G.R. No. L-25142 March 25, 1975
Tomas, The owners and managers of an
PHILIPPINE RABBIT BUS LINES, INC.
and FELIX PANGALANGAN, plaintiffs-
appellants,
vs.
PHIL-AMERICAN FORWARDERS, INC.,
ARCHIMEDES J. BALINGIT and
FERNANDO PINEDA, defendants-
appellees.
Angel A. Sison for plaintiffs-
appellants.
Fidel Zosimo U. Canilao for
defendants-appellees.
AQUINO, J.:ñé+.£ªwph!1
Philippine Rabbit Bus Lines, Inc. and Felix
Pangalangan appealed on pure questions
of law from the order of the Court of First
Instance of Tarlac, dismissing their
complaint against Archimedes J. Balingit.
The dismissal was based on the ground
that Balingit as the manager of Phil-
American Forwarders, Inc., which together
with Fernando Pineda and Balingit, was
sued for damages in an action based on
quasi-delict or culpa aquiliana, is not the
manager of an establishment
contemplated in article 2180 of the Civil
Code (Civil Case No. 3865).
In the complaint for damages filed by the
bus company and Pangalangan against
Phil-American Forwarders, Inc., Balingit
and Pineda, it was alleged that on
November 24, 1962, Pineda drove
recklessly a freight truck, owned by Phil-
American Forwarders, Inc., along the
national highway at Sto.
Pampanga. The truck bumped the bus
driven by Pangalangan, which was owned
by Philippine Rabbit Bus Lines, Inc. As a
result of the bumping, Pangalangan
suffered injuries and the bus was
damaged and could not be used for
seventy-nine days, thus depriving the
company of earnings amounting to
P8,665.51. Balingit was the manager of
Phil-American Forwarders, Inc.
Among the defenses interposed by the
defendants in their answer was that
Balingit was not Pineda's employer.
Balingit moved that the complaint against
him be dismissed on the ground that the
bus company and the bus driver had no
cause of action against him. As already
stated, the lower court dismissed the
action as to Balingit. The bus company
and its driver appealed.
The Civil Code provides:têñ.£îhqwâ£
ART. 2176. Whoever by act or omission
causes damage to another, there being
fault or negligence, is obliged to pay for
the damage done. Such fault or
negligence, if there is no pre-existing
contractual relation between the parties,
is called a quasi-delict and is governed by
the provisions of this Chapter.
ART. 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
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.
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)
The novel and unprecedented legal issue
in this appeal is whether the terms
"employers" and "owners and managers of
an establishment or enterprise" (dueños o
directores de un establicimiento o
empresa) used in article 2180 of the Civil
Code, formerly article 1903 of the old
Code, embrace the manager of a
corporation owning a truck, the reckless
operation of which allegedly resulted in
the vehicular accident from which the
damage arose.
We are of the opinion that those terms do
not include the manager of a corporation.
It may be gathered from the context of
article 2180 that the term "manager"
("director" in the Spanish version) is used
in the sense of "employer".
Hence, under the allegations of the Balingit and his wife should be treated as
complaint, no tortious or quasi-delictual one and the same civil personality.
liability can be fastened on Balingit as
We cannot countenance that argument in
manager of Phil-American Forwarders,
this appeal. It was not raised in the lower
Inc., in connection with the vehicular
court. The case has to be decided on the
accident already mentioned because he
basis of the pleadings filed in the trial
himself may be regarded as an employee
court where it was assumed that Phil-
or dependiente of his employer, Phil-
American Forwarders, Inc. has a
American Forwarders, Inc.
personality separate and distinct from that
Thus, it was held "que es dependiente, a of the Balingit spouses.
los efectos de la responsabilidad
The legal issue, which the plaintiffs-
subsidiaria establecida en el num 3.0 del
appellants can ventilate in this appeal, is
(art.) 1903, el director de un periodico
one which was raised in the lower court
explotado por una sociedad, porque
and which is within the issues framed by
cualquiera que sea su jerarquia y aunque
the parties (Sec. 18, Rule 46, Rules of
Ileve la direccion de determinadas
Court).
convicciones politicas no por eso deja de
estar subordinado a la superior autoridad When a party deliberately adopts a certain
de la Empresa" (Decision of Spanish theory and the case is decided upon that
Supreme Court dated December 6, 1912 theory in the court below, he will not be
cited in 12 Manresa, Codigo Civil Español permitted to change his theory on appeal
5th Ed. 662; 1913 Enciclopedia Juridica because, to permit him to do so, could be
Española 992). unfair to the adverse party (2 Moran's
Comments on the Rules of Court, 1970
The bus company and its driver, in their
Ed. p. 505).
appellants' brief, injected a new factual
issue which was not alleged in their WHEREFORE, the lower court's order of
complaint. They argue that Phil- American dismissal is affirmed. Costs against the
Forwarders, Inc. is merely a business plaintiffs-appellants.
conduit of Balingit because out of its
capital stock with a par value of P41,200, SO ORDERED.
Balingit and his wife had subscribed
P40,000 and they paid P10,000 on their
subscription, while the other
incorporators, namely, Rodolfo Limjuco,
Ponciano Caparas and Rafael Suntay paid
P250.25 and P25, respectively.

