poulinecmsn

REFLECTION

nicoleen2201 nicoleen2201

5 years ago

Advertisements

THE LEGAL BASES OF THE PHILIPPINE EDUCATION SYSTEM

To start with, let us first define “Legal.” According to Merriam-Webster dictionary, the term legal
derived from the Latin word legalis which means law. It means conforming to or permitted by law or
established rules and if we are to define The Legal Bases of the Philippine Education System, it would
mean as the laws which are the bases of the Philippine Education System.

In the Philippines, there are three levels of education, namely: elementary, secondary and tertiary.
Public and private elementary and secondary education fall under the governance of the Department of
Education whereas the tertiary education falls under the Commission on Higher Education.

The Philippines has three major legal bases and these are as follows:

1. The 1935 Philippine Constitution Article XIV Section 5

2. The 1973 Philippine Constitution Article XV Section 8 (1-8)

3. The 1987 Philippine Constitution Article XIV Sections 1-5(5)

THE 1987 PHILIPPINE CONSTITUTION ARTICLE XIV Sections 1-5(5)

In the article XIV that deals with education, science and technology, arts, culture and sports, it can be
said that the State should provide for a free public elementary and secondary education and should
provide scholarship grants, student loan programs, subsidies and other incentives to deserving and poor
students. Also, it is required to include the study of the Constitution in the school’s curricula to instill
values of patriotism and nationalism, foster love for humanity, promote respect for human rights and
the appreciation of the role of national heroes in the historical development of the country, teach the
rights and duties of citizenship, and encourage critical and creative thinking to the young minds of the
students. Moreover, the State should also give priority to research and development and innovation and
protect the rights of scientists, inventors, artists and other gifted citizens to their intellectual property
rights and the State should promote physical education and sports programs in order to instill self-
discipline and foster teamwork and excellence for the development of a healthy and alert citizenry.

The 1987 Constitution gives every Filipino citizen the privilege to be educated and utilize the free
education that each one deserves. The constitution also promotes the values and culture of the
Philippines by instilling in the minds of every student that we should learn how to appreciate what the
country has to offer. Also, the rights of every Filipino teachers are mentioned in the constitution. This is
to protect and strengthen the privileges the teachers have.

Summing it all up, the legal bases of the Philippine Education System was made to ensure that the
country has a strong foundation wherein the officials will look into in making decisions for the
betterment of the Philippine education.

FUNCTIONS OF CHED:

The Commission on Higher Education plays a vita role in the regulation of the tertiary education in the
country. It monitors and evaluate the performance of every institution to ensure that the country will be
producing skilled, efficient and effective graduate students. Through CHED, learning and research is
highly regarded which can boost the education system of the country.

FUNCTIONS OF TESDA:

The Technical Education and Skills Development Authority (TESDA) is responsible for managing and
supervising technical education and skills development in the Philippines. TESDA gives opportunity by
giving comprehensive skills training to those who want to learn technical-vocational education. Through
this, every Filipino citizen could have the chance to go abroad because of their learned skills which they
can also use for employment here in our country.
FUNCTIONS OF DEPED:

The Department of Education is the main agency tasked to manage and govern the Philippine system of
basic education. They are the one responsible for ensuring access to, promoting equity in, and improving
the quality of the primary and secondary education in the country. They also give the permission if the
said school is on it’s right role.

Advertisements

Share this:

Categories: Uncategorized

Leave a Comment

poulinecmsn

Back to top

Advertisements

menu
Rappler

searchmenu

FAST FACTS: 1987 Philippine Constitution

February 2 of each year is Constitution Day to commemorate the highest law of the land

Jodesz Gavilan

Published: 9:48 AM February 2, 2016

Updated: 11:32 AM February 1, 2018

1987 Constitution. February 2 commemorates the supreme law of the land. All photos from the Official
Gazette

MANILA, Philippines – Did you know that for every change in the constitution in the Philippines, the
President released a proclamation to commemorate the date when the new charter took effect? This
day is called Constitution Day.

Of all the constitutional changes the country went through, it's only the 1943 Constitution which did not
have a corresponding proclamation.

President Corazon C. Aquino, through Proclamation No. 211 of 1988, assigned February 2 of each year as
Constitution Day to mark the new 1987 Constitution.

How well do you know the supreme law of the land? We're listing down some vital information
concerning one of the country's most important legal documents.
The Philippines has had 6 constitutions

The 5 constitutions started with the country's independence in 1898:

The 1899 Malolos Constitution (1899-1901)

The 1935 Constitution (1935-1943, 1945-1973)

The 1943 Constitution (1943-1945)

The 1973 Constitution (1973-1986)

The 1987 Constitution (1987-present)

The 1973 Constitution, according to former Aquino spokesman Teodoro Locsin Jr, was never ratified as
the process conducted by then president Ferdinand Marcos Jr met strong opposition.

The Aquino government had 3 options with regard to the law of the land:

To revert to the 1935 Constitution. But because Marcos abolished the bicameral legislature they had to
resort to general elections.

To retain the 1973 Constitution and be granted the power to make reforms. This was shot down by
Aquino as "she did not want to derive legitimacy and power from the very institutions that she fought."

To start anew and break from the "vestiges of a disgraced dictatorship."

FIRST. President Corazon Aquino addresses the 1986 Constitutional Commission during its inaugural
session. Photo from the Official Gazette

President Corazon Aquino in April 1986 created – through Proclamation No. 9 – the 1986 Constitutional
Commission (ConCom), which was responsible for drafting a replacement for the 1973 Constitution.

The new constitution, she said, should be “truly reflective of the aspirations and ideals of the Filipino
people.”

The 1986 ConCom was composed of 48 individuals who represented all sectors in the country, including,
among others, Bishop Teodoro Bacani, former Supreme Court chief justice Roberto Concepcion, former
labor minister (and eventually senator and foreign affairs secretary) Blas Ople, Ateneo De Manila
University president Father Joaquin Bernas SJ, and University of the Philippines Student Council
Chairperson (now Commission on Human Rights chair) Chito Gascon.

The first session of the commission was held on June 2, 1986 when Cecilia Muñoz-Palma, the first
woman appointed to the Supreme Court in 1973, was elected president of ConCom.

Several issues were the subject of heated discussions within ConCom

The proceedings in relation to the drafting of the 1987 Philippine Constitution – just like other important
legal documents in the country – were in no doubt not without conflict.

According to accounts, members of the ConCom engaged in heated debates during the various sessions
on many issues, including the death penalty, economic policies, land reform, form of government, and
even the retention of American military bases in Clark and Subic, among others.

The ConCom was able to finish its work after more or less 111 days, according to Palma. On October 12,
1986, the draft constitution was passed – with 44 delegates voting for it and two against – and was
presented to Aquino 3 days after.
DRAFT. ConCom President Cecilia Munoz-Palma hands over the draft constitution to President Corazon
Aquino. Photo from the Official Gazette

On February 2, 1987, a National Plebiscite was held after a nationwide information campaign on the
draft constitution.

The question voters had to answer was: "Do you vote for the ratification of the proposed Constitution of
the Republic of the Philippines with the ordinance appended thereto?"

The results of the 1987 plebiscite canvassed by the Commission on Elections based on returns from
83,288 precincts – or a total of 21,785,216 votes – across the Philippines are as follows:

Number of votesAffirmative votes16,622,111 (76.30%)Negative votes4,953,375

(22.74%)Abstentions209,730 (0.96%)

On February 11, 1987, through Proclamation No. 58, Aquino announced the results of the plebiscite and
proclaimed the 1987 Philippine Constitution ratified. It took effect the same day.

Film director Lino Brocka was among the members who walked out from the ConCom

Lino Brocka, a filmmaker known for his films which explored social realities, was part of the ConCom.

However, the heated discussions and disapprovals of certain provisions led him and other ConCom
members to walk out of the sessions.

