 Consonantly with the axiom res inter alios acta aliis
neque nocet prodest, such contract can neither favor nor prejudice a third person. Petitioner’s civil action against the
driver can only be based on culpa aquiliana, which, unlike culpa contractual, would require the claimant for damages to
prove negligence or fault on the part of the defendant.18

A word in passing. Res ipsa loquitur, a doctrine being invoked by petitioner, holds a defendant liable where the thing
which caused the injury complained of is shown to be under the latter’s management and the accident is such that, in
the ordinary course of things, cannot be expected to happen if those who have its management or control use proper
care. It affords reasonable evidence, in the absence of explanation by the defendant, that the accident arose from want
of care.19 It is not a rule of substantive law and, as such, it does not create an independent ground of liability. Instead, it
is regarded as a mode of proof, or a mere procedural convenience since it furnishes a substitute for, and relieves the
plaintiff of, the burden of producing specific proof of negligence. The maxim simply places on the defendant the burden
of going forward with the proof.20 Resort to the doctrine, however, may be allowed only when (a) the event is of a kind
which does not ordinarily occur in the absence of negligence; (b) other responsible causes, including the conduct of the
plaintiff and third persons, are sufficiently eliminated by the evidence; and (c) the indicated negligence is within the scope
of the defendant's duty to the plaintiff.21 Thus, it is not applicable when an unexplained accident may be attributable to
one of several causes, for some of which the defendant could not be responsible.22

Res ipsa loquitur generally finds relevance whether or not a contractual relationship exists between the plaintiff and the
defendant, for the inference of negligence arises from the circumstances and nature of the occurrence and not from the
nature of the relation of the parties.23 Nevertheless, the requirement that responsible causes other than those due to
defendant’s conduct must first be eliminated, for the doctrine to apply, should be understood as being confined only to
cases of pure (non-contractual) tort since obviously the presumption of negligence in culpa contractual, as previously
so pointed out, immediately attaches by a failure of the covenant or its tenor. In the case of the truck driver, whose liability
in a civil action is predicated on culpa acquiliana, while he admittedly can be said to have been in control and management
of the vehicle which figured in the accident, it is not equally shown, however, that the accident could have been
exclusively due to his negligence, a matter that can allow, forthwith, res ipsa loquitur to work against him.

If a demurrer to evidence is granted but on appeal the order of dismissal is reversed, the movant shall be deemed to have
waived the right to present evidence.24 Thus, respondent corporation may no longer offer proof to establish that it has
exercised due care in transporting the cargoes of the assured so as to still warrant a remand of the case to the trial court.

WHEREFORE, the order, dated 30 April 1996, of the Regional Trial Court, Branch 66, of Makati City, and the decision,
dated 10 June 1999, of the Court of Appeals, are AFFIRMED only insofar as respondent Lambert M. Eroles is concerned,
but said assailed order of the trial court and decision of the appellate court are REVERSED as regards G.P. Sarmiento
Trucking Corporation which, instead, is hereby ordered to pay FGU Insurance Corporation the value of the damaged and
lost cargoes in the amount of P204,450.00. No costs.

SO ORDERED.
 Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 122039 May 31, 2000

VICENTE CALALAS, petitioner,

vs.

COURT OF APPEALS, ELIZA JUJEURCHE SUNGA and FRANCISCO SALVA, respondents.

MENDOZA, J.:

This is a petition for review on certiorari of the decision1 of the Court of Appeals, dated March 31, 1991, reversing the
contrary decision of the Regional Trial Court, Branch 36, Dumaguete City, and awarding damages instead to private
respondent Eliza Jujeurche Sunga as plaintiff in an action for breach of contract of carriage.

The facts, as found by the Court of Appeals, are as follows:

At 10 o'clock in the morning of August 23, 1989, private respondent Eliza Jujeurche G. Sunga, then a college freshman
majoring in Physical Education at the Siliman University, took a passenger jeepney owned and operated by petitioner
Vicente Calalas. As the jeepney was filled to capacity of about 24 passengers, Sunga was given by the conductor an
"extension seat," a wooden stool at the back of the door at the rear end of the vehicle.

On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to let a passenger off. As she was seated at
the rear of the vehicle, Sunga gave way to the outgoing passenger. Just as she was doing so, an Isuzu truck driven by
Iglecerio Verena and owned by Francisco Salva bumped the left rear portion of the jeepney. As a result, Sunga was
injured. She sustained a fracture of the "distal third of the left tibia-fibula with severe necrosis of the underlying skin."
Closed reduction of the fracture, long leg circular casting, and case wedging were done under sedation. Her confinement
in the hospital lasted from August 23 to September 7, 1989. Her attending physician, Dr. Danilo V. Oligario, an orthopedic
surgeon, certified she would remain on a cast for a period of three months and would have to ambulate in crutches during
said period.

On October 9, 1989, Sunga filed a complaint for damages against Calalas, alleging violation of the contract of carriage by
the former in failing to exercise the diligence required of him as a common carrier. Calalas, on the other hand, filed a
third-party complaint against Francisco Salva, the owner of the Isuzu truck.

The lower court rendered judgment against Salva as third-party defendant and absolved Calalas of liability, holding that
it was the driver of the Isuzu truck who was responsible for the accident. It took cognizance of another case (Civil Case
No. 3490), filed by Calalas against Salva and Verena, for quasi-delict, in which Branch 37 of the same court held Salva
and his driver Verena jointly liable to Calalas for the damage to his jeepney.

On appeal to the Court of Appeals, the ruling of the lower court was reversed on the ground that Sunga's cause of action
was based on a contract of carriage, not quasi-delict, and that the common carrier failed to exercise the diligence required
under the Civil Code. The appellate court dismissed the third-party complaint against Salva and adjudged Calalas liable
for damages to Sunga. The dispositive portion of its decision reads:

WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE, and another one is entered ordering
defendant-appellee Vicente Calalas to pay plaintiff-appellant:

(1) P50,000.00 as actual and compensatory damages;

(2) P50,000.00 as moral damages;

(3) P10,000.00 as attorney's fees; and

(4) P1,000.00 as expenses of litigation; and

(5) to pay the costs.

SO ORDERED.

Hence, this petition. Petitioner contends that the ruling in Civil Case No. 3490 that the negligence of Verena was the
proximate cause of the accident negates his liability and that to rule otherwise would be to make the common carrier an
insurer of the safety of its passengers. He contends that the bumping of the jeepney by the truck owned by Salva was a
caso fortuito. Petitioner further assails the award of moral damages to Sunga on the ground that it is not supported by
evidence.

The petition has no merit.

The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver and the owner of the truck liable
for quasi-delict ignores the fact that she was never a party to that case and, therefore, the principle of res judicata does
not apply.

Nor are the issues in Civil Case No. 3490 and in the present case the same. The issue in Civil Case No. 3490 was whether
Salva and his driver Verena were liable for quasi-delict for the damage caused to petitioner's jeepney. On the other hand,
the issue in this case is whether petitioner is liable on his contract of carriage. The first, quasi-delict, also known as culpa
aquiliana or culpa extra contractual, has as its source the negligence of the tortfeasor. The second, breach of contract or
culpa contractual, is premised upon the negligence in the performance of a contractual obligation.

Consequently, in quasi-delict, the negligence or fault should be clearly established because it is the basis of the action,
whereas in breach of contract, the action can be prosecuted merely by proving the existence of the contract and the fact
that the obligor, in this case the common carrier, failed to transport his passenger safely to his destination.2 In case of
death or injuries to passengers, Art. 1756 of the Civil Code provides that common carriers are presumed to have been at
fault or to have acted negligently unless they prove that they observed extraordinary diligence as defined in Arts. 1733
and 1755 of the Code. This provision necessarily shifts to the common carrier the burden of proof.

There is, thus, no basis for the contention that the ruling in Civil Case No. 3490, finding Salva and his driver Verena liable
for the damage to petitioner's jeepney, should be binding on Sunga. It is immaterial that the proximate cause of the
collision between the jeepney and the truck was the negligence of the truck driver. The doctrine of proximate cause is
applicable only in actions for quasi-delict, not in actions involving breach of contract. The doctrine is a device for imputing
liability to a person where there is no relation between him and another party. In such a case, the obligation is created by
law itself. But, where there is a pre-existing contractual relation between the parties, it is the parties themselves who
create the obligation, and the function of the law is merely to regulate the relation thus created. Insofar as contracts of
carriage are concerned, some aspects regulated by the Civil Code are those respecting the diligence required of common
carriers with regard to the safety of passengers as well as the presumption of negligence in cases of death or injury to
passengers. It provides:

Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them,
according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735, and 1746, Nos. 5,
6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756.

Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with due regard for all the circumstances.

Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have
acted negligently, unless they prove that they observed extraordinary diligence as prescribed by articles 1733 and 1755.

In the case at bar, upon the happening of the accident, the presumption of negligence at once arose, and it became the
duty of petitioner to prove that he had to observe extraordinary diligence in the care of his passengers.

Now, did the driver of jeepney carry Sunga "safely as far as human care and foresight could provide, using the utmost
diligence of very cautious persons, with due regard for all the circumstances" as required by Art. 1755? We do not think
so. Several factors militate against petitioner's contention.

First, as found by the Court of Appeals, the jeepney was not properly parked, its rear portion being exposed about two
meters from the broad shoulders of the highway, and facing the middle of the highway in a diagonal angle. This is a
violation of the R.A. No. 4136, as amended, or the Land Transportation and Traffic Code, which provides:

Sec. 54. Obstruction of Traffic. — No person shall drive his motor vehicle in such a manner as to obstruct or impede the
passage of any vehicle, nor, while discharging or taking on passengers or loading or unloading freight, obstruct the free
passage of other vehicles on the highway.

Second, it is undisputed that petitioner's driver took in more passengers than the allowed seating capacity of the jeepney,
a violation of §32(a) of the same law. It provides:

Exceeding registered capacity. — No person operating any motor vehicle shall allow more passengers or more freight or
cargo in his vehicle than its registered capacity.

The fact that Sunga was seated in an "extension seat" placed her in a peril greater than that to which the other passengers
were exposed. Therefore, not only was petitioner unable to overcome the presumption of negligence imposed on him for
the injury sustained by Sunga, but also, the evidence shows he was actually negligent in transporting passengers.

We find it hard to give serious thought to petitioner's contention that Sunga's taking an "extension seat" amounted to an
implied assumption of risk. It is akin to arguing that the injuries to the many victims of the tragedies in our seas should
not be compensated merely because those passengers assumed a greater risk of drowning by boarding an overloaded
ferry. This is also true of petitioner's contention that the jeepney being bumped while it was improperly parked constitutes
caso fortuito. A caso fortuito is an event which could not be foreseen, or which, though foreseen, was inevitable.3 This
requires that the following requirements be present: (a) the cause of the breach is independent of the debtor's will; (b)
the event is unforeseeable or unavoidable; (c) the event is such as to render it impossible for the debtor to fulfill his
obligation in a normal manner, and (d) the debtor did not take part in causing the injury to the

creditor.4 Petitioner should have foreseen the danger of parking his jeepney with its body protruding two meters into the
highway.

Finally, petitioner challenges the award of moral damages alleging that it is excessive and without basis in law. We find
this contention well taken.

In awarding moral damages, the Court of Appeals stated:

Plaintiff-appellant at the time of the accident was a first-year college student in that school year 1989-1990 at the Silliman
University, majoring in Physical Education. Because of the injury, she was not able to enroll in the second semester of
that school year. She testified that she had no more intention of continuing with her schooling, because she could not
walk and decided not to pursue her degree, major in Physical Education "because of my leg which has a defect already."

Plaintiff-appellant likewise testified that even while she was under confinement, she cried in pain because of her injured
left foot. As a result of her injury, the Orthopedic Surgeon also certified that she has "residual bowing of the fracture
side." She likewise decided not to further pursue Physical Education as her major subject, because "my left leg . . . has
a defect already."

Those are her physical pains and moral sufferings, the inevitable bedfellows of the injuries that she suffered. Under
Article 2219 of the Civil Code, she is entitled to recover moral damages in the sum of P50,000.00, which is fair, just and
reasonable.

As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of contract for it is
not one of the items enumerated under Art. 2219 of the Civil Code.5 As an exception, such damages are recoverable: (1)
in cases in which the mishap results in the death of a passenger, as provided in Art. 1764, in relation to Art. 2206(3) of
the Civil Code; and (2) in the cases in which the carrier is guilty of fraud or bad faith, as provided in Art. 2220.6

In this case, there is no legal basis for awarding moral damages since there was no factual finding by the appellate court
that petitioner acted in bad faith in the performance of the contract of carriage. Sunga's contention that petitioner's
admission in open court that the driver of the jeepney failed to assist her in going to a nearby hospital cannot be construed
as an admission of bad faith. The fact that it was the driver of the Isuzu truck who took her to the hospital does not imply
that petitioner was utterly indifferent to the plight of his injured passenger. If at all, it is merely implied recognition by
Verena that he was the one at fault for the accident.
WHEREFORE, the decision of the Court of Appeals, dated March 31, 1995, and its resolution, dated September 11, 1995,
are AFFIRMED, with the MODIFICATION that the award of moral damages is DELETED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT

Baguio City

THIRD DIVISION

G.R. No. 179337 April 30, 2008

JOSEPH SALUDAGA, petitioner,

vs.

FAR EASTERN UNIVERSITY and EDILBERTO C. DE JESUS in his capacity as President of FEU, respondents.
 DECISION

YNARES-SANTIAGO, J.:

This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the June 29, 2007 Decision2 of the Court of
Appeals in CA-G.R. CV No. 87050, nullifying and setting aside the November 10, 2004 Decision3 of the Regional Trial Court of
Manila, Branch 2, in Civil Case No. 98-89483 and dismissing the complaint filed by petitioner; as well as its August 23, 2007
Resolution4 denying the Motion for Reconsideration.5

The antecedent facts are as follows:

Petitioner Joseph Saludaga was a sophomore law student of respondent Far Eastern University (FEU) when he was shot by
Alejandro Rosete (Rosete), one of the security guards on duty at the school premises on August 18, 1996. Petitioner was rushed
to FEU-Dr. Nicanor Reyes Medical Foundation (FEU-NRMF) due to the wound he sustained.6 Meanwhile, Rosete was brought to
the police station where he explained that the shooting was accidental. He was eventually released considering that no formal
complaint was filed against him.

Petitioner thereafter filed a complaint for damages against respondents on the ground that they breached their obligation to provide
students with a safe and secure environment and an atmosphere conducive to learning. Respondents, in turn, filed a Third-Party
Complaint7 against Galaxy Development and Management Corporation (Galaxy), the agency contracted by respondent FEU to
provide security services within its premises and Mariano D. Imperial (Imperial), Galaxy's President, to indemnify them for whatever
would be adjudged in favor of petitioner, if any; and to pay attorney's fees and cost of the suit. On the other hand, Galaxy and
Imperial filed a Fourth-Party Complaint against AFP General Insurance.8

On November 10, 2004, the trial court rendered a decision in favor of petitioner, the dispositive portion of which reads:

WHEREFORE, from the foregoing, judgment is hereby rendered ordering:

1. FEU and Edilberto de Jesus, in his capacity as president of FEU to pay jointly and severally Joseph Saludaga the amount of
P35,298.25 for actual damages with 12% interest per annum from the filing of the complaint until fully paid; moral damages of
P300,000.00, exemplary damages of P500,000.00, attorney's fees of P100,000.00 and cost of the suit;

2. Galaxy Management and Development Corp. and its president, Col. Mariano Imperial to indemnify jointly and severally 3rd party
plaintiffs (FEU and Edilberto de Jesus in his capacity as President of FEU) for the above-mentioned amounts;

3. And the 4th party complaint is dismissed for lack of cause of action. No pronouncement as to costs.

SO ORDERED.9
Respondents appealed to the Court of Appeals which rendered the assailed Decision, the decretal portion of which provides, viz:

WHEREFORE, the appeal is hereby GRANTED. The Decision dated November 10, 2004 is hereby REVERSED and SET ASIDE.
The complaint filed by Joseph Saludaga against appellant Far Eastern University and its President in Civil Case No. 98-89483 is
DISMISSED.