That argument implies that the veil of

corporate fiction should be pierced and
that Phil-American Forwarders, Inc. and
G.R. No. 124354 December 29, 1999 The antecedent facts as summarized by the
ROGELIO E. RAMOS and ERLINDA trial court are reproduced hereunder:
RAMOS, in their own behalf and as Plaintiff Erlinda Ramos was, until the
natural guardians of the minors, afternoon of June 17, 1985, a 47-year old
ROMMEL RAMOS, ROY RODERICK (Exh. "A") robust woman (TSN, October
RAMOS and RON RAYMOND 19, 1989, p. 10). Except for occasional
RAMOS, petitioners, complaints of discomfort due to pains
vs. allegedly caused by the presence of a stone
COURT OF APPEALS, DELOS SANTOS in her gall bladder (TSN, January 13, 1988,
MEDICAL CENTER, DR. ORLINO pp. 4-5), she was as normal as any other
HOSAKA and DRA. PERFECTA woman. Married to Rogelio E. Ramos, an
GUTIERREZ, respondents. executive of Philippine Long Distance
Telephone Company, she has three
KAPUNAN, J.: children whose names are Rommel Ramos,
The Hippocratic Oath mandates physicians Roy Roderick Ramos and Ron Raymond
to give primordial consideration to the Ramos (TSN, October 19, 1989, pp. 5-6).
health and welfare of their patients. If a Because the discomforts somehow
doctor fails to live up to this precept, he is interfered with her normal ways, she
made accountable for his acts. A mistake, sought professional advice. She was
through gross negligence or incompetence advised to undergo an operation for the
or plain human error, may spell the removal of a stone in her gall bladder (TSN,
difference between life and death. In this January 13, 1988, p. 5). She underwent a
sense, the doctor plays God on his patient's series of examinations which included
fate. 1 blood and urine tests (Exhs. "A" and "C")
In the case at bar, the Court is called upon which indicated she was fit for surgery.
to rule whether a surgeon, an Through the intercession of a mutual
anesthesiologist and a hospital should be friend, Dr. Buenviaje (TSN, January 13,
made liable for the unfortunate comatose 1988, p. 7), she and her husband Rogelio
condition of a patient scheduled for met for the first time Dr. Orlino Hozaka
cholecystectomy. 2 (should be Hosaka; see TSN, February 20,
Petitioners seek the reversal of the 1990, p. 3), one of the defendants in this
decision 3 of the Court of Appeals, dated 29 case, on June 10, 1985. They agreed that
May 1995, which overturned the their date at the operating table at the
decision 4 of the Regional Trial Court, dated DLSMC (another defendant), would be on
30 January 1992, finding private June 17, 1985 at 9:00 A.M.. Dr. Hosaka
respondents liable for damages arising decided that she should undergo a
from negligence in the performance of their "cholecystectomy" operation after
professional duties towards petitioner examining the documents (findings from
Erlinda Ramos resulting in her comatose the Capitol Medical Center, FEU Hospital
condition. and DLSMC) presented to him. Rogelio E.
Ramos, however, asked Dr. Hosaka to look
for a good anesthesiologist. Dr. Hosaka, in
turn, assured Rogelio that he will get a
good anesthesiologist. Dr. Hosaka charged
a fee of P16,000.00, which was to include
the anesthesiologist's fee and which was to
be paid after the operation (TSN, October
19, 1989, pp. 14-15, 22-23, 31-33; TSN,
February 27, 1990, p. 13; and TSN,
November 9, 1989, pp. 3-4, 10, 17).
A day before the scheduled date of
operation, she was admitted at one of the
rooms of the DLSMC, located along E.
Rodriguez Avenue, Quezon City (TSN,
October 19,1989, p. 11).
At around 7:30 A.M. of June 17, 1985 and
while still in her room, she was prepared
for the operation by the hospital staff. Her
sister-in-law, Herminda Cruz, who was the
Dean of the College of Nursing at the
Capitol Medical Center, was also there for
moral support. She reiterated her previous
request for Herminda to be with her even
during the operation. After praying, she
was given injections. Her hands were held
by Herminda as they went down from her
room to the operating room (TSN, January
13, 1988, pp. 9-11). Her husband, Rogelio,
was also with her (TSN, October 19, 1989,
p. 18). At the operating room, Herminda
saw about two or three nurses and Dr.
Perfecta Gutierrez, the other defendant,
who was to administer anesthesia.
Although not a member of the hospital
staff, Herminda introduced herself as Dean
of the College of Nursing at the Capitol
Medical Center who was to provide moral
support to the patient, to them. Herminda
was allowed to stay inside the operating
room.
At around 9:30 A.M., Dr. Gutierrez reached
a nearby phone to look for Dr. Hosaka who
was not yet in (TSN, January 13, 1988, pp.
11-12). Dr. Gutierrez thereafter informed
Herminda Cruz about the prospect of a
delay in the arrival of Dr. Hosaka.
Herminda then went back to the patient
who asked, "Mindy, wala pa ba ang
Doctor"? The former replied, "Huwag kang
mag-alaala, darating na iyon" (Ibid.).
Thereafter, Herminda went out of the
operating room and informed the patient's
husband, Rogelio, that the doctor was not
yet around (id., p. 13). When she returned
to the operating room, the patient told her,
"Mindy, inip na inip na ako, ikuha mo ako
ng ibang Doctor." So, she went out again
and told Rogelio about what the patient
said (id., p. 15). Thereafter, she returned
to the operating room.
At around 10:00 A.M., Rogelio E. Ramos
was "already dying [and] waiting for the
arrival of the doctor" even as he did his
best to find somebody who will allow him
to pull out his wife from the operating room
(TSN, October 19, 1989, pp. 19-20). He
also thought of the feeling of his wife, who
was inside the operating room waiting for
the doctor to arrive (ibid.). At almost 12:00
noon, he met Dr. Garcia who remarked that
he (Dr. Garcia) was also tired of waiting for
Dr. Hosaka to arrive (id., p. 21). While
talking to Dr. Garcia at around 12:10 P.M.,
he came to know that Dr. Hosaka arrived
as a nurse remarked, "Nandiyan na si Dr.
Hosaka, dumating na raw." Upon hearing
those words, he went down to the lobby
and waited for the operation to be
completed (id., pp. 16, 29-30).
At about 12:15 P.M., Herminda Cruz, who
was inside the operating room with the
patient, heard somebody say that "Dr.
Hosaka is already here." She then saw
people inside the operating room "moving,
doing this and that, [and] preparing the
patient for the operation" (TSN, January
13, 1988, p. 16). As she held the hand of
Erlinda Ramos, she then saw Dr. Gutierrez
intubating the hapless patient. She
thereafter heard Dr. Gutierrez say, "ang
hirap ma-intubate nito, mali yata ang
pagkakapasok. O lumalaki ang tiyan" (id.,
p. 17). Because of the remarks of Dra.
Gutierrez, she focused her attention on
what Dr. Gutierrez was doing. She
thereafter noticed bluish discoloration of
the nailbeds of the left hand of the hapless
Erlinda even as Dr. Hosaka approached
her. She then heard Dr. Hosaka issue an
order for someone to call Dr. Calderon,
another anesthesiologist (id., p. 19). After
Dr. Calderon arrived at the operating room,
she saw this anesthesiologist trying to
intubate the patient. The patient's nailbed
became bluish and the patient was placed
in a trendelenburg position — a position
where the head of the patient is placed in
a position lower than her feet which is an
indication that there is a decrease of blood
supply to the patient's brain (Id., pp. 19-
20). Immediately thereafter, she went out
of the operating room, and she told Rogelio
E. Ramos "that something wrong was . . .
happening" (Ibid.). Dr. Calderon was then
able to intubate the patient (TSN, July 25,
1991, p. 9).
Meanwhile, Rogelio, who was outside the
operating room, saw a respiratory machine
being rushed towards the door of the
operating room. He also saw several
doctors rushing towards the operating
room. When informed by Herminda Cruz
that something wrong was happening, he
told her (Herminda) to be back with the
patient inside the operating room (TSN,
October 19, 1989, pp. 25-28).
Herminda Cruz immediately rushed back,
and saw that the patient was still in
trendelenburg position (TSN, January 13,
1988, p. 20). At almost 3:00 P.M. of that
fateful day, she saw the patient taken to
the Intensive Care Unit (ICU).
About two days thereafter, Rogelio E.
Ramos was able to talk to Dr. Hosaka. The
latter informed the former that something
went wrong during the intubation. Reacting
to what was told to him, Rogelio reminded
the doctor that the condition of his wife
would not have happened, had he (Dr.
Hosaka) looked for a good anesthesiologist
(TSN, October 19, 1989, p. 31).
Doctors Gutierrez and Hosaka were also
asked by the hospital to explain what
happened to the patient. The doctors
explained that the patient had
bronchospasm (TSN, November 15, 1990,
pp. 26-27).
Erlinda Ramos stayed at the ICU for a
month. About four months thereafter or on
November 15, 1985, the patient was
released from the hospital.
During the whole period of her
confinement, she incurred hospital bills
amounting to P93,542.25 which is the
subject of a promissory note and affidavit
of undertaking executed by Rogelio E.
Ramos in favor of DLSMC. Since that fateful
afternoon of June 17, 1985, she has been
in a comatose condition. She cannot do
anything. She cannot move any part of her
body. She cannot see or hear. She is living
on mechanical means. She suffered brain
damage as a result of the absence of
oxygen in her brain for four to five minutes
(TSN, November 9, 1989, pp. 21-22). After
being discharged from the hospital, she has
been staying in their residence, still
needing constant medical attention, with
her husband Rogelio incurring a monthly
expense ranging from P8,000.00 to
P10,000.00 (TSN, October 19, 1989, pp.
32-34). She was also diagnosed to be
suffering from "diffuse cerebral
parenchymal damage" (Exh. "G"; see
also TSN, December 21, 1989,
p. 6). 5
Thus, on 8 January 1986, petitioners filed
a civil case 6 for damages with the Regional
Trial Court of Quezon City against herein
private respondents alleging negligence in
the management and care of Erlinda
Ramos.
During the trial, both parties presented
evidence as to the possible cause of
Erlinda's injury. Plaintiff presented the
testimonies of Dean Herminda Cruz and Dr.
Mariano Gavino to prove that the sustained
by Erlinda was due to lack of oxygen in her
brain caused by the faulty management of
her airway by private respondents during
the anesthesia phase. On the other hand,
private respondents primarily relied on the
expert testimony of Dr. Eduardo Jamora, a
pulmonologist, to the effect that the cause
of brain damage was Erlinda's allergic
reaction to the anesthetic agent,
Thiopental Sodium (Pentothal).
After considering the evidence from both
sides, the Regional Trial Court rendered
judgment in favor of petitioners, to wit:
After evaluating the evidence as shown in
the finding of facts set forth earlier, and
applying the aforecited provisions of law
and jurisprudence to the case at bar, this
Court finds and so holds that defendants
are liable to plaintiffs for damages. The
defendants were guilty of, at the very least,
negligence in the performance of their duty
to plaintiff-patient Erlinda Ramos.
On the part of Dr. Perfecta Gutierrez, this
Court finds that she omitted to exercise
reasonable care in not only intubating the
patient, but also in not repeating the
administration of atropine (TSN, August
20, 1991, pp. 5-10), without due regard to
the fact that the patient was inside the
operating room for almost three (3) hours.
For after she committed a mistake in
intubating [the] patient, the patient's
nailbed became bluish and the patient,
thereafter, was placed in trendelenburg
position, because of the decrease of blood
supply to the patient's brain. The evidence
further shows that the hapless patient
suffered brain damage because of the
absence of oxygen in her (patient's) brain
for approximately four to five minutes
which, in turn, caused the patient to
become comatose.
On the part of Dr. Orlino Hosaka, this Court
finds that he is liable for the acts of Dr.
Perfecta Gutierrez whom he had chosen to
administer anesthesia on the patient as
part of his obligation to provide the patient
a good anesthesiologist', and for arriving
for the scheduled operation almost three
(3) hours late.
On the part of DLSMC (the hospital), this
Court finds that it is liable for the acts of
negligence of the doctors in their "practice
of medicine" in the operating room.
Moreover, the hospital is liable for failing
through its responsible officials, to cancel
the scheduled operation after Dr. Hosaka
inexcusably failed to arrive on time.
In having held thus, this Court rejects the
defense raised by defendants that they
have acted with due care and prudence in
rendering medical services to plaintiff-
patient. For if the patient was properly
intubated as claimed by them, the patient
would not have become comatose. And,
the fact that another anesthesiologist was
called to try to intubate the patient after
her (the patient's) nailbed turned bluish,
belie their claim. Furthermore, the
defendants should have rescheduled the
operation to a later date. This, they should
have done, if defendants acted with due
care and prudence as the patient's case
was an elective, not an emergency case.
xxx xxx xxx
WHEREFORE, and in view of the foregoing,
judgment is rendered in favor of the
plaintiffs and against the defendants.
Accordingly, the latter are ordered to pay,
jointly and severally, the former the
following sums of money, to wit:
1) the sum of P8,000.00 as actual monthly
expenses for the plaintiff Erlinda Ramos
reckoned from November 15, 1985 or in
the total sum of P632,000.00 as of April 15,
1992, subject to its being updated;
2) the sum of P100,000.00 as reasonable
attorney's fees;
3) the sum of P800,000.00 by way of moral
damages and the further sum of
P200,000,00 by way of exemplary
damages; and,
4) the costs of the suit.
SO ORDERED. 7
Private respondents seasonably interposed
an appeal to the Court of Appeals. The
appellate court rendered a Decision, dated
29 May 1995, reversing the findings of the
trial court. The decretal portion of the
decision of the appellate court reads:
WHEREFORE, for the foregoing premises
the appealed decision is hereby REVERSED,
and the complaint below against the
appellants is hereby ordered DISMISSED.
The counterclaim of appellant De Los
Santos Medical Center is GRANTED but only
insofar as appellees are hereby ordered to
pay the unpaid hospital bills amounting to
P93,542.25, plus legal interest for justice
must be tempered with mercy.
SO ORDERED. 8
The decision of the Court of Appeals was
received on 9 June 1995 by petitioner
Rogelio Ramos who was mistakenly
addressed as "Atty. Rogelio Ramos." No
copy of the decision, however, was sent nor
received by the Coronel Law Office, then
counsel on record of petitioners. Rogelio
referred the decision of the appellate court
to a new lawyer, Atty. Ligsay, only on 20
June 1995, or four (4) days before the
expiration of the reglementary period for
filing a motion for reconsideration. On the
same day, Atty. Ligsay, filed with the
appellate court a motion for extension of
time to file a motion for reconsideration.
The motion for reconsideration was
submitted on 4 July 1995. However, the
appellate court denied the motion for
extension of time in its Resolution dated 25
July 1995. 9 Meanwhile, petitioners
engaged the services of another counsel,
Atty. Sillano, to replace Atty. Ligsay. Atty.
Sillano filed on 7 August 1995 a motion to
admit the motion for reconsideration
contending that the period to file the
appropriate pleading on the assailed
decision had not yet commenced to run as
the Division Clerk of Court of the Court of
Appeals had not yet served a copy thereof
to the counsel on record. Despite this
explanation, the appellate court still denied
the motion to admit the motion for
reconsideration of petitioners in its
Resolution, dated 29 March 1996, primarily
on the ground that the fifteen-day (15)
period for filing a motion for
reconsideration had already expired, to
wit:
We said in our Resolution on July 25, 1995,
that the filing of a Motion for
Reconsideration cannot be extended;
precisely, the Motion for Extension (Rollo,
p. 12) was denied. It is, on the other hand,
admitted in the latter Motion that
plaintiffs/appellees received a copy of the
decision as early as June 9, 1995.
Computation wise, the period to file a
Motion for Reconsideration expired on June
24. The Motion for Reconsideration, in turn,
was received by the Court of Appeals
already on July 4, necessarily, the 15-day
period already passed. For that alone, the
latter should be denied.
Even assuming admissibility of the Motion
for the Reconsideration, but after
considering the Comment/Opposition, the
former, for lack of merit, is hereby DENIED.
SO ORDERED. 10
A copy of the above resolution was
received by Atty. Sillano on 11 April 1996.
The next day, or on 12 April 1996, Atty.
Sillano filed before this Court a motion for
extension of time to file the present petition
for certiorari under Rule 45. The Court
granted the motion for extension of time
and gave petitioners additional thirty (30)
days after the expiration of the fifteen-day
(15) period counted from the receipt of the
resolution of the Court of Appeals within
which to submit the petition. The due date
fell on 27 May 1996. The petition was filed
on 9 May 1996, well within the extended
period given by the Court.
Petitioners assail the decision of the Court
of Appeals on the following grounds:
I
IN PUTTING MUCH RELIANCE ON THE
TESTIMONIES OF RESPONDENTS DRA.
GUTIERREZ, DRA. CALDERON AND DR.
JAMORA;
II
IN FINDING THAT THE NEGLIGENCE OF
THE RESPONDENTS DID NOT CAUSE THE
UNFORTUNATE COMATOSE CONDITION OF
PETITIONER ERLINDA RAMOS;
III
IN NOT APPLYING THE DOCTRINE OF RES
IPSA LOQUITUR. 11
Before we discuss the merits of the case,
we shall first dispose of the procedural
issue on the timeliness of the petition in
relation to the motion for reconsideration
filed by petitioners with the Court of
Appeals. In their
Comment, 12 private respondents contend
that the petition should not be given due
course since the motion for reconsideration
of the petitioners on the decision of the
Court of Appeals was validly dismissed by
the appellate court for having been filed
beyond the reglementary period. We do not
agree.
A careful review of the records reveals that
the reason behind the delay in filing the
motion for reconsideration is attributable to
the fact that the decision of the Court of
Appeals was not sent to then counsel on
record of petitioners, the Coronel Law
Office. In fact, a copy of the decision of the
appellate court was instead sent to and
received by petitioner Rogelio Ramos on 9
June 1995 wherein he was mistakenly
addressed as Atty. Rogelio Ramos. Based
on the other communications received by
petitioner Rogelio Ramos, the appellate
court apparently mistook him for the
counsel on record. Thus, no copy of the
decision of the counsel on record.
Petitioner, not being a lawyer and unaware
of the prescriptive period for filing a motion
for reconsideration, referred the same to a
legal counsel only on 20 June 1995.
It is elementary that when a party is
represented by counsel, all notices should
be sent to the party's lawyer at his given
address. With a few exceptions, notice to a
litigant without notice to his counsel on
record is no notice at all. In the present
case, since a copy of the decision of the
appellate court was not sent to the counsel
on record of petitioner, there can be no
sufficient notice to speak of. Hence, the
delay in the filing of the motion for
reconsideration cannot be taken against
petitioner. Moreover, since the Court of
Appeals already issued a second
Resolution, dated 29 March 1996, which
superseded the earlier resolution issued on
25 July 1995, and denied the motion for
reconsideration of petitioner, we believed
that the receipt of the former should be
considered in determining the timeliness of
the filing of the present petition. Based on
this, the petition before us was submitted
on time.
After resolving the foregoing procedural
issue, we shall now look into the merits of
the case. For a more logical presentation of
the discussion we shall first consider the
issue on the applicability of the doctrine
of res ipsa loquitur to the instant case.
Thereafter, the first two assigned errors
shall be tackled in relation to the res ipsa
loquitur doctrine.
Res ipsa loquitur is a Latin phrase which
literally means "the thing or the transaction
speaks for itself." The phrase "res ipsa
loquitur'' is a maxim for the rule that the
fact of the occurrence of an injury, taken
with the surrounding circumstances, may
permit an inference or raise a presumption
of negligence, or make out a for, and relieves a plaintiff of, the burden
plaintiff's prima facie case, and present a
question of fact for defendant to meet with
an explanation. 13 Where the thing which
caused the injury complained of is shown
to be under the management of the
defendant or his servants and the accident
is such as in ordinary course of things does
not 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 or was caused
by the defendant's want of care. 14
The doctrine of res ipsa loquitur is simply a
recognition of the postulate that, as a
matter of common knowledge and
experience, the very nature of certain
types of occurrences may justify an
inference of negligence on the part of the
person who controls the instrumentality
causing the injury in the absence of some
explanation by the defendant who is
charged with negligence. 15 It is grounded
in the superior logic of ordinary human
experience and on the basis of such
experience or common knowledge,
negligence may be deduced from the mere
occurrence of the accident
itself. 16
Hence, res ipsa loquitur is applied
in conjunction with the doctrine of common
knowledge.
However, much has been said that res ipsa
loquitur is not a rule of substantive law
and, as such, does not create or constitute
an independent or separate ground of
liability. 17 Instead, it is considered as
merely evidentiary or in the nature of a
procedural rule. 18 It is regarded as a mode
of proof, or a mere procedural of
convenience since it furnishes a substitute
of producing specific proof of
negligence. 19 In other words, mere
invocation and application of the doctrine
does not dispense with the requirement of
proof of negligence. It is simply a step in
the process of such proof, permitting the
plaintiff to present along with the proof of
the accident, enough of the attending
circumstances to invoke the doctrine,
creating an inference or presumption of
negligence, and to thereby place on the
defendant the burden of going forward with
the proof. 20 Still, before resort to the
doctrine may be allowed, the following
requisites must be satisfactorily shown:
1. The accident is of a kind which ordinarily
does not occur in the absence of someone's
negligence;
2. It is caused by an instrumentality within
the exclusive control of the defendant or
defendants; and
3. The possibility of contributing conduct
which would make the plaintiff responsible
is eliminated. 21
In the above requisites, the fundamental
element is the "control of instrumentality"
which caused the damage. 22 Such element
of control must be shown to be within the
dominion of the defendant. In order to
have the benefit of the rule, a plaintiff, in
addition to proving injury or damage, must
show a situation where it is applicable, and
must establish that the essential elements
of the doctrine were present in a particular
incident. 23
Medical malpractice 24 cases do not escape
the application of this doctrine. Thus, res
ipsa loquitur has been applied when the
circumstances attendant upon the harm
are themselves of such a character as to
justify an inference of negligence as the
cause of that harm. 25 The application
of res ipsa loquitur in medical negligence
cases presents a question of law since it is
a judicial function to determine whether a
certain set of circumstances does, as a
matter of law, permit a given inference. 26
Although generally, expert medical
testimony is relied upon in malpractice
suits to prove that a physician has done a
negligent act or that he has deviated from
the standard medical procedure, when the
doctrine of res ipsa loquitur is availed by
the plaintiff, the need for expert medical
testimony is dispensed with because the
injury itself provides the proof of
negligence. 27 The reason is that the
general rule on the necessity of expert
testimony applies only to such matters
clearly within the domain of medical
science, and not to matters that are within
the common knowledge of mankind which
may be testified to by anyone familiar with
the facts. 28 Ordinarily, only physicians and
surgeons of skill and experience are
competent to testify as to whether a
patient has been treated or operated upon
with a reasonable degree of skill and care.
However, testimony as to the statements
and acts of physicians and surgeons,
external appearances, and manifest
conditions which are observable by any one
may be given by non-expert
witnesses. 29 Hence, in cases where the res
ipsa loquitur is applicable, the court is
permitted to find a physician negligent
upon proper proof of injury to the patient,
without the aid of expert testimony, where
the court from its fund of common
knowledge can determine the proper
standard of care. 30 Where common
knowledge and experience teach that a
resulting injury would not have occurred to
the patient if due care had been exercised,
an inference of negligence may be drawn
giving rise to an application of the doctrine
of res ipsa loquitur without medical
evidence, which is ordinarily required to
show not only what occurred but how and
why it occurred. 31 When the doctrine is
appropriate, all that the patient must do is
prove a nexus between the particular act or
omission complained of and the injury
sustained while under the custody and
management of the defendant without
need to produce expert medical testimony
to establish the standard of care. Resort
to res ipsa loquitur is allowed because
there is no other way, under usual and
ordinary conditions, by which the patient
can obtain redress for injury suffered by
him.
Thus, courts of other jurisdictions have
applied the doctrine in the following
situations: leaving of a foreign object in the
body of the patient after an
operation, 32
injuries sustained on a treatment.
healthy part of the body which was not
under, or in the area, of
treatment, 33 removal of the wrong part of
the body when another part was
intended, 34 knocking out a tooth while a
patient's jaw was under anesthetic for the
removal of his tonsils, 35 and loss of an eye
while the patient plaintiff was under the
influence of anesthetic, during or following
an operation for appendicitis, 36 among
others.
Nevertheless, despite the fact that the
scope of res ipsa loquitur has been
measurably enlarged, it does not
automatically apply to all cases of medical
negligence as to mechanically shift the
burden of proof to the defendant to show
that he is not guilty of the ascribed
negligence. Res ipsa loquitur is not a rigid
or ordinary doctrine to be perfunctorily
used but a rule to be cautiously applied,
depending upon the circumstances of each
case. It is generally restricted to situations
in malpractice cases where a layman is able
to say, as a matter of common knowledge
and observation, that the consequences of
professional care were not as such as
would ordinarily have followed if due care
had been
exercised. 37 A distinction must be made
between the failure to secure results, and
the occurrence of something more unusual
and not ordinarily found if the service or
treatment rendered followed the usual
procedure of those skilled in that particular
practice. It must be conceded that the
doctrine of res ipsa loquitur can have no
application in a suit against a physician or
surgeon which involves the merits of a
diagnosis or of a scientific
38
The physician or surgeon is
not required at his peril to explain why any
particular diagnosis was not correct, or why
any particular scientific treatment did not
produce the desired result. 39 Thus, res
ipsa loquitur is not available in a
malpractice suit if the only showing is that
the desired result of an operation or
treatment was not accomplished. 40 The
real question, therefore, is whether or not
in the process of the operation any
extraordinary incident or unusual event
outside of the routine performance
occurred which is beyond the regular scope
of customary professional activity in such
operations, which, if unexplained would
themselves reasonably speak to the
average man as the negligent cause or
causes of the untoward consequence. 41 If
there was such extraneous interventions,
the doctrine of res ipsa loquitur may be
utilized and the defendant is called upon to
explain the matter, by evidence of
exculpation, if he could. 42
We find the doctrine of res ipsa
loquitur appropriate in the case at bar. As
will hereinafter be explained, the damage
sustained by Erlinda in her brain prior to a
scheduled gall bladder operation presents
a case for the application of res ipsa
loquitur.
A case strikingly similar to the one before
us is Voss vs. Bridwell, 43 where the
Kansas Supreme Court in applying the res
ipsa loquitur stated:
The plaintiff herein submitted himself for a
mastoid operation and delivered his person
over to the care, custody and control of his
physician who had complete and exclusive
control over him, but the operation was
never performed. At the time of submission
he was neurologically sound and physically
fit in mind and body, but he suffered
irreparable damage and injury rendering
him decerebrate and totally incapacitated.
The injury was one which does not
ordinarily occur in the process of a mastoid
operation or in the absence of negligence
in the administration of an anesthetic, and
in the use and employment of an
endoctracheal tube. Ordinarily a person
being put under anesthesia is not rendered
decerebrate as a consequence of
administering such anesthesia in the
absence of negligence. Upon these facts
and under these circumstances a layman
would be able to say, as a matter of
common knowledge and observation, that
the consequences of professional
treatment were not as such as would
ordinarily have followed if due care had
been exercised.
Here the plaintiff could not have been guilty
of contributory negligence because he was
under the influence of anesthetics and
unconscious, and the circumstances are
such that the true explanation of event is
more accessible to the defendants than to
the plaintiff for they had the exclusive
control of the instrumentalities of
anesthesia.
Upon all the facts, conditions and
circumstances alleged in Count II it is held
that a cause of action is stated under the
doctrine of res ipsa loquitur. 44
Indeed, the principles enunciated in the
aforequoted case apply with equal force
here. In the present case, Erlinda
submitted herself for cholecystectomy and
expected a routine general surgery to be
performed on her gall bladder. On that
fateful day she delivered her person over
to the care, custody and control of private
respondents who exercised complete and
exclusive control over her. At the time of
submission, Erlinda was neurologically
sound and, except for a few minor
discomforts, was likewise physically fit in
mind and body. However, during the
administration of anesthesia and prior to
the performance of cholecystectomy she
suffered irreparable damage to her brain.
Thus, without undergoing surgery, she
went out of the operating room already
decerebrate and totally incapacitated.
Obviously, brain damage, which Erlinda
sustained, is an injury which does not
normally occur in the process of a gall
bladder operation. In fact, this kind of
situation does not in the absence of
negligence of someone in the
administration of anesthesia and in the use
of endotracheal tube. Normally, a person
being put under anesthesia is not rendered
decerebrate as a consequence of
administering such anesthesia if the proper
procedure was followed. Furthermore, the
instruments used in the administration of
anesthesia, including the endotracheal
tube, were all under the exclusive control
of private respondents, who are the
physicians-in-charge. Likewise, petitioner
Erlinda could not have been guilty of
contributory negligence because she was
under the influence of anesthetics which
rendered her unconscious.
Considering that a sound and unaffected
member of the body (the brain) is injured
or destroyed while the patient is
unconscious and under the immediate and
exclusive control of the physicians, we hold
that a practical administration of justice
dictates the application of res ipsa loquitur.
Upon these facts and under these
circumstances the Court would be able to
say, as a matter of common knowledge and
observation, if negligence attended the
management and care of the patient.
Moreover, the liability of the physicians and
the hospital in this case is not predicated
upon an alleged failure to secure the
desired results of an operation nor on an
alleged lack of skill in the diagnosis or
treatment as in fact no operation or
treatment was ever performed on Erlinda.
Thus, upon all these initial determination a
case is made out for the application of the
doctrine of res ipsa loquitur.
Nonetheless, in holding that res ipsa
loquitur is available to the present case we
are not saying that the doctrine is
applicable in any and all cases where injury
occurs to a patient while under anesthesia,
or to any and all anesthesia cases. Each
case must be viewed in its own light and
scrutinized in order to be within the res
ipsa loquitur coverage.
Having in mind the applicability of the res
ipsa loquitur doctrine and the presumption
of negligence allowed therein, the Court
now comes to the issue of whether the
Court of Appeals erred in finding that
private respondents were not negligent in
the care of Erlinda during the anesthesia
phase of the operation and, if in the
affirmative, whether the alleged negligence
was the proximate cause of Erlinda's
comatose condition. Corollary thereto, we
shall also determine if the Court of Appeals
erred in relying on the testimonies of the
witnesses for the private respondents.
In sustaining the position of private
respondents, the Court of Appeals relied on
the testimonies of Dra. Gutierrez, Dra.
Calderon and Dr. Jamora. In giving weight
to the testimony of Dra. Gutierrez, the
Court of Appeals rationalized that she was
candid enough to admit that she
experienced some difficulty in the
endotracheal intubation 45 of the patient
and thus, cannot be said to be covering her
negligence with falsehood. The appellate
court likewise opined that private
respondents were able to show that the
brain damage sustained by Erlinda was not
caused by the alleged faulty intubation but
was due to the allergic reaction of the
patient to the drug Thiopental Sodium
(Pentothal), a short-acting barbiturate, as
testified on by their expert witness, Dr.
Jamora. On the other hand, the appellate
court rejected the testimony of Dean
Herminda Cruz offered in favor of
petitioners that the cause of the brain
injury was traceable to the wrongful
insertion of the tube since the latter, being
a nurse, was allegedly not knowledgeable
in the process of intubation. In so holding,
the appellate court returned a verdict in
favor of respondents physicians and
hospital and absolved them of any liability
towards Erlinda and her family.
We disagree with the findings of the Court
of Appeals. We hold that private
respondents were unable to disprove the
presumption of negligence on their part in
the care of Erlinda and their negligence was
the proximate cause of her piteous
condition.
In the instant case, the records are helpful
in furnishing not only the logical scientific
evidence of the pathogenesis of the injury
but also in providing the Court the legal
nexus upon which liability is based. As will
be shown hereinafter, private respondents'
own testimonies which are reflected in the
transcript of stenographic notes are replete
of signposts indicative of their negligence
in the care and management of Erlinda.
With regard to Dra. Gutierrez, we find her
negligent in the care of Erlinda during the
anesthesia phase. As borne by the records,
respondent Dra. Gutierrez failed to
properly intubate the patient. This fact was
attested to by Prof. Herminda Cruz, Dean
of the Capitol Medical Center School of
Nursing and petitioner's sister-in-law, who
was in the operating room right beside the
patient when the tragic event occurred.
Witness Cruz testified to this effect:
ATTY. PAJARES:
Q: In particular, what did Dra. Perfecta
Gutierrez do, if any on the patient?
A: In particular, I could see that she was
intubating the patient.
Q: Do you know what happened to that
intubation process administered by Dra.
Gutierrez?
ATTY. ALCERA:
She will be incompetent Your Honor.
COURT:
Witness may answer if she knows.
A: As have said, I was with the patient, I
was beside the stretcher holding the left
hand of the patient and all of a sudden
heard some remarks coming from Dra.
Perfecta Gutierrez herself. She was saying
"Ang hirap ma-intubate nito, mali yata ang
pagkakapasok. O lumalaki ang tiyan.
xxx xxx xxx
ATTY. PAJARES:
Q: From whom did you hear those words
"lumalaki ang tiyan"?
A: From Dra. Perfecta Gutierrez.
xxx xxx xxx
Q: After hearing the phrase "lumalaki ang
tiyan," what did you notice on the person
of the patient?
A: I notice (sic) some bluish discoloration
on the nailbeds of the left hand where I was
at.
Q: Where was Dr. Orlino Ho[s]aka then at
that particular time?
A: I saw him approaching the patient
during that time.
Q: When he approached the patient, what
did he do, if any?
A: He made an order to call on the
anesthesiologist in the person of Dr.
Calderon.
Q: Did Dr. Calderon, upon being called,
arrive inside the operating room?
A: Yes sir.
Q: What did [s]he do, if any?
A: [S]he tried to intubate the patient.
Q: What happened to the patient?
A: When Dr. Calderon try (sic) to intubate
the patient, after a while the patient's
nailbed became bluish and I saw the
patient was placed in trendelenburg
position.
xxx xxx xxx
Q: Do you know the reason why the patient
was placed in that trendelenburg position?
A: As far as I know, when a patient is in
that position, there is a decrease of blood
supply to the brain. 46
xxx xxx xxx
The appellate court, however, disbelieved
Dean Cruz's testimony in the trial court by
declaring that:
A perusal of the standard nursing
curriculum in our country will show that
intubation is not taught as part of nursing
procedures and techniques. Indeed, we
take judicial notice of the fact that nurses
do not, and cannot, intubate. Even on the
assumption that she is fully capable of
determining whether or not a patient is
properly intubated, witness Herminda
Cruz, admittedly, did not peep into the
throat of the patient. (TSN, July 25, 1991,
p. 13). More importantly, there is no
evidence that she ever auscultated the
patient or that she conducted any type of
examination to check if the endotracheal
tube was in its proper place, and to
determine the condition of the heart, lungs,
and other organs. Thus, witness Cruz's
categorical statements that appellant Dra.
Gutierrez failed to intubate the appellee
Erlinda Ramos and that it was Dra.
Calderon who succeeded in doing so clearly
suffer from lack of sufficient factual
bases. 47
In other words, what the Court of Appeals
is trying to impress is that being a nurse,
and considered a layman in the process of
intubation, witness Cruz is not competent
to testify on whether or not the intubation
was a success.
We do not agree with the above reasoning
of the appellate court. Although witness
Cruz is not an anesthesiologist, she can
very well testify upon matters on which she
is capable of observing such as, the
statements and acts of the physician and
surgeon, external appearances, and
manifest conditions which are observable
by any one. 48 This is precisely allowed
under the doctrine of res ipsa
loquitur where the testimony of expert
witnesses is not required. It is the accepted
rule that expert testimony is not necessary
for the proof of negligence in non-technical
matters or those of which an ordinary
person may be expected to have
knowledge, or where the lack of skill or
want of care is so obvious as to render
expert testimony unnecessary. 49 We take
judicial notice of the fact that anesthesia
procedures have become so common, that
even an ordinary person can tell if it was
administered properly. As such, it would
not be too difficult to tell if the tube was
properly inserted. This kind of observation,
we believe, does not require a medical
degree to be acceptable.
At any rate, without doubt, petitioner's
witness, an experienced clinical nurse
whose long experience and scholarship led
to her appointment as Dean of the Capitol
Medical Center School at Nursing, was fully
capable of determining whether or not the
intubation was a success. She had
extensive clinical experience starting as a
staff nurse in Chicago, Illinois; staff nurse
and clinical instructor in a teaching
hospital, the FEU-NRMF; Dean of the
Laguna College of Nursing in San Pablo
City; and then Dean of the Capitol Medical
Center School of Nursing. 50 Reviewing
witness Cruz' statements, we find that the
same were delivered in a straightforward
manner, with the kind of detail, clarity,
consistency and spontaneity which would
have been difficult to fabricate. With her
clinical background as a nurse, the Court is
satisfied that she was able to demonstrate
through her testimony what truly
transpired on that fateful day.
Most of all, her testimony was affirmed by
no less than respondent Dra. Gutierrez who
admitted that she experienced difficulty in
inserting the tube into Erlinda's trachea, to
wit:
ATTY. LIGSAY:
Q: In this particular case, Doctora, while
you were intubating at your first attempt
(sic), you did not immediately see the
trachea?
DRA. GUTIERREZ:
A: Yes sir.
Q: Did you pull away the tube immediately?
A: You do not pull the . . .
Q: Did you or did you not?
A: I did not pull the tube.
Q: When you said "mahirap yata ito," what
were you referring to?
A: "Mahirap yata itong i-intubate," that was
the patient.
Q: So, you found some difficulty in
inserting the tube?
A: Yes, because of (sic) my first attempt, I
did not see right away. 51
Curiously in the case at bar, respondent
Dra. Gutierrez made the haphazard
defense that she encountered hardship in
the insertion of the tube in the trachea of
Erlinda because it was positioned more
anteriorly (slightly deviated from the
normal anatomy of a person) 52 making it
harder to locate and, since Erlinda is obese
and has a short neck and protruding teeth,
it made intubation even more difficult.
The argument does not convince us. If this
was indeed observed, private respondents
adduced no evidence demonstrating that
they proceeded to make a thorough
assessment of Erlinda's airway, prior to the
induction of anesthesia, even if this would
mean postponing the procedure. From
their testimonies, it appears that the
observation was made only as an
afterthought, as a means of defense.
The pre-operative evaluation of a patient
prior to the administration of anesthesia is
universally observed to lessen the
possibility of anesthetic accidents. Pre-
operative evaluation and preparation for
anesthesia begins when the
anesthesiologist reviews the patient's
medical records and visits with the patient,
traditionally, the day before elective
surgery. 53 It includes taking the patient's
medical history, review of current drug
therapy, physical examination and
interpretation of laboratory data. 54 The
physical examination performed by the
anesthesiologist is directed primarily
toward the central nervous system,
cardiovascular system, lungs and upper
airway. 55 A thorough analysis of the
patient's airway normally involves
investigating the following: cervical spine
mobility, temporomandibular mobility,
prominent central incisors, diseased or
artificial teeth, ability to visualize uvula and
the thyromental distance. 56 Thus, physical
characteristics of the patient's upper
airway that could make tracheal intubation
difficult should be studied. 57 Where the
need arises, as when initial assessment
indicates possible problems (such as the
alleged short neck and protruding teeth of
Erlinda) a thorough examination of the
patient's airway would go a long way
towards decreasing patient morbidity and
mortality.
In the case at bar, respondent Dra.
Gutierrez admitted that she saw Erlinda for
the first time on the day of the operation
itself, on 17 June 1985. Before this date,
no prior consultations with, or pre-
operative evaluation of Erlinda was done by
her. Until the day of the operation,
respondent Dra. Gutierrez was unaware of
the physiological make-up and needs of
Erlinda. She was likewise not properly
informed of the possible difficulties she
would face during the administration of
anesthesia to Erlinda. Respondent Dra.
Gutierrez' act of seeing her patient for the
first time only an hour before the scheduled
operative procedure was, therefore, an act
of exceptional negligence and professional
irresponsibility. The measures cautioning
prudence and vigilance in dealing with
human lives lie at the core of the
physician's centuries-old Hippocratic Oath.
Her failure to follow this medical procedure
is, therefore, a clear indicia of her
negligence.
Respondent Dra. Gutierrez, however,
attempts to gloss over this omission by
playing around with the trial court's
ignorance of clinical procedure, hoping that
she could get away with it. Respondent
Dra. Gutierrez tried to muddle the
difference between an elective surgery and
an emergency surgery just so her failure to
perform the required pre-operative
evaluation would escape unnoticed. In her
testimony she asserted:
ATTY. LIGSAY:
Q: Would you agree, Doctor, that it is good
medical practice to see the patient a day
before so you can introduce yourself to
establish good doctor-patient relationship
and gain the trust and confidence of the
patient?
DRA. GUTIERREZ:
A: As I said in my previous statement, it
depends on the operative procedure of the
anesthesiologist and in my case, with
elective cases and normal cardio-
pulmonary clearance like that, I usually
don't do it except on emergency and on
cases that have an abnormalities (sic). 58
However, the exact opposite is true. In an
emergency procedure, there is hardly
enough time available for the fastidious
demands of pre-operative procedure so
that an anesthesiologist is able to see the
patient only a few minutes before surgery,
if at all. Elective procedures, on the other
hand, are operative procedures that can
wait for days, weeks or even months.
Hence, in these cases, the anesthesiologist
possesses the luxury of time to be at the
patient's beside to do a proper interview
and clinical evaluation. There is ample time
to explain the method of anesthesia, the
drugs to be used, and their possible
hazards for purposes of informed consent.
Usually, the pre-operative assessment is
conducted at least one day before the
intended surgery, when the patient is
relaxed and cooperative.
Erlinda's case was elective and this was
known to respondent Dra. Gutierrez. Thus,
she had all the time to make a thorough
evaluation of Erlinda's case prior to the
operation and prepare her for anesthesia.
However, she never saw the patient at the
bedside. She herself admitted that she had
seen petitioner only in the operating room,
and only on the actual date of the
cholecystectomy. She negligently failed to
take advantage of this important