Brocka eventually sent a letter on August 28, 1986 to the commission stating that he had informed
President Cory Aquino of his irrevocable resignation. “The 48 was reduced by one,” Palma said during
her closing remarks at the closing session of the ConCom.
The late filmmaker, posthumously recognized as National Artist for Film in 1997, is credited for inserting
the freedom of expression clause in Article III, Section 4 as the word "freedom" is "more expansive, it
has a wider scope, and it would refer to means of expression other than speech.” – Rappler.com

RECOMMENDED STORIES

Robredo hits 'ill-timed' proposal to rename NAIA: 'We're in the middle of a pandemic'

PARTLY FALSE: Cory Aquino to blame for media ownership provision in 1987 Constitution

Kris Aquino signs new contract with Cornerstone

Libreng seminar sa korespondensiya opisyal ng KWF, online na!

FALSE: Cory Aquino's libel suit vs Beltran was not deemed press freedom issue

In the middle of pandemic, Paolo Duterte, 2 other lawmakers want to rename NAIA

Supreme Court to do pilot test for computerized Bar exams

Supreme Court fires Palace cameraman for unsolicited knee touch on female colleague

ABOUT RAPPLER
Welcome to Rappler, a social news network where stories inspire community engagement and digitally
fuelled actions for social change. Rappler comes from the root words "rap" (to discuss) + "ripple" (to
make waves).

Read more

Rappler's Founding Board

Rappler's 2017-2018 Board

Rappler Team

Rappler Indonesia Team

Job Openings

Archives

Privacy statement

Terms of Use

Comment moderation Policy

Advertise With Us

Contact Us

NEXT STORY >

2176

Today is Saturday, June 27, 2020 home

 Constitution Statutes Executive Issuances Judicial Issuances Other Issuances Jurisprudence
International Legal Resources AUSL Exclusive

Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. L-10129 April 22, 1957

PASCUAL ROMANO and JUANA LLEANZA DE ROMANO, plaintiffs-appellants,

vs.

CRISOSTOMO PARIÑAS and CARIDAD DONATO DE PARIÑAS, defendants-appellants.

Agripino A. Brillantes for appellants.

Crisostomo F. Pariñas for appellees.

BAUTISTA ANGELO, J.:

This is an action instituted by plaintiffs against defendants in the Court of First Instance of Abra to
recover damages in the amount of P10,000. Basis of the action is that defendants, being the legitimate
parents of Antonio Pariñas, a minor, allowed the latter to drive a motor vehicle having a passenger one
Editha Romano, and because of his lack of foresight and experience, the vehicle overturned resulting in
the death of Editha.
Defendants, in their answer, set up the defense that they never permitted their son to drive any motor
vehicle, if on the occasion alleged in the complaint he drove a jeep, it was upon the persistent plea of
Editha Romano. They alleged that the accident, if it happened, was due to her fault and negligence.

After filing their answer, defendant also filed a motion asking that Caridad Donato, wife of defendant
Crisostomo Pariñas, be dropped from the complaint on the ground of misjoinder of parties-defendants,
contending that under Article 2180 of the new Civil Code, the father is primarily responsible for the
damages caused by the minor children, except only in case of his death or incapacity when the mother
also becomes answerable.

On February 14, 1955, the court sustained the motion, ordering that Caridad Donato be dropped from
the complaint on the ground of misjoinder of parties, pursuant to Section 11, Rule 3, of the Rules of
Court. Hence this appeal.

There is no dispute that defendants are the parents of minor Antonio Pariñas whose negligent act gave
rise to the untimely death of Editha Romano. There is also no dispute that both are living and are not
incapacitated. The question now be determined is whether their inclusion in the complaint as
defendants is proper, or whether the lower court acted correctly in dropping the mother on the ground
of misjoinder of parties-defendants.

The legal provisions on which the action of plaintiffs is predicated are Articles 2176 and 2180 of the new
Civil Code, the pertinent portions of which are quoted here under for ready reference:

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 so pre-existing contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

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.
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.

It appears clear from the above that whoever by act or omission causes damage to another, there being
fault or negligence, is obliged to pay for the damage done, and this obligation is demandable not only
for one's own acts or omissions, but also for those persons for whom one is responsible. And one of the
cats mentioned therein is "The father and, in case of his death or incapacity, the mother", answers for
the damages caused by their minor children who live in their company. It is therefore clear that the
responsibility of the father and mother is not simultaneous, but alternate, the father being primarily
responsible, and the mother answering only "In case of his death or incapacity." Since in the instant case
the Father is both living and capable, as can be gleaned from the allegations of the complaint, it follows
that it is improper to join the mother as party-defendant.

It is true, as appellants contend, that there is sufficient averment in the complaint that both the father
and the mother have allowed their son to drive a motor vehicle without proper license or permit
thereby imputing acts of negligence to both of them. But from this it cannot be inferred that there is a
cause for action against the mother, for under the law her liability can of death or incapacity of her
husband.

The lower court therefore acted properly in dropping her from the complaint.

Bengzon, Padilla, Montemayor, Concepcion, Reyes, J.B.L., Endencia and Felix, JJ., concur.

The Lawphil Project - Arellano Law Foundation

HEADLINES NATION REGIONS OPINION BUSINESS WORLD SPORTS LIFESTYLE ENTERTAINMENT THE
SUNDAY TIMES SPECIAL SECTIONS PUBLIC SQUARE SPECIAL FEATURES THE MANILA TIMES 500

Negligent persons who cause harm liable for damages

The Manila Times

By THE MANILA TIMES

November 24, 2014

Persida Acosta
Persida Acosta

Dear PAO,

As I was passing by a salon last week, I was shocked to have been drenched in what seemed to me was
foul-smelling water. One of the hairdressers of that salon was cleaning up and threw a bucket of water
outside their window without even checking if there were people staying or passing by. I was so
outraged because I was then on my way to work. I demanded to talk to the salon owner, but they
refused to heed my demand. So, I decided to file a blotter to the nearest police station to document
what happened to me. Upon reaching my house, I started noticing that my scalp was itching. The next
day, hair strands started to fall off from my head, and now I have a small patch in my scalp for the lost
hair.

Ad

Can I sue the hairdresser? Can I also sue the salon owner? I hope you can advice me.

Ms. Depressed

Ad

Dear Ms. Depressed,

Every person must act diligently so as to avoid injury to another person or another’s property. A person
who causes damage to another or to the property of the latter may be held liable thereto to the extent
as may be provided under the terms and stipulations agreed upon by them, should a contract exist
between the parties, or in consonance with law, if there is no contractual relationship between them.
Accordingly, a person who throws a bucket of water outside his or her window may be held liable if he
was negligent in his actions and such negligence caused damage or injury to a bystander or a passerby,
similar to what happened to you. This is pursuant to Article 2176 of the New Civil Code of the
Philippines, which provides: “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 x x x”

The liability does not only extend to the perpetrator, but also to those responsible for them, as long as
the former is performing his or her assigned tasks. As provided for under Article 2180 of the said law:
“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. x x x Employers shall be liable for the damages
caused by their employees and household helpers acting within the scope of their tasks, even though
the former are not engaged in any business or industry. x x x”

However, it is still essential for you to establish that the injury you claim to have sustained, particularly
the itching of your scalp as well as the small patch which was brought about by the falling off of your
hair, was predominantly the result of the negligent act of the hairdresser. If you fail, however, to
establish this or if it is later on shown that the injury you sustained was by reason of your own
negligence, the award of damages may not prosper. According to Article 2179 of the New Civil Code of
the Philippines: “When the plaintiff’s own negligence was the immediate and proximate cause of his
injury, he cannot recover damages. But if his negligence was only contributory, the immediate and
proximate cause of the injury being the defendant’s lack of due care, the plaintiff may recover damages,
but the courts shall mitigate the damages to be awarded.”