SO ORDERED.10

Petitioner filed a Motion for Reconsideration which was denied; hence, the instant petition based on the following grounds:

THE COURT OF APPEALS SERIOUSLY ERRED IN MANNER CONTRARY TO LAW AND JURISPRUDENCE IN RULING THAT:

5.1. THE SHOOTING INCIDENT IS A FORTUITOUS EVENT;

5.2. RESPONDENTS ARE NOT LIABLE FOR DAMAGES FOR THE INJURY RESULTING FROM A GUNSHOT WOUND
SUFFERED BY THE PETITIONER FROM THE HANDS OF NO LESS THAN THEIR OWN SECURITY GUARD IN VIOLATION
OF THEIR BUILT-IN CONTRACTUAL OBLIGATION TO PETITIONER, BEING THEIR LAW STUDENT AT THAT TIME, TO
PROVIDE HIM WITH A SAFE AND SECURE EDUCATIONAL ENVIRONMENT;

5.3. SECURITY GAURD, ALEJANDRO ROSETE, WHO SHOT PETITIONER WHILE HE WAS WALKING ON HIS WAY TO THE
LAW LIBRARY OF RESPONDENT FEU IS NOT THEIR EMPLOYEE BY VIRTUE OF THE CONTRACT FOR SECURITY
SERVICES BETWEEN GALAXY AND FEU NOTWITHSTANDING THE FACT THAT PETITIONER, NOT BEING A PARTY TO IT,
IS NOT BOUND BY THE SAME UNDER THE PRINCIPLE OF RELATIVITY OF CONTRACTS; and

5.4. RESPONDENT EXERCISED DUE DILIGENCE IN SELECTING GALAXY AS THE AGENCY WHICH WOULD PROVIDE
SECURITY SERVICES WITHIN THE PREMISES OF RESPONDENT FEU.11

Petitioner is suing respondents for damages based on the alleged breach of student-school contract for a safe learning
environment. The pertinent portions of petitioner's Complaint read:

6.0. At the time of plaintiff's confinement, the defendants or any of their representative did not bother to visit and inquire about his
condition. This abject indifference on the part of the defendants continued even after plaintiff was discharged from the hospital
when not even a word of consolation was heard from them. Plaintiff waited for more than one (1) year for the defendants to perform
their moral obligation but the wait was fruitless. This indifference and total lack of concern of defendants served to exacerbate
plaintiff's miserable condition.

xxxx
11.0. Defendants are responsible for ensuring the safety of its students while the latter are within the University premises. And that
should anything untoward happens to any of its students while they are within the University's premises shall be the responsibility
of the defendants. In this case, defendants, despite being legally and morally bound, miserably failed to protect plaintiff from injury
and thereafter, to mitigate and compensate plaintiff for said injury;

12.0. When plaintiff enrolled with defendant FEU, a contract was entered into between them. Under this contract, defendants are
supposed to ensure that adequate steps are taken to provide an atmosphere conducive to study and ensure the safety of the
plaintiff while inside defendant FEU's premises. In the instant case, the latter breached this contract when defendant allowed harm
to befall upon the plaintiff when he was shot at by, of all people, their security guard who was tasked to maintain peace inside the
campus.12

In Philippine School of Business Administration v. Court of Appeals,13 we held that:

When an academic institution accepts students for enrollment, there is established a contract between them, resulting in bilateral
obligations which both parties are bound to comply with. For its part, the school undertakes to provide the student with an education
that would presumably suffice to equip him with the necessary tools and skills to pursue higher education or a profession. On the
other hand, the student covenants to abide by the school's academic requirements and observe its rules and regulations.

Institutions of learning must also meet the implicit or "built-in" obligation of providing their students with an atmosphere that
promotes or assists in attaining its primary undertaking of imparting knowledge. Certainly, no student can absorb the intricacies of
physics or higher mathematics or explore the realm of the arts and other sciences when bullets are flying or grenades exploding
in the air or where there looms around the school premises a constant threat to life and limb. Necessarily, the school must ensure
that adequate steps are taken to maintain peace and order within the campus premises and to prevent the breakdown thereof.14

It is undisputed that petitioner was enrolled as a sophomore law student in respondent FEU. As such, there was created a
contractual obligation between the two parties. On petitioner's part, he was obliged to comply with the rules and regulations of the
school. On the other hand, respondent FEU, as a learning institution is mandated to impart knowledge and equip its students with
the necessary skills to pursue higher education or a profession. At the same time, it is obliged to ensure and take adequate steps
to maintain peace and order within the campus.

It is settled that in culpa contractual, the mere proof of the existence of the contract and the failure of its compliance justify, prima
facie, a corresponding right of relief.15 In the instant case, we find that, when petitioner was shot inside the campus by no less the
security guard who was hired to maintain peace and secure the premises, there is a prima facie showing that respondents failed
to comply with its obligation to provide a safe and secure environment to its students.

In order to avoid liability, however, respondents aver that the shooting incident was a fortuitous event because they could not have
reasonably foreseen nor avoided the accident caused by Rosete as he was not their employee;16 and that they complied with their
obligation to ensure a safe learning environment for their students by having exercised due diligence in selecting the security
services of Galaxy.

After a thorough review of the records, we find that respondents failed to discharge the burden of proving that they exercised due
diligence in providing a safe learning environment for their students. They failed to prove that they ensured that the guards assigned
in the campus met the requirements stipulated in the Security Service Agreement. Indeed, certain documents about Galaxy were
presented during trial; however, no evidence as to the qualifications of Rosete as a security guard for the university was offered.

Respondents also failed to show that they undertook steps to ascertain and confirm that the security guards assigned to them
actually possess the qualifications required in the Security Service Agreement. It was not proven that they examined the
clearances, psychiatric test results, 201 files, and other vital documents enumerated in its contract with Galaxy. Total reliance on
the security agency about these matters or failure to check the papers stating the qualifications of the guards is negligence on the
part of respondents. A learning institution should not be allowed to completely relinquish or abdicate security matters in its premises
to the security agency it hired. To do so would result to contracting away its inherent obligation to ensure a safe learning
environment for its students.

Consequently, respondents' defense of force majeure must fail. In order for force majeure to be considered, respondents must
show that no negligence or misconduct was committed that may have occasioned the loss. An act of God cannot be invoked to
protect a person who has failed to take steps to forestall the possible adverse consequences of such a loss. One's negligence may
have concurred with an act of God in producing damage and injury to another; nonetheless, showing that the immediate or
proximate cause of the damage or injury was a fortuitous event would not exempt one from liability. When the effect is found to be
partly the result of a person's participation - whether by active intervention, neglect or failure to act - the whole occurrence is
humanized and removed from the rules applicable to acts of God.17

Article 1170 of the Civil Code provides that those who are negligent in the performance of their obligations are liable for damages.
Accordingly, for breach of contract due to negligence in providing a safe learning environment, respondent FEU is liable to petitioner
for damages. It is essential in the award of damages that the claimant must have satisfactorily proven during the trial the existence
of the factual basis of the damages and its causal connection to defendant's acts.18

In the instant case, it was established that petitioner spent P35,298.25 for his hospitalization and other medical expenses.19 While
the trial court correctly imposed interest on said amount, however, the case at bar involves an obligation arising from a contract
and not a loan or forbearance of money. As such, the proper rate of legal interest is six percent (6%) per annum of the amount
demanded. Such interest shall continue to run from the filing of the complaint until the finality of this Decision.20 After this Decision
becomes final and executory, the applicable rate shall be twelve percent (12%) per annum until its satisfaction.

The other expenses being claimed by petitioner, such as transportation expenses and those incurred in hiring a personal assistant
while recuperating were however not duly supported by receipts.21 In the absence thereof, no actual damages may be awarded.
Nonetheless, temperate damages under Art. 2224 of the Civil Code may be recovered where it has been shown that the claimant
suffered some pecuniary loss but the amount thereof cannot be proved with certainty. Hence, the amount of P20,000.00 as
temperate damages is awarded to petitioner.

As regards the award of moral damages, there is no hard and fast rule in the determination of what would be a fair amount of moral
damages since each case must be governed by its own peculiar circumstances.22 The testimony of petitioner about his physical
suffering, mental anguish, fright, serious anxiety, and moral shock resulting from the shooting incident23 justify the award of moral
damages. However, moral damages are in the category of an award designed to compensate the claimant for actual injury suffered
and not to impose a penalty on the wrongdoer. The award is not meant to enrich the complainant at the expense of the defendant,
but to enable the injured party to obtain means, diversion, or amusements that will serve to obviate the moral suffering he has
undergone. It is aimed at the restoration, within the limits of the possible, of the spiritual status quo ante, and should be
proportionate to the suffering inflicted. Trial courts must then guard against the award of exorbitant damages; they should exercise
balanced restrained and measured objectivity to avoid suspicion that it was due to passion, prejudice, or corruption on the part of
the trial court.24 We deem it just and reasonable under the circumstances to award petitioner moral damages in the amount of
P100,000.00.

Likewise, attorney's fees and litigation expenses in the amount of P50,000.00 as part of damages is reasonable in view of Article
2208 of the Civil Code.25 However, the award of exemplary damages is deleted considering the absence of proof that respondents
acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.

We note that the trial court held respondent De Jesus solidarily liable with respondent FEU. In Powton Conglomerate, Inc. v.
Agcolicol,26 we held that:

[A] corporation is invested by law with a personality separate and distinct from those of the persons composing it, such that, save
for certain exceptions, corporate officers who entered into contracts in behalf of the corporation cannot be held personally liable
for the liabilities of the latter. Personal liability of a corporate director, trustee or officer along (although not necessarily) with the
corporation may so validly attach, as a rule, only when - (1) he assents to a patently unlawful act of the corporation, or when he is
guilty of bad faith or gross negligence in directing its affairs, or when there is a conflict of interest resulting in damages to the
corporation, its stockholders or other persons; (2) he consents to the issuance of watered down stocks or who, having knowledge
thereof, does not forthwith file with the corporate secretary his written objection thereto; (3) he agrees to hold himself personally
and solidarily liable with the corporation; or (4) he is made by a specific provision of law personally answerable for his corporate
action.27

None of the foregoing exceptions was established in the instant case; hence, respondent De Jesus should not be held solidarily
liable with respondent FEU.
Incidentally, although the main cause of action in the instant case is the breach of the school-student contract, petitioner, in the
alternative, also holds respondents vicariously liable under Article 2180 of the Civil Code, which provides:

Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions, but also for those of
persons for whom one is responsible.

xxxx

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.

xxxx

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.

We agree with the findings of the Court of Appeals that respondents cannot be held liable for damages under Art. 2180 of the Civil
Code because respondents are not the employers of Rosete. The latter was employed by Galaxy. The instructions issued by
respondents' Security Consultant to Galaxy and its security guards are ordinarily no more than requests commonly envisaged in
the contract for services entered into by a principal and a security agency. They cannot be construed as the element of control as
to treat respondents as the employers of Rosete.28

As held in Mercury Drug Corporation v. Libunao:29

In Soliman, Jr. v. Tuazon,30 we held that where the security agency recruits, hires and assigns the works of its watchmen or
security guards to a client, the employer of such guards or watchmen is such agency, and not the client, since the latter has no
hand in selecting the security guards. Thus, the duty to observe the diligence of a good father of a family cannot be demanded
from the said client:

… [I]t is settled in our jurisdiction that where the security agency, as here, recruits, hires and assigns the work of its watchmen or
security guards, the agency is the employer of such guards or watchmen. Liability for illegal or harmful acts committed by the
security guards attaches to the employer agency, and not to the clients or customers of such agency. As a general rule, a client or
customer of a security agency has no hand in selecting who among the pool of security guards or watchmen employed by the
agency shall be assigned to it; the duty to observe the diligence of a good father of a family in the selection of the guards cannot,
in the ordinary course of events, be demanded from the client whose premises or property are protected by the security guards.

xxxx
The fact that a client company may give instructions or directions to the security guards assigned to it, does not, by itself, render
the client responsible as an employer of the security guards concerned and liable for their wrongful acts or omissions.31

We now come to respondents' Third Party Claim against Galaxy. In Firestone Tire and Rubber Company of the Philippines v.
Tempengko,32 we held that:

The third-party complaint is, therefore, a procedural device whereby a 'third party' who is neither a party nor privy to the act or deed
complained of by the plaintiff, may be brought into the case with leave of court, by the defendant, who acts as third-party plaintiff
to enforce against such third-party defendant a right for contribution, indemnity, subrogation or any other relief, in respect of the
plaintiff's claim. The third-party complaint is actually independent of and separate and distinct from the plaintiff's complaint. Were
it not for this provision of the Rules of Court, it would have to be filed independently and separately from the original complaint by
the defendant against the third-party. But the Rules permit defendant to bring in a third-party defendant or so to speak, to litigate
his separate cause of action in respect of plaintiff's claim against a third-party in the original and principal case with the object of
avoiding circuitry of action and unnecessary proliferation of law suits and of disposing expeditiously in one litigation the entire
subject matter arising from one particular set of facts.33

Respondents and Galaxy were able to litigate their respective claims and defenses in the course of the trial of petitioner's complaint.
Evidence duly supports the findings of the trial court that Galaxy is negligent not only in the selection of its employees but also in
their supervision. Indeed, no administrative sanction was imposed against Rosete despite the shooting incident; moreover, he was
even allowed to go on leave of absence which led eventually to his disappearance.34 Galaxy also failed to monitor petitioner's
condition or extend the necessary assistance, other than the P5,000.00 initially given to petitioner. Galaxy and Imperial failed to
make good their pledge to reimburse petitioner's medical expenses.

For these acts of negligence and for having supplied respondent FEU with an unqualified security guard, which resulted to the
latter's breach of obligation to petitioner, it is proper to hold Galaxy liable to respondent FEU for such damages equivalent to the
above-mentioned amounts awarded to petitioner.

Unlike respondent De Jesus, we deem Imperial to be solidarily liable with Galaxy for being grossly negligent in directing the affairs
of the security agency. It was Imperial who assured petitioner that his medical expenses will be shouldered by Galaxy but said
representations were not fulfilled because they presumed that petitioner and his family were no longer interested in filing a formal
complaint against them.35

WHEREFORE, the petition is GRANTED. The June 29, 2007 Decision of the Court of Appeals in CA-G.R. CV No. 87050 nullifying
the Decision of the trial court and dismissing the complaint as well as the August 23, 2007 Resolution denying the Motion for
Reconsideration are REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Manila, Branch 2, in Civil Case No.
98-89483 finding respondent FEU liable for damages for breach of its obligation to provide students with a safe and secure learning
atmosphere, is AFFIRMED with the following MODIFICATIONS:
a. respondent Far Eastern University (FEU) is ORDERED to pay petitioner actual damages in the amount of P35,298.25, plus 6%
interest per annum from the filing of the complaint until the finality of this Decision. After this decision becomes final and executory,
the applicable rate shall be twelve percent (12%) per annum until its satisfaction;

b. respondent FEU is also ORDERED to pay petitioner temperate damages in the amount of P20,000.00; moral damages in the
amount of P100,000.00; and attorney's fees and litigation expenses in the amount of P50,000.00;

c. the award of exemplary damages is DELETED.

The Complaint against respondent Edilberto C. De Jesus is DISMISSED. The counterclaims of respondents are likewise
DISMISSED.

Galaxy Development and Management Corporation (Galaxy) and its president, Mariano D. Imperial are ORDERED to jointly and
severally pay respondent FEU damages equivalent to the above-mentioned amounts awarded to petitioner.