opportunity. As such, her attempt to
exculpate herself must fail.
Having established that respondent Dra.
Gutierrez failed to perform pre-operative
evaluation of the patient which, in turn,
resulted to a wrongful intubation, we now
determine if the faulty intubation is truly
the proximate cause of Erlinda's comatose
condition.
Private respondents repeatedly hammered
the view that the cerebral anoxia which led
to Erlinda's coma was due to
bronchospasm 59 mediated by her allergic
response to the drug, Thiopental Sodium,
introduced into her system. Towards this
end, they presented Dr. Jamora, a Fellow
of the Philippine College of Physicians and
Diplomate of the Philippine Specialty Board
of Internal Medicine, who advanced private
respondents' theory that the oxygen
deprivation which led to anoxic A: We do it in conjunction with the
encephalopathy, 60 was due to an anesthesiologist when they have to
unpredictable drug reaction to the short- intubate our patient.
acting barbiturate. We find the theory of Q: But not in particular when you practice
private respondents unacceptable. pulmonology?
First of all, Dr. Jamora cannot be A: No.
considered an authority in the field of Q: In other words, your knowledge about
anesthesiology simply because he is not an pentothal is based only on what you have
anesthesiologist. Since Dr. Jamora is a read from books and not by your own
pulmonologist, he could not have been personal application of the medicine
capable of properly enlightening the court pentothal?
about anesthesia practice and procedure A: Based on my personal experience also
and their complications. Dr. Jamora is on pentothal.
likewise not an allergologist and could not Q: How many times have you used
therefore properly advance expert opinion pentothal?
on allergic-mediated processes. Moreover, A: They used it on me. I went into
he is not a pharmacologist and, as such, bronchospasm during my appendectomy.
could not have been capable, as an expert Q: And because they have used it on you
would, of explaining to the court the and on account of your own personal
pharmacologic and toxic effects of the experience you feel that you can testify on
supposed culprit, Thiopental Sodium pentothal here with medical authority?
(Pentothal). A: No. That is why I used references to
The inappropriateness and absurdity of support my claims. 61
accepting Dr. Jamora's testimony as an An anesthetic accident caused by a rare
expert witness in the anesthetic practice of drug-induced bronchospasm properly falls
Pentothal administration is further within the fields of anesthesia, internal
supported by his own admission that he medicine-allergy, and clinical
formulated his opinions on the drug not pharmacology. The resulting anoxic
from the practical experience gained by a encephalopathy belongs to the field of
specialist or expert in the administration neurology. While admittedly, many
and use of Sodium Pentothal on patients, bronchospastic-mediated pulmonary
but only from reading certain references, to diseases are within the expertise of
wit: pulmonary medicine, Dr. Jamora's field,
ATTY. LIGSAY: the anesthetic drug-induced, allergic
Q: In your line of expertise on mediated bronchospasm alleged in this
pulmonology, did you have any occasion to case is within the disciplines of
use pentothal as a method of anesthesiology, allergology and
management? pharmacology. On the basis of the
DR. JAMORA: foregoing transcript, in which the
pulmonologist himself admitted that he
could not testify about the drug with
medical authority, it is clear that the
appellate court erred in giving weight to Dr.
Jamora's testimony as an expert in the
administration of Thiopental Sodium.
The provision in the rules of
evidence 62 regarding expert witnesses
states:
Sec. 49. Opinion of expert witness. — The
opinion of a witness on a matter requiring
special knowledge, skill, experience or
training which he is shown to possess, may
be received in evidence.
Generally, to qualify as an expert witness,
one must have acquired special knowledge
of the subject matter about which he or she
is to testify, either by the study of
recognized authorities on the subject or by
practical experience. 63 Clearly, Dr. Jamora
does not qualify as an expert witness based
on the above standard since he lacks the
necessary knowledge, skill, and training in
the field of anesthesiology. Oddly, apart
from submitting testimony from a specialist
in the wrong field, private respondents'
intentionally avoided providing testimony
by competent and independent experts in
the proper areas.
Moreover, private respondents' theory,
that Thiopental Sodium may have
produced Erlinda's coma by triggering an
allergic mediated response, has no support
in evidence. No evidence of stridor, skin
reactions, or wheezing — some of the more
common accompanying signs of an allergic
reaction — appears on record. No
laboratory data were ever presented to the
court.
In any case, private respondents
themselves admit that Thiopental induced,
allergic-mediated bronchospasm happens
only very rarely. If courts were to accept
private respondents' hypothesis without
supporting medical proof, and against the
weight of available evidence, then every
anesthetic accident would be an act of God.
Evidently, the Thiopental-allergy theory
vigorously asserted by private respondents
was a mere afterthought. Such an
explanation was advanced in order to
advanced in order to absolve them of any
and all responsibility for the patient's
condition.
In view of the evidence at hand, we are
inclined to believe petitioners' stand that it
was the faulty intubation which was the
proximate cause of Erlinda's comatose
condition.
Proximate cause has been defined as that
which, in natural and continuous sequence,
unbroken by any efficient intervening
cause, produces injury, and without which
the result would not have occurred. 64 An
injury or damage is proximately caused by
an act or a failure to act, whenever it
appears from the evidence in the case, that
the act or omission played a substantial
part in bringing about or actually causing
the injury or damage; and that the injury
or damage was either a direct result or a
reasonably probable consequence of the
act or omission. 65 It is the dominant,
moving or producing cause.
Applying the above definition in relation to
the evidence at hand, faulty intubation is
undeniably the proximate cause which
triggered the chain of events leading to
Erlinda's brain damage and, ultimately, her
comatosed condition.
Private respondents themselves admitted
in their testimony that the first intubation
was a failure. This fact was likewise
observed by witness Cruz when she heard
respondent Dra. Gutierrez remarked, "Ang
hirap ma-intubate nito, mali yata ang
pagkakapasok. O lumalaki ang tiyan."
Thereafter, witness Cruz noticed abdominal
distention on the body of Erlinda. The
development of abdominal distention,
together with respiratory embarrassment
indicates that the endotracheal tube
entered the esophagus instead of the
respiratory tree. In other words, instead of
the intended endotracheal intubation what
actually took place was an esophageal
intubation. During intubation, such
distention indicates that air has entered the
gastrointestinal tract through the
esophagus instead of the lungs through the
trachea. Entry into the esophagus would
certainly cause some delay in oxygen
delivery into the lungs as the tube which
carries oxygen is in the wrong place. That
abdominal distention had been observed
during the first intubation suggests that the
length of time utilized in inserting the
endotracheal tube (up to the time the tube
was withdrawn for the second attempt)
was fairly significant. Due to the delay in
the delivery of oxygen in her lungs Erlinda
showed signs of cyanosis. 66 As stated in
the testimony of Dr. Hosaka, the lack of
oxygen became apparent only after he
noticed that the nailbeds of Erlinda were
already blue. 67 However, private
respondents contend that a second
intubation was executed on Erlinda and this
one was successfully done. We do not think
so. No evidence exists on record, beyond
private respondents' bare claims, which
supports the contention that the second
intubation was successful. Assuming that
the endotracheal tube finally found its way
into the proper orifice of the trachea, the
same gave no guarantee of oxygen
delivery, the hallmark of a successful
intubation. In fact, cyanosis was again
observed immediately after the second
intubation. Proceeding from this event
(cyanosis), it could not be claimed, as
private respondents insist, that the second
intubation was accomplished. Even
granting that the tube was successfully
inserted during the second attempt, it was
obviously too late. As aptly explained by
the trial court, Erlinda already suffered
brain damage as a result of the inadequate
oxygenation of her brain for about four to
five minutes. 68
The above conclusion is not without basis.
Scientific studies point out that intubation
problems are responsible for one-third
(1/3) of deaths and serious injuries
associated with
anesthesia. 69
Nevertheless, ninety-eight
percent (98%) or the vast majority of
difficult intubations may be anticipated by
performing a thorough evaluation of the
patient's airway prior to the
operation. 70 As stated beforehand,
respondent Dra. Gutierrez failed to observe
the proper pre-operative protocol which
could have prevented this unfortunate
incident. Had appropriate diligence and
reasonable care been used in the pre-
operative evaluation, respondent physician
could have been much more prepared to
meet the contingency brought about by the
perceived anatomic variations in the
patient's neck and oral area, defects which
would have been easily overcome by a
prior knowledge of those variations
together with a change in technique. 71 In
other words, an experienced
anesthesiologist, adequately alerted by a
thorough pre-operative evaluation, would
have had little difficulty going around the
short neck and protruding teeth. 72 Having
failed to observe common medical
standards in pre-operative management
and intubation, respondent Dra. Gutierrez'
negligence resulted in cerebral anoxia and
eventual coma of Erlinda.
We now determine the responsibility of
respondent Dr. Orlino Hosaka as the head
of the surgical team. As the so-called
"captain of the ship," 73 it is the surgeon's
responsibility to see to it that those under
him perform their task in the proper
manner. Respondent Dr. Hosaka's
negligence can be found in his failure to
exercise the proper authority (as the
"captain" of the operative team) in not
determining if his anesthesiologist
observed proper anesthesia protocols. In
fact, no evidence on record exists to show
that respondent Dr. Hosaka verified if
respondent Dra. Gutierrez properly
intubated the patient. Furthermore, it does
not escape us that respondent Dr. Hosaka
had scheduled another procedure in a
different hospital at the same time as
Erlinda's cholecystectomy, and was in fact
over three hours late for the latter's
operation. Because of this, he had little or
no time to confer with his anesthesiologist
regarding the anesthesia delivery. This
indicates that he was remiss in his
professional duties towards his patient.
Thus, he shares equal responsibility for the
events which resulted in Erlinda's
condition.
We now discuss the responsibility of the
hospital in this particular incident. The
unique practice (among private hospitals)
of filling up specialist staff with attending
and visiting "consultants," 74 who are
allegedly not hospital employees, presents
problems in apportioning responsibility for
negligence in medical malpractice cases.
However, the difficulty is only more
apparent than real.
In the first place, hospitals exercise
significant control in the hiring and firing of
consultants and in the conduct of their
work within the hospital premises. Doctors
who apply for "consultant" slots, visiting or
attending, are required to submit proof of
completion of residency, their educational
qualifications; generally, evidence of
accreditation by the appropriate board
(diplomate), evidence of fellowship in most
cases, and references. These requirements
are carefully scrutinized by members of the
hospital administration or by a review
committee set up by the hospital who
either accept or reject the
application. 75 This is particularly true with
respondent hospital.
After a physician is accepted, either as a
visiting or attending consultant, he is
normally required to attend clinico-
pathological conferences, conduct bedside
rounds for clerks, interns and residents,
moderate grand rounds and patient audits
and perform other tasks and
responsibilities, for the privilege of being
able to maintain a clinic in the hospital,
and/or for the privilege of admitting
patients into the hospital. In addition to
these, the physician's performance as a
specialist is generally evaluated by a peer
review committee on the basis of mortality
and morbidity statistics, and feedback from
patients, nurses, interns and residents. A
consultant remiss in his duties, or a
consultant who regularly falls short of the
minimum standards acceptable to the
hospital or its peer review committee, is
normally politely terminated.
In other words, private hospitals, hire, fire
and exercise real control over their
attending and visiting "consultant" staff.
While "consultants" are not, technically
employees, a point which respondent
hospital asserts in denying all responsibility
for the patient's condition, the control
exercised, the hiring, and the right to
terminate consultants all fulfill the
important hallmarks of an employer-
employee relationship, with the exception
of the payment of wages. In assessing
whether such a relationship in fact exists,
the control test is determining.
Accordingly, on the basis of the foregoing,
we rule that for the purpose of allocating
responsibility in medical negligence cases,
an employer-employee relationship in
effect exists between hospitals and their
attending and visiting physicians. This
being the case, the question now arises as
to whether or not respondent hospital is
solidarily liable with respondent doctors for
petitioner's condition. 76
The basis for holding an employer solidarily
responsible for the negligence of its
employee is found in Article 2180 of the
Civil Code which considers a person
accountable not only for his own acts but
also for those of others based on the
former's responsibility under a relationship
of patria potestas. 77 Such responsibility
ceases when the persons or entity
concerned prove that they have observed
the diligence of a good father of the family
to prevent damage. 78 In other words,
while the burden of proving negligence
rests on the plaintiffs, once negligence is
shown, the burden shifts to the
respondents (parent, guardian, teacher or
employer) who should prove that they
observed the diligence of a good father of
a family to prevent damage.
In the instant case, respondent hospital,
apart from a general denial of its
responsibility over respondent physicians,
failed to adduce evidence showing that it
exercised the diligence of a good father of
a family in the hiring and supervision of the
latter. It failed to adduce evidence with
regard to the degree of supervision which
it exercised over its physicians. In
neglecting to offer such proof, or proof of a
similar nature, respondent hospital thereby
failed to discharge its burden under the last
paragraph of Article 2180. Having failed to
do this, respondent hospital is
consequently solidarily responsible with its
physicians for Erlinda's condition.
Based on the foregoing, we hold that the
Court of Appeals erred in accepting and
relying on the testimonies of the witnesses
for the private respondents. Indeed, as
shown by the above discussions, private
respondents were unable to rebut the
presumption of negligence. Upon these
disquisitions we hold that private
respondents are solidarily liable for
damages under Article 2176 79 of the Civil
Code.
We now come to the amount of damages
due petitioners. The trial court awarded a
total of P632,000.00 pesos (should be
P616,000.00) in compensatory damages to
the plaintiff, "subject to its being updated"
covering the period from 15 November
1985 up to 15 April 1992, based on
monthly expenses for the care of the
patient estimated at P8,000.00.
At current levels, the P8000/monthly
amount established by the trial court at the
time of its decision would be grossly
inadequate to cover the actual costs of
home-based care for a comatose
individual. The calculated amount was not
even arrived at by looking at the actual cost
of proper hospice care for the patient. What
it reflected were the actual expenses
incurred and proved by the petitioners after
they were forced to bring home the patient
to avoid mounting hospital bills.
And yet ideally, a comatose patient should
remain in a hospital or be transferred to a
hospice specializing in the care of the
chronically ill for the purpose of providing a
proper milieu adequate to meet minimum
standards of care. In the instant case for
instance, Erlinda has to be constantly
turned from side to side to prevent
bedsores and hypostatic pneumonia.
Feeding is done by nasogastric tube. Food
preparation should be normally made by a
dietitian to provide her with the correct
daily caloric requirements and vitamin
supplements. Furthermore, she has to be
seen on a regular basis by a physical
therapist to avoid muscle atrophy, and by
a pulmonary therapist to prevent the
accumulation of secretions which can lead
to respiratory complications.
Given these considerations, the amount of
actual damages recoverable in suits arising
from negligence should at least reflect the
correct minimum cost of proper care, not
the cost of the care the family is usually
compelled to undertake at home to avoid
bankruptcy. However, the provisions of the
Civil Code on actual or compensatory
damages present us with some difficulties.
Well-settled is the rule that actual damages
which may be claimed by the plaintiff are
those suffered by him as he has duly
proved. The Civil Code provides:
Art. 2199. — Except as provided by law or
by stipulation, one is entitled to an
adequate compensation only for such
pecuniary loss suffered by him as he has
duly proved. Such compensation is referred
to as actual or compensatory damages.
Our rules on actual or compensatory
damages generally assume that at the time
of litigation, the injury suffered as a
consequence of an act of negligence has
been completed and that the cost can be
liquidated. However, these provisions
neglect to take into account those
situations, as in this case, where the
resulting injury might be continuing and
possible future complications directly
arising from the injury, while certain to
occur, are difficult to predict.
In these cases, the amount of damages
which should be awarded, if they are to
adequately and correctly respond to the
injury caused, should be one which
compensates for pecuniary loss incurred
and proved, up to the time of trial; and one
which would meet pecuniary loss certain to
be suffered but which could not, from the
nature of the case, be made with
certainty. 80 In other words, temperate
damages can and should be awarded on
top of actual or compensatory damages in
instances where the injury is chronic and
continuing. And because of the unique
nature of such cases, no incompatibility
arises when both actual and temperate
damages are provided for. The reason is
that these damages cover two distinct
phases.
As it would not be equitable — and certainly
not in the best interests of the
administration of justice — for the victim in
such cases to constantly come before the
courts and invoke their aid in seeking
adjustments to the compensatory damages
previously awarded — temperate damages
are appropriate. The amount given as
temperate damages, though to a certain
extent speculative, should take into
account the cost of proper care.
In the instant case, petitioners were able to
provide only home-based nursing care for
a comatose patient who has remained in
that condition for over a decade. Having
premised our award for compensatory
damages on the amount provided by
petitioners at the onset of litigation, it
would be now much more in step with the
interests of justice if the value awarded for
temperate damages would allow
petitioners to provide optimal care for their
loved one in a facility which generally
specializes in such care. They should not be
compelled by dire circumstances to provide
substandard care at home without the aid
of professionals, for anything less would be
grossly inadequate. Under the
circumstances, an award of P1,500,000.00
in temperate damages would therefore be
reasonable. 81
In Valenzuela vs. Court of Appeals, 82 this
Court was confronted with a situation
where the injury suffered by the plaintiff
would have led to expenses which were
difficult to estimate because while they
would have been a direct result of the
injury (amputation), and were certain to be
incurred by the plaintiff, they were likely to
arise only in the future. We awarded
P1,000,000.00 in moral damages in that
case.
Describing the nature of the injury, the
Court therein stated:
As a result of the accident, Ma. Lourdes
Valenzuela underwent a traumatic
amputation of her left lower extremity at
the distal left thigh just above the knee.
Because of this, Valenzuela will forever be
deprived of the full ambulatory functions of
her left extremity, even with the use of
state of the art prosthetic technology. Well
beyond the period of hospitalization (which
was paid for by Li), she will be required to
undergo adjustments in her prosthetic
devise due to the shrinkage of the stump
from the process of healing.
These adjustments entail costs, prosthetic
replacements and months of physical and
occupational rehabilitation and therapy.
During the lifetime, the prosthetic devise
will have to be replaced and readjusted to
changes in the size of her lower limb
effected by the biological changes of
middle-age, menopause and aging.
Assuming she reaches menopause, for
example, the prosthetic will have to be
adjusted to respond to the changes in bone
resulting from a precipitate decrease in
calcium levels observed in the bones of all
post-menopausal women. In other words,
the damage done to her would not only be
permanent and lasting, it would also be
permanently changing and adjusting to the
physiologic changes which her body would
normally undergo through the years. The
replacements, changes, and adjustments
will require corresponding adjustive
physical and occupational therapy. All of
these adjustments, it has been
documented, are painful.
xxx xxx xxx
A prosthetic devise, however
technologically advanced, will only allow a
reasonable amount of functional
restoration of the motor functions of the
lower limb. The sensory functions are
forever lost. The resultant anxiety,
sleeplessness, psychological injury, mental
and physical pain are inestimable. 83
The injury suffered by Erlinda as a
consequence of private respondents'
negligence is certainly much more serious
than the amputation in the Valenzuela
case.
Petitioner Erlinda Ramos was in her mid-
forties when the incident occurred. She has
been in a comatose state for over fourteen
years now. The burden of care has so far
been heroically shouldered by her husband
and children, who, in the intervening years
have been deprived of the love of a wife
and a mother.
Meanwhile, the actual physical, emotional
and financial cost of the care of petitioner
would be virtually impossible to quantify.
Even the temperate damages herein
awarded would be inadequate if petitioner's
condition remains unchanged for the next
ten years.
We recognized, in Valenzuela that a
discussion of the victim's actual injury
would not even scratch the surface of the
resulting moral damage because it would
be highly speculative to estimate the
amount of emotional and moral pain,
psychological damage and injury suffered
by the victim or those actually affected by
the victim's condition. 84 The husband and
the children, all petitioners in this case, will
have to live with the day to day uncertainty
of the patient's illness, knowing any hope
of recovery is close to nil. They have necessarily be called to account for it. In
fashioned their daily lives around the the case at bar, the failure to observe pre-
nursing care of petitioner, altering their operative assessment protocol which would
long term goals to take into account their have influenced the intubation in a salutary
life with a comatose patient. They, not the way was fatal to private respondents' case.
respondents, are charged with the moral WHEREFORE, the decision and resolution of
responsibility of the care of the victim. The the appellate court appealed from are
family's moral injury and suffering in this hereby modified so as to award in favor of
case is clearly a real one. For the foregoing petitioners, and solidarily against private
reasons, an award of P2,000,000.00 in respondents the following: 1)
moral damages would be appropriate. P1,352,000.00 as actual damages
Finally, by way of example, exemplary computed as of the date of promulgation of
damages in the amount of P100,000.00 are this decision plus a monthly payment of
hereby awarded. Considering the length P8,000.00 up to the time that petitioner
and nature of the instant suit we are of the Erlinda Ramos expires or miraculously
opinion that attorney's fees valued at survives; 2) P2,000,000.00 as moral
P100,000.00 are likewise proper. damages, 3) P1,500,000.00 as temperate
Our courts face unique difficulty in damages; 4) P100,000.00 each as
adjudicating medical negligence cases exemplary damages and attorney's fees;
because physicians are not insurers of life and, 5) the costs of the suit.
and, they rarely set out to intentionally SO ORDERED.
cause injury or death to their patients.
However, intent is immaterial in negligence
cases because where negligence exists and
is proven, the same automatically gives the
injured a right to reparation for the damage
caused.
Established medical procedures and
practices, though in constant flux are
devised for the purpose of preventing
complications. A physician's experience
with his patients would sometimes tempt
him to deviate from established community
practices, and he may end a distinguished
career using unorthodox methods without
incident. However, when failure to follow
established procedure results in the evil
precisely sought to be averted by
observance of the procedure and a nexus
is made between the deviation and the
injury or damage, the physician would
G.R. No. 157632 December 6,
2006
JOSE S. ROQUE, JR., substituted by his
wife NORMA ROQUE, petitioner,
vs.
JAIME T. TORRES, substituted by his
son JAMES KENLEY M. TORRES, and
the HONORABLE COURT OF
APPEALS, respondent.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review
on Certiorari under Rule 45 of the Rules of
Civil Procedure, assailing the Decision 1 of
the Court of Appeals in CA-G.R. CV No.
55895, dated 21 March 2003, which
reversed and set aside the Judgment2 of
the Regional Trial Court (RTC) of Quezon
City, Branch 104, in Civil Case No. Q-93-
14408, dated 8 April 1997, ordering
respondent to pay petitioner damages in
the total amount of P1,600,000.00 and
attorney’s fees.
The instant case sprang from an action for
damages filed by the original petitioner, the
late Jose Roque, Jr., against respondent,
the recently deceased Jaime Torres, for
injuries sustained by petitioner on 27
August 1989, allegedly inflicted by the
security guards employed by respondent.
In this petition, the deceased petitioner
Jose Roque, Jr. is substituted by his wife
Norma Roque while respondent Jaime T.
Torres, per agreement of all his heirs, is
herein represented by his son James
Kenley M. Torres.
Petitioner was the administrator of certain
parcels of land in Upper Boso-Boso,
Antipolo, Rizal, particularly Lots No. 13259
and 13260 covered by Original Certificates
of Titles (OCTs) No. NP-419 and NP-422,
both registered in the name of his son
Rafael Roque. Sometime before the
incident, respondent, claiming to be the
owner of said property, hired security
guards from Anchor Security and Detective
Agency, namely Cesar Aquino, Alfredo
Negro, and Mariano Cabos, who allegedly
barred petitioner from entering the
property and threatened him with physical
harm should he attempt to tend the said
land. As a result, petitioner filed a case for
grave threats against said security guards
before the Municipal Trial Court (MTC) of
Rizal.
Prior to the incident, or on 9 September
1988, respondent instituted an Action3 for
cancellation of OCTs No. NP-419 and NP-
422 in the name of petitioner’s son Rafael
Roque before the RTC of Antipolo which
was dismissed by the trial court in an
Order4 dated 26 June 1989. According to
the court a quo, therein petitioner Torres’
action was premature for failure to exhaust
administrative remedies in the Bureau of
Lands, consistent with the established
doctrine that where a party seeks for the
cancellation of a Free Patent, he must
pursue his action in the proper agency and
a review by the court will not be permitted
unless administrative remedies have been
exhausted. The trial court also declared
that the said action was in effect an action
for reversion under Section 101 of the
Public Land Act, thus, the action should be
in the name of the government and not the
private complainants. Respondent
appealed the dismissal before the Court of
Appeals, which later affirmed the decision
of the lower court in a Decision5 dated 11
June 1990. Respondent’s appeal to this
Court was also dismissed in a Resolution
dated 11 February 1991.
Petitioner maintained that at around four
o’clock in the afternoon of 27 August 1989,
he, together with his housemaid Leilyn
Saplot Kandt, Magno Imperial, Jose
Imperial, and Eliseo Pesito, visited the said
property and was surprised to see seven
security guards, including the above-
mentioned security guards, guarding the
property upon orders of respondent.
Aquino, Negro, and Cabos approached
petitioner and asked: "Bakit wala ka noong
arraignment sa Antipolo noong August 16,
1989?"6 to which he replied that his
presence was not necessary since he was
not the accused. Thereafter, the said
security guards asked him to leave the
property and uttered: "Bakit mo kami
kinakalaban? Utos ni Torres na ito’y
bantayan pagkat ito’y kanyang property
raw!." Petitioner showed his son’s titles to
the property but the security guards
merely answered: "Fake ‘yan at hindi kayo
maaaring pumasok dito. Kayo ay dapat
paalisin." A security guard then cocked his
shotgun and warned petitioner to leave the
place. Petitioner offered to settle the
dispute in the office of Anchor Security
Agency, through its manager, Mrs.
Nassam, but the security guards merely
replied: "Wala kaming pakialam kay
Nassam. Lahat ginagawa dito, lahat ay utos
ni Torres. At ‘yan ay sinusunod naming
dahil si Torres ang bumubuhay sa amin."
When petitioner refused to leave the
premises, Cabos threatened petitioner that
should he stay inside, Cabos would shoot
him, so petitioner immediately left the
place. However, Cabos still fired at him but
missed. Petitioner ran fast to his makeshift
hut where Cabos followed him. Petitioner
ran to the back of his makeshift hut and
was shot again by Cabos, hitting petitioner
on the back. When petitioner fell, he turned
and saw Cabos and Negro shooting at him.
At the same time, Aquino was also firing at
the makeshift hut. After a while, the other
security guards, namely Sulla, Betasulo,
and Romy Mendoza, came, and together
with Cabos and Negro, mauled and kicked
petitioner all over his body until he lost
consciousness.
As a result of the incident, petitioner was
hospitalized and placed under continuous
treatment and medication. Due to the
multiple gunshot wounds, hematoma, and
contusions sustained by petitioner, his left
eye became 90 to 95% blind and his body
was paralyzed from the bustline down.
Consequently, petitioner filed a criminal
case7 for frustrated murder before the RTC
of Antipolo against the security guards.
Eventually, after suffering for more than
nine years, petitioner died.
On his part, respondent admits the
existence of the titles in the name of Rafael
Roque but denies the latter’s ownership
over the property. He further admits the
dismissal of his case for cancellation of
Roque’s titles based on a technical ground.
Respondent likewise admits to the posting
of the security guards on the property to
guard the same from any intruder but
denies that they were his personal security
guards, and moreover claimed that they
were security guards of the Antipolo
Landowners and Farmers Association, Inc.
(ALFAI), of which he was president.
Respondent further asserts that being the
President of ALFAI, his instruction to the
security guards was to prevent squatters or
intruders from entering the property and to
make use of reasonable force to repel
aggression in the event of any untoward
incident.
After trial, the lower court, on 8 April 1997,
rendered judgment in favor of petitioner.
According to the court a quo:
After a thorough examination of the
evidence presented by both parties, the
Court is faced with the issue of: "Whether
or not defendant Torres can be held liable
for damages to herein plaintiff as a result
of the injuries inflicted by the security
guards deployed in the property in question
on August 28, 1989 [sic].
There is no question that the security
guards involved in the shooting incident on
August 28, 1989 [sic] were employed of
[sic] Anchor Security and Detective
Agency. There is also no question that the
same security guards were hired by
defendant Torres to man and guard the
property in question in Boso-Boso,
Antipolo, Rizal. In this simple scenario
and in the event that said security
guards caused wrong to others while
in their tour of duty, the law provides
that the liability falls on the employer
being the principal. On the contrary,
for illegal or harmful acts committed
by the security guards as [sic] per
order of the client or the one who hired
them, liability attaches to the latter. In
the instant case, the unlawful act
committed by the security guards
against the plaintiff is within the strict
compliance of the instruction of the
defendant. This is because of the fact that
defendant Torres exercised direct
supervision of the said security guards. As
a matter of fact, he provided the guards
with his school bus to perform their duties
effectively. Hence, defendant Torres is
liable for the unlawful acts committed by
the said security guards against herein
plaintiff. Such unlawful acts would not have
been accomplished had defendant Torres
being their "employer" at that time, not
instructed them so. What resulted to the
shooting of the plaintiff by the security
guards cannot be given justice except by
indemnifying him. And considering that
plaintiff suffered paralization of his body
and blindness in his left eye,
notwithstanding the fact of incurring the
amount of P300,000.00 as hospitalization
and medical expenses plus the continuous
medication up to the present, the Court
believes that the plaintiff should be
compensated. (Emphasis ours.)
WHEREFORE, judgment is hereby rendered
in favor of the plaintiff as against defendant
Torres and the latter is ordered to pay the
plaintiff the following:
a) the amount of P300,000.00 as actual
damages;
b) the amount of P1,000,000.00 as moral
damages;
c) the amount of P300,000.00 as
exemplary damages; and
d) the amount of P50,000.00 as attorney’s
fee.8
Aggrieved by the above judgment,
respondent lodged an appeal before the
Court of Appeals. According to respondent,
he did not know that the security guards
would commit the alleged aggressive acts
until the commission thereof, and that said
security guards acted upon their own
judgment. Respondent claimed that
petitioner was an intruder and squatter on
the property who entered it without
permission from members of the ALFAI, the
real owners of the said property. Thus,
respondent argued that petitioner forcibly
entered the property and that the security
guards merely repelled the unlawful
aggression.
Subsequently, the appellate court reversed
the RTC judgment and rendered a Decision,
the pertinent portions of which read:
It is appellee’s contention that appellant as
employer of the said security guards is
liable for the injuries inflicted by the latter
who acted under his instructions to guard
the subject premises.
Verily, the obligation imposed under Article
2176 of the Civil Code is demandable not
only for one’s own acts or omissions but
also for those persons for whom, one is
responsible. The owners and managers of
an establishment or enterprise are likewise
responsible for damages caused by their
employees in exercise of their duties
and/or functions.
Relevantly, Article 2180 of the Civil Code
provides that:
Art. 2180. The obligation imposed by
article 2176 is not demandable not only for
one’s own acts or omissions, but also for
those persons for whom one is responsible.
xxxx
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
occasion of their functions.
Under the facts obtaining, the above
provision of law does not apply. The court
a quo succinctly declared:
"There is no question that the security
guards involved in the shooting incident on
August 28, 1989 were employed (sic) of
Anchor Security Detective Agency. There is
also no question that the same security
guards were hired by defendant Torres to
man and guard the property in question in
Boso-Boso, Antipolo, Rizal.
xxxx
There is no question therefore that the said
security guards who inflicted the injuries
sustained by the appellee were not
employees of herein appellant. This being
so, the ruling in the case of Soliman, Jr. vs.
Tuazon applies, viz:
It is settled 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 security
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.
At any rate, the appellant cannot be held
liable under Art. 33 of the Civil Code as no
evidence whatsoever, was adduced to
show his participation in the commission of
the acts complained of. Neither was
appellee able to prove that appellant can
be held liable in the alternative under
Article 2176 in relation to Article 2180 of
the Civil Code.
xxxx
WHEREFORE, the assailed decision is
hereby REVERSED and SET ASIDE and the
complaint as well as the counterclaim filed
before the court a quo is DISMISSED.9
With the reversal of the trial court
judgment, petitioner filed the instant
appeal, raising the following issues:
I. Whether or not the Court of Appeals
committed grave and reversible error in
ruling that petitioner failed to prove by
mere preponderance of evidence that
respondent Torres was involved in any
malevolent designs on petitioner;
II. Whether or not the Court of Appeals
committed grave and reversible error in
ruling that Article 2180 in relation to Article
2176 of the Civil Code is not applicable to
the case at bar; and
III. Whether or not the Court of Appeals
committed grave and reversible error in
applying the case of Soliman, Jr. v. Tuazon
to the case at bar.
We agree with the Court of Appeals’ finding
that respondent cannot be held liable under
Article 2180 of the Civil Code for the
damages suffered by petitioner because
respondent is not the employer of the
security guards who inflicted the injuries
upon the person of the petitioner. As
reiterated in the recent case of Mercury
Drug Corporation v. Libunao:[10]
In Soliman, Jr. v. Tuazon, 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:
x x x [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.
x x x [T]he 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.11
This conclusion, however, does not
necessarily preclude this Court from
holding respondent liable under the law for
damages resulting from the injuries
inflicted on petitioner by the unlawful acts
of the security guards. As stressed by
petitioner in his Memorandum:
Assuming arguendo that the security
guards are not respondent’s employees,
the same does not constitute a valid
defense at all. Article 2176 of the Civil Code
provides that a person who, by act or
omission, causes damage to another
through fault or negligence may be held
liable in damages. By making it appear
that he owns the disputed properties,
putting security guards thereat to
inti[mi]date, harass or cause the
rightful owner and his
representatives and by providing the
escape vehicle, more than sufficient
evidence was established on the civil
liability of private respondent under
Article 2176 of the Civil Code of the
Philippines.
It must be emphasized that private
respondent committed all these overt acts
despite an earlier Decision by the Regional
Trial Court of Antipolo, Branch 71, affirming
Rafael Roque’s ownership of the properties
and dismissing the case he (private
respondent) filed for the cancellation of NP-
419 and NP-422 in Rafael Roque’s
name. Had he not misrepresented to
the security guards that he owns the
properties and had he not hired these
security guards/common thugs to
secure the premises which he does not
own, then the untoward incident
would not have happened. To allow
private respondent to escape liability,
despite his misdeeds, will not only result in
grave injustice to Jose Roque, Jr. who
eventually died after having been
paralyzed for several years as a result of
[the] incident but will likewise result in the
implied tolerance by this Honorable Court
of private respondent’s disobedience or
disrespect of a lawful order/decision of the
trial court (RTC Branch 71, Antipolo) which
he failed or refused to honor.12 (Emphasis
ours.)
Article 2176 of the Civil Code states that
"whoever by act or omission causes
damage to another, there being fault or
negligence, is obliged to pay for the
damage done." In the case at bar,
respondent cannot feign ignorance of the
fact that at the time of the shooting
incident, the titles to the disputed property
were already registered in the name of
petitioner’s son, the cancellation for title
case filed by respondent having been
dismissed. In fact, during trial, the offer for
stipulation of petitioner’s counsel that at
the time of the shooting incident, there is a
valid and existing title in the name of
petitioner’s son which was never cancelled
by the court, was accepted by the
respondent. Therefore, by hiring the
security guards to prevent entry, possibly
even by the registered owner, to the
subject property, titles to which he fully
knew he did not possess, respondent
blatantly acted in bad faith. Respondent’s
unwarranted act of posting security guards
within the property, which he clearly knew
is registered in the name of another,
unduly placed petitioner at harm and
deprived him of his right to fully exercise
his privileges and duties as administrator of
said property. Respondent, by his grossly
faulty acts, paved the way to the infliction
of injuries by the security guards on
petitioner.
Furthermore, respondent’s palpable
display of bad faith in claiming a superior
right to the property over petitioner’s son
entitles petitioner to damages resulting
therefrom. In order that a plaintiff may
maintain an action for the injuries which he
sustained, he must establish that such
injuries resulted from a breach of duty
which the defendant owed to the plaintiff –
a concurrence of injury to the plaintiff and
legal responsibility by the person causing
it.13 In other words, in order that the law
will give redress for an act causing
damage, the act must be not only hurtful,
but wrongful.14
In the case at bar, it is clear that
respondent violated the principle embodied
in Article 19 of the Civil Code which
mandates that "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." When
a right is exercised in a manner which
discards these norms resulting in damage
to another, a legal wrong is committed for
which the actor can be held
accountable.15 As we have stated in a
previous case, if mere fault or negligence
in one’s acts can make him liable for
damages for injury caused thereby, with
more reason should abuse or bad faith
make him liable.16
With respect to the award of damages, we
sustain the ruling of the trial court. 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.17 During
trial, petitioner, through his own testimony
and that of his wife, was able to establish
that they have incurred actual damages in
the amount of P300,000.00 for the
hospitalization of petitioner as a result of
the shooting and the mauling incident,
thus, the award of actual damages in said
amount is proper.
As regards the award of moral damages,
we have ruled that 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.18 As reflected in the records
of the instant case, there is no gainsaying
the fact that petitioner, together with his
family, had suffered physical suffering, damages as a result of the wanton act of
mental anguish, fright, serious anxiety and respondent in stationing security guards in
moral shock resulting from respondent’s the property, the title of which is under the
acts which caused petitioner grave physical name of petitioner’s son, said act
injuries eventually leading to his death. The ultimately resulting in the paralysis and
several years of torment and agonizing on blindness of petitioner, we find the award
the part of the deceased petitioner and his of exemplary damages to be proper by way
family more than justifiy the award of of correction for the public good of
moral damages. It must be emphasized respondent’s flagrant display of bad faith.
that moral damages are not intended to WHEREFORE, premises considered, the
enrich the complainant at the expense of a Petition for Review is hereby GRANTED.
defendant.19 They are awarded only to The Decision of the Court of Appeals in CA-
enable the injured parties to obtain means, G.R. CV No. 55895 is
diversions or amusements that will serve to hereby REVERSED and SET ASIDE. The
alleviate the moral sufferings the injured Judgment of the Regional Trial Court of
parties have undergone by reason of Quezon City, Branch 104, in Civil Case No.
defendant’s culpable action.20 In other Q-93-14408 ordering respondent Torres to
words, the award of moral damages is pay petitioner Roque the amount
aimed at a restoration within the limits of of P300,000.00 as actual damages; the
the possible, of the spiritual status quo amount of P1,000,000.00 as moral
ante; and therefore it must be damages; the amount of P300,000.00 as
proportionate to the suffering exemplary damages; and the amount
inflicted.21 Therefore, in light of the of P50,000.00 as attorney’s fee is
sufferings sustained by petitioner and his hereby REINSTATED.
family, we are inclined to sustain the award SO ORDERED.
of P1,000,000.00 as moral damages.
As to exemplary damages, Article 2229 of
the Civil Code provides that such damages
may be imposed by way of example or
correction for the public good, in addition
to the moral, temperate, liquidated or
compensatory damages. While exemplary
damages cannot be recovered as a matter
of right, they need not be proved, although
plaintiff must show that he is entitled to
moral, temperate or compensatory
damages before the court may consider the
question of whether or not exemplary
damages should be awarded.22 In the case
at bar, having determined that petitioner is
entitled to the award of actual and moral
G.R. No. 185597 Petitioners filed with the Regional Trial On January 18, 1999, the RTC rendered
JOHN E.R. REYES and MERWIN JOSEPH Court (RTC) of Makati a complaint for judgment 12 against respondents Doctolero and Avila,
REYES, Petitioners, damages against respondents Doctolero finding them responsible for the injuries sustained by petitioners.