We hope that we were able to answer your queries. Please be reminded that this advice is based solely
on the facts you have narrated and our appreciation of the same. Our opinion may vary when other
facts are changed or elaborated.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may
be sent to dearpao@www.manilatimes.net
NEXT ARTICLE

TODAY IN HEADLINES

Cebu City now a Covid ‘hotspot’

Red Mendoza

Año: ‘Guerilla’ tactics of LSIs behind Covid spike in provinces

Darwin Pesco

TOP STORIES

DoH revises protocol on recovered patients

Two senators press DepEd on blended learning

Duterte warns Asean: Terrorism ‘remains alive’

The ‘agimat’ is gone: Ramon Revilla Sr., 93

Duterte to Asean: Avoid escalating sea dispute

OPINION ON PAGE ONE

Coronavirus cases are climbing again. So what?

Yen Makabenta

Hocus-pocus in the 2nd tranche SAP distribution?

Ramon T. Tulfo

State terrorist

Antonio Contreras

LATEST STORIES

OFW repatriation fund may dry up by August – DFA

Over 1,000 infected for 3rd day; total cases top 34K

BI clears over 16K seamen

DoLE to fly in dead OFWs from KSA

Taguig courts ordered closed

Geisler alerts PCC to alleged PTA abuse

Ex-Sen. Ramon Revilla Sr., 93

Yanong burns Texan Burns by split decision

Manila mayor opens city’s first swab testing lab

2 men found dead in shooting incidents in Manila

Archives Advertise Contact Us About Us Privacy Policy

Copyright © The Manila Times – All Rights Reserved.

Supreme Court E-Library

Information At Your Fingertips

Home

2018 Bar Passers

REGISTER HERE

Chief Justices

News and Advisories

Site Map

About Us

The Supreme Court E-Library

The E-Library Development Team

Contact Us

Toggle posts

A A+ A++

Username:

Password:

Forgot password?

[REGISTER]

[(02)524-2706]

[E-LIBRARY HOTLINE]

Supreme Court of the Philippines Cour of Appeals Sandiganbayan Court of Tax Appeals Judicial and Bar
Council Office of the Court Administrator Philippine Judicial Academy Philippine Meditation Center

Foreign Supreme Courts

Korea, South

Malaysia

Singapore

United States of America

View printer friendly version

816 Phil. 163

SECOND DIVISION

[ G.R. No. 191937, August 09, 2017 ]

ORIENT FREIGHT INTERNATIONAL, INC., PETITIONER, V. KEIHIN-EVERETT FORWARDING COMPANY, INC.,

RESPONDENT.

DECISION

LEONEN, J.:

Article 2176 of the Civil Code does not apply when the party's negligence occurs in the performance of
an obligation. The negligent act would give rise to a quasi-delict only when it may be the basis for an
independent action were the parties not otherwise bound by a contract.

This resolves a Petition for Review[1] on Certiorari under Rule 45 of the Rules of Court, assailing the
January 21, 2010 Decision[2] and April 21, 2010 Resolution[3] of the Court of Appeals, which affirmed
the Regional Trial Court February 27, 2008 Decision.[4] The Regional Trial Court found that petitioner
Orient Freight International, Inc.'s (Orient Freight) negligence caused the cancellation of Keihin-Everett
Forwarding Company, Inc.'s (Keihin-Everett) contract with Matsushita Communication Industrial
Corporation of the Philippines (Matsushita).[5]

On October 16, 2001, Keihin-Everett entered into a Trucking Service Agreement with Matsushita. Under
the Trucking Service Agreement, Keihin-Everett would provide services for Matsushita's trucking
requirements. These services were subcontracted by Keihin-Everett to Orient Freight, through their own
Trucking Service Agreement executed on the same day.[6]

When the Trucking Service Agreement between Keihin-Everett and Matsushita expired on December 31,
2001, Keihin-Everett executed an In-House Brokerage Service Agreement for Matsushita's Philippine
Economic Zone Authority export operations. Keihin-Everett continued to retain the services of Orient
Freight, which sub-contracted its work to Schmitz Transport and Brokerage Corporation.[7]

In April 2002, Matsushita called Keihin-Everett's Sales Manager, Salud Rizada, about a column in the
April 19, 2002 issue of the tabloid newspaper Tempo. This news narrated the April 17, 2002 interception
by Caloocan City police of a stolen truck filled with shipment of video monitors and CCTV systems owned
by Matsushita.[8]

When contacted by Keihin-Everett about this news, Orient Freight stated that the tabloid report had
blown the incident out of proportion. They claimed that the incident simply involved the breakdown and
towing of the truck, which was driven by Ricky Cudas (Cudas), with truck helper, Rubelito Aquino[9]
(Aquino). The truck was promptly released and did not miss the closing time of the vessel intended for
the shipment.[10]

Keihin-Everett directed Orient Freight to investigate the matter. During its April 20, 2002 meeting with
Keihin-Everett and Matsushita, as well as in its April 22, 2002 letter addressed to Matsushita, Orient
Freight reiterated that the truck merely broke down and had to be towed.[11]

However, when the shipment arrived in Yokohama, Japan on May 8, 2002, it was discovered that 10
pallets of the shipment's 218 cartons, worth US$34,226.14, were missing.[12]

Keihin-Everett independently investigated the incident. During its investigation, it obtained a police
report from the Caloocan City Police Station. The report stated, among others, that at around 2:00 p.m.
on April 17, 2002, somewhere in Plaza Dilao, Paco Street, Manila, Cudas told Aquino to report engine
trouble to Orient Freight. After Aquino made the phone call, he informed Orient Freight that the truck
had gone missing. When the truck was intercepted by the police along C3 Road near the corner of
Dagat-Dagatan Avenue in Caloocan City, Cudas escaped and became the subject of a manhunt.[13]

When confronted with Keihin-Everett's findings, Orient Freight wrote back on May 15, 2002 to admit
that its previous report was erroneous and that pilferage was apparently proven.[14]

In its June 6, 2002 letter, Matsushita terminated its In-House Brokerage Service Agreement with Keihin-
Everett, effective July 1, 2002. Matsushita cited loss of confidence for terminating the contract, stating
that Keihin-Everett's way of handling the April 17, 2002 incident and its nondisclosure of this incident's
relevant facts "amounted to fraud and signified an utter disregard of the rule of law."[15]
Keihin-Everett, by counsel, sent a letter dated September 16, 2002 to Orient Freight, demanding
P2,500,000.00 as indemnity for lost income. It argued that Orient Freight's mishandling of the situation
caused the termination of Keihin-Everett's contract with Matsushita.[16]

When Orient Freight refused to pay, Keihin-Everett filed a complaint dated October 24, 2002 for
damages with Branch 10, Regional Trial Court, Manila. The case was docketed as Civil Case No. 02-
105018.[17] In its complaint, Keihin-Everett alleged that Orient Freight's "misrepresentation, malice,
negligence and fraud" caused the termination of its In-House Brokerage Service Agreement with
Matsushita. Keihin-Everett prayed for compensation for lost income, with legal interest, exemplary
damages, attorney's fees, litigation expenses, and the costs of the suit.[18]

In its December 20, 2002 Answer, Orient Freight claimed, among others, that its initial ruling of pilferage
was in good faith as manifested by the information from its employees and the good condition and the
timely shipment of the cargo. It also alleged that the contractual termination was a prerogative of
Matsushita. Further, by its own Audited Financial Statements on file with the Securities and Exchange
Commission, Keihin-Everett derived income substantially less than what it sued for. Along with the
dismissal of the complaint, Orient Freight also asserted counterclaims for compensatory and exemplary
damages, attorney's fees, litigation expenses, and the costs of the suit.[19]

The Regional Trial Court rendered its February 27, 2008 Decision,[20] in favor of Keihin-Everett. It found
that Orient Freight was "negligent in failing to investigate properly the incident and make a factual
report to Keihin[-Everett] and Matsushita," despite having enough time to properly investigate the
incident.[21]

The trial court also ruled that Orient Freight's failure to exercise due diligence in disclosing the true facts
of the incident to Keihin-Everett and Matsushita caused Keihin-Everett to suffer income losses due to
Matsushita's cancellation of their contract.[22] The trial court ordered Orient Freight "to pay [Keihin-
Everett] the amount of [P] 1,666,667.00 as actual damages representing net profit loss incurred" and
P50,000.00 in attorney's fees.[23] However, it denied respondent's prayer for exemplary damages,
finding that petitioner did not act with gross negligence.[24]