SO ORDERED.

G.R. No. 180440

DR. GENEVIEVE L. HUANG, Petitioner,

- versus -

PHILIPPINE HOTELIERS, INC., DUSIT THANI PUBLIC CO., LTD. And FIRST LEPANTO TAISHO INSURANCE CORPORATION,
Respondents.

DECISION

PEREZ, J.:

For this Court’s resolution is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision

of the Court of Appeals in CA-G.R. CV No. 87065 dated 9 August 2007, affirming the Decision of Branch 56 of the Regional Trial
Court (RTC) of Makati City in Civil Case No. 96-1367 dated 21 February 2006, dismissing for lack of merit herein petitioner Dr.
Genevieve L. Huang’s Complaint for Damages. Assailed as well is the Court of Appeals’ Resolution dated 5 November 2007
denying for lack of merit petitioner’s Motion for Reconsideration.
This case stemmed from a Complaint for Damages filed on 28 August 1996 by petitioner Dr. Genevieve L. Huang

against herein respondents Philippine Hoteliers, Inc. (PHI) and Dusit Thani Public Co., Ltd. (DTPCI), as owners of Dusit Thani
Hotel Manila (Dusit Hotel); and co-respondent First Lepanto Taisho Insurance Corporation (First Lepanto), as insurer of the
aforesaid hotel. The said Complaint was premised on the alleged negligence of respondents PHI and DTPCI’s staff, in the
untimely putting off all the lights within the hotel’s swimming pool area, as well as the locking of the main entrance door of the
area, prompting petitioner to grope for a way out. While doing so, a folding wooden counter top fell on her head causing her
serious brain injury. The negligence was allegedly compounded by respondents PHI and DTPCI’s failure to render prompt and
adequate medical assistance.
Petitioner’s version of the antecedents of this case is as follows:

On 11 June 1995, Delia Goldberg (Delia), a registered guest of Dusit Hotel, invited her friend, petitioner Dr. Genevieve L. Huang,
for a swim at the hotel’s swimming pool facility. They started bathing at around 5:00 p.m. At around 7:00 p.m., the hotel’s swimming
pool attendant informed them that the swimming pool area was about to be closed. The two subsequently proceeded to the shower
room adjacent to the swimming pool to take a shower and dress up. However, when they came out of the bathroom, the entire
swimming pool area was already pitch black and there was no longer any person around but the two of them. They carefully walked
towards the main door leading to the hotel but, to their surprise, the door was locked.

Petitioner and Delia waited for 10 more minutes near the door hoping someone would come to their rescue but they waited in vain.
Delia became anxious about their situation so petitioner began to walk around to look for a house phone. Delia followed petitioner.
After some time, petitioner saw a phone behind the lifeguard’s counter. While slowly walking towards the phone, a hard and heavy
object, which later turned out to be the folding wooden counter top, fell on petitioner’s head that knocked her down almost
unconscious.
Delia immediately got hold of the house phone and notified the hotel telephone operator of the incident. Not long after, the hotel
staff arrived at the main entrance door of the swimming pool area but it took them at least 20 to 30 minutes to get inside. W hen
the door was finally opened, three hotel chambermaids assisted petitioner by placing an ice pack and applying some ointment on
her head. After petitioner had slightly recovered, she requested to be assisted to the hotel’s coffee shop to have some rest.
Petitioner demanded the services of the hotel physician.

Dr. Violeta Dalumpines (Dr. Dalumpines) arrived. She approached petitioner and introduced herself as the hotel physician.
However, instead of immediately providing the needed medical assistance, Dr. Dalumpines presented a "Waiver" and demanded
that it be signed by petitioner, otherwise, the hotel management will not render her any assistance. Petitioner refused to do so.

After eating her dinner and having rested for a while, petitioner left the hotel’s coffee shop and went home. Thereupon, petitioner
started to feel extraordinary dizziness accompanied by an uncomfortable feeling in her stomach, which lasted until the following
day. Petitioner was constrained to stay at home, thus, missing all her important appointments with her patients. She also began
experiencing "on" and "off" severe headaches that caused her three (3) sleepless nights.

Petitioner, thus, decided to consult a certain Dr. Perry Noble (Dr. Noble), a neurologist from Makati Medical Center, who required
her to have an X-ray and a Magnetic Resonance Imaging (MRI) tests.

The MRI Report dated 23 August 1995 revealed the following findings:
CONSULTATION REPORT:

MRI examination of the brain shows scattered areas of intraparenchymal contusions and involving mainly the left middle and
posterior temporal and slightly the right anterior temporal lobe.

Other small areas of contusions with suggestive pertechiae are seen in the left fronto-parietal, left parieto-occipital and with deep
frontal periventricular subcortical and cortical regions. There is no mass effect nor signs of localized hemorrhagic extravasation.

The ventricles are not enlarged, quite symmetrical without shifts or deformities; the peripheral sulci are within normal limits.

The C-P angles, petromastoids, sella, extrasellar and retro orbital areas appear normal.

The brainstem is unremarkable.

IMPRESSION: Scattered small intraparenchymal contusions mainly involving the left middle-posterior temporal lobe and also right
medial anterior temporal, both deep frontal subcortical, left parieto-occipital subcortical and cortical regions. Ischemic etiology not
ruled out. No localized intra - or extracerebral hemorrhage.
Petitioner claimed that the aforesaid MRI result clearly showed that her head was bruised. Based also on the same MRI result, Dr.
Noble told her that she has a very serious brain injury. In view thereof, Dr. Noble prescribed the necessary medicine for her
condition.

Petitioner likewise consulted a certain Dr. Ofelia Adapon, also a neurologist from Makati Medical Center, who required her to
undergo an Electroencephalogram examination (EEG) to measure the electrostatic in her brain.

Based on its result, Dr. Ofelia Adapon informed her that she has a serious condition—a permanent one. Dr. Ofelia Adapon
similarly prescribed medicines for her brain injury.
Petitioner’s condition did not get better. Hence, sometime in September 1995, she consulted another neuro-surgeon by the name
of Dr. Renato Sibayan (Dr. Sibayan), who required her to have an X-ray test.

According to petitioner, Dr. Sibayan’s finding was the same as those of the previous doctors that she had consulted—she has a
serious brain injury.
By reason of the unfortunate 11 June 1995 incident inside the hotel’s swimming pool area, petitioner also started to feel losing her
memory, which greatly affected and disrupted the practice of her chosen profession.

Thus, on 25 October 1995, petitioner, through counsel, sent a demand letter to respondents PHI and DTPCI seeking payment of
an amount not less than P100,000,000.00 representing loss of earnings on her remaining life span. But, petitioner’s demand was
unheeded.
In November 1995, petitioner went to the United States of America (USA) for further medical treatment. She consulted a certain
Dr. Gerald Steinberg and a certain Dr. Joel Dokson

from Mount Sinai Hospital who both found that she has "post traumatic-post concussion/contusion cephalgias-vascular and
neuralgia." She was then prescribed to take some medications for severe pain and to undergo physical therapy. Her condition
did not improve so she returned to the Philippines.
Petitioner, once again, consulted Dr. Sibayan, who simply told her to just relax and to continue taking her medicines. Petitioner
also consulted other neurologists, who all advised her to just continue her medications and to undergo physical therapy for her
neck pain.

Sometime in 1996, petitioner consulted as well a certain Dr. Victor Lopez (Dr. Lopez), an ophthalmologist from the Makati Medical
Center, because of her poor vision, which she has experienced for several months.

Petitioner’s Eye Report dated 5 March 1996 issued by Dr. Lopez stated: "IMPRESSION: Posterior vitreous detachment, right
eye of floaters." Dr. Lopez told petitioner that her detached eye is permanent and very serious. Dr. Lopez then prescribed an eye
drop to petitioner.
For petitioner’s frustration to dissipate and to regain her former strength and physical well-being, she consulted another neuro-
surgeon from Makati Medical Center by the name of Dr. Leopoldo P. Pardo, Jr. (Dr. Pardo, Jr.).

She disclosed to Dr. Pardo, Jr. that at the age of 18 she suffered a stroke due to mitral valve disease and that she was given
treatments, which also resulted in thrombocytopenia. In Dr. Pardo, Jr.’s medical evaluation of petitioner dated 15 May 1996, he
made the following diagnosis and opinion:
DIAGNOSIS AND OPINION:

This patient sustained a severe head injury in (sic) 11 June 1995 and as a result of which she developed the following injuries:

1. Cerebral Concussion and Contusion

2. Post-traumatic Epilepsy

3. Post-concussional Syndrome

4. Minimal Brain Dysfunction

5. Cervical Sprain, chronic recurrent

It is my opinion that the symptoms she complained of in the foregoing history are all related to and a result of the injury sustained
on 11 June 1995.

It is further my opinion that the above diagnosis and complaints do materially affect her duties and functions as a practicing
physician and dermatologist, and that she will require treatment for an undetermined period of time.

The percentage of disability is not calculated at this time and will require further evaluation and observation.

Dr. Pardo, Jr. then advised petitioner to continue her medications.

Petitioner likewise consulted a certain Dr. Tenchavez

for her follow-up EEG. He similarly prescribed medicine for petitioner’s deep brain injury. He also gave her pain killer for her
headache and advised her to undergo physical therapy. Her symptoms, however, persisted all the more.
In 1999, petitioner consulted another neurologist at the Makati Medical Center by the name of Dr. Martesio Perez (Dr. Perez)
because of severe fleeting pains in her head, arms and legs; difficulty in concentration; and warm sensation of the legs, which
symptoms also occurred after the 11 June 1995 incident. Upon examination, Dr. Perez observed that petitioner has been
experiencing severe pains and she has a slight difficulty in concentration. He likewise noted that there was a slight spasm of
petitioner’s neck muscle but, otherwise, there was no objective neurologic finding. The rest of petitioner’s neurologic examination
was essentially normal.

Dr. Perez’s neurologic evaluation

 of petitioner reflected, among others: (1) petitioner’s past medical history, which includes, among others, mitral valve stenosis;
(2) an interpretation of petitioner’s EEG results in October 1995 and in January 1999, i.e., the first EEG showed sharp waves
seen bilaterally more on the left while the second one was normal; and (3) interpretation of petitioner’s second MRI result, i.e.,
petitioner has a permanent damage in the brain, which can happen either after a head injury or after a stroke. Dr. Perez
concluded that petitioner has post-traumatic or post concussion syndrome.
Respondents, on the other hand, denied all the material allegations of petitioner and, in turn, countered the latter’s statement of
facts, thus:

According to respondents PHI and DTPCI, a sufficient notice had been posted on the glass door of the hotel leading to the
swimming pool area to apprise the people, especially the hotel guests, that the swimming pool area is open only from 7:00 a.m. to
7:00 p.m.

Though the hotel’s swimming pool area is open only between the aforestated time, the lights thereon are kept on until 10:00
p.m. for, (1) security reasons; (2) housekeeping personnel to do the cleaning of the swimming pool surroundings; and (3) people
doing their exercise routine at the Slimmer’s World Gym adjacent to the swimming pool area, which was then open until 10:00
p.m., to have a good view of the hotel’s swimming pool. Even granting that the lights in the hotel’s swimming pool area were
turned off, it would not render the area completely dark as the Slimmer’s World Gym near it was well-illuminated.
Further, on 11 June 1995, at round 7:00 p.m., the hotel’s swimming pool attendant advised petitioner and Delia to take their
showers as it was already closing time. Afterwards, at around 7:40 p.m., Pearlie Benedicto-Lipana (Ms. Pearlie), the hotel staff
nurse, who was at the hotel clinic located at the mezzanine floor, received a call from the hotel telephone operator informing her
that there was a guest requiring medical assistance at the hotel’s swimming pool area located one floor above the clinic.

Immediately, Ms. Pearlie got hold of her medical kit and hurriedly went to the hotel’s swimming pool area. There she saw Delia
and petitioner, who told her that she was hit on the head by a folding wooden counter top. Although petitioner looked normal as
there was no indication of any blood or bruise on her head, Ms. Pearlie still asked her if she needed any medical attention to which
petitioner replied that she is a doctor, she was fine and she did not need any medical attention. Petitioner, instead, requested for
a hirudoid cream to which Ms. Pearlie acceded.

At about 8:00 p.m., after attending to petitioner, Ms. Pearlie went back to the hotel clinic to inform Dr. Dalumpines of the incident
at the hotel’s swimming pool area. But before she could do that, Dr. Dalumpines had already chanced upon Delia and petitioner at
the hotel’s coffee shop and the latter reported to Dr. Dalumpines that her head was hit by a folding wooden counter top while she
was inside the hotel’s swimming pool area. When asked by Dr. Dalumpines how she was, petitioner responded she is a doctor,
she was fine and she was already attended to by the hotel nurse, who went at the hotel’s swimming pool area right after the
accident. Dr. Dalumpines then called Ms. Pearlie to verify the same, which the latter confirmed.

Afterwards, Dr. Dalumpines went back to petitioner and checked the latter’s condition. Petitioner insisted that she was fine and
that the hirudoid cream was enough. Having been assured that everything was fine, Dr. Dalumpines requested petitioner to execute
a handwritten certification
 regarding the incident that occurred that night. Dr. Dalumpines then suggested to petitioner to have an X-ray test. Petitioner
replied that it was not necessary. Petitioner also refused further medical attention.
On 13 June 1995, petitioner called up Dr. Dalumpines. The call, however, had nothing to do with the 11 June 1995 incident. Instead,
petitioner merely engaged in small talk with Dr. Dalumpines while having her daily massage. The two talked about petitioner’s
personal matters, i.e., past medical history, differences with siblings and family over inheritance and difficulty in practice. Petitioner
even disclosed to Dr. Dalumpines that she once fell from a horse; that she had a stroke; had hysterectomy and is incapable of
having children for her uterus had already been removed; that she had blood disorder, particularly lack of platelets, that can cause
bleeding; and she had an "on" and "off" headaches. Petitioner oftentimes called Dr. Dalumpines at the hotel clinic to discuss topics
similar to those discussed during their 13 June 1995 conversation.

Also, during one of their telephone conversations, petitioner requested for a certification regarding the 11 June 1995 incident inside
the hotel’s swimming pool area. Dr. Dalumpines accordingly issued Certification dated 7 September 1995, which states that:

CERTIFICATION

This is to certify that as per Clinic records, duty nurse Pearlie was called to attend to an accident at the poolside at 7:45PM on 11
June 1995.

Same records show that there, she saw petitioner who claimed the folding countertop fell on her head when she lifted it to enter
the lifeguard’s counter to use the phone. She asked for Hirudoid.

The same evening petitioner met Dr. Dalumpines at the Coffee Shop. After narrating the poolside incident and declining Dr.
Dalumpines’ offer of assistance, she reiterated that the Hirudoid cream was enough and that petitioner being a doctor herself,
knew her condition and she was all right.

This certification is given upon the request of petitioner for whatever purpose it may serve, 7 September 1995 at Makati City.

(Emphasis supplied).
Petitioner personally picked up the afore-quoted Certification at the hotel clinic without any objection as to its contents.

From 11 June 1995 until 7 September 1995, the hotel clinic never received any complaint from petitioner regarding the latter’s
condition. The hotel itself neither received any written complaint from petitioner.

After trial, the court a quo in its Decision dated 21 February 2006 dismissed petitioner’s Complaint for lack of merit.

The trial court found petitioner’s testimony self-serving, thus, devoid of credibility. Petitioner failed to present any evidence to
substantiate her allegation that the lights in the hotel’s swimming pool area were shut off at the time of the incident. She did not
even present her friend, Delia, to corroborate her testimony. More so, petitioner’s testimony was contradicted by one of the
witnesses presented by the respondents who positively declared that it has been a normal practice of the hotel management not
to put off the lights until 10:00 p.m. to allow the housekeepers to do the cleaning of the swimming pool surroundings, including the
toilets and counters. Also, the lights were kept on for security reasons and for the people in the nearby gym to have a good view
of the swimming pool while doing their exercise routine. Besides, there was a remote possibility that the hotel’s swimming pool
area was in complete darkness as the aforesaid gym was then open until 10:00 p.m., and the lights radiate to the hotel’s swimming
pool area. As such, petitioner would not have met the accident had she only acted with care and caution.