vs. and Avila and their employer Grandeur, The RTC ordered them to jointly and severally pay petitioners the

ORICO DOCTOLERO, ROMEO A VILA, charging the latter with negligence in the following: ₱344,898.73 as actual damages; ₱360,000.00 as lost

GRANDEUR SECURITY AND SERVICES selection and supervision of its employees. income; ₱20,000.00 as school expenses; ₱300,000.00 as moral

CORPORATION, and MAKATI CINEMA They likewise impleaded MCS on the damages; ₱100,000.00 as exemplary damages; ₱75,000.00 as

SQUARE, Respondents. ground that it was negligent in getting attorney's fees; and costs of suit. 13 The trial thereafter continued

DECISION Grandeur's services. In their complaint, with respect to Grandeur and MCS.

JARDELEZA, J.:
This is a petition for review
on certiorari 1 under Rule 45 of the Rules of Court
challenging the Decision2 dated July 25, 2008 and
Resolution3 dated December 5, 2008 of the Court of Appeals (CA)
in CA-G.R. CV No. 88101.
The case arose from an altercation between
respondent Orico Doctolero (Doctolero ), a
security guard of respondent Grandeur
Security and Services Corporation
(Grandeur) and petitioners John E.R. Reyes
(John) and Mervin Joseph Reyes (Mervin)
in the parking area of respondent Makati
Cinema Square (MCS).4
Grandeur advances a different version, one
based on the Initial Report 6 conducted by
Investigator Cosme Giron. While Doctolero was on duty at the
ramp of the exit driveway of MCS's basement parking, John took
over the left lane and insisted entry through the basement
parking's exit driveway. Knowing that this is against traffic rules,
Doctolero stopped John, prompting the latter to alight from his
vehicle and confront Doctolero. With his wife unable to pacify him,
John punched and kicked Doctolero, hitting the latter on his left
face and stomach. Doctolero tried to step back to avoid his
aggressor but John persisted, causing Doctolero to draw his
service firearm and fire a warning shot. John ignored this and
continued his attack.
He caught up with Doctolero and wrestled
with him to get the firearm. This caused the
gun to fire off and hit John's leg. Mervin
then ran after Doctolero but was shot on
the stomach by security guard Avila. 7
petitioners prayed that respondents be
ordered, jointly and severally, to pay them
actual, moral, and exemplary damages,
the
attorney's fees and litigation 8 costs.
Respondents Doctolero and Avila failed to
file an answer despite service of summons
upon them. Thus, they were declared in
default in an Order dated December 12,
1997.9
For its part, Grandeur asserted that it
exercised the required diligence in the
selection and supervision of its employees.
It likewise averred that the shooting
incident was caused by the unlawful
aggression of petitioners who took
advantage of their "martial arts" skills. 10
On the other hand, MCS contends that it
cannot be held liable for damages simply
because of its ownership of the premises
where the shooting incident occurred. It
argued that the injuries sustained by
petitioners were caused by the acts of
respondents Doctolero and Avila, for whom
respondent Grandeur should be solely
responsible. It further argued that the
carpark was, at that time, being managed
by Park Asia Philippines and MCS had no
control over the carpark when the shooting
incident occurred on January 26, 1996. It
likewise denied liability for the items lost in
petitioners' vehicle. 11
On April 15, 2005, the RTC rendered a
decision dismissing the complaint against
MCS. It, however, held Grandeur solidarily
liable with respondents Doctolero and
Avila. According to the RTC, Grandeur was
unable to prove that it exercised the
diligence of a good father of a family in
the supervision of its employees because it
failed to prove strict implementation of its
rules, regulations, guidelines, issuances
and instructions, and to monitor consistent
compliance by respondents. 14
On September 19, 2005, upon Grandeur's
motion for reconsideration, the RTC issued
an Order modifying its April 15, 2005
Decision, to wit:
WHEREFORE, premises considered, the
Motion for Reconsideration is
hereby GRANTED, and the decision dated
15 April 2005 is hereby modified, as
follows:
The Court renders judgment in favor of
plaintiffs finding defendants Orico
Doctolero and [Romeo] Avila liable for
negligence and to pay plaintiffs, the
following amounts:
1. [P]344,898. 73 as actual damages;
2. [P]360,000.00 as the reasonable lost
(sic) or income and P20,000.00 in the form
or tuition fees, books, and other school
incidental expenses;
3. [P]300,000 as moral damages;
4. [P] 100,000.00 as exemplary damages;
5. [P]75,000.00 as attorney's fees;
6. costs of suit.
The Court, however, orders
the DISMISSAL of the complaint filed
against defendants Grandeur Security and
Services Corporation and
[MCS].1âwphi1 It is likewise ordered the
Dismissal or both the Counterclaims filed
by defendants Grandeur Security and
Services Corp., and [MCS] for the right to
litigate is the price we pay in a civil society.
SO ORDERED. 15 (Emphasis in the original.)
In reconsidering its Decision, the RTC held
that it re-evaluated the facts and the
attending circumstances of the present
case and was convinced that Grandeur has
sufficiently overcome the presumption of
negligence. It gave credence to the
testimony of Grandeur's witness, Eduardo
Ungui, the head of the Human Resources
Department (HRD) of Grandeur, as regards
the various procedures in its selection from
and hiring of security guards. Ungui
testified that Grandeur's hiring procedure
included, among others, several rounds of
interview, submission of various clearances
from different government agencies, such
as the NBI clearance and PNP clearance,
undergoing neuro-psychiatric
examinations, drug testing and physical
examinations, attending pre-licensing
training and seminars, securing a security
license, and undergoing on the job training
for seven days. 16
Furthermore, the RTC held that Grandeur
was able to show that it observed diligence
of a good father of the family during the
existence of the employment when it
conducted regular and close supervision of
its security guards assigned to various
clients. In this regard, the RTC cited
Grandeur's standard operational
procedures, as testified to by Ungui, which
include: (1) daily marking before the
security guards are posted; (2) post-to-
post station conducted by the branch
supervisor and vice-supervisor; (3) round
the clock inspection by the company
inspector to determine the efficiency and
fulfilment by the security guards of their
respective duties; (4) a monthly area
formation conducted by the operation
officer; (5) a quarterly area formation
conducted by the operation officer; (6) a
general formation conducted every six
months by the president, vice-president,
operation officer and HRD head; (7) a
yearly neuro-psychiatric test; (8) a special
seminar conducted every two years; (9) re-
training course also held every two years;
and (10) monthly briefing or orientation to
those security guards who committed
violations. 17 The RTC likewise gave weight to the
memorandum/certificates submitted by Grandeur as proof of its
diligence in the supervision of the actual work performances of its
employees. 18
Petitioners assailed the RTC Order dated
September 19, 2005 before the CA.
The CA dismissed petitioners' appeal and
affirmed the RTC's Order. It agreed that
Grandeur was able to prove with
preponderant evidence that it observed the
degree of diligence required in both
selection and supervision of its security
guards. 19
The CA likewise rejected petitioners'
arguments against the additional evidence
belatedly adduced by Grandeur in support
of its motion for reconsideration before the
RTC. It ruled that the additional
memoranda and certificate of attendance
to seminars which Grandeur attached to its
motion for reconsideration can be
considered as they are related to the
testimonial evidence adduced during
trial. 20
Finally, the CA rejected petitioners'
argument that MCS should be held liable as
indirect employers of respondents.
According to the CA, the concept of indirect
employer only relates to the liability for
unpaid wages and, as such, finds no
application to this case involving "imputed
negligence" under Article 2180 of the Civil
Code. It held that the lack of employer-
employee relationship between
respondents Doctolero and Avila and
respondent MCS bars petitioners' claim
against MCS for the former's acts. [[21]
Petitioners filed a motion for
reconsideration which the CA denied in its
Resolution dated December 5, 2008.22
Hence, the present petition.
The sole issue for the consideration of this
Court is whether Grandeur and MCS may
be held vicariously liable for the damages
caused by respondents Doctolero and Avila
to petitioners John and Mervin Reyes.
We deny the petition.
Petitioner contends that MCS should be
held liable for the negligence of
respondents Avila and Doctolero. According
to petitioners, since the act or omission
complained of took place in the vicinity of
MCS, it is liable for all damages which are
the natural and probable consequences of
the act or omission complained of. They
reasoned that MCS hired the services of
Grandeur, whose employees (the security
guards), in turn, committed harmful acts
that caused the damages suffered by
petitioners. MCS should thus be declared as
joint tortfeasor with Grandeur and
respondent security guards. 23
We cannot agree. MCS is not liable to
petitioners.
As a general rule, one is only responsible
for his own act or omission. 24 This general rule is
laid down in Article 2176 of the Civil Code, which provides:
Art. 2176. Whoever by act or omission
causes damage to another, there being
fault or negligence, is obliged to pay for the
damage clone. 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 or this
Chapter.
The law, however, provides for exceptions
when it makes certain persons liable for the
act or omission of another.1âwphi1 One
exception is an employer who is made
vicariously liable for the tort committed by
his employee under paragraph 5 of Article
2180.25 Here, although the employer is not the actual
tortfeasor, the law makes him vicariously liable on the basis of the
civil law principle of paterfamilias for failure to exercise due care
and vigilance over the acts of one's subordinates to prevent
damage to another.26
It must be stressed, however, that the
above rule is applicable only if there is an
employer-employee relationship. 27 This
employer-employee relationship cannot be presumed but must be
sufficiently proven by the plaintiff.28 The plaintiff must also show
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 defendant, as employer, may find it necessary to interpose the
defense of due diligence in the selection and supervision
of 29 employees.
In Mamaril v. The Boy Scout of the
Philippines,30 we found that there was no employer-
employee relationship between Boy Scout of the Philippines (BSP)
and the security guards assigned to it by an agency pursuant to a
Guard Service Contract. In the absence of such relationship,
vicarious liability under Article 2180 of the Civil Code cannot apply
Avila, and second, that after hiring
as against BSP. 31 Similarly, we find no employer-employee
Doctolero and Avila, Grandeur had
relationship between MCS and respondent guards. The guards
exercised due diligence
were merely assigned by Grandeur to secure MCS' premises
in supervising them.
pursuant to their Contract of Guard Services. Thus, MCS cannot be
In Metro Manila Transit Corporation v.
held vicariously liable for damages caused by these guards' acts
Court of Appeals, we held:
or omissions.
On the matter of selection of
Neither can it be said that a principal- employees, Campo vs. Camarote, supra,
agency relationship existed between MCS lays down this admonition:
and Grandeur. Section 8 of the Contract for x x x In order that the owner of a vehicle
Guard Services between them explicitly may be considered as having exercised all
states: diligence of a good father of a family, he
8. LIABILITY TO GUARDS AND THIRD should not have been satisfied with the
PARTIES mere possession of a professional driver's
The SECURITY COMPANY is NOT an agent license; he should have carefully
or employees (sic) of the CLIENT and the examined the applicant for
guards to be assigned by the SECURITY employment as to his qualifications,
COMP ANY to the CLIENT are in no sense his experience and record of
employees of the latter as they arc for all service. These steps appellant failed to
intents and purposes under contract with observe; he has therefore, failed to
the SECURITY COMPANY. Accordingly, the exercise all due diligence required of a
CLIENT shall not be responsible for any and good father of a family in the choice or
all claims for personal injury or death that selection of driver.
arises of or in the course of the Due diligence in the supervision of
performance of guard duties. 32 (Emphasis in the employees, on the other hand, includes the
original.)
formulation of suitable rules and
II regulations for the guidance of employees
On the other hand, paragraph 5 of Article and the issuance of proper instructions
218033 of the Civil Code may be applicable to Grandeur, it intended for the protection of the public
being undisputed that respondent guards were its employees.
and persons with whom the employer has
When the employee causes damage due to his own negligence
relations through his or its employees and
while performing his own duties, there arises the Juris
the imposition of necessary disciplinary
tantum presumption that the employer is negligent, rebuttable
measures upon employees in case of
only by proof of observance of the diligence of a good father of a
breach or as may be warranted to ensure
family. 34 The "diligence of a good father" referred to in the last
the performance of acts indispensable to
paragraph of Article 2180 means diligence in the selection and
the business of and beneficial to their
supervision of employees. 35
employer. To this, we add that actual
To rebut the presumption of negligence, implementation and monitoring of
Grandeur must prove two things: first, that consistent compliance with said rules
it had exercised due diligence in should be the constant concern of the
the selection of respondents Doctolero and employer, acting through dependable
supervisors who should regularly report on diligence of a good father of a family in 9. The applicant then undergoes a
their supervisory functions. 36 (Emphasis supplied; the selection and hiring of its security probationary period of six months after
citations omitted.)
guards. As testified to by its HRD head which the employee automatically becomes
In the earlier case of Central Taxicab Corp. Ungui, and corroborated by documentary regular upon meeting the company
v. Ex-Meralco Employees Transportation evidence including clearances from various standards. 41
Co.,37 the Court held that there was no hard-and-fast rule on government agencies, certificates, and Unlike in the aforecited MMTC cases, the
the quantum of evidence needed to prove due observance of all
favorable test results in medical and evidence presented by Grandeur consists
the diligence of a good father of a family as would constitute a
psychiatric examinations, Grandeur's not only in the testimony of its HRD head
valid defense to the legal presumption of negligence on the part of
selection and hiring procedure was outlined but also by documentary evidence showing
an employer or master whose employee has, by his negligence,
as follows: respondents Doctolero's and Avila's
caused damage to another. Jurisprudence nevertheless shows that
1. Initial screening; compliance with the above hiring and
testimonial evidence, without more, is insufficient to meet the
2. Submission of personal bio-data; selection process consisting of their
required quantum of proof.38
3. Submission of the following documents respective: (1) private security
In Metro Manila Transit Corporation v. and clearances: (1) NBI Clearance; (2) licenses; 42 (2) NBI Clearances;43 (3) Medical