Orient Freight appealed the Regional Trial Court Decision to the Court of Appeals. On January 21, 2010,
the Court of Appeals issued its Decision[25] affirming the trial court's decision. It ruled that Orient
Freight "not only had knowledge of the foiled hijacking of the truck carrying the . . . shipment but, more
importantly, withheld [this] information from [Keihin-Everett]."[26]
The Court of Appeals ruled that the oral and documentary evidence has established both the damage
suffered by Keihin-Everett and Orient Freight's fault or negligence. Orient Freight was negligent in not
reporting and not thoroughly investigating the April 17, 2002 incident despite Keihin-Everett's
instruction to do so.[27] It further ruled that while Keihin-Everett sought to establish its claim for lost
income of P2,500,000.00 by submitting its January 2002 to June 2002 net income statement,[28] this
was refuted by Orient Freight by presenting Keihin-Everett's own audited financial statements. The
Court of Appeals held that the trial court correctly arrived at the amount of P1,666,667.00 as the award
of lost income.[29]

The Court of Appeals denied Orient Freight's Motion for Reconsideration in its April 21, 2010 Resolution.
[30]

On June 9, 2010, Orient Freight filed this Petition for Review on Certiorari under Rule 45 with this Court,
arguing that the Court of Appeals incorrectly found it negligent under Article 2176 of the Civil Code.[31]
As there was a subsisting Trucking Service Agreement between Orient Freight itself and Keihin-Everett,
petitioner avers that there was a pre-existing contractual relation between them, which would preclude
the application of the laws on quasi-delicts.[32]

Applying the test in Far East Bank and Trust Company v. Court of Appeals,[33] petitioner claims that its
failure to inform respondent Keihin-Everett about the hijacking incident could not give rise to a quasi-
delict since the Trucking Service Agreement between the parties did not include this obligation. It argues
that there being no obligation under the Trucking Service Agreement to inform Keihin-Everett of the
hijacking incident, its report to Keihin-Everett was done in good faith and did not constitute negligence.
Its representations regarding the hijacking incident were a sound business judgment and not a negligent
act.[34] Finally, it claims that the Court of Appeals incorrectly upheld the award of damages, as the trial
court had based its computation on, among others, Keihin-Everett's profit and loss statement.[35]

On August 2, 2010, Keihin-Everett filed its Comment,[36] arguing that the petition does not contain the
names of the parties in violation of Rule 45, Section 4 of the Rules of Court. It contends that the issues
and the arguments raised in this petition are the same issues it raised in the Regional Trial Court and the
Court of Appeals.[37] It claims that the findings of fact and law of the Court of Appeals are in accord
with this Court's decisions.[38]
On October 7, 2010, Orient Freight filed its Reply.[39] It notes that a cursory reading of the petition
would readily show the parties to the case. It claims that what is being contested and appealed is the
application of the law on negligence by lower courts and, while the findings of fact by the lower courts
are entitled to great weight, the exceptions granted by jurisprudence apply to this case. It reiterates that
the pre-existing contractual relation between the parties should bar the application of the principles of
quasi-delict. Because of this, the terms and conditions of the contract between the parties must be
applied. It also claimed that the Regional Trial Court's computation of the award included figures from
respondent's Profit and Loss Statement, which the trial court had allegedly rejected. It rendered the
computation unreliable.[40]

This Court issued a Resolution[41] dated February 16, 2011, requiring petitioner to submit a certified
true copy of the Regional Trial Court February 27, 2008 Decision.

On March 31, 2011, petitioner filed its Compliance,[42] submitting a certified true copy of the Regional
Trial Court Decision.

The issues for this Court's resolution are:

First, whether the failure to state the names of the parties in this Petition for Review, in accordance with
Rule 45, Section 4 of the Rules of Court, is a fatal defect;

Second, whether the Court of Appeals, considering the existing contracts in this case, erred in applying
Article 2176 of the Civil Code;

Third, whether Orient Freight, Inc. was negligent for failing to disclose the facts surrounding the
hijacking incident on April 17, 2002, which led to the termination of the Trucking Service Agreement
between Keihin-Everett Forwarding Co., Inc. and Matsushita Communication Industrial Corporation of
the Philippines; and

Finally, whether the trial court erred in the computation of the awarded actual and pecuniary loss by
basing it on, among others, the Profit and Loss Statement submitted by Keihin-Everett Forwarding Co.,
Inc.
The petition is denied.

The petition does not violate Rule 45, Section 4 of the Rules of Court[43] for failing to state the names of
the parties in the body. The names of the parties are readily discernable from the caption of the
petition, clearly showing the appealing party as the petitioner and the adverse party as the respondent.
The Court of Appeals had also been erroneously impleaded in the petition. However, this Court in
Aguilar v. Court of Appeals, et al.[44] ruled that inappropriately impleading the lower court as
respondent does not automatically mean the dismissal of the appeal. This is a mere formal defect.[45]

II

Negligence may either result in culpa aquiliana or culpa contractual.[46] Culpa aquiliana is the "the
wrongful or negligent act or omission which creates a vinculum juris and gives rise to an obligation
between two persons not formally bound by any other obligation,"[47] and is governed by Article 2176
of the Civil Code:

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.

Negligence in culpa contractual, on the other hand, is "the fault or negligence incident in the
performance of an obligation which already-existed, and which increases the liability from such already
existing obligation."[48] This is governed by Articles 1170 to 1174 of the Civil Code:[49]

Article 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay,
and those who in any manner contravene the tenor thereof, are liable for damages.
Article 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action
for future fraud is void.

Article 1172. Responsibility arising from negligence in the performance of every kind of obligation is also
demandable, but such liability may be regulated by the courts, according to the circumstances.

Article 1173. The fault or negligence of the obligor consists in the omission of that diligence which is
required by the nature of the obligation and corresponds with the circumstances of the persons, of the
time and of the place. When negligence shows bad faith, the provisions of articles 1171 and 2201,
paragraph 2, shall apply.

If the law or contract does not state the diligence which is to be observed in the performance, that
which is expected of a good father of a family shall be required.

Article 1174. Except in cases expressly specified by the law, or when it is otherwise declared by
stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be
responsible for those events which could not be foreseen, or which, though foreseen, were inevitable.

Actions based on contractual negligence and actions based on quasi-delicts differ in terms of conditions,
defenses, and proof. They generally cannot co-exist.[50] Once a breach of contract is proved, the
defendant is presumed negligent and must prove not being at fault. In a quasi-delict, however, the
complaining party has the burden of proving the other party's negligence.[51] In Huang v. Phil. Hoteliers,
Inc.:[52]

[T]his 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.[53] (Emphasis
in the original, citations omitted)

In Government Service Insurance System v. Spouses Labung-Deang,[54] since the petitioner's obligation
arose from a contract, this Court applied the Civil Code provisions on contracts, instead of those of
Article 2176:

The trial court and the Court of Appeals treated the obligation of GSIS as one springing from quasi-delict.
We do not agree. Article 2176 of the Civil Code defines quasi-delict as follows:

"Whoever by act or omission causes damages 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 (italics
ours)."

Under the facts, there was a pre-existing contract between the parties. GSIS and the spouses Deang had
a loan agreement secured by a real estate mortgage. The duty to return the owner's duplicate copy of
title arose as soon as the mortgage was released. GSIS insists that it was under no obligation to return
the owner's duplicate copy of the title immediately. This insistence is not warranted. Negligence is
obvious as the owners' duplicate copy could not be returned to the owners. Thus, the more applicable
provisions of the Civil Code are:

"Article 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay
and those who in any manner contravene the tenor thereof are liable for damages."

"Article 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good
faith is liable shall be those that are the natural and probable consequences of the breach of the
obligation, and which the parties have foreseen or could have reasonably foreseen at the time the
obligation was constituted . .."