The trial court further struck down petitioner’s contention that the hotel management did not extend medical assistance to her in
the aftermath of the accident. Records showed that the hotel management immediately responded after being notified of the
accident. The hotel nurse and the two chambermaids placed an ice pack on petitioner’s head. They were willing to extend further
emergency assistance but petitioner refused and merely asked for a hirudoid cream. Petitioner even told them she is a doctor and
she was fine. Even the medical services offered by the hotel physician were turned down by petitioner. Emphatically, petitioner
cannot fault the hotel for the injury she sustained as she herself did not heed the warning that the swimming pool area is open only
from 7:00 a.m. to 7:00 p.m. As such, since petitioner’s own negligence was the immediate and proximate cause of her injury, she
cannot recover damages.

The trial court similarly observed that the records revealed no indication that the head injury complained of by petitioner was the
result of the alleged 11 June 1995 accident. Firstly, petitioner had a past medical history which might have been the cause of her
recurring brain injury. Secondly, the findings of Dr. Perez did not prove a causal relation between the 11 June 1995 accident and
the brain damage suffered by petitioner. Even Dr. Perez himself testified that the symptoms being experienced by petitioner might
have been due to factors other than the head trauma she allegedly suffered. It bears stressing that petitioner had been suffering
from different kinds of brain problems since she was 18 years old, which may have been the cause of the recurring symptoms of
head injury she is experiencing at present. Absent, therefore, of any proof establishing the causal relation between the injury she
allegedly suffered on 11 June 1995 and the head pains she now suffers, her claim must fail. Thirdly, Dr. Teresita Sanchez’s (Dr.
Sanchez) testimony cannot be relied upon since she testified on the findings and conclusions of persons who were never presented
in court. Ergo, her testimony thereon was hearsay. Fourthly, the medical reports/evaluations/certifications issued by myriads of
doctors whom petitioner sought for examination or treatment were neither identified nor testified to by those who issued them.
Being deemed as hearsay, they cannot be given probative value. Even assuming that petitioner suffered head injury as a
consequence of the 11 June 1995 accident, she cannot blame anyone but herself for staying at the hotel’s swimming pool area
beyond its closing hours and for lifting the folding wooden counter top that eventually hit her head.

For petitioner’s failure to prove that her serious and permanent injury was the result of the 11 June 1995 accident, thus, her claim
for actual or compensatory damages, loss of income, moral damages, exemplary damages and attorney’s fees, must all fail.

With regard to respondent First Lepanto’s liability, the trial court ruled that under the contract of insurance, suffice it to state that
absent any cause for any liability against respondents PHI and DTPCI, respondent First Lepanto cannot be made liable thereon.
Dissatisfied, petitioner elevated the matter to the Court of Appeals with the following assignment of errors: (1) the trial court erred
in finding that the testimony of petitioner is self-serving and thus void of credibility; (2) the trial court erred in applying the doctrine
of proximate cause in cases of breach of contract and even assuming arguendo that the doctrine is applicable, petitioner was able
to prove by sufficient evidence the causal connection between her injuries and respondents PHI and DTPCI’s negligent act; and
(3) the trial court erred in holding that petitioner is not entitled to damages.

On 9 August 2007, the Court of Appeals rendered a Decision affirming the findings and conclusions of the trial court.

The Court of Appeals ratiocinated in this wise:

At the outset, it is necessary for our purpose to determine whether to decide this case on the theory that herein respondents PHI
and DTPCI are liable for breach of contract or on the theory of quasi-delict.

xxxx

It cannot be gainsaid that herein petitioner’s use of the hotel’s pool was only upon the invitation of Delia, the hotel’s registered
guest. As such, she cannot claim contractual relationship between her and the hotel. Since the circumstances of the present case
do not evince a contractual relation between petitioner and respondents, the rules on quasi-delict , thus, govern.

The pertinent provision of Art. 2176 of the Civil Code which states: "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 quasi-delict."

A perusal of Article 2176 shows that obligations arising from quasi-delict or tort, also known as extra-contractual obligations, arise
only between parties not otherwise bound by contract, whether express or implied. Thus, to sustain a claim liability under quasi-
delict, the following requisites must concur: (a) damages suffered by the plaintiff; (b) fault or negligence of the defendant, or some
other person for whose acts he must respond; and (c) the connection of cause and effect between the fault or negligence of the
defendant and the damages incurred by the plaintiff.

Viewed from the foregoing, the question now is whether respondents PHI and DTPCI and its employees were negligent? We do
not think so. Several factors militate against petitioner’s contention.

One. Petitioner recognized the fact that the pool area’s closing time is 7:00 p.m.. She, herself, admitted during her testimony that
she was well aware of the sign when she and Delia entered the pool area. Hence, upon knowing, at the outset, of the pool’s closing
time, she took the risk of overstaying when she decided to take shower and leave the area beyond the closing hour. In fact, it was
only upon the advise of the pool attendants that she thereafter took her shower.
Two. She admitted, through her certification that she lifted the wooden bar countertop, which then fell onto her head. The admission
in her certificate proves the circumstances surrounding the occurrence that transpired on the night of 11 June 1995. This is contrary
to her assertion in the complaint and testimony that, while she was passing through the counter door, she was suddenly knocked
out by a hard and heavy object. In view of the fact that she admitted having lifted the counter top, it was her own doing, therefore,
that made the counter top fell on to her head.

Three. We cannot likewise subscribe to petitioner’s assertion that the pool area was totally dark in that she herself admitted that
she saw a telephone at the counter after searching for one. It must be noted that petitioner and Delia had walked around the pool
area with ease since they were able to proceed to the glass entrance door from shower room, and back to the counter area where
the telephone was located without encountering any untoward incident. Otherwise, she could have easily stumbled over, or slid,
or bumped into something while searching for the telephone. This negates her assertion that the pool area was completely dark,
thereby, totally impairing her vision.

xxxx

The aforementioned circumstances lead us to no other conclusion than that the proximate and immediate cause of the injury of
petitioner was due to her own negligence.

Moreover, petitioner failed to sufficiently substantiate that the medical symptoms she is currently experiencing are the direct result
of the head injury she sustained on 11 June 1995 as was aptly discussed in the lower court’s findings.

xxxx

It bears stressing that in civil cases, the law requires that the party who alleges a fact and substantially asserts the affirmative of
the issue has the burden of proving it. Hence, for petitioner to be entitled to damages, she must show that she had suffered an
actionable injury. Regrettably, petitioner failed in this regard.

(Emphasis supplied).
Petitioner’s Motion for Reconsideration was denied for lack of merit in a Resolution dated 5 November 2007.

Hence, this Petition raising the following issues:

(1) Whether or not the findings of fact of the trial court and of the Court of Appeals are conclusive in this case.
(2) Whether or not herein respondents PHI and DTPCI are responsible by implied contract to exercise due care for the safety and
welfare of the petitioner.

(3) Whether or not the cause of action of the petitioner can be based on both breach of contract and tort.

(4) Whether or not it is respondents PHI and DTPCI and its employees who are liable to the petitioner for negligence, applying the
well-established doctrines of res ipsa loquitur and respondeat superior.

(5) Whether the petitioner’s debilitating and permanent injuries were a result of the accident she suffered at the hotel on 11 June
1995.

(6) Whether or not the petitioner is entitled to the payment of damages, attorney’s fees, interest, and the costs of suit.

(7) Whether or not the respondent insurance company is liable, even directly, to the petitioner.

(8) Whether or not petitioner’s motion for reconsideration of the decision of the Court of Appeals is pro forma.

Petitioner argues that the rule that "findings of fact of the lower courts are conclusive and must be respected on appeal" finds no
application herein because this case falls under the jurisprudentially established exceptions. Moreover, since the rationale behind
the afore-mentioned rule is that "the trial judge is in a vantage point to appreciate the conduct and behavior of the witnesses and
has the unexcelled opportunity to evaluate their testimony," one logical exception to the rule that can be deduced therefrom is
when the judge who decided the case is not the same judge who heard and tried the case.

Petitioner further faults the Court of Appeals in ruling that no contractual relationship existed between her and respondents PHI
and DTPCI since her use of the hotel’s swimming pool facility was only upon the invitation of the hotel’s registered guest. On the
contrary, petitioner maintains that an implied contract existed between them in view of the fact that the hotel guest status extends
to all those who avail of its services—its patrons and invitees. It follows then that all those who patronize the hotel and its facilities,
including those who are invited to partake of those facilities, like petitioner, are generally regarded as guests of the hotel. As such,
respondents PHI and DTPCI are responsible by implied contract for the safety and welfare of petitioner while the latter was inside
their premises by exercising due care, which they failed to do.
Petitioner even asserts that the existence of a contract between the parties does not bar any liability for tort since the act that
breaks a contract may also be a tort. Hence, the concept of change of theory of cause of action pointed to by respondents is
irrelevant.

Petitioner similarly avows that the doctrines of res ipsa loquitur and respondeat superior are applicable in this case. She argues
that a person who goes in a hotel without a "bukol" or hematoma and comes out of it with a "bukol" or hematoma is a clear case
of res ipsa loquitur. It was an accident caused by the fact that the hotel staff was not present to lift the heavy counter top for
petitioner as is normally expected of them because they negligently locked the main entrance door of the hotel’s swimming pool
area. Following the doctrine of res ipsa loquitur, respondents PHI and DTPCI’s negligence is presumed and it is incumbent upon
them to prove otherwise but they failed to do so. Further, respondents PHI and DTPCI failed to observe all the diligence of a good
father of a family in the selection and supervision of their employees, hence, following the doctrine of respondeat superior, they
were liable for the negligent acts of their staff in not verifying if there were still people inside the swimming pool area before turning
off the lights and locking the door. Had respondents PHI and DTPCI’s employees done so, petitioner would not have been injured.
Since respondents PHI and DTPCI’s negligence need not be proved, the lower courts erred in shifting the burden to petitioner and,
thereafter, holding the hotel and its employees not negligent for petitioner’s failure to prove their negligence. Moreover, petitioner
alleges that there was no contributory negligence on her part for she did not do anything that could have contributed to her injury.
And, even if there was, the same does not bar recovery.

Petitioner equally declares that the evidence on record, including the objective medical findings, had firmly established that her
permanent debilitating injuries were the direct result of the 11 June 1995 accident inside the hotel’s swimming pool area. This fact
has not been totally disputed by the respondents. Further, the medical experts who had been consulted by petitioner were in unison
in their diagnoses of her condition. Petitioner was also able to prove that the falling of the folding wooden counter top on her head
while she was at the hotel’s swimming pool area was the cause of her head, eye and neck injuries.

Petitioner reiterates her claim for an award of damages, to wit: actual, including loss of income; moral, exemplary; as well as
attorney’s fees, interest and costs of suit. She states that respondents PHI and DTPCI are liable for quasi-delict under Articles 19,
2176 and 2180 of the New Civil Code. At the same time, they are liable under an implied contract for they have a public duty to
give due courtesy, to exercise reasonable care and to provide safety to hotel guests, patrons and invitees. Respondent First
Lepanto, on the other hand, is directly liable under the express contract of insurance.

Lastly, petitioner contends that her Motion for Reconsideration before the Court of Appeals was not pro forma for it specifically
pointed out the alleged errors in the Court of Appeals Decision.

The instant Petition is devoid of merit.

Primarily, only errors of law and not of facts are reviewable by this Court in a Petition for Review on Certiorari under Rule 45 of the
Rules of Court.
 This Court is not a trier of facts and it is beyond its function to re-examine and weigh anew the respective evidence of the
parties. Besides, this Court adheres to the long standing doctrine that the factual findings of the trial court, especially when
affirmed by the Court of Appeals, are conclusive on the parties and this Court. Nonetheless, this Court has, at times, allowed
exceptions thereto, to wit:
(a) When the findings are grounded entirely on speculation, surmises, or conjectures;

(b) When the inference made is manifestly mistaken, absurd, or impossible;

(c) When there is grave abuse of discretion;

(d) When the judgment is based on a misapprehension of facts;

(e) When the findings of facts are conflicting;

(f) When in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee;

(g) When the Court of Appeals’ findings are contrary to those by the trial court;

(h) When the findings are conclusions without citation of specific evidence on which they are based;

(i) When the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondent;

(j) When the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; or

(k) When the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly
considered, would justify a different conclusion.

Upon meticulous perusal of the records, however, this Court finds that none of these exceptions is obtaining in this case. No such
justifiable or compelling reasons exist for this Court to depart from the general rule. This Court will not disturb the factual findings
of the trial court as affirmed by the Court of Appeals and adequately supported by the evidence on record.
Also, this Court will not review the factual findings of the trial court simply because the judge who heard and tried the case was not
the same judge who penned the decision. This fact alone does not diminish the veracity and correctness of the factual findings of
the trial court.

Indeed, "the efficacy of a decision is not necessarily impaired by the fact that its writer only took over from a colleague who had
earlier presided at the trial, unless there is showing of grave abuse of discretion in the factual findings reached by him." In this
case, there was none.
It bears stressing that in this jurisdiction there is a disputable presumption that the trial court’s decision is rendered by the judge in
the regular performance of his official duties. While the said presumption is only disputable, it is satisfactory unless contradicted or
overcame by other evidence. Encompassed in this presumption of regularity is the presumption that the trial court judge, in
resolving the case and drafting the decision, reviewed, evaluated, and weighed all the evidence on record. That the said trial court
judge is not the same judge who heard the case and received the evidence is of little consequence when the records and transcripts
of stenographic notes (TSNs) are complete and available for consideration by the former,

just like in the present case.

Irrefragably, the fact that the judge who penned the trial court’s decision was not the same judge who heard the case and received
the evidence therein does not render the findings in the said decision erroneous and unreliable. While the conduct and demeanor
of witnesses may sway a trial court judge in deciding a case, it is not, and should not be, his only consideration. Even more vital
for the trial court judge’s decision are the contents and substance of the witnesses’ testimonies, as borne out by the TSNs, as well
as the object and documentary evidence submitted and made part of the records of the case.

This Court examined the records, including the TSNs, and found no reason to disturb the factual findings of both lower courts. This
Court, thus, upholds their conclusiveness.

In resolving the second and third issues, a determination of the cause of action on which petitioner’s Complaint for Damages was
anchored upon is called for.

Initially, petitioner was suing respondents PHI and DTPCI mainly on account of their negligence but not on any breach of contract.
Surprisingly, when the case was elevated on appeal to the Court of Appeals, petitioner had a change of heart and later claimed
that an implied contract existed between her and respondents PHI and DTPCI and that the latter were liable for breach of their
obligation to keep her safe and out of harm. This allegation was never an issue before the trial court. It was not the cause of action
relied upon by the petitioner not until the case was before the Court of Appeals. Presently, petitioner claims that her cause of action
can be based both on quasi-delict and breach of contract.