Court of Appeals, the Court found that PDICE Clearance; (3) Barangay Clearance; Certificates; 44 (4) Police Clearances; 45 (5) Certificate of Live

"[p]etitioner's attempt to prove (4) PNP Clearance; (5) Birth Certificate; (6) Birth46/Certification issued by the Local Civil Registrar

its diligentissimi patris familias in the High School Diploma/Transcript/College appertaining to date of birth; 47 (6) Certificates issued by the

selection and supervision of Diploma; (7) Reserved Officers Training Safety Vocational and Training Center for satisfactory completion

employees through oral evidence must Corps or Citizens Army Training ce1iificate; of the Pre-Licensing Training Course;48 (7) High School

fail as it was unable to buttress the same (8) Court Clearances; and (9) resignation Diplomas;49 (8) SSS Personal Data Records;50 (9) Barangay

with any other evidence, object or or clearance from previous employment; Clearances;51 (10) Court Clearance; 52 (11) Neuro-psychiatric

documentary, which might obviate the 4. Pre-licensing training (15 days or 150 result issued by Goodwill Medical Center, Inc. for Doctolero's pre-

apparent biased nature of the hours) for those without experience or pre- employment screening as Security Guard 53 /Evaluation Report by

testimony."39 There, the supposed training course (56 hours) for applicants Office Chief Surgeon Army, Headquarters, Phil. Army, Fort

clearances, results of seminars and tests with working experience as security guard; Bonifacio Metro-Manila for Avila showing an above-average result

which Leonardo allegedly submitted and 5. Undergo neuro-psychiatric examination, and no psychotic ideations;54 (12) Certification from Varsitarian

complied with were never presented in drug testing and physical examination; Security and Investigation Agency, Inc. that Doctolero has been

court despite the fact that, if true, then 6. Submit and secure a security license employed with said agency; 55 (13) Ce1iificate issued by Cordova

they were obviously in the possession and before being given an application form; High School showing that Doctolero had completed the

control of Metro Manila Transit Corporation 7. Series of Interviews by Grandeur's requirements of the courts of Institution in Citizen Army Training-

(MMTC). Subsequently, in a different case Recruiting Officer, Personnel Clerk, Head of I ; 56 (14) Certification by Grandeur that Doctolero has submitted

also involving MMTC, the Court held that Human Resources Department, Operation the requirements for his application for the post of Security

"in a trial involving the issue of vicarious Department or Security Officer, Senior Guard. 57 Thus, we agree with the RTC and CA's evaluation that

liability, employers must submit concrete Security Officer, Chief Security Officer, Grandeur was able to satisfactorily prove that it had exercised due

proof, including documentary Assistant Vice President for Operations, diligence in the selection of respondents Doctolero and Avila.

evidence." 40 Assistant Vice President for Accounting, Once evidence is introduced showing that
A and recommending approval by the Vice the employer exercised the required
Here, both the R TC and the CA found that President and the President. amount of care in selecting its employees,
Grandeur was able to sufficiently prove, 8. The applicant undergoes on-the-job half of the employer's burden is
through testimonial and documentary training (OJT) for seven days assigned in overcome.58
evidence, that it had exercised the the field or within Grandeur's office; and B
The question of diligent supervision,
however, depends on the circumstances of
employment.1âwphi1 Ordinarily, evidence
demonstrating that the employer has
exercised diligent supervision of its
employee during the performance of the
latter's assigned tasks would be enough to
relieve him of the liability imposed by
Article 2180 in relation to Article 2176 of
the Civil Code 59
Here, Grandeur's HRD head, Ungui,
likewise testified on Grandeur's standard
operational procedures, showing the
means by which Grandeur conducts close
and regular supervision over the security
guards assigned to their various
clients. 60 Grandeur also submitted as evidence certificates of

the 62 attendance to various seminars and the memoranda both

those commending respondents for their good works63 and

reprimanding them for violations of various company

policies.64 We agree with the CA that these may be considered,

as they are related to the documents and testimonies adduced

during trial to show Grandeur's diligence in the supervision of the

actual work performance of its employees.