Since good faith is presumed and bad faith is a matter of fact which should be proved, we shall treat
GSIS as a party who defaulted in its obligation to return the owners' duplicate copy of the title. As an
obligor in good faith, GSIS is liable for all the "natural and probable consequences of the breach of the
obligation." The inability of the spouses Deang to secure another loan and the damages they suffered
thereby has its roots in the failure of the GSIS to return the owners' duplicate copy of the title.[55]
(Citations omitted)

Similarly, in Syquia v. Court of Appeals,[56] this Court ruled that private respondent would have been
held liable for a breach of its contract with the petitioners, and not for quasi-delict, had it been found
negligent:

With respect to herein petitioners' averment that private respondent has committed culpa aquiliana,
the Court of Appeals found no negligent act on the part of private respondent to justify an award of
damages against it. Although a pre-existing contractual relation between the parties does not preclude
the existence of a culpa aquiliana, We find no reason to disregard the respondent's Court finding that
there was no negligence.

....

In this case, it has been established that the Syquias and the Manila Memorial Park Cemetery, Inc.,
entered into a contract entitled "Deed of Sale and Certificate of Perpetual Care" on August 27, 1969.
That agreement governed the relations of the parties and defined their respective rights and obligations.
Hence, had there been actual negligence on the part of the Manila Memorial Park Cemetery, Inc., it
would be held liable not for a quasi-delict or culpa aquiliana, but for culpa contractual as provided by
Article 1170 of the Civil Code[.][57]

However, there are instances when Article 2176 may apply even when there is a pre-existing contractual
relation. A party may still commit a tort or quasi-delict against another, despite the existence of a
contract between them.[58]

In Cangco v. Manila Railroad,[59] this Court explained why a party may be held liable for either a breach
of contract or an extra-contractual obligation for a negligent act:

It is evident, therefore, that in its decision in the Yamada case, the court treated plaintiff's action as
though founded in tort rather than as based upon the breach of the contract of carriage, and an
examination of the pleadings and of the briefs shows that the questions of law were in fact discussed
upon this theory. Viewed from the standpoint of the defendant the practical result must have been the
same in any event. The proof disclosed beyond doubt that the defendant's servant was grossly negligent
and that his negligence was the proximate cause of plaintiff's injury. It also affirmatively appeared that
defendant had been guilty of negligence in its failure to exercise proper discretion in the direction of the
servant. Defendant was, therefore, liable for the injury suffered by plaintiff, whether the breach of the
duty were to be regarded as constituting culpa aquilina or culpa contractual. As Manresa points out . . .
whether negligence occurs as an incident in the course of the performance of a contractual undertaking
or is itself (he source of an extra-contractual obligation, its essential characteristics are identical. There is
always an act or omission productive of damage due to carelessness or inattention on the part of the
defendant. Consequently, when the court holds that a defendant is liable in damages for having failed to
exercise due care, either directly, or in failing to exercise proper care in the selection and direction of his
servants, the practical result is identical in either case . . ,

The true explanation of such cases is to be found by directing the attention to the relative spheres of
contractual and extra-contractual obligations. The field of non-contractual obligation is much more
broader [sic] than that of contractual obligation, comprising, as it does, the whole extent of juridical
human relations. These two fields, figuratively speaking, concentric; that is to say, the mere fact that a
person is bound to another by contract does not relieve him from extra-contractual liability to such
person. When such a contractual relation exists the obligor may break the contract under such
conditions that the same act which constitutes a breach of the contract would have constituted the
source of an extra-contractual obligation had no contract existed between the parties.[60] (Emphasis
supplied, citation omitted)

If a contracting party's act that breaches the contract would have given rise to an extra-contractual
liability had there been no contract, the contract would be deemed breached by a tort,[61] and the
party may be held liable under Article 2176 and its related provisions.[62]

In Singson v. Bank of the Philippine Islands,[63] this Court upheld the petitioners' claim for damages
based on a quasi-delict, despite the parties' relationship being contractual in nature:

After appropriate proceedings, the Court of First Instance of Manila rendered judgment dismissing the
complaint upon the ground that plaintiffs cannot recover from the defendants upon the basis of a quasi-
delict, because the relation between the parties is contractual in nature; because this case does not fall
under Article 2219 of our Civil Code, upon which plaintiffs rely; and because plaintiffs have not
established the amount of damages allegedly sustained by them.
The lower court held that plaintiffs' claim for damages cannot be based upon a tort or quasi-delict, their
relation with the defendants being contractual in nature. 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
order and the consequent recovery of damages therefor. Indeed, this view has been in effect, reiterated
in a comparatively recent case. Thus, in Air France vs. Carrascoso, involving an airplane passenger who,
despite his 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 a passenger and the
carrier is "contractual both in origin and nature . . . the act that breaks the contract may also be a tort".
[64] (Citations omitted)

However, if the act complained of would not give rise to a cause of action for a quasi-delict independent
of the contract, then the provisions on quasi-delict or tort would be inapplicable.[65]

In Philippine School of Business Administration v. Court of Appeals,[66] petitioner's obligation to

maintain peace and order on campus was based on a contract with its students. Without this contract,
the obligation does not exist. Therefore, the private respondents' cause of action must be founded on
the breach of contract and cannot be based on Article 2176:

Because the circumstances of the present case evince a contractual relation between the PSBA and
Carlitos Bautista, the rules on quasi-delict do not really govern. A perusal of Article 2176 shows that
obligations arising from quasi-delicts or tort, also known as extra-contractual obligations, arise only
between parties not otherwise bound by contract, whether express or implied. However, this
impression has not prevented this Court from determining the existence of a tort even when there
obtains a contract. In Air France vs. Carroscoso (124 Phil. 722), the private respondent was awarded
damages for his unwarranted expulsion from a first-class seat aboard the petitioner airline. It is noted,
however, that the Court referred to the petitioner-airline's liability as one arising from tort, not one
arising from a contract of carriage. In effect, Air France is authority for the view that liability from tort
may exist even if there is a contract, for the act that breaks the contract may be also a tort. (Austro-
America S.S. Co. vs. Thomas, 248 Fed. 231).

This view was not all that revolutionary, for even as early as 1918, this Court was already of a similar
mind. In Cangco vs. Manila Railroad (38 Phil. 780), Mr. Justice Fisher elucidated thus:
"The field of non-contractual obligation is much more broader [sic] than that of contractual obligation,
comprising, as it does, the whole extent of juridical human relations. These two fields, figuratively
speaking, concentric; that is to say, the mere fact that a person is bound to another by contract does not
relieve him from extra-contractual liability to such person. When such a contractual relation exists the
obligor may break the contract under such conditions that the same act which constitutes a breach of
the contract would have constituted the source of an extra-contractual obligation had no contract
existed between the parties."

Immediately what comes to mind is the chapter of the Civil Code on Human Relations, particularly
Article 21, which provides:

"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." (Italics supplied)

Air France penalized the racist policy of the airline which emboldened the petitioner's employee to
forcibly oust the private respondent to cater to the comfort of a white man who allegedly "had a better
right to the seat." In Austro-American, supra, the public embarrassment caused to the passenger was
the justification for the Circuit Court of Appeals, (Second Circuit), to award damages to the latter. From
the foregoing, it can be concluded that should the act which breaches a contract be done in bad faith
and be violative of Article 21, then there is a cause to view the act as constituting a quasi-delict.