A perusal of petitioner’s Complaint evidently shows that her cause of action was based solely on quasi-delict. Telling are the
following allegations in petitioner’s Complaint:

6. THAT, in the evening of 11 June 1995, between the hours from 7:00 to 8:00 o’clock, after herein petitioner and her friend from
New York, Delia, the latter being then a Hotel guest, were taking their shower after having a dip in the hotel’s swimming pool,
without any notice or warning, the Hotel’s staff put off all the lights within the pool area including the lights on the hallway and also
locked the main entrance door of the pool area, x x x;

7. THAT, Hotel guest Delia started to panic while petitioner pacified her by telling her not to worry as they would both find their way
out. Petitioner knowing that within the area there is a house phone, started to look around while Delia was following her, eventually
petitioner saw a phone behind the counter x x x, that while slowly moving on towards the phone on a stooping manner due to the
darkness CAUSED BY UNTIMELY AND NEGLIGENTLY PUTTING OFF WITH THE LIGHTS BY THE HEREIN RESPONDENTS
PHI AND DTPCI’S EMPLOYEE while passing through the open counter door with its Folding Counter Top also opened, x x x, a
hard and heavy object fell onto the head of the petitioner that knocked her down almost unconscious which hard and heavy object
turned out to be the Folding Counter Top;

8. THAT, Delia immediately got hold of the house phone and notified the Hotel Telephone Operator about the incident, immediately
the hotel staffs (sic) arrived but they were stranded behind the main door of the pool entrance and it too (sic) them more than
twenty (20) minutes to locate the hotel maintenance employee who holds the key of the said main entrance door;

9. THAT, when the door was opened, two Hotel Chamber Maids assisted the petitioner to get out of the counter door. Petitioner
being a Physician tried to control her feelings although groggy and requested for a HURIDOID, a medicine for HEMATOMA, as a
huge lump developed on her head while the two Chamber Maids assisted petitioner by holding the bag of ice on her head and
applying the medicine on the huge lump;

10. THAT, petitioner after having recovered slightly from her nightmare, though still feeling weak, asked to be assisted to the Hotel
Coffee Shop to take a rest but requested for the hotel’s Physician. Despite her insistent requests, the Dusit Hotel refused to lift a
finger to assists petitioner who was then in distress until a lady approached and introduced herself as the Hotel’s house Doctor.
Instead however of assisting petitioner by asking her what kind of assistance the Hotel could render, in a DISCOURTEOUS
MANNER presented instead a paper and demanding petitioner to affix her signature telling her that the Hotel Management would
only assists and answer for all expenses incurred if petitioner signs the paper presented, but she refused and petitioner instead
wrote a marginal note on the said paper stating her reason therefore, said paper later on turned out to be a WAIVER OF RIGHT
or QUIT CLAIM;

xxxx
14. THAT, due to the unfortunate incident caused by respondents PHI and DTPCI’s gross negligence despite medical assistance,
petitioner started to feel losing her memory that greatly affected and disrupted the practice of her chosen profession x x x.

xxxx

19. THAT, due to respondents PHI and DTPCI’s gross negligence as being narrated which caused petitioner to suffer sleepless
nights, depression, mental anguish, serious anxiety, wounded feelings, and embarrassment with her Diplomate friends in the
profession and industry, her social standing in the community was greatly affected and hence, respondents PHI and DTPCI must
be imposed the hereunder damages, prayed for x x x and Artile (sic) 2176 and 2199 of the New Civil Code of the Philippines x x
x.

xxxx

22. THAT, as to Moral, Exemplary and Actual Damages, as well as petitioner’s Loss of Income, the amounts are stated in its prayer
hereunder.

It is clear from petitioner’s allegations that her Complaint for Damages was predicated on the alleged negligence of respondents
PHI and DTPCI’s staff in the untimely putting off of all the lights within the hotel’s swimming pool area, as well as the locking of its
main door, prompting her to look for a way out leading to the fall of the folding wooden counter top on her head causing her serious
brain injury. The said negligence was allegedly compounded by respondents PHI and DTPCI’s failure to render prompt and
adequate medical assistance. These allegations in petitioner’s Complaint constitute a cause of action for quasi-delict, which under
the New Civil Code is defined as an act, or omission which causes damage to another, there being fault or negligence.

It is evident from petitioner’s Complaint and from her open court testimony that the reliance was on the alleged tortious acts
committed against her by respondents PHI and DTPCI, through their management and staff. It is now too late in the day to raise
the said argument for the first time before this Court.

Petitioner’s belated reliance on breach of contract as her cause of action cannot be sanctioned by this Court. Well-settled is the
rule that a party is not allowed to change the theory of the case or the cause of action on appeal. Matters, theories or arguments
not submitted before the trial court cannot be considered for the first time on appeal or certiorari.

When a party adopts a certain theory in the court below, he will not be permitted to change his theory on appeal for to permit
him to do so would not only be unfair to the other party but it would also be offensive to the basic rules of fair play, justice and
due process. Hence, a party is bound by the theory he adopts and by the cause of action he stands on and cannot be permitted
after having lost thereon to repudiate his theory and cause of action and adopt another and seek to re-litigate the matter anew
either in the same forum or on appeal.
In that regard, this Court finds it significant to take note of the following differences between quasi-delict (culpa aquilina) and breach
of contract (culpa contractual). In quasi-delict, negligence is direct, substantive and independent, while in breach of contract,
negligence is merely incidental to the performance of the contractual obligation; there is a pre-existing contract or obligation.

In quasi-delict, the defense of "good father of a family" is a complete and proper defense insofar as parents, guardians and
employers are concerned, while in breach of contract, such is not a complete and proper defense in the selection and
supervision of employees. In quasi- delict , there is no presumption of negligence and it is incumbent upon the injured party to
prove the negligence of the defendant, otherwise, the former’s complaint will be dismissed, while in breach of contract,
negligence is presumed so long as it can be proved that there was breach of the contract and the burden is on the defendant to
prove that there was no negligence in the carrying out of the terms of the contract; the rule of respondeat superior is followed.
Viewed from the foregoing, petitioner’s change of theory or cause of action from quasi-delict to breach of contract only on appeal
would necessarily cause injustice to respondents PHI and DTPCI. First, the latter will have no more opportunity to present evidence
to contradict petitioner’s new argument. Second, the burden of proof will be shifted from petitioner to respondents PHI and DTPCI.
Petitioner’s change of theory from quasi-delict to breach ofcontract must be repudiated.

As petitioner’s cause of action is based on quasi-delict, it is incumbent upon her to prove the presence of the following requisites
before respondents PHI and DTPCI can be held liable, to wit: (a) damages suffered by the plaintiff; (b) fault or negligence of the
defendant, or some other person for whose acts he must respond; and (c) the connection of cause and effect between the fault or
negligence of the defendant and the damages incurred by the plaintiff.

Further, since petitioner’s case is for quasi-delict , the negligence or fault should be clearly established as it is the basis of her
action. The burden of proof is upon petitioner. Section 1, Rule 131 of the Rules of Court provides that "burden of proof is the duty
of a party to present evidence on the facts in issue necessary to establish his claim or defense by the amount of evidence
required by law." It is then up for the plaintiff to establish his cause of action or the defendant to establish his defense. Therefore,
if the plaintiff alleged in his complaint that he was damaged because of the negligent acts of the defendant, he has the burden of
proving such negligence. It is even presumed that a person takes ordinary care of his concerns. The quantum of proof required is
preponderance of evidence.
In this case, as found by the trial court and affirmed by the Court of Appeals, petitioner utterly failed to prove the alleged negligence
of respondents PHI and DTPCI. Other than petitioner’s self-serving testimony that all the lights in the hotel’s swimming pool area
were shut off and the door was locked, which allegedly prompted her to find a way out and in doing so a folding wooden counter
top fell on her head causing her injury, no other evidence was presented to substantiate the same. Even her own companion during
the night of the accident inside the hotel’s swimming pool area was never presented to corroborate her allegations. Moreover,
petitioner’s aforesaid allegations were successfully rebutted by respondents PHI and DTPCI. Here, we quote with conformity the
observation of the trial court, thus:

x x x Besides not being backed up by other supporting evidence, said statement is being contradicted by the testimony of Engineer
Dante L. Costas,
 who positively declared that it has been a normal practice of the Hotel management not to put off the lights until 10:00P.M. in
order to allow the housekeepers to do the cleaning of the pool’s surrounding, the toilets and the counters. It was also confirmed
that the lights were kept on for security reasons and so that the people exercising in the nearby gym may be able to have a good
view of the swimming pool. This Court also takes note that the nearby gymnasium was normally open until 10:00 P.M. so that
there was a remote possibility the pool area was in complete darkness as was alleged by herein petitioner, considering that the
illumination which reflected from the gym. Ergo, considering that the area were sufficient (sic) illuminated when the alleged
incident occurred, there could have been no reason for the petitioner to have met said accident, much less to have been injured
as a consequence thereof, if she only acted with care and caution, which every ordinary person is expected to do.
More telling is the ratiocination of the Court of Appeals, to wit:

Viewed from the foregoing, the question now is whether respondents PHI and DTPCI and its employees were negligent? We do
not think so. Several factors militate against petitioner’s contention.

One. Petitioner recognized the fact that the pool area’s closing time is 7:00 p.m.. She, herself, admitted during her testimony that
she was well aware of the sign when she and Delia entered the pool area. Hence, upon knowing, at the outset, of the pool’s closing
time, she took the risk of overstaying when she decided to take shower and leave the area beyond the closing hour. In fact, it was
only upon the advise of the pool attendants that she thereafter took her shower.

Two. She admitted, through her certification, that she lifted the wooden bar countertop, which then fell on to her head. The
admission in her certificate proves the circumstances surrounding the occurrence that transpired on the night of 11 June 1995.
This is contrary to her assertion in the complaint and testimony that, while she was passing through the counter door, she was
suddenly knocked out by a hard and heavy object. In view of the fact that she admitted having lifted the countertop, it was her own
doing, therefore, that made the counter top fell on to her head.

Three. We cannot likewise subscribe to petitioner’s assertion that the pool area was totally dark in that she herself admitted that
she saw a telephone at the counter after searching for one. It must be noted that petitioner and Delia had walked around the pool
area with ease since they were able to proceed to the glass entrance door from the shower room, and back to the counter area
where the telephone was located without encountering any untoward incident. Otherwise, she could have easily stumbled over, or
slid, or bumped into something while searching for the telephone. This negates her assertion that the pool area was completely
dark, thereby, totally impairing her vision.

xxxx

The aforementioned circumstances lead us to no other conclusion than that the proximate and immediate cause of the injury of
petitioner was due to her own negligence.

(Emphasis supplied).
Even petitioner’s assertion of negligence on the part of respondents PHI and DTPCI in not rendering medical assistance to her is
preposterous. Her own Complaint affirmed that respondents PHI and DTPCI afforded medical assistance to her after she met the
unfortunate accident inside the hotel’s swimming pool facility. Below is the portion of petitioner’s Complaint that would contradict
her very own statement, thus:

14. THAT, due to the unfortunate incident caused by respondents PHI and DTPCI’s gross negligence despite medical assistance,
petitioner started to feel losing her memory that greatly affected and disrupted the practice of her chosen profession. x x x.

(Emphasis supplied).
Also, as observed by the trial court, respondents PHI and DTPCI, indeed, extended medical assistance to petitioner but it was
petitioner who refused the same. The trial court stated, thus:

Further, herein petitioner’s asseverations that the Hotel Management did not extend medical assistance to her in the aftermath of
the alleged accident is not true. Again, this statement was not supported by any evidence other that the sole and self-serving
testimony of petitioner. Thus, this Court cannot take petitioner’s statement as a gospel truth. It bears stressing that the Hotel
Management immediately responded after it received notice of the incident. As a matter of fact, Ms. Pearlie, the Hotel nurse, with
two chambermaids holding an ice bag placed on petitioner’s head came to the petitioner to extend emergency assistance when
she was notified of the incident, but petitioner merely asked for Hirudoid, saying she was fine, and that she was a doctor and know
how to take care of herself. Also, the Hotel, through its in-house physician, Dr. Dalumpines offered its medical services to petitioner
when they met at the Hotel’s coffee shop, but again petitioner declined the offer. Moreover, the Hotel as a show of concern for the
petitioner’s welfare, shouldered the expenses for the MRI services performed on petitioner at the Makati Medical Center.
Emphatically, petitioner herself cannot fault the Hotel for the injury she allegedly suffered because she herself did not heed the
warning at the pool to the effect that it was only open from 7:00 to 7:00 P.M. Thus, when the petitioner’s own negligence was the
immediate and proximate cause of his injury, shecannot recover damages x x x.

With the foregoing, the following were clearly established, to wit: (1) petitioner stayed in the hotel’s swimming pool facility beyond
its closing hours; (2) she lifted the folding wooden counter top that eventually hit her head; and (3) respondents PHI and DTPCI
extended medical assistance to her. As such, no negligence can be attributed either to respondents PHI and DTPCI or to their
staff and/or management. Since the question of negligence is one of fact, this Court is bound by the said factual findings made by
the lower courts. It has been repeatedly held that the trial court's factual findings, when affirmed by the Court of Appeals, are
conclusive and binding upon this Court, if they are not tainted with arbitrariness or oversight of some fact or circumstance of
significance and influence. Petitioner has not presented sufficient ground to warrant a deviation from this rule.

With regard to petitioner’s contention that the principles of res ipsa loquitur and respondeat superior are applicable in this case,
this Court holds otherwise.

Res ipsa loquitur is a Latin phrase which literally means "the thing or the transaction speaks for itself." It relates to the fact of an
injury that sets out an inference to the cause thereof or establishes the plaintiff’s prima facie case. The doctrine rests on inference
and not on presumption. The facts of the occurrence warrant the supposition of negligence and they furnish circumstantial evidence
of negligence when direct evidence is lacking.
 Simply stated, this doctrine finds no application if there is direct proof of absence or presence of negligence. If there is sufficient
proof showing the conditions and circumstances under which the injury occurred, then the creative reason for the said doctrine
disappears.
Further, the doctrine of res ipsa loquitur applies where, (1) the accident was of such character as to warrant an inference that it
would not have happened except for the defendant’s negligence; (2) the accident must have been caused by an agency or
instrumentality within the exclusive management or control of the person charged with the negligence complained of; and (3) the
accident must not have been due to any voluntary action or contribution on the part of the person injured.

In the case at bench, even granting that respondents PHI and DTPCI’s staff negligently turned off the lights and locked the door,
the folding wooden counter top would still not fall on petitioner’s head had she not lifted the same. Although the folding wooden
counter top is within the exclusive management or control of respondents PHI and DTPCI, the falling of the same and hitting the
head of petitioner was not due to the negligence of the former. As found by both lower courts, the folding wooden counter top did
not fall on petitioner’s head without any human intervention. Records showed that petitioner lifted the said folding wooden counter
top that eventually fell and hit her head. The same was evidenced by the, (1) 11 June 1995 handwritten certification of petitioner
herself; (2) her Letter dated 30 August 1995 addressed to Mr. Yoshikazu Masuda (Mr. Masuda), General Manager of Dusit Hotel;
and, (3) Certification dated 7 September 1995 issued to her by Dr. Dalumpines upon her request, which contents she never
questioned.

Here, we, respectively, quote the 11 June 1995 handwritten certification of petitioner; her letter to Mr. Masuda dated 30 August
1995; and Dr. Dalumpines’ Certification dated 7 September 1995, to wit:

Petitioner’s 11 June 1995 Handwritten Certification:

I was requested by Dr. Dalumpines to write that I was assured of assistance should it be necessary with regard an accident at the
pool. x x x The phone was in an enclosed area on a chair - I lifted the wooden bar counter top which then fell on my head producing
a large hematoma x x x.

Petitioner’s Letter addressed to Mr. Masuda dated 30 August 1995:

Dear Mr. Masuda,

xxxx

x x x We searched and saw a phone on a chair behind a towel counter. However, in order to get behind the counter I had to lift a
hinged massive wooden section of the counter which subsequently fell and knocked me on my head x x x.

Dr. Dalumpines’ Certification dated 7 September 1995:

CERTIFICATION
This is to certify that as per Clinic records, duty nurse Pearlie was called to attend to an accident at the poolside at 7:45PM on 11
June 1995.

Same records show that there, she saw petitioner who claimed the folding countertop fell on her head when she lifted it to enter
the lifeguard’s counter to use the phone. She asked for Hirudoid.