Considering all the evidence borne by the

records, we find that Grandeur has
sufficiently exercised the diligence of a
good father of a family in the selection and
supervision of its employees. Hence,
having successfully overcome the legal
presumption of negligence, it is relieved of
liability from the negligent acts of its
employees, respondents Doctolero and
Avila.
WHEREFORE, the petition is DENIED.
The Decision dated July 25, 2008 and the
Resolution dated December 5, 2008 of the
Court of Appeals are AFFIRMED.
SO ORDERED.
G.R. No. 163609 November 27,
2008
SPS. BUENAVENTURA JAYME AND
ROSARIO JAYME, petitioners,
vs.
RODRIGO APOSTOL, FIDEL LOZANO,
ERNESTO SIMBULAN, MAYOR
FERNANDO Q. MIGUEL, MUNICIPALITY
OF KORONADAL (NOW CITY OF
KORONADAL), PROVINCE OF SOUTH
COTABATO, represented by the
MUNICIPAL TREASURER and/or
MUNICIPAL MAYOR FERNANDO Q.
MIGUEL, and THE FIRST INTEGRATED
BONDING AND INSURANCE COMPANY,
INC., respondents.
DECISION
REYES, R.T., J.:
MAY a municipal mayor be held solidarily
liable for the negligent acts of the driver
assigned to him, which resulted in the
death of a minor pedestrian?
Challenged in this petition for review
on certiorari is the Decision1 of the Court of
Appeals (CA) which reversed and set aside
the decision of the Regional Trial Court
(RTC), Polomolok, Cotabato City, Branch
39, insofar as defendant Mayor Fernando
Q. Miguel is concerned. The CA absolved
Mayor Miguel from any liability since it was
not he, but the Municipality of Koronadal,
that was the employer of the negligent
driver.
The Facts
On February 5, 1989, Mayor Miguel of
Koronadal, South Cotabato was on board
the Isuzu pick-up truck driven by Fidel
Lozano, an employee of the Municipality of
Koronadal.2 The pick-up truck was
registered under the name of Rodrigo
Apostol, but it was then in the possession
of Ernesto Simbulan.3 Lozano borrowed the
pick-up truck from Simbulan to bring
Miguel to Buayan Airport at General Santos
City to catch his Manila flight.4
The pick-up truck accidentally hit Marvin C.
Jayme, a minor, who was then crossing the
National Highway in Poblacion, Polomolok,
South Cotabato.5 The intensity of the
collision sent Marvin some fifty (50) meters
away from the point of impact, a clear
indication that Lozano was driving at a very
high speed at the time of the accident.6
Marvin sustained severe head injuries with
subdural hematoma and diffused cerebral
contusion.7 He was initially treated at the
Howard Hubbard Memorial Hospital.8 Due
to the seriousness of his injuries, he was
airlifted to the Ricardo Limso Medical
Center in Davao City for more intensive
treatment.9 Despite medical attention,
Marvin expired six (6) days after the
accident.10
Petitioners spouses Buenaventura and
Rosario Jayme, the parents of Marvin, filed
a complaint for damages with the RTC
against respondents.11 In their complaint,
they prayed that all respondents be held
solidarily liable for their loss. They pointed
out that that proximate cause of Marvin's
death was Lozano's negligent and reckless
operation of the vehicle. They prayed for
actual, moral, and exemplary damages,
attorney's fees, and litigation expenses.
In their respective Answers, all
respondents denied liability for Marvin's
death. Apostol and Simbulan averred that
Lozano took the pick-up truck without their
consent. Likewise, Miguel and Lozano
pointed out that Marvin's sudden sprint
across the highway made it impossible to
avoid the accident. Yet, Miguel denied
being on board the vehicle when it hit
Marvin. The Municipality of Koronadal
adopted the answer of Lozano and Miguel.
As for First Integrated Bonding and
Insurance Company, Inc., the vehicle
insurer, it insisted that its liability is
contributory and is only conditioned on the
right of the insured. Since the insured did
not file a claim within the prescribed
period, any cause of action against it had
prescribed.
RTC Disposition
On January 25, 1999, the RTC rendered
judgment in favor of spouses Jayme, the
dispositive portion of which reads:
WHEREFORE, in view of the foregoing, the
defendant Municipality of Koronadal cannot
be held liable for the damages incurred by
other defendant (sic) being an agency of
the State performing a (sic) governmental
functions. The same with defendant
Hermogenes Simbulan, not being the
owner of the subject vehicle, he is absolved
of any liability. The complaint against
defendant First Integrated Bonding
Insurance Company, Inc. is hereby ordered
dismissed there being no cause of action
against said insurance company.
However, defendants Fidel Lozano, Rodrigo
Apostol, and Mayor Fernando Miguel of
Koronadal, South Cotabato, are hereby
ordered jointly and severally to pay the
plaintiff (sic) the following sums:
1. One Hundred Seventy Three Thousand
One Hundred One and Forty Centavos
(P173,101.40) Pesos as actual damages
with legal interest of 12% per annum
computed from February 11, 1989 until
fully paid;
2. Fifty Thousand (P50,000.00) Pesos as
moral damages;
3. Twenty Thousand (P20,000.00) Pesos as
exemplary damages;
4. Twenty Thousand (P20,000.00) Pesos as
Attorney's fees;
5. Fifty Thousand (P50,000.00) Pesos for
the death of Marvin Jayme;
6. Three Thousand (P3,000.00) as litigation
expenses; and
7. To pay the cost of this suit.
SO ORDERED.12
Dissatisfied with the RTC ruling, Mayor
Miguel interposed an appeal to the CA.
CA Disposition
In his appeal, Mayor Miguel contended that
the RTC erred in ruling that he was
Lozano's employer and, hence, solidarily
liable for the latter's negligent act. Records
showed that the Municipality of Koronadal
was the driver's true and lawful employer.
Mayor Miguel also denied that he did not
exercise due care and diligence in the
supervision of Lozano. The incident,
although unfortunate, was unexpected and
cannot be attributed to him.
On October 22, 2003, the CA granted the
appeal, disposing as follows:
WHEREFORE, the Decision appealed from is
REVERSED and SET ASIDE, insofar as
defendant-appellant Mayor Fernando Q.
Miguel is concerned, and the complaint
against him is DISMISSED.
IT IS SO ORDERED.13
The CA held that Mayor Miguel should not
be held liable for damages for the death of
Marvin Jayme. Said the appellate court:
Moreover, plaintiffs-appellees admitted
that Mayor Miguel was not the employer of
Lozano. Thus, paragraph 9 of the complaint
alleged that the Municipality of
Koronadal was the employer of both
Mayor Miguel and Lozano. Not being the
employer of Lozano, Mayor Miguel could
not thus be held liable for the damages
caused by the former. Mayor Miguel was
a mere passenger in the Isuzu pick-up
at the time of the accident.14 (Emphasis
supplied)
The CA also reiterated the settled rule that
it is the registered owner of a vehicle who
is jointly and severally liable with the driver
for damages incurred by passengers or
third persons as a consequence of injuries
or death sustained in the operation of the
vehicle.
Issues
The spouses Jayme have resorted to the
present recourse and assign to the CA the
following errors:
I.
THE HONORABLE COURT OF APPEALS
ERRED IN HOLDING THAT MAYOR
FERNANDO MIGUEL CANNOT BE HELD
LIABLE FOR THE DEATH OF MARVIN JAYME
WHICH CONCLUSION IS CONTRARY TO
LAW AND THE SETTLED
PRONOUNCEMENTS OF THIS HONORABLE
TRIBUNAL;
II.
THE FINDINGS OF FACTS OF THE
HONORABLE COURT OF APPEALS ARE
CONTRARY TO THE FINDINGS OF THE
TRIAL COURT AND ARE CONTRADICTED BY
THE EVIDENCE ON RECORD; MOREOVER,
THE CONCLUSIONS DRAWN BY THE
HONORABLE COURT OF APPEALS ARE ALL
BASED ON CONJECTURES AND SURMISES
AND AGAINST ACCEPTED COURSE OF
JUDICIAL PROCEEDINGS WHICH
URGENTLY CALL FOR AN EXERCISE OF
THIS HONORABLE COURT'S
SUPERVISION.15
Our Ruling
The doctrine of vicarious liability or
imputed liability finds no application in
the present case.
Spouses Jayme contend, inter alia, that
vicarious liability attaches to Mayor Miguel.
He was not a mere passenger, but instead
one who had direct control and supervision
over Lozano during the time of the
accident. According to petitioners, the
element of direct control is not negated by
the fact that Lozano's employer was the
Municipality of Koronadal. Mayor Miguel,
being Lozano's superior, still had control
over the manner the vehicle was operated.
Article 218016 of the Civil Code provides
that a person is not only liable for one's
own quasi-delictual acts, but also for those
persons for whom one is responsible for.
This liability is popularly known as vicarious
or imputed liability. To sustain claims
against employers for the acts of their
employees, the following requisites must
be established: (1) That the employee was
chosen by the employer personally or
through another; (2) That the service to be
rendered in accordance with orders which
the employer has the authority to give at
all times; and (3) That the illicit act of the
employee was on the occasion or by reason
of the functions entrusted to him.17
Significantly, to make the employee liable
under paragraphs 5 and 6 of Article 2180,
it must be established that the injurious or
tortuous act was committed at the time the
employee was performing his functions.18
Furthermore, the employer-employee
relationship cannot be assumed. It is
incumbent upon the plaintiff to prove the
relationship by preponderant evidence.
In Belen v. Belen,19 this Court ruled that it
was enough for defendant to deny an
alleged employment relationship. The
defendant is under no obligation to prove
the negative averment. This Court said:
It is an old and well-settled rule of the
courts that the burden of proving the action
is upon the plaintiff, and that if he fails
satisfactorily to show the facts upon which
he bases his claim, the defendant is under
no obligation to prove his exceptions. This
rue is in harmony with the provisions of
Section 297 of the Code of Civil Procedure
holding that each party must prove his own
affirmative allegations, etc.20
In resolving the present controversy, it is
imperative to find out if Mayor Miguel is,
indeed, the employer of Lozano and
therefore liable for the negligent acts of the
latter. To determine the existence of an
employment relationship, We rely on the
four-fold test. This involves: (1) the
employer's power of selection; (2)
payment of wages or other remuneration;
(3) the employer's right to control the
method of doing the work; and (4) the
employer's right of suspension or
dismissal.21
Applying the foregoing test, the CA
correctly held that it was the Municipality
of Koronadal which was the lawful
employer of Lozano at the time of the
accident. It is uncontested that Lozano was
employed as a driver by the municipality.
That he was subsequently assigned to
Mayor Miguel during the time of the
accident is of no moment. This Court has,
on several occasions, held that an
employer-employee relationship still exists
even if the employee was loaned by the
employer to another person or entity
because control over the employee
subsists.22 In the case under review, the
Municipality of Koronadal remains to be
Lozano's employer notwithstanding
Lozano's assignment to Mayor Miguel.
Spouses Jayme argued that Mayor Miguel
had at least supervision and control over
Lozano and how the latter operated or
drove the Isuzu pick-up during the time of
the accident. They, however, failed to
buttress this claim.
Even assuming arguendo that Mayor
Miguel had authority to give instructions or
directions to Lozano, he still can not be held
liable. In Benson v. Sorrell,23 the New
England Supreme Court ruled that mere
giving of directions to the driver does not
establish that the passenger has control
over the vehicle. Neither does it render one
the employer of the driver. This Court,
in Soliman, Jr. v. Tuazon,24 ruled in a
similar vein, to wit:
x x x 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
and omissions. Those instructions or
directions are ordinarily no more than
requests commonly envisaged in the
contract for services entered into with the
security agency. x x x25 (Emphasis
supplied)
Significantly, no negligence may be
imputed against a fellow employee
although the person may have the right to
control the manner of the vehicle's
operation.26 In the absence of an
employer-employee relationship
establishing vicarious liability, the driver's
negligence should not be attributed to a
fellow employee who only happens to be an
occupant of the vehicle.27 Whatever right of
control the occupant may have over the
driver is not sufficient by itself to justify an
application of the doctrine of vicarious
liability. Handley v. Lombardi28 is
instructive on this exception to the rule on
vicarious liability:
Plaintiff was not the master or principal of
the driver of the truck, but only an
intermediate and superior employee or
agent. This being so, the doctrine
of respondeat superior or qui facit per
alium is not properly applicable to him. His
power to direct and control the driver was
not as master, but only by virtue of the fact
that they were both employed by Kruse,
and the further fact that as Kruse's agent
he was delegated Kruse's authority over
the driver. x x x
In the case of actionable negligence, the
rule is well settled both in this state and
elsewhere that the negligence of a
subordinate employee or subagent is not to
be imputed to a superior employee or
agent, but only to the master or principal.
(Hilton v. Oliver, 204 Cal. 535 [61 A. L. R.
297, 269 Pac. 425; Guild v. Brown, 115
Cal. App. 374 [1 Pac. (2d) 528; Ellis v.
Southern Ry. Co., 72 S. C. 464 [2 L. R. A.
(N. S.) 378, 52 S. E. 228; Thurman v.
Pittsburg & M. Copper Co., 41 Mont. 141
[108 Pac. 588]; 2 Cor. Jur., p. 829; and see
the elaborate note in 61 A. L. R. 277, and
particularly that part commencing at p.
290.) We can see no logical reason for
drawing any distinction in this regard
between actionable negligence and
contributory negligence. x x x29
The rule was reiterated in Bryant v. Pacific
Elec. Ry. Co.[30 and again in Sichterman v.
Hollingshead Co.31
In Swanson v. McQuown,32 a case
involving a military officer who happened
to be riding in a car driven by a subordinate
later involved in an accident, the Colorado
Supreme Court adhered to the general rule
that a public official is not liable for the
wrongful acts of his subordinates on a
vicarious basis since the relationship is not
a true master-servant situation.33 The
court went on to rule that the only
exception is when they cooperate in the act
complained of, or direct or encourage it.34
In the case at bar, Mayor Miguel was
neither Lozano's employer nor the vehicle's
registered owner. There existed no causal
relationship between him and Lozano or
the vehicle used that will make him
accountable for Marvin's death. Mayor
Miguel was a mere passenger at the time
of the accident.
Parenthetically, it has been held that the
failure of a passenger to assist the driver,
by providing him warnings or by serving as
lookout does not make the passenger liable
for the latter's negligent acts.35 The driver's
duty is not one that may be delegated to
others.36
As correctly held by the trial court, the true
and lawful employer of Lozano is the
Municipality of Koronadal. Unfortunately
for Spouses Jayme, the municipality may
not be sued because it is an agency of the
State engaged in governmental functions
and, hence, immune from suit. This
immunity is illustrated in Municipality of
San Fernando, La Union v. Firme,37 where
this Court held:
It has already been remarked that
municipal corporations are suable because
their charters grant them the competence
to sue and be sued. Nevertheless, they are
generally not liable for torts committed by WHEREFORE, the petition is DENIED and
them in the discharge of governmental the appealed Decision AFFIRMED.
functions and can only be held answerable SO ORDERED.
only if it can be shown that they were
acting in proprietary capacity. In
permitting such entities to be sued, the
State merely gives the claimant the right to
show that the defendant was not acting in
governmental capacity when the injury was
committed or that the case comes under
the exceptions recognized by law. Failing
this, the claimant cannot recover.38
Verily, liability attaches to the registered
owner, the negligent driver and his direct
employer. The CA observation along this
line are worth restating:
Settled is the rule that the registered owner
of a vehicle is jointly and severally liable
with the driver for damages incurred by
passengers and third persons as a
consequence of injuries or death sustained
in the operation of said vehicles.
Regardless of who the actual owner of the
vehicle is, the operator of record continues
to be the operator of the vehicle as regards
the public and third persons, and as such is
directly and primarily responsible for the
consequences incident (sic) to its operation
x x x.39
The accidental death of Marvin Jayme is a
tragic loss for his parents. However, justice
demands that only those liable under our
laws be held accountable for Marvin's
demise. Justice can not sway in favor of
petitioners simply to assuage their pain and
loss. The law on the matter is clear: only
the negligent driver, the driver's employer,
and the registered owner of the vehicle are
liable for the death of a third person
resulting from the negligent operation of
the vehicle.
G.R. No. 132266 December 21, 1999
CASTILEX INDUSTRIAL
CORPORATION, petitioner,
vs.
VICENTE VASQUEZ, JR. and LUISA SO
VASQUEZ, and CEBU DOCTORS'
HOSPITAL, INC., respondents.
DAVIDE, JR., C.J.:
The pivotal issue in this petition is whether
an employer may be held vicariously liable
for the death resulting from the negligent
operation by a managerial employee of a
company-issued vehicle.
The antecedents, as succinctly summarized
by the Court of Appeals, are as follows:
On 28 August 1988, at around 1:30 to 2:00
in the morning, Romeo So Vasquez, was
driving a Honda motorcycle around Fuente
Osmeña Rotunda. He was traveling
counter-clockwise, (the normal flow of
traffic in a rotunda) but without any
protective helmet or goggles. He was also
only carrying a Student's Permit to Drive at
the time. Upon the other hand, Benjamin
Abad [was a] manager of Appellant
Castilex Industrial Corporation, registered
owner [of] a Toyota Hi-Lux Pick-up with
plate no. GBW-794. On the same date and
time, Abad drove the said company car out
of a parking lot but instead of going around
the Osmeña rotunda he made a short cut
against [the] flow of the traffic in
proceeding to his route to General Maxilom
St. or to Belvic St.
In the process, the motorcycle of Vasquez
and the pick-up of Abad collided with each
other causing severe injuries to the former.
Abad stopped his vehicle and brought
Vasquez to the Southern Islands Hospital
and later to the Cebu Doctor's Hospital.
On September 5, 1988, Vasquez died at the
Cebu Doctor's Hospital. It was there that
Abad signed an acknowledgment of
Responsible Party (Exhibit K) wherein he
agreed to pay whatever hospital bills,
professional fees and other incidental
charges Vasquez may incur.
After the police authorities had conducted
the investigation of the accident, a Criminal
Case was filed against Abad but which was
subsequently dismissed for failure to
prosecute. So, the present action for
damages was commenced by Vicente
Vasquez, Jr. and Luisa So Vasquez, parents
of the deceased Romeo So Vasquez,
against Jose Benjamin Abad and Castilex
Industrial Corporation. In the same action,
Cebu Doctor's Hospital intervened to collect
unpaid balance for the medical expense
given to Romeo So Vasquez.1
The trial court ruled in favor of private
respondents Vicente and Luisa Vasquez
and ordered Jose Benjamin Abad (hereafter
ABAD) and petitioner Castilex Industrial
Corporation (hereafter CASTILEX) to pay
jointly and solidarily (1) Spouses Vasquez,
the amounts of P8,000.00 for burial
expenses; P50,000.00 as moral damages;
P10,000.00 as attorney's fees; and
P778,752.00 for loss of earning capacity;
and (2) Cebu Doctor's Hospital, the sum of
P50,927.83 for unpaid medical and hospital
bills at 3% monthly interest from 27 July
1989 until fully paid, plus the costs of
litigation.2
CASTILEX and ABAD separately appealed
the decision.
In its decision3 of 21 May 1997, the Court
of Appeals affirmed the ruling of the trial
court holding ABAD and CASTILEX liable
but held that the liability of the latter is
"only vicarious and not solidary" with the
former. It reduced the award of damages
representing loss of earning capacity from
P778,752.00 to P214,156.80; and the
interest on the hospital and medical bills,
from 3% per month to 12% per
annum from 5 September 1988 until fully
paid.
Upon CASTILEX's motion for
reconsideration, the Court of Appeals
modified its decision by (1) reducing the
award of moral damages from P50,000 to
P30,000 in view of the deceased's
contributory negligence; (b) deleting the
award of attorney's fees for lack of
evidence; and (c) reducing the interest on
hospital and medical bills to 6% per
annum from 5 September 1988 until fully
paid.4
Hence, CASTILEX filed the instant petition
contending that the Court of Appeals erred
in (1) applying to the case the fifth
paragraph of Article 2180 of the Civil Code,
instead of the fourth paragraph thereof;
(2) that as a managerial employee, ABAD
was deemed to have been always acting
within the scope of his assigned task even
outside office hours because he was using
a vehicle issued to him by petitioner; and
(3) ruling that petitioner had the burden to
prove that the employee was not acting
within the scope of his assigned task.
Jose Benjamin ABAD merely adopted the
statement of facts of petitioner which holds
fast on the theory of negligence on the part
of the deceased.
On the other hand, respondents Spouses
Vasquez argue that their son's death was
caused by the negligence of petitioner's
employee who was driving a vehicle issued
by petitioner and who was on his way home
from overtime work for petitioner; and that
petitioner is thus liable for the resulting
injury and subsequent death of their son on
the basis of the fifth paragraph of Article
2180. Even if the fourth paragraph of
Article 2180 were applied, petitioner
cannot escape liability therefor. They
moreover argue that the Court of Appeals
erred in reducing the amount of
compensatory damages when the award
made by the trial court was borne both by
evidence adduced during the trial regarding
deceased's wages and by jurisprudence on
life expectancy. Moreover, they point out
that the petition is procedurally not
acceptable on the following grounds: (1)
lack of an explanation for serving the
petition upon the Court of Appeals by
registered mail, as required under Section
11, Rule 13 of the Rules of Civil Procedure;
and (2) lack of a statement of the dates of
the expiration of the original reglementary
period and of the filing of the motion for
extension of time to file a petition for
review.
For its part, respondent Cebu Doctor's
Hospital maintains that petitioner
CASTILEX is indeed vicariously liable for
the injuries and subsequent death of
Romeo Vasquez caused by ABAD, who was
on his way home from taking snacks after
doing overtime work for petitioner.
Although the incident occurred when ABAD
was not working anymore "the inescapable
fact remains that said employee would not
have been situated at such time and place
had he not been required by petitioner to
do overtime work." Moreover, since
petitioner adopted the evidence adduced
by ABAD, it cannot, as the latter's
employer, inveigle itself from the ambit of
liability, and is thus estopped by the
records of the case, which it failed to
refute.
We shall first address the issue raised by
the private respondents regarding some
alleged procedural lapses in the petition.
Private respondent's contention of
petitioner's violation of Section 11 of Rule
13 and Section 4 of Rule 45 of the 1997
Rules of Civil Procedure holds no water.
Sec. 11 of Rule 13 provides:
Sec. 11. Priorities in modes of services and
filing. — Whenever practicable, the service
and filing of pleadings and other papers
shall be done personally. Except with
respect to papers emanating from the
court, a resort to other modes must be
accompanied by a written explanation why
the service or filing was not done
personally. A violation of this Rule may be
cause to consider the paper as not filed.
The explanation why service of a copy of
the petition upon the Court of Appeals was
done by registered mail is found on Page
28 of the petition. Thus, there has been
compliance with the aforequoted provision.
As regards the allegation of violation of the
material data rule under Section 4 of Rule
45, the same is unfounded. The material
dates required to be stated in the petition
are the following: (1) the date of receipt of
the judgment or final order or resolution
subject of the petition; (2) the date of filing
of a motion for new trial or reconsideration,
if any; and (3) the date of receipt of the
notice of the denial of the motion. Contrary
to private respondent's claim, the petition
need not indicate the dates of the
expiration of the original reglementary
period and the filing of a motion for
extension of time to file the petition. At any
rate, aside from the material dates
required under Section 4 of Rule 45,
petitioner CASTILEX also stated in the first
page of the petition the date it filed the
motion for extension of time to file the
petition.
Now on the merits of the case.
The negligence of ABAD is not an issue at
this instance. Petitioner CASTILEX
presumes said negligence but claims that it
is not vicariously liable for the injuries and
subsequent death caused by ABAD.
Petitioner contends that the fifth paragraph
of Article 2180 of the Civil Code should only
apply to instances where the employer is
not engaged in business or industry. Since
it is engaged in the business of
manufacturing and selling furniture it is
therefore not covered by said provision.
Instead, the fourth paragraph should
apply.
Petitioner's interpretation of the fifth
paragraph is not accurate. The phrase
"even though the former are not engaged
in any business or industry" found in the
fifth paragraph should be interpreted to
mean that it is not necessary for the
employer to be engaged in any business or
industry to be liable for the negligence of
his employee who is acting within the scope
of his assigned task.5
A distinction must be made between the
two provisions to determine what is
applicable. Both provisions apply to
employers: the fourth paragraph, to
owners and managers of an establishment
or enterprise; and the fifth paragraph, to
employers in general, whether or not
engaged in any business or industry. The
fourth paragraph covers negligent acts of
employees committed either in the service
of the branches or on the occasion of their
functions, while the fifth paragraph
encompasses negligent acts of employees
acting within the scope of their assigned
task. The latter is an expansion of the
former in both employer coverage and acts
included. Negligent acts of employees,
whether or not the employer is engaged in
a business or industry, are covered so long
as they were acting within the scope of
their assigned task, even though
committed neither in the service of the
branches nor on the occasion of their
functions. For, admittedly, employees
oftentimes wear different hats. They
perform functions which are beyond their
office, title or designation but which,
nevertheless, are still within the call of
duty.
This court has applied the fifth paragraph
to cases where the employer was engaged
in a business or industry such as truck
operators6 and banks.7 The Court of
Appeals cannot, therefore, be faulted in
applying the said paragraph of Article 2180
of the Civil Code to this case.
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.8
It is undisputed that ABAD was a
Production Manager of petitioner CASTILEX
at the time of the tort occurrence. As to
whether he was acting within the scope of
his assigned task is a question of fact,
which the court a quo and the Court of
Appeals resolved in the affirmative.
Well-entrenched in our jurisprudence is the
rule that the factual findings of the Court of
Appeals are entitled to great respect, and
even finality at times. This rule is, however,
subject to exceptions such as when the
conclusion is grounded on speculations,
surmises, or conjectures.9 Such exception
obtain in the present case to warrant
review by this Court of the finding of the
Court of Appeals that since ABAD was
driving petitioner's vehicle he was acting
within the scope of his duties as a manager.
Before we pass upon the issue of whether
ABAD was performing acts within the range
of his employment, we shall first take up
the other reason invoked by the Court of
Appeals in holding petitioner CASTILEX
vicariously liable for ABAD's
negligence, i.e., that the petitioner did not
present evidence that ABAD was not acting
within the scope of his assigned tasks at
the time of the motor vehicle mishap.
Contrary to the ruling of the Court of
Appeals, it was not incumbent upon the
petitioner to prove the same. It was
enough for petitioner CASTILEX to deny
that ABAD was acting within the scope of
his duties; petitioner was not under
obligation to prove this negative
averment. Ei incumbit probatio qui dicit,
non qui negat (He who asserts, not he who
denies, must prove). The Court has
consistently applied the ancient rule that if
the plaintiff, upon whom rests the burden
of proving his cause of action, fails to show
in a satisfactory manner facts which he
bases his claim, the defendant is under no
obligation to prove his exception or
defense. 10
Now on the issue of whether the private
respondents have sufficiently established
that ABAD was acting within the scope of
his assigned tasks.
ABAD, who was presented as a hostile
witness, testified that at the time of the
incident, he was driving a company-issued
vehicle, registered under the name of
petitioner. He was then leaving the
restaurant where he had some snacks and
had a chat with his friends after having
done overtime work for the petitioner.
No absolutely hard and fast rule can be
stated which will furnish the complete
answer to the problem of whether at a
given moment, an employee is engaged in
his employer's business in the operation of
a motor vehicle, so as to fix liability upon
the employer because of the employee's
action or inaction; but rather, the result
varies with each state of facts. 11
In Filamer Christian Institute
v. Intermediate Appellant Court, 12 this
Court had the occasion to hold that acts
done within the scope of the employee's
assigned tasks includes "any act done by
an employee in furtherance of the interests
of the employer or for the account of the
employer at the time of the infliction of the
injury or damages."
The court a quo and the Court of Appeals
were one in holding that the driving by a
manager of a company-issued vehicle is
within the scope of his assigned tasks
regardless of the time and circumstances.
We do not agree. The mere fact that ABAD
was using a service vehicle at the time of
the injurious incident is not of itself
sufficient to charge petitioner with liability
for the negligent operation of said vehicle
unless it appears that he was operating the
vehicle within the course or scope of his
employment.
The following are principles in American
Jurisprudence on the employer's liability for
the injuries inflicted by the negligence of an
employee in the use of an employer's
motor vehicle:
I. Operation of Employer's Motor Vehicle in
Going to
or from Meals
It has been held that an employee who
uses his employer's vehicle in going from
his work to a place where he intends to eat
or in returning to work from a meal is not
ordinarily acting within the scope of his
employment in the absence of evidence of
some special business benefit to the
employer. Evidence that by using the
employer's vehicle to go to and from meals,
an employee is enabled to reduce his time-
off and so devote more time to the
performance of his duties supports the
finding that an employee is acting within
the scope of his employment while so
driving the vehicle. 13
II. Operation of Employer's Vehicle in Going
to
or from Work
In the same vein, traveling to and from the
place of work is ordinarily a personal
problem or concern of the employee, and
not a part of his services to his employer.
Hence, in the absence of some special
benefit to the employer other than the
mere performance of the services available
at the place where he is needed, the
employee is not acting within the scope of
his employment even though he uses his
employer's motor vehicle. 14
The employer may, however, be liable
where he derives some special benefit from
having the employee drive home in the
employer's vehicle as when the employer
benefits from having the employee at work
earlier and, presumably, spending more
time at his actual duties. Where the
employee's duties require him to circulate
in a general area with no fixed place or
hours of work, or to go to and from his
home to various outside places of work,
and his employer furnishes him with a
vehicle to use in his work, the courts have
frequently applied what has been called the
"special errand" or "roving commission"
rule, under which it can be found that the
employee continues in the service of his
employer until he actually reaches home.
However, even if the employee be deemed
to be acting within the scope of his
employment in going to or from work in his
employer's vehicle, the employer is not
liable for his negligence where at the time