In the circumstances obtaining in the case at bar, however, there is, as yet, no finding that the contract
between the school and Bautista had been breached thru the former's negligence in providing proper
security measures. This would be for the trial court to determine. And, even if there be a finding of
negligence, the same could give rise generally to a breach of contractual obligation only. Using the test
of Cangco, supra, the negligence of the school would not be relevant absent a contract. In fact, that
negligence becomes material only because of the contractual relation between PSBA and Bautista. In
other words, a contractual relation is a condition sine qua non to the school's liability. The negligence of
the school cannot exist independently on the contract, unless the negligence occurs under the
circumstances set out in Article 21 of the Civil Code.[67] (Citations omitted)

In situations where the contractual relation is indispensable to hold a party liable, there must be a
finding that the act or omission complained of was done in bad faith and in violation of Article 21 of the
Civil Code to give rise to an action based on tort.[68]
In Far East Bank and Trust Company v. Court of Appeals,[69] as the party's claim for damages was based
on a contractual relationship, the provisions on quasi-delict generally did not apply. In this case, this
Court did not award moral damages to the private respondent because the applicable Civil Code
provision was Article 2220,[70] not Article 21, and neither fraud nor bad faith was proved:

We are not unaware of the previous rulings of this Court, such as in American Express International, Inc.
vs. Intermediate Appellate Court (167 SCRA 209) and Bank of [the] Philippine Islands vs. Intermediate
Appellate Court (206 SCRA 408), sanctioning the application of Article 21, in relation to Article 2217 and
Article 2219 of the Civil Code to a contractual breach similar to the case at bench. Article 21 states:

"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."

Article 21 of the Code, it should be observed, contemplates a conscious act to cause harm. Thus, even if
we are to assume that the provision could properly relate to a breach of contract, its application can be
warranted only when the defendant's disregard of his contractual obligation is so deliberate as to
approximate a degree of misconduct certainly no less worse [sic] than fraud or bad faith. Most
importantly, Article 21 is a mere declaration of a general principle in human relations that clearly must,
in any case, give way to the specific provision of Article 2220 of the Civil Code authorizing the grant of
moral damages in culpa contractual solely when the breach is due to fraud or bad faith.

....

The Court has not in the process overlooked another rule that a quasi-delict can be the cause for
breaching a contract that might thereby permit the application of applicable principles on tort even
where there is a pre-existing contract between the plaintiff and the defendant (Phil. Airlines vs. Court of
Appeals, 106 SCRA 143; Singson vs. Bank of the Phil. Islands, 23 SCRA 1117; and Air France vs.
Carrascoso, 18 SCRA 155). This doctrine, unfortunately, cannot improve private respondents' case for it
can aptly govern only where the act or omission complained of would constitute an actionable tort
independently of the contract. The test (whether a quasi-delict can be deemed to underlie the breach of
a contract) can be stated thusly: Where, without a pre-existing contract between two parties, an act or
omission can nonetheless amount to an actionable tort by itself, the fact that the parties are
contractually bound is no bar to the application of quasi-delict provisions to the case. Here, private
respondents' damage claim is predicated solely on their contractual relationship; without such
agreement, the act or omission complained of cannot by itself be held to stand as a separate cause of
action or as an independent actionable tort.[71] (Citations omitted)

Here, petitioner denies that it was obliged to disclose the facts regarding the hijacking incident since this
was not among the provisions of its Trucking Service Agreement with respondent. There being no
contractual obligation, respondent had no cause of action against petitioner:

Applying said test, assuming for the sake of argument that petitioner indeed failed to inform respondent
of the incident where the truck was later found at the Caloocan Police station, would an independent
action prosper based on such omission? Assuming that there is no contractual relation between the
parties herein, would petitioner's omission of not informing respondent that the truck was impounded
gives [sic] rise to a quasi-delict? Obviously not, because the obligation, if there is any in the contract,
that is to inform plaintiff of said incident, could have been spelled out in the very contract itself duly
executed by the parties herein specifically in the Trucking Service Agreement. It is a fact that no such
obligation or provision existed in the contract. Absent said terms and obligations, applying the principles
on tort as a cause for breaching a contract would therefore miserably fail as the lower Court erroneously
did in this case.[72]

The obligation to report what happened during the hijacking incident, admittedly, does not appear on
the plain text of the Trucking Service Agreement. Petitioner argues that it is nowhere in the agreement.
Respondent does not dispute this claim. Neither the Regional Trial Court nor the Court of Appeals relied
on the provisions of the Trucking Service Agreement to arrive at their respective conclusions. Breach of
the Trucking Service Agreement was neither alleged nor proved.

While petitioner and respondent were contractually bound under the Trucking Service Agreement and
the events at the crux of this controversy occurred during the performance of this contract, it is
apparent that the duty to investigate and report arose subsequent to the Trucking Service Agreement.
When respondent discovered the news report on the hijacking incident, it contacted petitioner,
requesting information on the incident.[73] Respondent then requested petitioner to investigate and
report on the veracity of the news report. Pursuant to respondent's request, petitioner met with
respondent and Matsushita on April 20, 2002 and issued a letter dated April 22, 2002, addressed to
Matsushita.[74] Respondent's claim was based on petitioner's negligent conduct when it was required
to investigate and report on the incident:
The defendant claimed that it should not be held liable for damages suffered by the plaintiff considering
that the proximate cause of the damage done to plaintiff is the negligence by employees of Schmitz
trucking. This argument is untenable because the defendant is being sued in this case not for the
negligence of the employees of Schmitz trucking but based on defendant's own negligence in failing to
disclose the true facts of the hijacking incident to plaintiff Keihin and Matsushita.[75]

Both the Regional Trial Court and Court of Appeals erred in finding petitioner's negligence of its
obligation to report to be an action based on a quasi-delict Petitioner's negligence did not create the
vinculum juris or legal relationship with the respondent, which would have otherwise given rise to a
quasi-delict. Petitioner's duty to respondent existed prior to its negligent act. When respondent
contacted petitioner regarding the news report and asked it to investigate the incident, petitioner's
obligation was created. Thereafter, petitioner was alleged to have performed its obligation negligently,
causing damage to respondent.

The doctrine "the act that breaks the contract may also be a tort," on which the lower courts relied, is
inapplicable here. Petitioner's negligence, arising as it does from its performance of its obligation to
respondent, is dependent on this obligation. Neither do the facts show that Article 21 of the Civil Code
applies, there being no finding that petitioner's act was a conscious one to cause harm, or be of such a
degree as to approximate fraud or bad faith:

To be sure, there was inaction on the part of the defendant which caused damage to the plaintiff, but
there is nothing to show that the defendant intended to conceal the truth or to avoid liability. When the
facts became apparent to defendant, the latter readily apologized to Keihin and Matsushita for their
mistake.[76]

Consequently, Articles 1170, 1172, and 1173 of the Civil Code on negligence in the performance of an
obligation should apply.

III

Under Article 1170 of the Civil Code, liability for damages arises when those in the performance of their
obligations are guilty of negligence, among others. Negligence here has been defined as "the failure to
observe that degree of care, precaution and vigilance that the circumstances just demand, whereby that
other person suffers injury."[77] If the law or contract does not provide for the degree of diligence to be
exercised, then the required diligence is that of a good father of a family.[78] The test to determine a
party's negligence is if the party used "the reasonable care and caution which an ordinarily prudent
person would have used in the same situation"[79] when it performed the negligent act. If the party did
not exercise reasonable care and caution, then it is guilty of negligence.