The same evening petitioner met Dr. Dalumpnes at the Coffee Shop. After narrating the poolside incident and declining Dr.
Dalumpines’ offer of assistance, she reiterated that the Hirudoid cream was enough and that petitioner]being a doctor herself,
knew her condition and she was all right.

This certification is given upon the request of petitioner for whatever purpose it may serve, 7 September 1995 at Makati City.

(Emphasis supplied).
This Court is not unaware that in petitioner’s Complaint and in her open court testimony, her assertion was, "while she was passing
through the counter door, she was suddenly knocked out by a hard and heavy object, which turned out to be the folding wooden
counter top." However, in her open court testimony, particularly during cross-examination, petitioner confirmed that she made such
statement that "she lifted the hinge massive wooden section of the counter near the swimming pool."

In view thereof, this Court cannot acquiesce petitioner’s theory that her case is one of res ipsa loquitur as it was sufficiently
established how petitioner obtained that "bukol" or "hematoma."

The doctrine of respondeat superior finds no application in the absence of any showing that the employees of respondents PHI
and DTPCI were negligent. Since in this case, the trial court and the appellate court found no negligence on the part of the
employees of respondents PHI and DTPCI, thus, the latter cannot also be held liable for negligence and be made to pay the
millions of pesos damages prayed for by petitioner.

The issue on whether petitioner’s debilitating and permanent injuries were the result of the accident she suffered at the hotel’s
swimming pool area on 11 June 1995 is another question of fact, which is beyond the function of this Court to resolve. More so,
this issue has already been properly passed upon by the trial court and the Court of Appeals. To repeat, this Court is bound by the
factual findings of the lower courts and there is no cogent reason to depart from the said rule.

The following observations of the trial court are controlling on this matter:

Firstly, petitioner had a past medical history which might have been the cause of her recurring brain injury.

Secondly, the findings of Dr. Perez did not prove a causal relation between the 11 June 1995 accident and the brain damage
suffered by petitioner. Dr. Perez himself testified that the symptoms being experienced by petitioner might have been due to factors
other than the head trauma she allegedly suffered. Emphasis must be given to the fact that petitioner had been suffering from
different kinds of brain problems since she was 18 years old, which may have been the cause of the recurring symptoms of head
injury she is experiencing at present.

Thirdly, Dr. Sanchez’s testimony cannot be relied upon since she testified on the findings and conclusions of persons who were
never presented in court. Ergo, her testimony thereon was hearsay. A witness can testify only with regard to facts of which they
have personal knowledge. Testimonial or documentary evidence is hearsay if it is based, not on the personal knowledge of the
witness, but on the knowledge of some other person not on the witness stand. Consequently, hearsay evidence -- whether objected
to or not -- has no probative value.

Fourthly, the medical reports/evaluations/certifications issued by myriads of doctors whom petitioner sought for examination or
treatment were neither identified nor testified to by those who issued them. Being deemed as hearsay, they cannot be given
probative value.

The aforesaid medical reports/evaluations/certifications of different doctors in favor of petitioner cannot be given probative value
and their contents cannot be deemed to constitute proof of the facts stated therein. It must be stressed that a document or writing
which is admitted not as independent evidence but merely as part of the testimony of a witness does not constitute proof of the
facts related therein.

In the same vein, the medical certificate which was identified and interpreted in court by another doctor was not accorded
probative value because the doctor who prepared it was not presented for its identification. Similarly, in this case, since the
doctors who examined petitioner were not presented to testify on their findings, the medical certificates issued on their behalf and
identified by another doctor cannot be admitted as evidence. Since a medical certificate involves an opinion of one who must first
be established as an expert witness, it cannot be given weight or credit unless the doctor who issued it is presented in court to
show his qualifications. Thus, an unverified and unidentified private document cannot be accorded probative value. It is
precluded because the party against whom it is presented is deprived of the right and opportunity to cross-examine the person to
whom the statements or writings are attributed. Its executor or author should be presented as a witness to provide the other party
to the litigation the opportunity to question its contents. Being mere hearsay evidence, failure to present the author of the letter
renders its contents suspect and of no probative value.

All told, in the absence of negligence on the part of respondents PHI and DTPCI, as well as their management and staff, they
cannot be made Iiable to pay for the millions of damages prayed for by the petitioner. Since respondents PHI and DTPCI arc not
liable, it necessarily follows that respondent First Lepanto cannot also be made liable under the contract or Insurance.

WHEREFORE, premises considered, the Decision and Resolution or the Court of Appeals in CA-G.R. CV No. 87065 dated 9
August 2007 and 5 November 2007, respectively, are hereby AFFIRMED. Costs against petitioner.

SO ORDERED.
 Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. L-21438 September 28, 1966

AIR FRANCE, petitioner,

vs.

RAFAEL CARRASCOSO and the HONORABLE COURT OF APPEALS, respondents.

Lichauco, Picazo and Agcaoili for petitioner.

Bengzon Villegas and Zarraga for respondent R. Carrascoso.

SANCHEZ, J.:

The Court of First Instance of Manila 1 sentenced petitioner to pay respondent Rafael Carrascoso P25,000.00 by way of moral
damages; P10,000.00 as exemplary damages; P393.20 representing the difference in fare between first class and tourist class for
the portion of the trip Bangkok-Rome, these various amounts with interest at the legal rate, from the date of the filing of the
complaint until paid; plus P3,000.00 for attorneys' fees; and the costs of suit.

On appeal,2 the Court of Appeals slightly reduced the amount of refund on Carrascoso's plane ticket from P393.20 to P383.10,
and voted to affirm the appealed decision "in all other respects", with costs against petitioner.

The case is now before us for review on certiorari.

The facts declared by the Court of Appeals as " fully supported by the evidence of record", are:

Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila for Lourdes on March 30, 1958.
On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines, Inc., issued to plaintiff a "first
class" round trip airplane ticket from Manila to Rome. From Manila to Bangkok, plaintiff travelled in "first class", but at Bangkok,
the Manager of the defendant airline forced plaintiff to vacate the "first class" seat that he was occupying because, in the words of
the witness Ernesto G. Cuento, there was a "white man", who, the Manager alleged, had a "better right" to the seat. When asked
to vacate his "first class" seat, the plaintiff, as was to be expected, refused, and told defendant's Manager that his seat would be
taken over his dead body; a commotion ensued, and, according to said Ernesto G. Cuento, "many of the Filipino passengers got
nervous in the tourist class; when they found out that Mr. Carrascoso was having a hot discussion with the white man [manager],
they came all across to Mr. Carrascoso and pacified Mr. Carrascoso to give his seat to the white man" (Transcript, p. 12, Hearing
of May 26, 1959); and plaintiff reluctantly gave his "first class" seat in the plane.3

1. The trust of the relief petitioner now seeks is that we review "all the findings" 4 of respondent Court of Appeals. Petitioner charges
that respondent court failed to make complete findings of fact on all the issues properly laid before it. We are asked to consider
facts favorable to petitioner, and then, to overturn the appellate court's decision.

Coming into focus is the constitutional mandate that "No decision shall be rendered by any court of record without expressing
therein clearly and distinctly the facts and the law on which it is based". 5 This is echoed in the statutory demand that a judgment
determining the merits of the case shall state "clearly and distinctly the facts and the law on which it is based"; 6 and that "Every
decision of the Court of Appeals shall contain complete findings of fact on all issues properly raised before it". 7

A decision with absolutely nothing to support it is a nullity. It is open to direct attack. 8 The law, however, solely insists that a
decision state the "essential ultimate facts" upon which the court's conclusion is drawn. 9 A court of justice is not hidebound to
write in its decision every bit and piece of evidence 10 presented by one party and the other upon the issues raised. Neither is it
to be burdened with the obligation "to specify in the sentence the facts" which a party "considered as proved". 11 This is but a part
of the mental process from which the Court draws the essential ultimate facts. A decision is not to be so clogged with details such
that prolixity, if not confusion, may result. So long as the decision of the Court of Appeals contains the necessary facts to warrant
its conclusions, it is no error for said court to withhold therefrom "any specific finding of facts with respect to the evidence for the
defense". Because as this Court well observed, "There is no law that so requires". 12 Indeed, "the mere failure to specify (in the
decision) the contentions of the appellant and the reasons for refusing to believe them is not sufficient to hold the same contrary
to the requirements of the provisions of law and the Constitution". It is in this setting that in Manigque, it was held that the mere
fact that the findings "were based entirely on the evidence for the prosecution without taking into consideration or even mentioning
the appellant's side in the controversy as shown by his own testimony", would not vitiate the judgment. 13 If the court did not recite
in the decision the testimony of each witness for, or each item of evidence presented by, the defeated party, it does not mean that
the court has overlooked such testimony or such item of evidence. 14 At any rate, the legal presumptions are that official duty has
been regularly performed, and that all the matters within an issue in a case were laid before the court and passed upon by it. 15

Findings of fact, which the Court of Appeals is required to make, maybe defined as "the written statement of the ultimate facts as
found by the court ... and essential to support the decision and judgment rendered thereon". 16 They consist of the court's
"conclusions" with respect to the determinative facts in issue". 17 A question of law, upon the other hand, has been declared as
"one which does not call for an examination of the probative value of the evidence presented by the parties." 18

2. By statute, "only questions of law may be raised" in an appeal by certiorari from a judgment of the Court of Appeals. 19 That
judgment is conclusive as to the facts. It is not appropriately the business of this Court to alter the facts or to review the questions
of fact. 20

With these guideposts, we now face the problem of whether the findings of fact of the Court of Appeals support its judgment.

3. Was Carrascoso entitled to the first class seat he claims?

It is conceded in all quarters that on March 28, 1958 he paid to and received from petitioner a first class ticket. But petitioner asserts
that said ticket did not represent the true and complete intent and agreement of the parties; that said respondent knew that he did
not have confirmed reservations for first class on any specific flight, although he had tourist class protection; that, accordingly, the
issuance of a first class ticket was no guarantee that he would have a first class ride, but that such would depend upon the
availability of first class seats.

These are matters which petitioner has thoroughly presented and discussed in its brief before the Court of Appeals under its third
assignment of error, which reads: "The trial court erred in finding that plaintiff had confirmed reservations for, and a right to, first
class seats on the "definite" segments of his journey, particularly that from Saigon to Beirut". 21

And, the Court of Appeals disposed of this contention thus:

Defendant seems to capitalize on the argument that the issuance of a first-class ticket was no guarantee that the passenger to
whom the same had been issued, would be accommodated in the first-class compartment, for as in the case of plaintiff he had yet
to make arrangements upon arrival at every station for the necessary first-class reservation. We are not impressed by such a
reasoning. We cannot understand how a reputable firm like defendant airplane company could have the indiscretion to give out
tickets it never meant to honor at all. It received the corresponding amount in payment of first-class tickets and yet it allowed the
passenger to be at the mercy of its employees. It is more in keeping with the ordinary course of business that the company should
know whether or riot the tickets it issues are to be honored or not.22

Not that the Court of Appeals is alone. The trial court similarly disposed of petitioner's contention, thus:

On the fact that plaintiff paid for, and was issued a "First class" ticket, there can be no question. Apart from his testimony, see
plaintiff's Exhibits "A", "A-1", "B", "B-1," "B-2", "C" and "C-1", and defendant's own witness, Rafael Altonaga, confirmed plaintiff's
testimony and testified as follows:

Q. In these tickets there are marks "O.K." From what you know, what does this OK mean?
A. That the space is confirmed.

Q. Confirmed for first class?

A. Yes, "first class". (Transcript, p. 169)

xxx xxx xxx

Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga that although plaintiff paid for, and
was issued a "first class" airplane ticket, the ticket was subject to confirmation in Hongkong. The court cannot give credit to the
testimony of said witnesses. Oral evidence cannot prevail over written evidence, and plaintiff's Exhibits "A", "A-l", "B", "B-l", "C"
and "C-1" belie the testimony of said witnesses, and clearly show that the plaintiff was issued, and paid for, a first class ticket
without any reservation whatever.

Furthermore, as hereinabove shown, defendant's own witness Rafael Altonaga testified that the reservation for a "first class"
accommodation for the plaintiff was confirmed. The court cannot believe that after such confirmation defendant had a verbal
understanding with plaintiff that the "first class" ticket issued to him by defendant would be subject to confirmation in Hongkong.
23

We have heretofore adverted to the fact that except for a slight difference of a few pesos in the amount refunded on Carrascoso's
ticket, the decision of the Court of First Instance was affirmed by the Court of Appeals in all other respects. We hold the view that
such a judgment of affirmance has merged the judgment of the lower court. 24 Implicit in that affirmance is a determination by the
Court of Appeals that the proceeding in the Court of First Instance was free from prejudicial error and "all questions raised by the
assignments of error and all questions that might have been raised are to be regarded as finally adjudicated against the appellant".
So also, the judgment affirmed "must be regarded as free from all error". 25 We reached this policy construction because nothing
in the decision of the Court of Appeals on this point would suggest that its findings of fact are in any way at war with those of the
trial court. Nor was said affirmance by the Court of Appeals upon a ground or grounds different from those which were made the
basis of the conclusions of the trial court. 26

If, as petitioner underscores, a first-class-ticket holder is not entitled to a first class seat, notwithstanding the fact that seat
availability in specific flights is therein confirmed, then an air passenger is placed in the hollow of the hands of an airline. What
security then can a passenger have? It will always be an easy matter for an airline aided by its employees, to strike out the very
stipulations in the ticket, and say that there was a verbal agreement to the contrary. What if the passenger had a schedule to fulfill?
We have long learned that, as a rule, a written document speaks a uniform language; that spoken word could be notoriously
unreliable. If only to achieve stability in the relations between passenger and air carrier, adherence to the ticket so issued is
desirable. Such is the case here. The lower courts refused to believe the oral evidence intended to defeat the covenants in the
ticket.
The foregoing are the considerations which point to the conclusion that there are facts upon which the Court of Appeals predicated
the finding that respondent Carrascoso had a first class ticket and was entitled to a first class seat at Bangkok, which is a stopover
in the Saigon to Beirut leg of the flight. 27 We perceive no "welter of distortions by the Court of Appeals of petitioner's statement
of its position", as charged by petitioner. 28 Nor do we subscribe to petitioner's accusation that respondent Carrascoso
"surreptitiously took a first class seat to provoke an issue". 29 And this because, as petitioner states, Carrascoso went to see the
Manager at his office in Bangkok "to confirm my seat and because from Saigon I was told again to see the Manager". 30 Why,
then, was he allowed to take a first class seat in the plane at Bangkok, if he had no seat? Or, if another had a better right to the
seat?

4. Petitioner assails respondent court's award of moral damages. Petitioner's trenchant claim is that Carrascoso's action is planted
upon breach of contract; that to authorize an award for moral damages there must be an averment of fraud or bad faith;31 and that
the decision of the Court of Appeals fails to make a finding of bad faith. The pivotal allegations in the complaint bearing on this
issue are:

3. That ... plaintiff entered into a contract of air carriage with the Philippine Air Lines for a valuable consideration, the latter acting
as general agents for and in behalf of the defendant, under which said contract, plaintiff was entitled to, as defendant agreed to
furnish plaintiff, First Class passage on defendant's plane during the entire duration of plaintiff's tour of Europe with Hongkong as
starting point up to and until plaintiff's return trip to Manila, ... .

4. That, during the first two legs of the trip from Hongkong to Saigon and from Saigon to Bangkok, defendant furnished to the
plaintiff First Class accommodation but only after protestations, arguments and/or insistence were made by the plaintiff with
defendant's employees.

5. That finally, defendant failed to provide First Class passage, but instead furnished plaintiff only Tourist Class accommodations
from Bangkok to Teheran and/or Casablanca, ... the plaintiff has been compelled by defendant's employees to leave the First Class
accommodation berths at Bangkok after he was already seated.