of the accident, the employee has left the
direct route to his work or back home and
is pursuing a personal errand of his own.
III. Use of Employer's Vehicle Outside
Regular Working Hours
An employer who loans his motor vehicle to
an employee for the latter's personal use
outside of regular working hours is
generally not liable for the employee's
negligent operation of the vehicle during
the period of permissive use, even where
the employer contemplates that a regularly
assigned motor vehicle will be used by the
employee for personal as well as business
purposes and there is some incidental
benefit to the employer. Even where the
employee's personal purpose in using the
vehicle has been accomplished and he has
started the return trip to his house where
the vehicle is normally kept, it has been
held that he has not resumed his
employment, and the employer is not liable
for the employee's negligent operation of
the vehicle during the return trip. 15
The foregoing principles and jurisprudence
are applicable in our jurisdiction albeit
based on the doctrine of respondent
superior, not on the principle of bonus
pater familias as in ours. Whether the fault
or negligence of the employee is conclusive
on his employer as in American law or
jurisprudence, or merely gives rise to the
presumption juris tantum of negligence on
the part of the employer as in ours, it is
indispensable that the employee was acting
in his employer's business or within the
scope of his assigned task. 16
In the case at bar, it is undisputed that
ABAD did some overtime work at the
petitioner's office, which was located in
Cabangcalan, Mandaue City. Thereafter, he
went to Goldie's Restaurant in Fuente
Osmeña, Cebu City, which is about seven
kilometers away from petitioner's place of
business. 17 A witness for the private
respondents, a sidewalk vendor, testified
that Fuente Osmeña is a "lively place" even
at dawn because Goldie's Restaurant and
Back Street were still open and people were
drinking thereat. Moreover, prostitutes,
pimps, and drug addicts littered the
place. 18
At the Goldie's Restaurant, ABAD took
some snacks and had a chat with friends.
It was when ABAD was leaving the
restaurant that the incident in question liability for the damages caused by its
occurred. That same witness for the private employee, Jose Benjamin Abad.
respondents testified that at the time of the SO ORDERED.
vehicular accident, ABAD was with a
woman in his car, who then shouted:
"Daddy, Daddy!" 19 This woman could not
have been ABAD's daughter, for ABAD was
only 29 years old at the time.
To the mind of this Court, ABAD was
engaged in affairs of his own or was
carrying out a personal purpose not in line
with his duties at the time he figured in a
vehicular accident. It was then about 2:00
a.m. of 28 August 1988, way beyond the
normal working hours. ABAD's working day
had ended; his overtime work had already
been completed. His being at a place
which, as petitioner put it, was known as a
"haven for prostitutes, pimps, and drug
pushers and addicts," had no connection to
petitioner's business; neither had it any
relation to his duties as a manager. Rather,
using his service vehicle even for personal
purposes was a form of a fringe benefit or
one of the perks attached to his position.
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. 20
WHEREFORE, the petition is GRANTED, and
the appealed decision and resolution of the
Court of Appeals is AFFIRMED with the
modification that petitioner Castilex
Industrial Corporation be absolved of any
G.R. No. 75112 August 17, 1992
FILAMER CHRISTIAN
INSTITUTE, petitioner,
vs.
HON. INTERMEDIATE APPELLATE
COURT, HON. ENRIQUE P. SUPLICO, in
his capacity as Judge of the Regional
Trial Court, Branch XIV, Roxas City and
POTENCIANO KAPUNAN,
SR., respondents.
Bedona & Bedona Law Office for petitioner.
Rhodora G. Kapunan for private
respondents.
GUTIERREZ, JR., J.:
The private respondents, heirs of the late
Potenciano Kapunan, seek reconsideration
of the decision rendered by this Court on
October 16, 1990 (Filamer Christian
Institute v. Court of Appeals, 190 SCRA
477) reviewing the appellate court's
conclusion that there exists an employer-
employee relationship between the
petitioner and its co-defendant Funtecha.
The Court ruled that the petitioner is not
liable for the injuries caused by Funtecha
on the grounds that the latter was not an
authorized driver for whose acts the
petitioner shall be directly and primarily
answerable, and that Funtecha was merely
a working scholar who, under Section 14,
Rule X, Book III of the Rules and
Regulations Implementing the Labor Code
is not considered an employee of the
petitioner.
The private respondents assert that the
circumstances obtaining in the present
case call for the application of Article 2180
of the Civil Code since Funtecha is no doubt
an employee of the petitioner. The private
respondents maintain that under Article
2180 an injured party shall have recourse
against the servant as well as the petitioner
for whom, at the time of the incident, the
servant was performing an act in
furtherance of the interest and for the
benefit of the petitioner. Funtecha allegedly
did not steal the school jeep nor use it for
a joy ride without the knowledge of the
school authorities.
After a re-examination of the laws relevant
to the facts found by the trial court and the
appellate court, the Court reconsiders its
decision. We reinstate the Court of Appeals'
decision penned by the late Justice
Desiderio Jurado and concurred in by
Justices Jose C. Campos, Jr. and Serafin E.
Camilon. Applying Civil Code provisions,
the appellate court affirmed the trial court
decision which ordered the payment of the
P20,000.00 liability in the Zenith Insurance
Corporation policy, P10,000.00 moral
damages, P4,000.00 litigation and actual
expenses, and P3,000.00 attorney's fees.
It is undisputed that Funtecha was a
working student, being a part-time janitor
and a scholar of petitioner Filamer. He was,
in relation to the school, an employee even
if he was assigned to clean the school
premises for only two (2) hours in the
morning of each school day.
Having a student driver's license, Funtecha
requested the driver, Allan Masa, and was
allowed, to take over the vehicle while the
latter was on his way home one late
afternoon. It is significant to note that the
place where Allan lives is also the house of
his father, the school president, Agustin
Masa. Moreover, it is also the house where
Funtecha was allowed free board while he
was a student of Filamer Christian
Institute.
Allan Masa turned over the vehicle to
Funtecha only after driving down a road,
negotiating a sharp dangerous curb, and
viewing that the road was clear. (TSN, April
4, 1983, pp. 78-79) According to Allan's
testimony, a fast moving truck with glaring
lights nearly hit them so that they had to
swerve to the right to avoid a collision.
Upon swerving, they heard a sound as if
something had bumped against the
vehicle, but they did not stop to check.
Actually, the Pinoy jeep swerved towards
the pedestrian, Potenciano Kapunan who
was walking in his lane in the direction
against vehicular traffic, and hit him. Allan
affirmed that Funtecha followed his advise
to swerve to the right. (Ibid., p. 79) At the
time of the incident (6:30 P.M.) in Roxas
City, the jeep had only one functioning
headlight.
Allan testified that he was the driver and at
the same time a security guard of the
petitioner-school. He further said that
there was no specific time for him to be off-
duty and that after driving the students
home at 5:00 in the afternoon, he still had
to go back to school and then drive home
using the same vehicle.
Driving the vehicle to and from the house
of the school president where both Allan
and Funtecha reside is an act in furtherance
of the interest of the petitioner-school.
Allan's job demands that he drive home the
school jeep so he can use it to fetch
students in the morning of the next school
day.
It is indubitable under the circumstances
that the school president had knowledge
that the jeep was routinely driven home for
the said purpose. Moreover, it is not
improbable that the school president also
had knowledge of Funtecha's possession of
a student driver's license and his desire to
undergo driving lessons during the time
that he was not in his classrooms.
In learning how to drive while taking the
vehicle home in the direction of Allan's
house, Funtecha definitely was not having
a joy ride. Funtecha was not driving for the
purpose of his enjoyment or for a "frolic of
his own" but ultimately, for the service for
which the jeep was intended by the
petitioner school. (See L. Battistoni v.
Thomas, Can SC 144, 1 D.L.R. 577, 80 ALR
722 [1932]; See also Association of
Baptists for World Evangelism, Inc. v.
Fieldmen's Insurance Co., Inc. 124 SCRA
618 [1983]). Therefore, the Court is
constrained to conclude that the act of
Funtecha in taking over the steering wheel
was one done for and in behalf of his
employer for which act the petitioner-
school cannot deny any responsibility by
arguing that it was done beyond the scope
of his janitorial duties. The clause "within
the scope of their assigned tasks" for
purposes of raising the presumption of
liability of an employer, includes any act
done by an employee, in furtherance of the
interests of the employer or for the account
of the employer at the time of the infliction
of the injury or damage. (Manuel Casada,
190 Va 906, 59 SE 2d 47 [1950]) Even if
somehow, the employee driving the vehicle
derived some benefit from the act, the
existence of a presumptive liability of the
employer is determined by answering the
question of whether or not the servant was
at the time of the accident performing any
act in furtherance of his master's business.
(Kohlman v. Hyland, 210 NW 643, 50 ALR
1437 [1926]; Jameson v. Gavett, 71 P 2d
937 [1937])
Section 14, Rule X, Book III of the Rules
implementing the Labor Code, on which the
petitioner anchors its defense, was
promulgated by the Secretary of Labor and
Employment only for the purpose of
administering and enforcing the provisions
of the Labor Code on conditions of
employment. Particularly, Rule X of Book
III provides guidelines on the manner by
which the powers of the Labor Secretary
shall be exercised; on what records should
be kept; maintained and preserved; on
payroll; and on the exclusion of working
scholars from, and inclusion of resident
physicians in the employment coverage as
far as compliance with the substantive
labor provisions on working conditions, rest
periods, and wages, is concerned.
In other words, Rule X is merely a guide to
the enforcement of the substantive law on
labor. The Court, thus, makes the
distinction and so holds that Section 14,
Rule X, Book III of the Rules is not the
decisive law in a civil suit for damages
instituted by an injured person during a
vehicular accident against a working
student of a school and against the school
itself.
The present case does not deal with a labor
dispute on conditions of employment
between an alleged employee and an
alleged employer. It invokes a claim
brought by one for damages for injury
caused by the patently negligent acts of a
person, against both doer-employee and
his employer. Hence, the reliance on the
implementing rule on labor to disregard the
primary liability of an employer under
Article 2180 of the Civil Code is misplaced.
An implementing rule on labor cannot be
used by an employer as a shield to avoid
liability under the substantive provisions of
the Civil Code.
There is evidence to show that there exists
in the present case an extra-contractual
obligation arising from the negligence or
reckless imprudence of a person "whose
acts or omissions are imputable, by a legal
fiction, to other(s) who are in a position to
exercise an absolute or limited control over
(him)." (Bahia v. Litonjua and Leynes, 30
Phil. 624 [1915])
Funtecha is an employee of petitioner
Filamer. He need not have an official
appointment for a driver's position in order
that the petitioner may be held responsible
for his grossly negligent act, it being
sufficient that the act of driving at the time
of the incident was for the benefit of the
petitioner. Hence, the fact that Funtecha
was not the school driver or was not acting
within the scope of his janitorial duties does
not relieve the petitioner of the burden of
rebutting the presumption juris
tantum that there was negligence on its
part either in the selection of a servant or
employee, or in the supervision over him.
The petitioner has failed to show proof of
its having exercised the required diligence
of a good father of a family over its
employees Funtecha and Allan.
The Court reiterates that supervision
includes the formulation of suitable rules
and regulations for the guidance of its
employees and the issuance of proper
instructions intended for the protection of
the public and persons with whom the
employer has relations through his
employees. (Bahia v. Litonjua and
Leynes, supra, at p. 628; Phoenix
Construction, v. Intermediate Appellate
Court, 148 SCRA 353 [1987])
An employer is expected to impose upon its
employees the necessary discipline called
for in the performance of any act
indispensable to the business and
beneficial to their employer.
In the present case, the petitioner has not
shown that it has set forth such rules and
guidelines as would prohibit any one of its
employees from taking control over its
vehicles if one is not the official driver or
prohibiting the driver and son of the
Filamer president from authorizing another
employee to drive the school vehicle.
Furthermore, the petitioner has failed to
prove that it had imposed sanctions or
warned its employees against the use of its
vehicles by persons other than the driver.
The petitioner, thus, has an obligation to
pay damages for injury arising from the
unskilled manner by which Funtecha drove
the vehicle. (Cangco v. Manila Railroad Co.,
38 Phil. 768, 772 [1918]). In the absence
of evidence that the petitioner had
exercised the diligence of a good father of
a family in the supervision of its
employees, the law imposes upon it the
vicarious liability for acts or omissions of its
employees. (Umali v. Bacani, 69 SCRA 263
[1976]; Poblete v. Fabros, 93 SCRA 200
[1979]; Kapalaran Bus Liner v. Coronado,
176 SCRA 792 [1989]; Franco v.
Intermediate Appellate Court, 178 SCRA
331 [1989]; Pantranco North Express, Inc.
v. Baesa, 179 SCRA 384 [1989]) The
liability of the employer is, under Article
2180, primary and solidary. However, the
employer shall have recourse against the
negligent employee for whatever damages
are paid to the heirs of the plaintiff.
It is an admitted fact that the actual driver
of the school jeep, Allan Masa, was not
made a party defendant in the civil case for
damages. This is quite understandable
considering that as far as the injured
pedestrian, plaintiff Potenciano Kapunan,
was concerned, it was Funtecha who was
the one driving the vehicle and presumably
was one authorized by the school to drive.
The plaintiff and his heirs should not now
be left to suffer without simultaneous
recourse against the petitioner for the
consequent injury caused by a janitor doing
a driving chore for the petitioner even for a
short while. For the purpose of recovering
damages under the prevailing
circumstances, it is enough that the
plaintiff and the private respondent heirs
were able to establish the existence of
employer-employee relationship between
Funtecha and petitioner Filamer and the
fact that Funtecha was engaged in an act
not for an independent purpose of his own
but in furtherance of the business of his
employer. A position of responsibility on
the part of the petitioner has thus been
satisfactorily demonstrated.
WHEREFORE, the motion for
reconsideration of the decision dated
October 16, 1990 is hereby GRANTED. The
decision of the respondent appellate court
affirming the trial court decision is
REINSTATED.
SO ORDERED.
G.R. No. 197626, October 03, 2018
RAUL S. IMPERIAL, Petitioner, v. HEIRS
OF NEIL BAYABAN, AND MARY LOU
BAYABAN, Respondents.
DECISION
LEONEN, J.:
The burden of proving that a negligent act
of an employee was performed within the
scope of his or her assigned tasks rests
with the plaintiff. When the plaintiff has
discharged this burden, as in this case, the
presumption that the employer was
negligent arises, and the employer must
put forward evidence showing that he or
she had exercised the due diligence of a
good father of a family in the selection and
supervision of the employee. Failing to
dispute this presumption renders the
employer solidarily liable with the
employee for the quasi-delict.
This resolves a Petition for Review on
Certiorari1 filed by Raul S. Imperial
(Imperial) assailing the Court of Appeals
March 18, 2011 Decision2 and July 11,
2011 Resolution3 in CA-G.R. CV No. 93498.
The Court of Appeals found Imperial
solidarity liable with his employee and
driver, William Laraga (Laraga), for the
damages suffered by spouses Neil Bayaban
(Neil) and Mary Lou Bayaban (Mary Lou)
(collectively, the Bayaban Spouses) as a
result of Laraga's negligent operation of the
van owned by Imperial.
On December 14, 2003, at about 3:00
p.m., two (2) vehicles, a van and a tricycle,
figured in an accident along Sumulong
Highway, Antipolo City. The Mitsubishi L-
300 van with plate number USX 931 was
owned and registered under Imperial's
name, and was driven by Laraga. The
tricycle with plate number DU 8833 was income as pharmacist, P200,000.00 as
driven by Gerardo Mercado (Mercado).4 moral damages, and P20,000.00 as
On board the tricycle were the Bayaban attorney's fees.11
Spouses, who sustained injuries.5 They In his Answer,12 Imperial denied liability,
were brought to Unciano Hospital where contending that the van was under the
the attending physician found that Neil custody of one Rosalia Habon Pascua
suffered the following: (Pascua). According to Imperial, he lent the
Fracture Open Type III-B, Complete van to Pascua who needed it in fixing the
Comminuted, Displaced, middle Third greenhouse and water line pipes in
Tibia, Fracture Closed, Complete Imperial's garden somewhere in
comminuted displaced, Middle Third Antipolo.13 Imperial admitted that he had
Femur, right Fracture, closed complete employed Laraga as family driver14 but
disp. Lateral Tibial plateau knee joint left.6 contended that he had exercised due
As for Mary Lou, she was found to have diligence in the selection and supervision of
suffered the following: Laraga.15 He even allegedly sponsored
Fracture closed, complete, comminuted, Laraga's formal driving lessons.
Displaced distal radius left (Frykmann Furthermore, Laraga was allegedly acting
VIII), Dislocation, ulnocarpal/ulnoradial jt. outside the scope of his duties when the
left, Fracture, closed, complete, accident happened considering that it was
transverse, displaced, middle-distal a Sunday, his rest day.16
3rd Humerus right.7 Before the case proceeded to trial, Neil died
For the injuries they sustained, the on May 23, 2006.17 He was substituted by
Bayaban Spouses had to undergo therapy his heirs, namely, Mary Lou and their
and post-medical treatment.8 children, Donna Grace and Dan Geofrey
The Bayaban Spouses demanded (the Heirs of Neil Bayaban).18
compensation from Imperial, Laraga, and In its March 15, 2009 Decision,19 the
Mercado for the hospital bills and loss of Regional Trial Court ruled in favor of the
income that they sustained while Bayaban Spouses. It found Laraga
undergoing therapy and post-medical negligent and the proximate cause of the
treatment.9 When neither Imperial, accident, i.e., overtaking another vehicle
Laraga, nor Mercado heeded their demand, and, in the process, colliding with the
the Bayaban Spouses filed a tricycle that carried the Bayaban Spouses
Complaint10 for damages before the on the other side of the road.20 As for
Regional Trial Court of Antipolo City, Imperial, it ruled that he failed to prove
impleading Imperial, Laraga, and Mercado that he had exercised due diligence in the
as defendants. In their Complaint, they selection and supervision of Laraga, his
prayed for P311,760.75 as actual employee; thus, he was presumed
damages, US$1,900.00 per month negligent and was likewise held liable for
representing Neil's unearned income as a damages to the Bayaban Spouses.21
second-mate seaman, P7,600.00 per The Regional Trial Court held that the
month representing Mary Lou's unearned official receipts presented in evidence
substantiated the Bayaban Spouses' claim
for reimbursement of medical and hospital
expenses.22 However, it found the
certificates of employment inadequate to
prove the amount of their unearned
income.23 Nevertheless, Mary Lou, for her
own behalf, and the Heirs of Neil Bayaban
were awarded P100,000.00 as temperate
damages. Moral damages and exemplary
damages of P50,000.00 each and
attorney's fees of P25,000.00 plus costs of
suit were awarded to them as well.24
The dispositive portion of the Regional Trial
Court March 15, 2009 Decision read:
WHEREFORE, premises considered,
judgment is hereby rendered in favor of
Plaintiffs and against Defendants Raul
Imperial and William Laraga, ordering the
said Defendants to pay, jointly and
severally, the following:
1. Actual damages in the amount of
Php462,868.83 for medical
expenses and Php100,000.00 for
lost earnings during medical
treatment;
2. Moral damages in the amount [of]
P50,000.00;
3. Exemplary damages in the amount
of P50,000.00;
4. Attorney's fees, inclusive of
appearance fees, in the amount of
Php25,000.00, plus cost of suit.
SO ORDERED.25
Imperial appealed this Decision to the
Court of Appeals.26 Nevertheless, the Court
of Appeals maintained his liability, ruling
that "the registered owner of a motor
vehicle is primarily and directly responsible
for the consequences of its operation,
including the negligence of the driver, with
respect to the public and all third
persons."27 He could not escape liability by
arguing that it was Laraga's day off when
the accident happened or that the van was
in the custody of Pascua because neither
Laraga nor Pascua was presented in court
to confirm his assertions.28
The Court of Appeals likewise found that
Imperial failed to prove that he had
exercised due diligence in the selection and
supervision of Laraga. Apart from his bare
allegation that he had financed the formal
driving lessons of Laraga, he failed to
present documentary evidence that he did
so. He could not even remember the name
of the driving school where Laraga had
allegedly enrolled.29
However, the Court of Appeals deleted the
award of temperate damages because the
claim was allegedly not substantiated. It
added that temperate and actual damages
were mutually exclusive and could not be
awarded at the same time.30
The dispositive portion of the Court of
Appeals March 18, 2011 Decision31 read:
WHEREFORE, premises considered, the
instant appeal is DENIED. The assailed
Decision dated 15 March 2009 of the
Regional Trial Court of Antipolo, Branch 73
in Civil Case No. 04-7131 is
hereby AFFIRMED with
MODIFICATION, deleting the award of
temperate damages in the amount of
P100,000.00 for lost earnings during
medical treatment.
SO ORDERED.32 (Emphasis in the original)
Imperial filed a Motion for
Reconsideration,33 which the Court of
Appeals denied in its July 11, 2011
Resolution.34
On August 23, 2011, Imperial filed a
Petition for Review on Certiorari35 before
this Court. Mary Lou and the Heirs of Neil
Bayaban filed a Comment36 to which
Imperial replied.37 Upon the directive38 of
this Court, the parties filed their respective
Memoranda.39
Citing Castilex Industrial Corporation v.
Vasquez, Jr.,40 petitioner maintains that he
is not liable because respondents failed to
discharge their burden of proving that
Laraga was acting within the scope of his
assigned tasks at the time of the
accident.41 Furthermore, the official
receipts of the medical and hospital bills,
though original, were allegedly not
authenticated as required under Rule 132,
Section 2042 of the Rules of Court.
Therefore, these receipts are not
competent evidence of the actual damages
sustained by Neil and respondent Mary
Lou.43
Respondents point out Imperial's
admission that Laraga was his employee,
specifically, his family's stay-in driver.
Thus, even though the accident happened
on a Sunday, they contend that "it [was]
not far-fetched to conclude that ... Laraga
had always been utilized as a driver by the
petitioner and his family during
Sundays,"44 as this is allegedly the
"common practice under Philippine set
up."45 They maintain that Laraga was
acting within the scope of his assigned
tasks when the accident happened.46
Additionally, respondents contend that
petitioner failed to prove that he exercised
due diligence in the selection and
supervision of Laraga by failing to present
the original receipts showing that he had
enrolled Laraga to a formal driving school.
The contention that Imperial shouldered
Laraga's expenses in obtaining a driver's
license is hardly the due diligence of a good those of persons for whom one is
father of a family required to absolve him responsible.
from liability as Laraga's employer.47 ....
Lastly, respondents argue that original Employers shall be liable for the damages
receipts of medical and hospital bills are caused by their employees and household
sufficient proof of the actual damages they helpers acting within the scope of their
have sustained; hence, they need not be assigned tasks, even though the former are
authenticated to be competent proof of not engaged in any business or industry.
their claims.48 ....
Based on the pleadings submitted, the The responsibility treated of in this article
Issues for this Court's resolution are the shall cease when the persons herein
following: mentioned prove that they observed all the
First, whether or not the Court of Appeals diligence of a good father of a family to
shifted the burden on petitioner Raul S. prevent damage.
Imperial to prove that his employee, Articles 2176 and 2180 of the Civil Code
William Laraga, was not acting within the were derived from Articles 190249 and
scope of his assigned tasks; and 190350 of the Spanish Civil Code of 1889.
Second, whether or not the original Article 2176 defines "quasi-delict" as the
receipts of the medical and hospital bills fault or negligence that causes damage to
presented by respondents Neil Bayaban another, there being no pre-existing
and Mary Lou Bayaban are not competent contractual relations between the parties.
evidence of the actual damages that they On the other hand, Article 2180
have sustained considering that the enumerates persons who are vicariously
receipts were not authenticated. liable for the fault or negligence of persons
This Petition must be denied. over whom they exercise control, whether
I absolute or limited.
Articles 2176 and 2180 of the Civil Code This Court explained the legal fiction of
provide: vicarious liability in Cangco v. Manila
Article 2176. Whoever by act or omission Railroad Co.51 Though involving Articles
causes damage to another, there being 1902 and 1903 of the Spanish Civil Code of
fault or negligence, is obliged to pay for the 1889, Cangco's explanation of the law's
damage done. Such fault or negligence, if rationale remains relevant considering that
there is no pre-existing contractual relation Articles 1902 and 1903, and the present
between the parties, is called a quasi-delict Articles 2176 and 2180 are similarly
and is governed by the provisions of this worded. In Cangco:
Chapter. With respect to extra-contractual
.... obligation arising from negligence, whether
Article 2180. The obligation imposed by of act or omission, it is competent for the
Article 2176 is demandable not only for legislature to elect—and our Legislature
one's own acts or omissions, but also for has so elected—to limit such liability to
cases in which the person upon whom such
an obligation is imposed is morally culpable
or, on the contrary, for reasons of public
policy, to extend that liability, without
regard to the lack of moral culpability, so
as to include responsibility for the
negligence of those persons whose acts or
omissions are imputable, by a legal fiction,
to others who are in a position to exercise
an absolute or limited control over them.
The legislature which adopted our Civil
Code has elected to limit extra contractual
liability—with certain well-defined
exceptions—to cases in which moral
culpability can be directly imputed to the
persons to be charged. This moral
responsibility may consist in having failed
to exercise due care in one's own acts, or
in having failed to exercise due care in the
selection and control of one's agents or
servants, or in the control of persons who,
by reason of their status, occupy a position
of dependency with respect to the person
made liable for their conduct.52
Specifically for employers, they are
deemed liable or morally responsible53 for
the fault or negligence of their employees
but only if the employees are acting within
the scope of their assigned tasks. An act is
deemed an assigned task if it is "done by
an employee, in furtherance of the
interests of the employer or for the account
of the employer at the time of the infliction
of the injury or damage."54
Filamer Christian Institute v. Court of
Appeals55 explained when an act is within
the scope of an employee's assigned tasks
so as to hold an employer liable under
Article 2180. In Filamer, Daniel Funtecha
(Funtecha) was a working scholar of
Filamer Christian Institute (Filamer) and
had the duty of sweeping the school
passages for two (2) hours every morning
before his classes in exchange for free
tuition. On October 20, 1977, at about 6:30
p.m., Funtecha was driving the Pinoy jeep
owned by Filamer along Roxas Avenue in
Roxas City when the jeep struck Potenciano
Kapunan, Sr. (Kapunan), a pedestrian.
Kapunan sustained injuries and was
hospitalized for 20 days.56
Kapunan first filed a criminal case for
reckless imprudence resulting in serious
physical injuries against Funtecha,
reserving the right to file an independent
civil action for damages. Funtecha was
found guilty as charged and was sentenced
accordingly. As for the civil action for
damages, Kapunan sued Funtecha,
Filamer, and the school director and
president, Agustin Masa (Agustin).57
The Regional Trial Court58 and the Court of
Appeals59 both found Funtecha and Filamer
liable. On appeal, this Court reversed the
lower courts and absolved Filamer for
finding no employer-employee relationship
between them. According to this Court,
driving the school's Pinoy jeep was outside
the scope of Funtecha's employment as
sweeper within the school grounds.60
On reconsideration,61 however, this Court
reversed itself and found Filamer solidarily
liable with Funtecha. It found that Funtecha
resided with the family of the school
president, Agustin, whose son, Allan Masa
(Allan), was the school guard and driver of
the Pinoy jeep that served as school
service. After driving the students home,
Allan's duty included going back to the
school for his shift then driving home the
school jeep so he could use it to fetch the
students the next morning. On the day of
the accident, Allan was on his way home
from duty when Funtecha, who was with
him, requested to drive the jeep.
Negotiating a dangerous curve and blinded
by the glaring lights of a fast moving truck,
Funtecha swerved to the right and
accidentally hit Kapunan.62 Under these
circumstances, this Court said that
Funtecha "was not having a joy ride [and]
not driving for the purpose of his
enjoyment or for a 'frolic of his own' but
ultimately, for the service for which the
jeep was intended by the ... school."63
An employee's act was deemed outside his
assigned tasks and his employer was
absolved in Castilex Industrial Corporation
v. Vasquez, Jr.64 In Castilex, a managerial
employee of Castilex Industrial Corporation
(Castilex) was driving a company-issued
pick up which collided with the motorcycle
driven by Romeo So Vasquez, who later
died as a result of the accident. His parents
sued the managerial employee and Castilex
for damages.65 The trial court66 and the
Court of Appeals67 held Castilex solidarily
liable with the managerial employee, but
on appeal, this Court reversed and
absolved Castilex. This Court found that
the managerial employee was not acting
within the scope of his assigned tasks when
the accident happened. It was 2:00 a.m.,
way beyond office hours, and the
managerial employee had just got out of a
restaurant dubbed as a "haven for
prostitutes, pimps, and drug pushers and
addicts."68 In other words, the activity that
the managerial employee was doing when
the accident happened was not for the
account of Castilex or in furtherance of the
employee's assigned tasks.
One of the issues in Castilex was
determining who had the burden of proving
that the act was within the scope of the
employee's assigned tasks. On this issue,
this Court said that the burden of proving
the existence of an employer-employee
relationship and that the employee was
acting within the scope of his or her
assigned tasks rests with the plaintiff under
the Latin maxim "ei incumbit probatio qui
dicit, non qui negat" or "he who asserts,
not he who denies, must
prove."69 Therefore, it is not incumbent on
the employer to prove that the employee
was not acting within the scope of his
assigned tasks.70 Once the plaintiff
establishes the requisite facts, the