In this case, both the Regional Trial Court and the Court of Appeals found that petitioner was negligent
in failing to adequately report the April 17, 2002 hijacking incident to respondent and not conducting a
thorough investigation despite being directed to do so. The trial court's factual findings, when affirmed
by the Court of Appeals, are binding on this Court and are generally conclusive.[80]

The Regional Trial Court found that petitioner's conduct showed its negligent handling of the
investigation and its failure to timely disclose the facts of the incident to respondent and Matsushita:

[Orient Freight] was clearly negligent in failing to investigate properly the incident and make a factual
report to Keihin and Matsushita. [Orient Freight] claimed that it was pressed for time considering that
they were given only about one hour and a half to investigate the incident before making the initial
report. They claimed that their employees had no reason to suspect that the robbery occurred
considering that the seal of the van remained intact. Moreover, the priority they had at that time was to
load the cargo to the carrying vessel on time for shipment on April 19, 200[2]. They claimed that they
made arrangement with the Caloocan Police Station for the release of the truck and the cargo and they
were able to do that and the objective was achieved. This may be true but the Court thinks that [Orient
Freight] had enough time to investigate properly the incident. The hijacking incident happened on April
17, 200[2] and the tabloid Tempo published the hijacking incident only on April 19, 200[2]. This means
that [Orient Freight] had about two (2) days to conduct a diligent inquiry about the incident. It took
them until May 15, 200[2] to discover that a robbery indeed occurred resulting in the loss of ten pallets
or 218 cartons valued at US $34,226.14. They even denied that there was no police report only to find
out that on May 15, 200[2] that there was such a report. It was [Orient Freight] 's duty to inquire from
the Caloocan Police Station and to find out if they issued a police report, Yet, it was plaintiff Keihin which
furnished them a copy of the police report. The failure of [Orient Freight] to investigate properly the
incident and make a timely report constitutes negligence. Evidently, [Orient Freight] failed to exercise
due diligence in disclosing the true facts of the incident to plaintiff Keihin and Matsushita. As a result,
plaintiff Keihin suffered income losses by reason of Matsushita's cancellation of their contract which
primarily was caused by the negligence of [Orient Freight].[81]

The Court of Appeals affirmed the trial court's finding of negligence:

From the foregoing account, it is evident that [Orient Freight] not only had knowledge of the foiled
hijacking of the truck carrying the subject shipment but, more importantly, withheld said information
from [Keihin-Everett], Confronted with the April 19, 2002 tabloid account thereof, [Orient Freight]
appears to have further compounded its omission by misleading [Keihin-Everett] and Matsu[s]hita into
believing that the subject incident was irresponsibly reported and merely involved a stalled vehicle
which was towed to avoid obstruction of traffic. Given that the police report subsequently obtained by
[Keihin-Everett] was also dated April 17, 2002, [Orient Freight's insistence on its good faith on the
strength of the information it gathered from its employees as well as the timely shipment and supposed
good condition of the cargo clearly deserve scant consideration.[82]

Petitioner's argument that its acts were a "sound business judgment which the court cannot supplant or
question nor can it declare as a negligent act"[83] lacks merit. The Regional Trial Court found that the
circumstances should have alerted petitioner to investigate the incident in a more circumspect and
careful manner:

On this score, [Orient Freight] itself presented the circumstances which should have alerted [Orient
Freight] that there was more to the incident than simply a case of mechanical breakdown or towing of
the container truck to the police station. [Orient Freight] pointed to specific facts that would naturally
arouse suspicion that something was wrong when the container was found in the premises of the
Caloocan Police Station and that driver Ricky Cudas was nowhere to be found. The police does [sic] not
ordinarily impound a motor vehicle if the problem is merely a traffic violation. More important, driver
Ricky Cudas disappeared and was reported missing. When the Caloocan Police chanced upon the
container van, it was found straying at C-3 which is outside its usual route. All these circumstances
should have been enough for [Orient Freight] to inquire deeper on the real circumstances of the
incident.

....

[Orient Freight] talked to Rubelito Aquino and apparently failed to listen closely to the statement given
by their truck helper to the Caloocan Police. The truck helper recounted how the engine of the truck
stalled and the driver was able to start the engine but thereafter, he was nowhere to be seen. By this
circumstance alone, it should have become apparent to [Orient Freight] that the truck driver gypped the
truck helper into calling the company and had a different intention which was to run away with the
container van. It readily shows that Ricky Cudas intended to hijack the vehicle by feigning or giving the
false appearance of an engine breakdown. Yet, [Orient Freight] dismissed the incident as a simple case
of a unit breakdown and towing of vehicle allegedly due to traffic violation. Under the circumstances,
therefore, the defendant failed to exercise the degree of care, precaution and vigilance which the
situation demands.[84]

Despite the circumstances which would have cautioned petitioner to act with care while investigating
and reporting the hijacking incident, petitioner failed to do so. Petitioner is responsible for the damages
that respondent incurred due to the former's negligent performance of its obligation.

IV

Articles 2200 and 2201 of the Civil Code provide for the liability for damages in contractual obligations:

Article 2200. Indemnification for damages shall comprehend not only the value of the loss suffered, but
also that of the profits which the obligee failed to obtain.

Article 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good
faith is liable shall be those that are the natural and probable consequences of the breach of the
obligation, and which the parties have foreseen or could have reasonably foreseen at the time the
obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages
which may be reasonably attributed to the non-performance of the obligation.

In Central Bank of the Philippines v. Court of Appeals,[85] this Court explained the principles underlying
Articles 2200 and 2201:

Construing these provisions, the following is what this Court held in Cerrano vs. Tan Chuco, 38 Phil. 392:

"... Article 1106 (now 2200) of the Civil Code establishes the rule that prospective profits may be
recovered as damages, while article 1107 (now 2201) of the same Code provides that the damages
recoverable for the breach of obligations not originating in fraud (dolo) are those which were or might
have been foreseen at the time the contract was entered into. Applying these principles to the facts in
this case, we think that it is unquestionable that defendant must be deemed to have foreseen at the
time he made the contract that in the event of his failure to perform it, the plaintiff would be damaged
by the loss of the profit he might reasonably have expected to derive from its use.

"When the existence of a loss is established, absolute certainty as to its amount is not required. The
benefit to be derived from a contract which one of the parties has absolutely failed to perform is of
necessity to some extent, a matter of speculation, but the injured party is not to be denied all remedy
for that reason alone. He must produce the best evidence of which his case is susceptible and if that
evidence warrants the inference that he has been damaged by the loss of profits which he might with
reasonable certainty have anticipated but for the defendant's wrongful act, he is entitled to recover. As
stated in Sedgwick on Damages (Ninth Ed., par. 177):

'The general rule is, then, that a plaintiff may recover compensation for any gain which he can make it
appear with reasonable certainty the defendant's wrongful act prevented him from acquiring, . . .' (See
also Algarra vs. Sandejas, 27 Phil. Rep., 284, 289; Hicks vs. Manila Hotel Co., 28 Phil, Rep., 325.)" (At pp.
398-399.)[86]

The lower courts established that petitioner's negligence resulted in Matsushita's cancellation of its
contract with respondent. The Regional Trial Court found:

In the letter dated June 6, 2002, Matsushita pre-terminated its In-House Brokerage Service Agreement
with plaintiff Keihin for violation of the terms of said contract. Its President, KenGo Toda, stated that
because of the incident that happened on April 17, 2002 involving properties which the plaintiff failed to
inform them, Matsushita has lost confidence in plaintiff's capability to handle its brokerage and
forwarding requirements. There was clearly a breach of trust as manifested by plaintiff's failure to
disclose facts when it had the duty to reveal them and it constitutes fraud. Moreover, the negligence of
plaintiff personnel cannot be tolerated as Matsushita is bound to protect the integrity of the company.
[87]

It could be reasonably foreseen that the failure to disclose the true facts of an incident, especially when
it turned out that a crime might have been committed, would lead to a loss of trust and confidence in
the party which was bound to disclose these facts. Petitioner caused the loss of trust and confidence
when it misled respondent and Matsushita into believing that the incident had been irresponsibly
reported and merely involved a stalled truck.[88] Thus, petitioner is liable to respondent for the loss of
profit sustained due to Matsushita's termination of the In-House Brokerage Service Agreement.

As regards the amount of damages, this Court cannot rule on whether the Regional Trial Court erred in
using the Profit and Loss Statement submitted by respondent for its computation. The amount of the
award of damages is a factual matter generally not reviewable in a Rule 45 petition,[89] The damages
awarded by the Regional Trial Court, as affirmed by the Court of Appeals, were supported by
documentary evidence such as respondent's audited financial statement. The trial court clearly
explained how it reduced the respondent's claimed loss of profit and arrived at the damages to be
awarded:

The difference between the total gross revenue of plaintiff for 2002 as reported in the monthly profit
and loss statement of [P]14,801,744.00 and the audited profit and loss statement of the amount of
[P]10,434,144.00 represents 1/3 of the total gross revenues of the plaintiff for the six months period.
Accordingly, the net profit loss of [P]2.5 million pesos as reported in the monthly profit and loss
statement of the plaintiff should be reduced by 1/3 or the amount of [P]833,333.33. Therefore, the net
profit loss of the plaintiff for the remaining period of six months should only be the amount of [P]
1,666,667.70 and not [P]2.5 million as claimed.[90]

Petitioner has not sufficiently shown why the computation made by the trial court should be disturbed.