6. That consequently, the plaintiff, desiring no repetition of the inconvenience and embarrassments brought by defendant's breach
of contract was forced to take a Pan American World Airways plane on his return trip from Madrid to Manila.32

xxx xxx xxx

2. That likewise, as a result of defendant's failure to furnish First Class accommodations aforesaid, plaintiff suffered
inconveniences, embarrassments, and humiliations, thereby causing plaintiff mental anguish, serious anxiety, wounded feelings,
social humiliation, and the like injury, resulting in moral damages in the amount of P30,000.00. 33

xxx xxx xxx

The foregoing, in our opinion, substantially aver: First, That there was a contract to furnish plaintiff a first class passage covering,
amongst others, the Bangkok-Teheran leg; Second, That said contract was breached when petitioner failed to furnish first class
transportation at Bangkok; and Third, that there was bad faith when petitioner's employee compelled Carrascoso to leave his first
class accommodation berth "after he was already, seated" and to take a seat in the tourist class, by reason of which he suffered
inconvenience, embarrassments and humiliations, thereby causing him mental anguish, serious anxiety, wounded feelings and
social humiliation, resulting in moral damages. It is true that there is no specific mention of the term bad faith in the complaint. But,
the inference of bad faith is there, it may be drawn from the facts and circumstances set forth therein. 34 The contract was averred
to establish the relation between the parties. But the stress of the action is put on wrongful expulsion.

Quite apart from the foregoing is that (a) right the start of the trial, respondent's counsel placed petitioner on guard on what
Carrascoso intended to prove: That while sitting in the plane in Bangkok, Carrascoso was ousted by petitioner's manager who
gave his seat to a white man; 35 and (b) evidence of bad faith in the fulfillment of the contract was presented without objection on
the part of the petitioner. It is, therefore, unnecessary to inquire as to whether or not there is sufficient averment in the complaint
to justify an award for moral damages. Deficiency in the complaint, if any, was cured by the evidence. An amendment thereof to
conform to the evidence is not even required. 36 On the question of bad faith, the Court of Appeals declared:

That the plaintiff was forced out of his seat in the first class compartment of the plane belonging to the defendant Air France while
at Bangkok, and was transferred to the tourist class not only without his consent but against his will, has been sufficiently
established by plaintiff in his testimony before the court, corroborated by the corresponding entry made by the purser of the plane
in his notebook which notation reads as follows:

"First-class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene",

and by the testimony of an eye-witness, Ernesto G. Cuento, who was a co-passenger. The captain of the plane who was asked by
the manager of defendant company at Bangkok to intervene even refused to do so. It is noteworthy that no one on behalf of
defendant ever contradicted or denied this evidence for the plaintiff. It could have been easy for defendant to present its manager
at Bangkok to testify at the trial of the case, or yet to secure his disposition; but defendant did neither. 37

The Court of appeals further stated —

Neither is there evidence as to whether or not a prior reservation was made by the white man. Hence, if the employees of the
defendant at Bangkok sold a first-class ticket to him when all the seats had already been taken, surely the plaintiff should not have
been picked out as the one to suffer the consequences and to be subjected to the humiliation and indignity of being ejected from
his seat in the presence of others. Instead of explaining to the white man the improvidence committed by defendant's employees,
the manager adopted the more drastic step of ousting the plaintiff who was then safely ensconsced in his rightful seat. We are
strengthened in our belief that this probably was what happened there, by the testimony of defendant's witness Rafael Altonaga
who, when asked to explain the meaning of the letters "O.K." appearing on the tickets of plaintiff, said "that the space is confirmed
for first class. Likewise, Zenaida Faustino, another witness for defendant, who was the chief of the Reservation Office of defendant,
testified as follows:

"Q How does the person in the ticket-issuing office know what reservation the passenger has arranged with you?

A They call us up by phone and ask for the confirmation." (t.s.n., p. 247, June 19, 1959)

In this connection, we quote with approval what the trial Judge has said on this point:

Why did the, using the words of witness Ernesto G. Cuento, "white man" have a "better right" to the seat occupied by Mr.
Carrascoso? The record is silent. The defendant airline did not prove "any better", nay, any right on the part of the "white man" to
the "First class" seat that the plaintiff was occupying and for which he paid and was issued a corresponding "first class" ticket.

If there was a justified reason for the action of the defendant's Manager in Bangkok, the defendant could have easily proven it by
having taken the testimony of the said Manager by deposition, but defendant did not do so; the presumption is that evidence
willfully suppressed would be adverse if produced [Sec. 69, par (e), Rules of Court]; and, under the circumstances, the Court is
constrained to find, as it does find, that the Manager of the defendant airline in Bangkok not merely asked but threatened the
plaintiff to throw him out of the plane if he did not give up his "first class" seat because the said Manager wanted to accommodate,
using the words of the witness Ernesto G. Cuento, the "white man".38

It is really correct to say that the Court of Appeals in the quoted portion first transcribed did not use the term "bad faith". But can it
be doubted that the recital of facts therein points to bad faith? The manager not only prevented Carrascoso from enjoying his right
to a first class seat; worse, he imposed his arbitrary will; he forcibly ejected him from his seat, made him suffer the humiliation of
having to go to the tourist class compartment - just to give way to another passenger whose right thereto has not been established.
Certainly, this is bad faith. Unless, of course, bad faith has assumed a meaning different from what is understood in law. For, "bad
faith" contemplates a "state of mind affirmatively operating with furtive design or with some motive of self-interest or will or for
ulterior purpose." 39

And if the foregoing were not yet sufficient, there is the express finding of bad faith in the judgment of the Court of First Instance,
thus:

The evidence shows that the defendant violated its contract of transportation with plaintiff in bad faith, with the aggravating
circumstances that defendant's Manager in Bangkok went to the extent of threatening the plaintiff in the presence of many
passengers to have him thrown out of the airplane to give the "first class" seat that he was occupying to, again using the words of
the witness Ernesto G. Cuento, a "white man" whom he (defendant's Manager) wished to accommodate, and the defendant has
not proven that this "white man" had any "better right" to occupy the "first class" seat that the plaintiff was occupying, duly paid for,
and for which the corresponding "first class" ticket was issued by the defendant to him.40
5. The responsibility of an employer for the tortious act of its employees need not be essayed. It is well settled in law. 41 For the
willful malevolent act of petitioner's manager, petitioner, his employer, must answer. Article 21 of the Civil Code says:

ART. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public
policy shall compensate the latter for the damage.

In parallel circumstances, we applied the foregoing legal precept; and, we held that upon the provisions of Article 2219 (10), Civil
Code, moral damages are recoverable. 42

6. A contract to transport passengers is quite different in kind and degree from any other contractual relation. 43 And this, because
of the relation which an air-carrier sustains with the public. Its business is mainly with the travelling public. It invites people to avail
of the comforts and advantages it offers. The contract of air carriage, therefore, generates a relation attended with a public duty.
Neglect or malfeasance of the carrier's employees, naturally, could give ground for an action for damages.

Passengers do not contract merely for transportation. They have a right to be treated by the carrier's employees with kindness,
respect, courtesy and due consideration. They are entitled to be protected against personal misconduct, injurious language,
indignities and abuses from such employees. So it is, that any rule or discourteous conduct on the part of employees towards a
passenger gives the latter an action for damages against the carrier. 44

Thus, "Where a steamship company 45 had accepted a passenger's check, it was a breach of contract and a tort, giving a right of
action for its agent in the presence of third persons to falsely notify her that the check was worthless and demand payment under
threat of ejection, though the language used was not insulting and she was not ejected." 46 And this, because, although the relation
of passenger and carrier is "contractual both in origin and nature" nevertheless "the act that breaks the contract may be also a
tort". 47 And in another case, "Where a passenger on a railroad train, when the conductor came to collect his fare tendered him
the cash fare to a point where the train was scheduled not to stop, and told him that as soon as the train reached such point he
would pay the cash fare from that point to destination, there was nothing in the conduct of the passenger which justified the
conductor in using insulting language to him, as by calling him a lunatic," 48 and the Supreme Court of South Carolina there held
the carrier liable for the mental suffering of said passenger.

Petitioner's contract with Carrascoso is one attended with public duty. The stress of Carrascoso's action as we have said, is placed
upon his wrongful expulsion. This is a violation of public duty by the petitioner air carrier — a case of quasi-delict. Damages are
proper.

7. Petitioner draws our attention to respondent Carrascoso's testimony, thus —

Q You mentioned about an attendant. Who is that attendant and purser?

A When we left already — that was already in the trip — I could not help it. So one of the flight attendants approached me and
requested from me my ticket and I said, What for? and she said, "We will note that you transferred to the tourist class". I said,
"Nothing of that kind. That is tantamount to accepting my transfer." And I also said, "You are not going to note anything there
because I am protesting to this transfer".

Q Was she able to note it?

A No, because I did not give my ticket.

Q About that purser?

A Well, the seats there are so close that you feel uncomfortable and you don't have enough leg room, I stood up and I went to the
pantry that was next to me and the purser was there. He told me, "I have recorded the incident in my notebook." He read it and
translated it to me — because it was recorded in French — "First class passenger was forced to go to the tourist class against his
will, and that the captain refused to intervene."

Mr. VALTE —

I move to strike out the last part of the testimony of the witness because the best evidence would be the notes. Your Honor.

COURT —

I will allow that as part of his testimony. 49

Petitioner charges that the finding of the Court of Appeals that the purser made an entry in his notebook reading "First class
passenger was forced to go to the tourist class against his will, and that the captain refused to intervene" is predicated upon
evidence [Carrascoso's testimony above] which is incompetent. We do not think so. The subject of inquiry is not the entry, but the
ouster incident. Testimony on the entry does not come within the proscription of the best evidence rule. Such testimony is
admissible. 49a

Besides, from a reading of the transcript just quoted, when the dialogue happened, the impact of the startling occurrence was still
fresh and continued to be felt. The excitement had not as yet died down. Statements then, in this environment, are admissible as
part of the res gestae. 50 For, they grow "out of the nervous excitement and mental and physical condition of the declarant". 51
The utterance of the purser regarding his entry in the notebook was spontaneous, and related to the circumstances of the ouster
incident. Its trustworthiness has been guaranteed. 52 It thus escapes the operation of the hearsay rule. It forms part of the res
gestae.
At all events, the entry was made outside the Philippines. And, by an employee of petitioner. It would have been an easy matter
for petitioner to have contradicted Carrascoso's testimony. If it were really true that no such entry was made, the deposition of the
purser could have cleared up the matter.

We, therefore, hold that the transcribed testimony of Carrascoso is admissible in evidence.

8. Exemplary damages are well awarded. The Civil Code gives the court ample power to grant exemplary damages — in contracts
and quasi- contracts. The only condition is that defendant should have "acted in a wanton, fraudulent, reckless, oppressive, or
malevolent manner." 53 The manner of ejectment of respondent Carrascoso from his first class seat fits into this legal precept. And
this, in addition to moral damages.54

9. The right to attorney's fees is fully established. The grant of exemplary damages justifies a similar judgment for attorneys' fees.
The least that can be said is that the courts below felt that it is but just and equitable that attorneys' fees be given. 55 We do not
intend to break faith with the tradition that discretion well exercised — as it was here — should not be disturbed.

10. Questioned as excessive are the amounts decreed by both the trial court and the Court of Appeals, thus: P25,000.00 as moral
damages; P10,000.00, by way of exemplary damages, and P3,000.00 as attorneys' fees. The task of fixing these amounts is
primarily with the trial court. 56 The Court of Appeals did not interfere with the same. The dictates of good sense suggest that we
give our imprimatur thereto. Because, the facts and circumstances point to the reasonableness thereof.57

On balance, we say that the judgment of the Court of Appeals does not suffer from reversible error. We accordingly vote to affirm
the same. Costs against petitioner.

So ordered.
 Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 74431 November 6, 1989

PURITA MIRANDA VESTIL and AGUSTIN VESTIL, petitioners,

vs.

INTERMEDIATE APPELLATE COURT, DAVID UY and TERESITA UY, respondents.

Pablo P. Garcia for petitioners.

Roberto R. Palmares for private respondents.

CRUZ, J.:

Little Theness Tan Uy was dead at the age of three. Her parents said she died because she was bitten by a dog of the petitioners,
but the latter denied this, claiming they had nothing to do with the dog. The Uys sued the Vestils, who were sustained by the trial
court. On appeal, the decision of the court a quo was reversed in favor of the Uys. The Vestils are now before us. They ask us to
set aside the judgment of the respondent court and to reinstate that of the trial court.

On July 29, 1915, Theness was bitten by a dog while she was playing with a child of the petitioners in the house of the late Vicente
Miranda, the father of Purita Vestil, at F. Ramos Street in Cebu City. She was rushed to the Cebu General Hospital, where she
was treated for "multiple lacerated wounds on the forehead" 1 and administered an anti-rabies vaccine by Dr. Antonio Tautjo. She
was discharged after nine days but was readmitted one week later due to "vomiting of saliva." 2 The following day, on August 15,
1975, the child died. The cause of death was certified as broncho-pneumonia. 3

Seven months later, the Uys sued for damages, alleging that the Vestils were liable to them as the possessors of "Andoy," the dog
that bit and eventually killed their daughter. The Vestils rejected the charge, insisting that the dog belonged to the deceased Vicente
Miranda, that it was a tame animal, and that in any case no one had witnessed it bite Theness. After trial, Judge Jose R. Ramolete
of the Court of First Instance of Cebu sustained the defendants and dismissed the complaint. 4

The respondent court arrived at a different conclusion when the case was appealed. 5 It found that the Vestils were in possession
of the house and the dog and so should be responsible under Article 2183 of the Civil Code for the injuries caused by the dog. It
also held that the child had died as a result of the dog bites and not for causes independent thereof as submitted by the appellees.
Accordingly, the Vestils were ordered to pay the Uys damages in the amount of P30,000.00 for the death of Theness, P12,000.00
for medical and hospitalization expenses, and P2,000.00 as attorney's fees.

In the proceedings now before us, Purita Vestil insists that she is not the owner of the house or of the dog left by her father as his
estate has not yet been partitioned and there are other heirs to the property. Pursuing the logic of the Uys, she claims, even her
sister living in Canada would be held responsible for the acts of the dog simply because she is one of Miranda's heirs. However,
that is hardly the point. What must be determined is the possession of the dog that admittedly was staying in the house in question,
regardless of the ownership of the dog or of the house.

Article 2183 reads as follows:

The possessor of an animal or whoever may make use of the same is responsible for the damage which it may cause, although it
may escape or be lost. 'This responsibility shall cease only in case the damages should come from force majeure from the fault of
the person who has suffered damage.

Thus, in Afialda v. Hisole, 6a person hired as caretaker of a carabao gored him to death and his heirs thereupon sued the owner
of the animal for damages. The complaint was dismissed on the ground that it was the caretaker's duty to prevent the carabao
from causing injury to any one, including himself.

Purita Vestil's testimony that she was not in possession of Miranda's house is hardly credible. She said that the occupants of the
house left by her father were related to him ("one way or the other") and maintained themselves out of a common fund or by some
kind of arrangement (on which, however, she did not elaborate ). 7 She mentioned as many as ten of such relatives who had
stayed in the house at one time or another although they did not appear to be close kin. 8 She at least implied that they did not
pay any rent, presumably because of their relation with Vicente Miranda notwithstanding that she herself did not seem to know
them very well.