WHEREFORE, the petition is DENIED. The January 21, 2010 Decision and April 21, 2010 Resolution of the
Court of Appeals in CA-G.R. CV No. 91889 are AFFIRMED.

SO ORDERED.

Carpio (Chairperson), Peralta, Mendoza, and Martires, JJ., concur.

[1] Rollo, pp. 8-30.

[2] Id. at 32-43. The Decision, docketed as CA-G.R. CV No. 91889, was penned by Associate Justice
Rebecca De Guia-Salvador and concurred in by Associate Justices Estela M. Perlas-Bernabe (now an
Associate Justice of this Court) and Jane Aurora C. Lantion of the Sixth Division, Court of Appeals, Manila.

[3] Id. at 45-46. The Resolution was penned by Associate Justice Rebecca De Guia-Salvador and
concurred in by Associate Justices Estela M. Perlas-Bernabe (now an Associate Justice of this Court) and
Jane Aurora C. Lantion of the Former Sixth Division, Court of Appeals, Manila.

[4] Id. at 70-92. The Decision, docketed as Civil Case No. 02-105018, was rendered by Judge Virgilio M.
Alameda of Branch 10, Regional Trial Court, Manila.

[5] The Court of Appeals Decision refers to it as "Matsuhita."

[6] Rollo, p. 33.

[7] Id.

[8] Id.

[9] Referred to as "Rudelito Aquino" in the Court of Appeals Decision.

[10] Id. at 33.

[11] Id. at 34.

[12] Id.
[13] Id.

[14] Id.

[15] Id. at 34-35.

[16] Id. at 35.

[17] Id. at 70.

[18] Id. at 35.

[19] Id.

[20] Id. at 70-92.

[21] Id. at 86.

[22] Id. at 89.

[23] Id. at 92.

[24] Id. at 91.

[25] Id. at 32-43.

[26] Id. at 38.

[27] Id. at 39. The Court of Appeals Decision mentioned "August 17, 2002" but meant "April 17, 2002."

[28] Id. at 41.

[29] Id.

[30] Id. at 45-46.

[31] Id. at 15.

[32] Id. at 17-18.

[33] 311 Phil. 783 (1995) [Per J. Vitug, En Banc].

[34] Rollo, pp. 19-20.

[35] Id. at 23-24.

[36] Id. at 53-57.

[37] Id. at 53.

[38] Id. at 55.

[39] Id. at 59-62.

[40] Id. at 60.

[41] Id. at 65.

[42] Id. at 67-68.

[43] Section 4 of Rule 45 of the Rules of Court states, in part:

Section 4. Contents of petition. - The petition shall be filed in eighteen (18) copies, with the original copy
intended for the court being indicated as such by the petitioner, and shall (a) state the full name of the
appealing party as the petitioner and the adverse party as respondent, without impleading the lower
courts or judges thereof either as petitioners or respondents[.] (Emphasis supplied)

[44] 617 Phil. 543 (2009) [Per J. Brion, En Banc].

[45] Id. at 552-553.

[46] Spouses Batal v. Spouses Tominaga, 534 Phil. 798, 804 (2006) [Per J. Austria-Martinez, First
Division].

[47] Id.

[48] Id.
[49] Id. at 804-805.

[50] Fores v. Miranda, 105 Phil. 266, 275 (1959) [Per J. Reyes, J.B.L., En Banc].

[51] Consolidated Bank and Trust Corp. v. Court of Appeals, 457 Phi]. 688, 708 (2003) [Per J. Carpio, First
Division].

[52] 700 Phil. 327 (2012) [Per J. Perez, Second Division].

[53] Id. at 357-358.

[54] 417 Phil. 662 (2001) [Per J. Pardo, First Division].

[55] Id. at 670-671.

[56] 291 Phil. 653 (1993) [Per J. Campos, Jr., Second Division].

[57] Id. at 659-660.

[58] Singson v. Bank of the Philippine Islands, 132 Phil. 597, 599-600 (1968) [Per J. Concepcion, En Banc].

[59] 38 Phil. 768 (1918) [Per J. Fisher, En Banc].

[60] Id. at 779-781.

[61] The general formulation of this principle is "the act that breaks the contract may also be a tort" (Air
France v. Carrascoso, 124 Phil. 722, 739 (1966) [Per J. Sanchez, En Banc]). The use of the word "tort"
instead of "quasi-delict" is significant since this Court has noted that a "quasi-delict, as defined in Article
2176 of the Civil Code ... is homologous but not identical to tort under the common law, which includes
not only negligence, but also intentional criminal acts, such as assault and battery, false imprisonment,
and deceit." (Coca-Cola Bottlers Philippines, Inc. v. Court of Appeals, 298 Phil. 52, 61 (1993) [Per J.
Davide, Jr., First Division], citing the Report of the Code Commission on the Proposed Civil Code of the
Philippines).

[62] See American Express International, Inc. v. Cordero, 509 Phil. 619 (2005) [Per J. Sandoval-Gutierrez,
Third Division]; Singson v. Bank of the Philippine Islands, 132 Phil. 597 (1968) [Per J. Concepcion, En
Banc]; Coca-Cola Bottlers Philippines, Inc. v. Court of Appeals, 298 Phil. 52 (1993) [Per J. Davide, Jr., First
Division]; Light Rail Transit Authority v. Navidad, 445 Phil. 31 (2003) [Per J. Vitug, First Division].

[63] 132 Phil. 597 (1968) [Per J. Concepcion, En Banc].

[64] Id. at 599-600.

[65] Far East Bank and Trust Company v. Court of Appeals, 311 Phil. 783, 792-793 (1995) [Per J. Vitug, En
Banc].

[66] 282 Phil. 759 (1992) [Per J. Padilla, Second Division].

[67] Id. at 765-766.

[68] Id.

[69] 311 Phil. 783 (1995) [Per J. Vitug, En Banc].

[70] CIVIL CODE, art. 2220 states:

Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the court
should find that, under the circumstances, such damages are justly due. The same rule applies to
breaches of contract where the defendant acted fraudulently or in bad faith.

[71] Far East Bank and Trust Company v. Court of Appeals, 311 Phil. 783, 788-793 (1995) [Per J. Vitug, En
Banc].

[72] Rollo, pp. 17-18.

[73] Id. at 76.

[74] Id. at 33-34.

[75] Id. at 88.

[76] Id. at 91.

[77] Filinvest Land, Inc. v. Flood-Affected Homeowners of Meritville Alliance, 556 Phil. 622, 628 (2007)
[Per J. Sandoval-Gutierrez, First Division].

[78] CIVIL CODE, art. 1173.

[79] United Coconut Planters Bank v. Ramos, 461 Phil. 277, 295 (2003) [Per J. Callejo, Second Division].

[80] Garcia, Jr. v. Salvador, 547 Phil. 463, 469-470 (2007) [Per J. Ynares-Santiago, Third Division].
[81] Rollo, p. 86. While this paragraph stated that the year was 2001, the trial court indicated 2002
throughout the Decision.

[82] Id. at 38-39.

[83] Id. at 20.

[84] Id. at 84-86.

[85] 159-A Phil. 21 (1975) [Per J. Barredo, Second Division].

[86] Id. at 50-51.

[87] Rollo, p. 83.

[88] Id. at 38.

[89] Spouses Lam v. Kodak Philippines, Ltd., G.R. No. 167615, January 11, 2016, 778 SCRA 96, 126 [Per J.
Leonen, Second Division].

[90] Rollo, p. 90.

© Supreme Court E-Library 2019

This website was designed and developed, and is maintained, by the E-Library Technical Staff in
collaboration with the Management Information Systems Office.