There is contrary evidence that the occupants of the house, were boarders (or more of boarders than relatives) who paid the
petitioners for providing them with meals and accommodations. It also appears that Purita Vestil had hired a maid, Dolores Jumao-
as, who did the cooking and cleaning in the said house for its occupants. 9 Her mother, Pacita, who was a nursemaid of Purita
herself, categorically declared that the petitioners were maintaining boarders in the house where Theness was bitten by a dog. 10
Another witness, Marcial Lao, testified that he was indeed a boarder and that the Vestils were maintaining the house for business
purposes. 11 And although Purita denied paying the water bills for the house, the private respondents submitted documentary
evidence of her application for water connection with the Cebu Water District, which strongly suggested that she was administering
the house in question. 12

While it is true that she is not really the owner of the house, which was still part of Vicente Miranda's estate, there is no doubt that
she and her husband were its possessors at the time of the incident in question. She was the only heir residing in Cebu City and
the most logical person to take care of the property, which was only six kilometers from her own house. 13 Moreover, there is
evidence showing that she and her family regularly went to the house, once or twice weekly, according to at least one witness, 14
and used it virtually as a second house. Interestingly, her own daughter was playing in the house with Theness when the little girl
was bitten by the dog. 15 The dog itself remained in the house even after the death of Vicente Miranda in 1973 and until 1975,
when the incident in question occurred. It is also noteworthy that the petitioners offered to assist the Uys with their hospitalization
expenses although Purita said she knew them only casually. 16

The petitioners also argue that even assuming that they were the possessors of the dog that bit Theness there was no clear
showing that she died as a result thereof. On the contrary, the death certificate 17 declared that she died of broncho-pneumonia,
which had nothing to do with the dog bites for which she had been previously hospitalized. The Court need not involve itself in an
extended scientific discussion of the causal connection between the dog bites and the certified cause of death except to note that,
first, Theness developed hydrophobia, a symptom of rabies, as a result of the dog bites, and second, that asphyxia broncho-
pneumonia, which ultimately caused her death, was a complication of rabies. That Theness became afraid of water after she was
bitten by the dog is established by the following testimony of Dr. Tautjo:

COURT: I think there was mention of rabies in the report in the second admission?

A: Now, the child was continuously vomiting just before I referred to Dr. Co earlier in the morning and then the father, because the
child was asking for water, the father tried to give the child water and this child went under the bed, she did not like to drink the
water and there was fright in her eyeballs. For this reason, because I was in danger there was rabies, I called Dr. Co.
Q: In other words, the child had hydrophobia?

A: Yes, sir. 18

As for the link between rabies and broncho-pneumonia, the doctor had the following to say under oath:

A: Now, as 1 said before, broncho-pneumonia can result from physical, chemical and bacterial means. ... It can be the result of
infection, now, so if you have any other disease which can lower your resistance you can also get pneumonia.

xxx xxx xxx

Q: Would you say that a person who has rabies may die of complication which is broncho-pneumonia?

A: Yes.

Q: For the record, I am manifesting that this book shown the witness is know as CURRENT DIANOSIS & TREATMENT, 1968 by
Henry Brainerd, Sheldon Margen and Milton Chaton. Now, I invite your attention, doctor, to page 751 of this book under the title
"Rabies." There is on this page, "Prognosis" as a result of rabies and it says: Once the symptoms, have appeared death inevitably
occurs after 2-3 days as a result of cardiac or respiratory failure or generalized paralysis. After a positive diagnosis of rabies or
after a bite by a suspected animal if the animal cannot be observed or if the bite is on the head, give rabies vaccine (duck embryo).
Do you believe in this statement?

A: Yes.

Q: Would you say therefore that persons who have rabies may die of respiratory failure which leave in the form of bronco-
pneumonia?

A: Broncho-pneumonia can be a complication of rabies. 19

On the strength of the foregoing testimony, the Court finds that the link between the dog bites and the certified cause of death has
beep satisfactorily established. We also reiterate our ruling in Sison v. Sun Life Assurance Company of Canada, 20 that the death
certificate is not conclusive proof of the cause of death but only of the fact of death. Indeed, the evidence of the child's hydrophobia
is sufficient to convince us that she died because she was bitten by the dog even if the death certificate stated a different cause of
death. The petitioner's contention that they could not be expected to exercise remote control of the dog is not acceptable. In fact,
Article 2183 of the Civil Code holds the possessor liable even if the animal should "escape or be lost" and so be removed from his
control. And it does not matter either that, as the petitioners also contend, the dog was tame and was merely provoked by the child
into biting her. The law does not speak only of vicious animals but covers even tame ones as long as they cause injury. As for the
alleged provocation, the petitioners forget that Theness was only three years old at the time she was attacked and can hardly be
faulted for whatever she might have done to the animal.
It is worth observing that the above defenses of the petitioners are an implied rejection of their original posture that there was no
proof that it was the dog in their father's house that bit Theness.

According to Manresa the obligation imposed by Article 2183 of the Civil Code is not based on the negligence or on the presumed
lack of vigilance of the possessor or user of the animal causing the damage. It is based on natural equity and on the principle of
social interest that he who possesses animals for his utility, pleasure or service must answer for the damage which such animal
may cause. 21

We sustain the findings of the Court of Appeals and approve the monetary awards except only as to the medical and hospitalization
expenses, which are reduced to P2,026.69, as prayed for in the complaint. While there is no recompense that can bring back to
the private respondents the child they have lost, their pain should at least be assuaged by the civil damages to which they are
entitled.

WHEREFORE, the challenged decision is AFFIRMED as above modified. The petition is DENIED, with costs against the
petitioners. It is so ordered.
 Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 110295 October 18, 1993

COCA-COLA BOTTLERS PHILIPPINES, INC.,

vs.

THE HONORABLE COURT OF APPEALS (Fifth Division) and MS. LYDIA GERONIMO, respondents.

Angara, Abello, Concepcion, Regala & Cruz Law Offices for petitioner.

Alejandro M. Villamil for private respondent.

DAVIDE, JR., J.:

This case concerns the proprietress of a school canteen which had to close down as a consequence of the big drop in its sales of
soft drinks triggered by the discovery of foreign substances in certain beverages sold by it. The interesting issue posed is whether
the subsequent action for damages by the proprietress against the soft drinks manufacturer should be treated as one for breach
of implied warranty against hidden defects or merchantability, as claimed by the manufacturer, the petitioner herein which must
therefore be filed within six months from the delivery of the thing sold pursuant to Article 1571 of the Civil Code, or one for quasi-
delict, as held by the public respondent, which can be filed within four years pursuant to Article 1146 of the same Code.

On 7 May 1990, Lydia L. Geronimo, the herein private respondent, filed a complaint for damages against petitioner with the
Regional Trial Court (RTC) of Dagupan City. 1 The case was docketed as Civil Case No. D-9629. She alleges in her complaint that
she was the proprietress of Kindergarten Wonderland Canteen docketed as located in Dagupan City, an enterprise engaged in the
sale of soft drinks (including Coke and Sprite) and other goods to the students of Kindergarten Wonderland and to the public; on
or about 12 August 1989, some parents of the students complained to her that the Coke and Sprite soft drinks sold by her contained
fiber-like matter and other foreign substances or particles; he then went over her stock of softdrinks and discovered the presence
of some fiber-like substances in the contents of some unopened Coke bottles and a plastic matter in the contents of an unopened
Sprite bottle; she brought the said bottles to the Regional Health Office of the Department of Health at San Fernando, La Union,
for examination; subsequently, she received a letter from the Department of Health informing her that the samples she submitt ed
"are adulterated;" as a consequence of the discovery of the foreign substances in the beverages, her sales of soft drinks severely
plummeted from the usual 10 cases per day to as low as 2 to 3 cases per day resulting in losses of from P200.00 to P300.00 per
day, and not long after that she had to lose shop on 12 December 1989; she became jobless and destitute; she demanded from
the petitioner the payment of damages but was rebuffed by it. She prayed for judgment ordering the petitioner to pay her P5,000.00
as actual damages, P72,000.00 as compensatory damages, P500,000.00 as moral damages, P10,000.00 as exemplary damages,
the amount equal to 30% of the damages awarded as attorney's fees, and the costs. 2

The petitioner moved to dismiss 3 the complaint on the grounds of failure to exhaust administrative remedies and prescription.
Anent the latter ground, the petitioner argued that since the complaint is for breach of warranty under Article 1561 of the said Code.
In her Comment 4 thereto, private respondent alleged that the complaint is one for damages which does not involve an
administrative action and that her cause of action is based on an injury to plaintiff's right which can be brought within four years
pursuant to Article 1146 of the Civil Code; hence, the complaint was seasonably filed. Subsequent related pleadings were thereafter
filed by the parties. 5

In its Order of 23 January 1991, 6 the trial court granted the motion to dismiss. It ruled that the doctrine of exhaustion of
administrative remedies does not apply as the existing administrative remedy is not adequate. It also stated that the complaint is
based on a contract, and not on quasi-delict, as there exists pre-existing contractual relation between the parties; thus, on the
basis of Article 1571, in relation to Article 1562, the complaint should have been filed within six months from the delivery of the
thing sold.

Her motion for the reconsideration of the order having been denied by the trial court in its Order of 17 April 1991, 7 the private
respondent came to this Court via a petition for review on certiorari which we referred to the public respondent "for proper
determination and disposition. 8 The public respondent docketed the case as CA-G.R. SP No. 25391.

In a decision promulgated on 28 January 1992, 9 the public respondent annulled the questioned orders of the RTC and directed it
to conduct further proceedings in Civil Case No. D-9629. In holding for the private respondent, it ruled that:

Petitioner's complaint being one for quasi-delict, and not for breach of warranty as respondent contends, the applicable prescriptive
period is four years.

It should be stressed that the allegations in the complaint plainly show that it is an action or damages arising from respondent's act
of "recklessly and negligently manufacturing adulterated food items intended to be sold or public consumption" (p. 25, rollo). It is
truism in legal procedure that what determines the nature of an action are the facts alleged in the complaint and those averred as
a defense in the defendant's answer (I Moran 126; Calo v. Roldan, 76 Phil. 445; Alger Electric, Inc. v. CA, 135 SCRA 340).

Secondly, despite the literal wording of Article 2176 of the Civil code, the existence of contractual relations between the parties
does not absolutely preclude an action by one against the other for quasi-delict arising from negligence in the performance of a
contract.

In Singson v. Court of Appeals (23 SCRA 1117), the Supreme Court ruled:

It has been repeatedly held: that the existence of a contract between the parties does not bar the commission of a tort by the one
against the other and the consequent recovery of damages therefor

. . . . Thus in Air France vs. Carrascoso, . . . (it was held that) although the relation between a passenger and a carrier is "contractual
both in origin and in nature the act that breaks the contract may also be a tort.

Significantly, in American jurisprudence, from which Our law on Sales was taken, the authorities are one in saying that he
availability of an action or breach of warranty does not bar an action for torts in a sale of defective goods. 10

Its motion for the reconsideration of the decision having been denied by the public respondent in its Resolution of 14 May 1993, 11
the petitioner took his recourse under Rule 45 of the Revised Rules of Court. It alleges in its petition that:

I.

THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE AND REVERSIBLE ERROR IN RULING THAT ARTICLE
2176, THE GENERAL PROVISION ON QUASI-DELICTS, IS APPLICABLE IN THIS CASE WHEN THE ALLEGATIONS OF THE
COMPLAINT CLEARLY SHOW THAT PRIVATE RESPONDENT'S CAUSE OF ACTION IS BASEDON BREACH OF A SELLER'S
IMPLIED WARRANTIES UNDER OUR LAW ON SALES.

II.
CORROLARILY, THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE AND REVERSIBLE ERROR IN
OVERRULING PETITIONER'S ARGUMENT THAT PRIVATE RESPONDENT'S CAUSE OF ACTION HAD PRESCRIBED UNDER
ARTICLE 1571 OF THE CIVIL CODE. 12

The petitioner insists that a cursory reading of the complaint will reveal that the primary legal basis for private respondent's cause
of action is not Article 2176 of the Civil Code on quasi-delict — for the complaint does not ascribe any tortious or wrongful conduct
on its part — but Articles 1561 and 1562 thereof on breach of a seller's implied warranties under the law on sales. It contends the
existence of a contractual relation between the parties (arising from the contract of sale) bars the application of the law on quasi-
delicts and that since private respondent's cause of action arose from the breach of implied warranties, the complaint should have
been filed within six months room delivery of the soft drinks pursuant to Article 171 of the Civil Code.

In her Comment the private respondent argues that in case of breach of the seller's implied warranties, the vendee may, under
Article 1567 of the Civil Code, elect between withdrawing from the contract or demanding a proportionate reduction of the price,
with damages in either case. She asserts that Civil Case No. D-9629 is neither an action for rescission nor for proportionate
reduction of the price, but for damages arising from a quasi-delict and that the public respondent was correct in ruling that the
existence of a contract did not preclude the action for quasi-delict. As to the issue of prescription, the private respondent insists
that since her cause of action is based on quasi-delict, the prescriptive period therefore is four (4) years in accordance with Article
1144 of the Civil Code and thus the filing of the complaint was well within the said period.

We find no merit in the petition. The public respondent's conclusion that the cause of action in Civil Case No. D-9629 is found on
quasi-delict and that, therefore, pursuant to Article 1146 of the Civil Code, it prescribes in four (4) years is supported by the
allegations in the complaint, more particularly paragraph 12 thereof, which makes reference to the reckless and negligent
manufacture of "adulterated food items intended to be sold for public consumption."

The vendee's remedies against a vendor with respect to the warranties against hidden defects of or encumbrances upon the thing
sold are not limited to those prescribed in Article 1567 of the Civil Code which provides:

Art. 1567. In the case of Articles 1561, 1562, 1564, 1565 and 1566, the vendee may elect between withdrawing from the contract
and demanding a proportionate reduction of the price, with damages either

case. 13

The vendee may also ask for the annulment of the contract upon proof of error or fraud, in which case the ordinary rule on
obligations shall be applicable. 14 Under the law on obligations, responsibility arising from fraud is demandable in all obligations
and any waiver of an action for future fraud is void. Responsibility arising from negligence is also demandable in any obligation,
but such liability may be regulated by the courts, according to the circumstances. 15 Those guilty of fraud, negligence, or delay in
the performance of their obligations and those who in any manner contravene the tenor thereof are liable for damages. 16

The vendor could likewise be liable for quasi-delict under Article 2176 of the Civil Code, and an action based thereon may be
brought by the vendee. While it may be true that the pre-existing contract between the parties may, as a general rule, bar the
applicability of the law on quasi-delict, the liability may itself be deemed to arise from quasi-delict, i.e., the acts which breaks the
contract may also be a quasi-delict. Thus, in Singson vs. Bank of the Philippine Islands, 17 this Court stated:

We have repeatedly held, however, that the existence of a contract between the parties does not bar the commission of a tort by
the one against the other and the consequent recovery of damages therefor. 18 Indeed, this view has been, in effect, reiterated in
a comparatively recent case. Thus, in Air France vs. Carrascoso, 19 involving an airplane passenger who, despite hi first-class
ticket, had been illegally ousted from his first-class accommodation and compelled to take a seat in the tourist compartment, was
held entitled to recover damages from the air-carrier, upon the ground of tort on the latter's part, for, although the relation between
the passenger and a carrier is "contractual both in origin and nature . . . the act that breaks the contract may also be a tort.
Otherwise put, liability for quasi-delict may still exist despite the presence of contractual relations. 20

Under American law, the liabilities of a manufacturer or seller of injury-causing products may be based on negligence, 21 breach of
warranty, 22 tort, 23 or other grounds such as fraud, deceit, or misrepresentation. 24 Quasi-delict, as defined in Article 2176 of the
Civil Code, (which is known in Spanish legal treaties as culpa aquiliana, culpa extra-contractual or cuasi-delitos) 25 is homologous
but not identical to tort under the common law, 26 which includes not only negligence, but also intentional criminal acts, such as
assault and battery, false imprisonment and deceit. 27

It must be made clear that our affirmance of the decision of the public respondent should by no means be understood as suggesting
that the private respondent's claims for moral damages have sufficient factual and legal basis.

IN VIEW OF ALL THE FOREGOING, the instant petition is hereby DENIED for lack of merit, with costs against the petitioner.

SO ORDERED.