presumption that the employer was
negligent in the selection and supervision
of the employee arises, disputable with
evidence that the employer has observed
all the diligence of a good father of a family
to prevent damage.71 Though vicarious,
the liability of employers under Article 2180
is personal and direct.72
Applying the foregoing, this Court finds
that respondents have discharged the
burden of proof necessary to hold Imperial
vicariously liable under Article 2180 of the
Civil Code.
There is no question here that Laraga was
petitioner's driver, hence, his employee, as
this fact was admitted by petitioner. This
Court likewise finds that respondents have
established that Laraga was acting within
the scope of his assigned tasks at the time
of the accident. It was 3:00 p.m.73 and
Laraga was driving in Antipolo City, where,
as alleged by petitioner, his greenhouse
and garden were located.74 It is worth
noting that according to petitioner, he
loaned the van to Pascua for the
maintenance of his greenhouse and the
repair of the water line pipes in his garden.
The logical conclusion is that Laraga was
driving the van in connection with the
upkeep of petitioner's Antipolo greenhouse
and garden. Laraga was driving the van in
furtherance of the interests of petitioner at
the time of 1 the accident.
The defense that Sunday was supposedly
Laraga's day off fails to convince. There is
no proof whatsoever of the truthfulness of
this allegation, with Laraga not having
appeared in court to testify on this
matter.75
With respondents having discharged their
burden of proof, the disputable
presumption that petitioner Imperial was
negligent in the selection and supervision
of Laraga arises. Contrary to petitioner's
claim, there was no shifting of burden on
him to prove that Laraga was acting
outside of his assigned tasks. Rather,
petitioner had to put forward evidence that
he had exercised due diligence in the
selection and supervision of Laraga as his
driver to be relieved of liability.
Unfortunately for petitioner, he miserably
failed to dispute the presumption of
negligence in his selection and supervision
of Laraga. As the Regional Trial Court and
the Court of Appeals found, he only gave
self-serving testimonies without the
requisite documentary proof that he had
enrolled Laraga in a formal driving school.
At best, he only established that he had
financed the fees needed for Laraga to
obtain his driver's license, which is hardly
the due diligence contemplated in Article
2180 of the Civil Code.
Considering that petitioner failed to dispute
the presumption of negligence on his part,
he was correctly deemed liable for the
damages incurred by the Bayaban Spouses
when the tricycle they were riding collided
with the van driven by petitioner's
employee, Laraga. It must be noted that
the accident happened because Laraga
tried to overtake another vehicle and, in
doing so, drove to the opposite lane when
the van collided with the approaching
tricycle. Laraga was negligent in operating
the van. Pleyto v. Lomboy,76 cited in the
Regional Trial Court March 15, 2009
Decision, is on point:
A driver abandoning his proper lane for the
purpose of overtaking another vehicle in an
ordinary situation has the duty to see to it
that the road is clear and not to proceed if
he cannot do so in safety. When a motor
vehicle is approaching or rounding a curve,
there is special necessity for keeping to the
right side of the road and the driver does
not have the right to drive on the left hand
side relying upon having time to turn to the
right if a car approaching from the opposite
direction comes into view.77 (Citation
omitted)
II
Petitioner nevertheless claims that the
official receipts of the medical and hospital
bills are not competent evidence of the
actual damages allegedly sustained by the
Bayaban Spouses for not having been
authenticated. He, therefore, cannot be
held liable for unsubstantiated claims for
actual damages.
Petitioner's argument lacks merit.
Under the rules of evidence, documents are
either public or private. Public documents
are those exclusively enumerated in Rule
132, Section 19 of the Rules of Court.
These include written official acts, or
records of the official acts of the sovereign
authority, official bodies and tribunals, and
public officers, whether of the Philippines,
or of a foreign country; documents
acknowledged before a notary public
except last wills and testaments; and public
records, kept in the Philippines, of private
documents required by law to be entered
there. When public documents are
presented in evidence, they are prima
facie evidence of the facts stated there,
and thus, need not be authenticated.78
As for private documents, i.e., those not
enumerated in Rule 132, Section 19, they
must be authenticated, or their due
execution and authenticity proven, per
Rule 132, Section 20 of the Rules of Court,
thus:
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.
Any other private document need only be
identified as that which it is claimed to be.
Official receipts of hospital and medical
expenses are not among those enumerated
in Rule 132, Section 19. These official
receipts, therefore, are private documents
which may be authenticated either by
presenting as witness anyone who saw the
document executed or written, or by
presenting an evidence of the genuineness
of the signature or handwriting of the
maker.
In insisting that respondents should have
presented as witnesses the persons who
signed the official receipts, petitioner
ignores the first manner of authenticating
private documents. Respondent Mary Lou
testified as to the circumstances of the
accident and the expenses she and Neil had
incurred as a result of it.79 The official
receipts were issued to her and Neil upon
payment of the expenses. Since the official
receipts were issued to respondent Mary
Lou, her testimony, therefore, is a
competent evidence of the execution of the
official receipts.
With respondent Mary Lou testifying as to
the execution and issuance of the official
receipts, they were duly authenticated,
contrary to petitioner's claim. There being
no question that the official receipts were
all in the original, they were the best
evidence of their contents,80 specifically, of
the actual damages incurred by the
Bayaban Spouses. The Regional Trial Court
correctly admitted the receipts in evidence.
III
Furthermore, apart from the actual
damages for the hospital and medical
expenses that respondents have incurred,
this Court finds that respondents are
entitled to temperate damages for loss of
earning capacity.
Temperate or moderate damages, which
are more than nominal but less than actual
or compensatory damages, may be
recovered when the court finds that some
pecuniary loss has been suffered, but its
amount cannot, from the nature of the
case, be proved with
certainty.81 Temperate damages must be
reasonable under the circumstances.82
While respondents failed to put forward
definite proof of income lost during
confinement and post-therapy, they still
suffered pecuniary loss when they were
incapacitated to work. Under the moral damages; P50,000.00 as exemplary
circumstances, the P100,000.00 awarded damages; and P25,000.00 as attorney's
by the Regional Trial Court is reasonable to fees, inclusive of appearance fees plus cost
compensate them for the income that the of suit. The total amount shall earn legal
Bayaban Spouses could have earned as a interest at the rate of six percent (6%) per
second-mate seaman and a pharmacist, annum from the finality of this Decision
respectively. As opposed to the Court of until full payment.85
Appeals' ruling, temperate damages may SO ORDERED.
still be awarded to respondents despite
previous award of actual damages because
the damages cover distinct pecuniary
losses.83 The temperate damages awarded
cover the loss of earning capacity while the
actual damages cover the medical and
hospital expenses.84
In sum, respondents have proven by
preponderance of evidence that Laraga,
petitioner's employee, was acting within
the scope of his assigned tasks at the time
of the accident. The presumption of
negligence on the part of petitioner in his
selection and supervision of Laraga as an
employee arose, a presumption that he has
miserably failed to dispute. Consequently,
petitioner is solidarily liable with Laraga for
the damages sustained by the Bayaban
Spouses.
WHEREFORE, the Petition for Review on
Certiorari is DENIED. The Court of Appeals
March 18, 2011 Decision in CA-G.R. CV No.
93498 is AFFIRMED with
the MODIFICATION that the award of
temperate damages to respondents Mary
Lou Bayaban and the Heirs of Neil Bayaban
is REINSTATED. Consequently, Raul S.
Imperial is ordered to pay Mary Lou
Bayaban and the Heirs of Neil Bayaban the
following: P462,868.83 as actual damages
representing medical expenses;
P100,000.00 as temperate damages for
loss of earning capacity; P50,000.00 as
G.R. No. 205090, October 17, 2016 holiday,7 petitioner's bus, which was then SPO3 Ernesto Marfori, Fruto Sayson and
GREENSTAR EXPRESS, INC. AND being driven toward the direction of Manila Lilia Morales.
FRUTO L. SAYSON, by Sayson, collided head-on with the URC
JR., Petitioners, v. UNIVERSAL ROBINA van, which was then being driven Quezon x x x x
CORPORATION AND NISSIN province-bound by NURC's Operations
UNIVERSAL ROBINA Manager, Renante Bicomong (Bicomong). Plaintiff Fruto Sayson testified that on that
CORPORATION, Respondent. The incident occurred along Km. 76, fateful day, he was driving the plaintiff
DECISION Maharlika Highway, Brgy. San Agustin, passenger bus from Lucena City going to
DEL CASTILLO, J.: Alaminos, Laguna. Bicomong died on the Manila at a speed of more or less 60
This Petition for Review spot, while the colliding vehicles sustained kilometers per hour when he met a
on Certiorari1 seeks to set aside; a) the considerable damage. vehicular accident at Barangay San
September 26, 2012 Decision2 of the Court Agustin, Alaminos, Laguna. He saw from
of Appeals (CA) in CA-G.R. CV No, 96961 On September 23, 2003, petitioners filed a afar an L-300 UV coming from the shoulder
affirming the April 4, 2011 Decision3 of the Complaint8 against NURC to recover going on the opposite direction to Lucena
Regional Trial Court (RTC) of San Pedro, damages sustained during the collision, City. Said vehicle was already near his bus
Laguna, Branch 31 in Civil Case No. SPL- premised on negligence. The case was when it (UV) managed to return to ifs
0969; and b) the CA's December 28, 2012 docketed as Civil Case No. SPL-0969 and proper lane, then hit and swerved his
Resolution4 denying herein petitioners' assigned to Branch 31 of the RTC of San vehicle.- "He tried to prevent the collision
Motion for Reconsideration.5chanrobleslaw Pedro, Laguna, An Amended by swerving to the right but it was too late.
Complaint9 was later filed, wherein URC As a result, the left front portion of the bus
Factual Antecedents was impleaded as additional defendant. was damaged while the front portion of the
L-300 UV was totally wrecked- He and his
Petitioner Greenstar Express, Inc. URC and NURC filed their respective conductor, one.Mendoza, managed to get
(Grepistar) is a domestic corporation Answers,10 where they particularly alleged but of the bug by forcibly opening the
engaged in the business of public and claimed lack of negligence on their part automatic door which was also damaged
transportation, while petitioner Fruto L. and on the part of Bicomong. due to the impact After getting out of the
Sayson, Jr. (Sayson) is one of its bus bus, he looked for the driver of the L300
drivers, After the issues were joined, trial UV but he was informed by a bystander
proceeded. During trial, only Sayson was that he was thrown in a canal arid already
Respondents Universal Robina Corporation presented by petitioners as eyewitness to dead. For fear of possible reprisals from
(URC) and Nissin Universal Robina the collision. bystanders as experienced by most drivers
Corporation (NURC) are domestic involved in an accident, he boarded
corporations engaged in the food business. Riding of the Regional Trial Court smother bug owned by bis employer.
NURC is a subsidiary of URC. Before he left, he indorsed the matter to
On April 4, 2011, the RTC issued its hip conductor and line inspector.
URC is the registered owner of a Mitsubishi Decision, which decreed thus: Thereafter, he reported to their office at
L-300 van with plate number WRN 403 San Pedro, Laguna. He executed a
(URC van).6chanrobleslaw chanRoblesvirtualLawlibrary statement on the same day x x x and
During the trial on the merits, submitted the same to their operations
At about 6:50 a.m. on February 25, 2003, plaintiffs11 presented five witnesses department. He likewise testified that
which was then a declared national namely Josephine Gadiaza, Miguel Galvan, before the incident, he was earning
P700.00 to P900,00 a day on commission
basis and he drives 25 days in a month.
However, after the incident, he was not
able to drive for almost two months.
On cross-examination, it was established
that the incident happened along the
Maharlika Highway along Kilometer 72.
There were no structures near the site of
the incident, The highway ha§ two lanes
which can accommodate the size of the bus
about 3 meters wide and a. light vehicle.
He was bound for Manila and had about ten
passengers. He saw the L-300 UV on the
shoulder of the opposite lane about 250
meters away from, his bus while he was
driving [at] a speed of 60 kilometers per
hour. He did not sense any danger when he
saw the vehicle from afar. He cannot drive
fast as there were five vehicles ahead of his
bus. When the L-300 UV managed to return
to it? proper lane coming from the
shoulder, it was heading directly towards
his direction, at a distance of more or less
five, meters away from his bus, He noticed
that the L-300 UV was running at full speed
as he saw dust clouds. "The point of impact
happened on his lane. He tried to swerve
his bus to prevent the impact but lie
admitted that at his speed, it was difficult
for him to maneuver his vehicle
Investigator SPO3 Ernesto Marfori of the
Alaminos Police Station testified that at
about 7:00 in the morning, he received a
report from the Barangay Chairman of a
vehicular accident that occurred at Brgy.
§an Agustin, Alaminos, Laguna. He
proceeded to the site with SPO2 Rolando
Alias. Upon arrival at the scene of the
accident, he attended to the victim, but
found him dead inside the L- 300 UV. He
came to know later that he was Renante
Bicomong. He immediately called up his
office and requested that funeral services
for the dead man. be arranged. Thereafter,
he photographed the damaged vehicles
(Exhibits "F" and sub-markings) and
interviewed some witnesses. He made a
sketch depicting the damages suffered by
both vehicles (Exhibit "D-2"), the L-300 IV
at the front portion (Exhibit "D-4") while
the bus at the left side of its front portion
(Exhibit "D-3"). Based on the sketch he
prepared, the impact happened almost at
the right lane which was the bus lane
(Exhibit "D-6"). He likewise noticed some
debris also found at the bus lane. He was
able to interview the bus conductor and a
fruit store owner in [sic] the names of
Apolinar Devilla and Virgilio Adao, He did
not see the driver of the bus at the scene
of the accident and he was told that he had
left the place. Based on, his investigation,
the possible cause of the accident was the
swerving to the left lane [by] the driver of
the L-300 UV which resulted in me
encroaching of the bus' lane. He reduced
bis findings into writing in a Report dated
February 28, 2003 (Exhibits "D" and sub-
markings).
On cross-examination, the witness
admitted that he was not present when the
vehicles collided. The entries he made in
the blotter report were mainly based on the
accounts of the witnesses he was able to
interview who however did not give their
written statements. When he arrived at the
scene of the accident, the L-300 UV was
already on the shoulder of the road and it
was totally wrecked. According to reports,
the van spun around when it was bit
causing the metal scar found on the road.
On the other hand, the
defendants12 presented three witnesses:
its employees Alexander Caoleng and John
Legaspi and deceased Renante Bicomong's
widow, Gloria Bicomgng, These witnesses
were presented to prove that deceased
Bicomong was acting in his personal
capacity when the mishap happened on
February 25, 2003 as that day had been
declared an official holiday and the L-300
UV he was driving had not been issued to
him, among others.
Alexander Caoleng, HR. Manager of
defendant NURC, testified that deceased
Bicomong worked as the Operations
Manager of defendant NURC until his death
as evidenced by a Certificate of
Employment dated December 9, 2008
(Exhibit "I"), His last assignment was in
First Cavite Industrial Estate (FCEB). He
died in a vehicular accident in Alaminos,
Laguna on February 25, 2003 which was
declared a holiday by virtue of
Proclamation No. 331 (Exhibit "2"). Despite
having been issued his own service vehicle
(Exhibits "3", "4" and "5"), he used the L-
300 UV which was not officially issued to
him but in the name of Florante Soro-Soro,
defendant NURC's Logistics Manager at
that time (Exhibits "7" and "B"). The said
vehicle was used mainly to transport items
coming from their office at Pasig to Cavite
and vice versa (Exhibit "9").
John Legaspi, Project Manager of
defendant NURC, testified that he was first
assigned in its Cavite Plant in 1999 with
deceased Bicomaog as his immediate
supervisor being the Production Manager
then. He last saw him in the afternoon of
February 24, 2003 at about 6:00 pm when
they had a short chat He (Bicomong) was
then transferring his things from his
executive vehicle which was a Toyota
Corolla to the L-300 UY which was a
company vehicle. He (Bicomong) shared
that he would go home to Quezon Province
the following day (February 25) to give
money to his daughter. He knew that his
trip to Quezon was not work-related as
February 25, 2003 was declared a holiday.
Besides, there exists no plant owned by
defendant NURC in the provinces of
Quezon, Laguna or Bicol as attested to by
the General Manager of defendant NURC in
a Certification to that effect (Exhibit "11").
On cross-examination, he distinguished the
use of an executive vehicle assigned to an
executive officer for his personal use and
the company vehicle which was supposed
to be for official use only.
Finally, Gloria Bicomong, widow of
deceased Reynante Bicomong testified that
she knew that her husband was going
home to Calendaria (sic), Quezon on
February 25, 2003 because he informed
their daughter. He was on his way home
when he met a vehicular-accident in
Alaminos. Laguna which claimed his life.
She was informed about the accident
involving her husband by a high school
friend who was also traveling to Quezon at
that time, She filed a criminal complaint at
Alaminos, Laguna but it was dismissed for
reasons unknown to her. She likewise filed
a civil complaint for damages before the
Regional Trial Court of Lucena City
docketed as Civil Case No. 2.103-135.
On cross-examination, she narrated that
aside from the Toyota Corolla service of her
husband, he would use the L-300 UV
whenever he had to bring bulky things
home. As far as she can recall, he used the
L-300 UV about 5 times.
After an evaluation of the foregoing
testimonies and documentary evidence of
the parties, the court had [sic] arrived at
the following findings and conclusions:
chanRoblesvirtualLawlibraryPlaintiff has no
cause of action and cannot recover from
the defendants even assuming that the
direct and proximate cause of the accident
was the negligence of the defendant's
employee Renato Bicomong.
Pursuant to Article 2184 of the New Civil
Code, the owner of a motor vehicle is
solidarily liable with his driver if at the time
of the mishap, the owner was in the vehicle
and by the use of due diligence could have
presented (sic) the misfortune; if the
owner is not in the motor vehicle, the
provision of Article 2180 is applicable. The
defendants being juridical persons, the first
paragraph of Article 2184 is obviously not
applicable.
Under Article 2180, "employers shall be
liable tor 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. "In other words,
for the employer to be liable for the
damages caused by his employee, the
latter must have caused the damage in the
course of doing his assigned tasks or in the-
performance of his duties" (Yambao vs.
Zuñiga, G.R. No: 146173, December 11,
2003)
In this case, it is beyond cavil that the
deceased Renante Bicong [sic] was not in
the performance of his duty on that fateful
day of February 25, 2003. In the first place
that day was a holiday; there was no work
and it was not shown that he was working
as indeed his work assignment is
operations manager of the company's plant
m, Cavite while the accident happened
while he was in Alaminos, Laguna on his
way home to Candelaria, Quezon.
Secondly, as an operations manager, he
was issued an executive car for. Ms own
use, a Toyota Corolla vehicle and he merely
preferred to use the L-300 UV when going
home to his family in Quezon. Even
assuming that the company allowed or
tolerated this, by itself, the tolerance did
not make, the employer liable in the
absence of showing that he was using the
vehicle in the performance of a duty or
within the scope of his assigned tasks. But
as clearly relayed by defendant's
witnesses, defendants have no business or
plant in Quezen. The L-300 vehicle was for
the hauling of items between their Pasig
and Cavite offices and was merely
borrowed by Bicomong in going to
Candelaria, Quezon on that day.
The accident having occurred outside
Remnte Bicomong's assigned tasks,
defendant employers cannot be held liable
to the plaintiffs, even assuming that it is
the fault of defendants' employee that was
the direct and proximate cause of their
damages.
However, the question of whose fault or
negligence was the direct and proximate
cause of the mishap is material to the
resolution of defendants' counterclaim.
The rule is that the burden of proof lies on
him who claims a fact (Federico Ledesina
vs. NLRC, G.R. No. 175585, October
19,2007). Therefore, to be able to recover
in their counterclaim, the defendants must
prove by preponderance of evidence that
the direct and proximate cause of their
losses was the fault of the plaintiff-driver.
Defendants were not able to present any
witness as to how the mishap occurred
Their witnesses were limited to proving
that Renante Bicomong was not in the
performance of his assigned task when the
incident happened.
A reading of their answer would reveal,
that their attribution of fault to the plaintiff-
driver is based only on the point of impact
of the two vehicles. Thus:
chanRoblesvirtualLawlibrary
'4.3 Based on the damage sustained by the
passenger bus, plaintiffs' claim that
Renante Bicomong swerved on the left lane
and encroached on the path of the said bus
moments before the accident could not
have been true. Such claim would have
resulted to a head-on collision between the
vehicle driven by Mr. Bicomong and the
bus; the latter would have sustained
damage on its front side. However, based
on Annexes "B" and "C" of the Complaint,
the. said bus sustained damage on its left
side. Clearly, it was the passenger bus that
swerved on the left lane, which was being
traversed by Renante Bicomong, and while
returning to the right lane, said bus hit the
vehicle being driven by Mr. Bicomong.
Thus, explaining the damage sustained by
the said bus on its left side just below the
driver's seat.'
The foregoing however is a mere
interpretation or speculation and not
supported by any account, either by an
eyewitness [or by] a explanation tracing
the relative positions of the two vehicles in
relation to the road at the time of impact
and the movements of the two vehicles
after the impact. For this reason, it will be
unfair to make an interpretation of the
events based alone on the point of impact
[on] the vehicles. The points of impact by
themselves cannot explain the positions of
the vehicles on the road.
Defendants Memorandum attributed the
cause of the mishap to the excessive speed
of the bus. In their Memorandum, the
defendants content [sic] that if the driver
had seen the L-3G0 UV meters away in
front of him running along the shoulder and
negotiating back to its lane, the bus driver
would have watched out and slackened his
speed. Considering the damage to both the
vehicles and the fact that the L-300,UV
span [sic] and w,as thrown 40 feet away
from the point of impact and its driver was
thrown 14 feet away from his vehicle,
defendant argued that the bus could not be
running at 60 kilometers only. But
assuming the bus indeed was running at
high speed that alone does not mean that
the negligence of the driver was the direct
and proximate cause, If it is true that the
L-300 UV ran from the right shoulder,
climbed up to the right lane but overshoot
[sic] it and occupied the bus' lane, the
speed of the bus cannot be considered the
proximate and direct cause of the collision;
But as stated earlier, this were [sic] merely
conjectures and surmises of the defendants
and not proven by competent evidence.
All told, defendants were not able to prove
by their own evidence that the direct and
proximate cause of the collision was the
fault of plaintiffs driver. Hence, they cannot
hold plaintiffs liable for the logs of their L-
300 UV. As both parties failed to prove by
their respective evidence where the fault
that occasioned their losses lie, they must
bear their respective losses.
Anent defendants' counterclaim for
attorney's fees and exemplary damages,
there is no evidence to show that the filing,
of this suit was motivated [by] malice. It
cannot be denied that plaintiffs suffered
damages. The court mainly, dismissed the
complaint for lack of cause of action as
Renante Bicomong was not performing his
assigned tasks at the time of the incident.
Besides, to hold them liable to defendants
for attorney's fees and exemplary damages
simply because they failed to come up with
sufficient evidence will be tantamount to
putting a price on one's right to sue.
WHEREFORE, judgment is hereby rendered
dismissing the complaint as well as the
counterclaim.
No costs.
SO ORDERED.13
Ruling of the Court of Appeals
Petitioners filed an appeal before the CA,
docketed as CA-G.R. CV No. 96961. They
argued that Bicomong's negligence was the
proximate cause of the collision, as the van
he was 4rjvmg swerved to the opposite
lane and hit the bus which was then
traveling along its proper lane; that
Bicomong's act of occupying the bus's lane
was illegal and thus constituted a traffic
violation; that respondents are liable for
damages as the registered owner of the
van and failing to exercise due diligence in
the selection and supervision of its
employee, Bicomong, Respondents,
countered that the bus driven by Sayson
was running at high speed when the,
collision occurred, thus indicating that
Sayson was in violation of traffic rules; and
that Say-son had the last clear chance to
avert collision but he failed to take the
necessary precaution under the
circumstances, by reducing his speed and
applying the brakes on time to avoid
collision.
On September 26, 2012, the CA rendered
the assailed Decision containing the
following pronouncement:
chanRoblesvirtualLawlibrary
The present case involving an action for
damages based on quasi-delict is governed
by Articles 2176 and 2180 of the New Civil
Code, pertinent provisions of which read:
chanRoblesvirtualLawlibrary
'ART. 2176, Whoever by act or omission
causes damage to another, there being
fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if
there is no pre-existing contractual relation
between the parties, is called a quasi-delict
and is governed by the provisions of this
Chapter.
ART. 2180. The obligation imposed by
Article 2176 is demandable not only for
one's own acts or omission also for those of
persons for whom one is responsible.
xxx xxx xxx
Employers shall be liable for the damages
caused by their employees and household
helpers acting within the scope of their
assigned tasks even though the former are
not engaged in any business or industry.'
Under Article 2180 of the New Civil Code,
employers shall be held primarily and
solidarily liable for damages caused by
their employees acting within the scope of
their assigned tasks. To hold the employer
liable under this provision, it must be
shown that an employer-employee
relationship exists, and that the employee
was acting within the scope of his assigned
task when the act complained of was
committed.
Records bear that the vehicular collision
occurred on February 25, 2003 which was
declared by former Executive Secretary
Alberto G. Romulo, by order of former
President Gloria Macapagal-Arroyo, as a
special national holiday, per Proclamation
No. 331 dated February 19, 2003. Renante
Bicomong had no work on that day and at
the time the accident occurred, he was on
his way home to Candelaria, Quezon. There
was no showing that on that day, Renante
Bicomong was given by defendants-
appellees14 an assigned task, much less
instructed to go to Quezon. As testified to
by Renante Bicomong's widow Gloria
Bicomong, Renante Bicomong was on the
road that day because he was going home
to Candelaria, Quezon. Thus, he was then
carrying out a personal purpose and not
performing work for defendants-appellees.
Apropos is Castilex Industrial Corp. vs.
Vicente Vasquez, Jr.,15 wherein the
Supreme Court held that the mere fact that
an employee was using a service vehicle at
the time of the injurious incident is not of
itself sufficient to charge his employer with
liability for the operation of said vehicle
unless it appeared that he was operating
the vehicle within the course or scope of bis
employment.
Thus:ChanRoblesVirtualawlibrary
xxxx
'The court a quo and the Court of Appeals
were one in holding that the driving by a
messenger of a company-issued vehicle is
within the scope of his assigned tasks
regardless of the time and circumstances.
We do not agree. The mere fact that ABAD
was using a service vehicle at the time of
the injurious incident is not of itself
sufficient to charge petitioner with liability
for the negligent operation of said vehicle
unless it appears mat he was operating the
vehicle within the course or scope of his
employment.
The following are principles in American
Jurisprudence on the employer's liability for
the injuries inflicted by the negligence of an
employee in the use of an employer's
motor vehicle.
xxxx
III. Use of Employer's Vehicle Outside
Regular Working Hours
An employer who loans his motor vehicle to
an employee for the latter's personal use
outside of regular working hours is
generally not liable for the employees
negligent operation of the vehicle during
the period of permissive use, even where
the employer contemplates that a regularly
assigned motor vehicle will be used by the
employee for personal as well as business
purposes and there is some incidental
benefit to the employer. Even where the
employee's personal purpose in using the
vehicle has been accomplished and he has
started the return trip to his house where
the vehicle is normally kept, it has been
held that he has not resumed his
employment, and the employer is not liable
for the employees negligent operation of
the vehicle during the return trip.
The foregoing principles and jurisprudence
are applicable in our jurisdiction albeit
based on the doctrine of respondent
superior, not on the principle of bonus
pater familias as in ours. Whether the fault
or negligence of the employee is conclusive
on his employer as in American law or
jurisprudence, or merely gives rise to the
presumption juris tantum of negligence on
the part of the employer as in ours, it is
indispensable that the employee was acting
in his employer's business or within the
scope of his assigned task.
In the case at bar, it is undisputed that
ABAD did some overtime work at Hie
petitioner's office, which was located in
Cabangcalan, Mandaue City. Thereafter, he
went to Goldie's Restaurant in Fuente
Osmefia, Cebu City, which is about seven
kilometers away from petitioner's place of
business. A witness for the private
respondents, a sidewalk vendor, testified
that Fuente Osmeña is a lively place even
at dawn because Goldie's Restaurant and
Back Street were still open and people were
drinking thereat Moreover, prostitutes,
pimps, and drug addicts littered the place.
xxx xxx xxx
To the mind of this Court, ABAD was
engaged in affairs of his own or was
carrying out a personal purpose not in line
with his duties at the time he figured in a
vehicular accident. It was then about 2:00
a.m. of 28 August 1988, way beyond the
normal working hours. ABAD's working day
had ended; his overtime work had already
been completed. His being at a place
which, as petitioner put it, was known as a
haven for prostitutes, pimps, and drug
pushers and addicts, had no connection to
petitioner's business; neither had it any
relation to his duties as a manager. Rather,
using his service vehicle even for personal
purposes was a form of a fringe benefit or
one of the perks attached to his position.
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.
Accordingly, in the absence of showing that
Renante Bicomong was acting within the
scope of his assigned task at the time of
the vehicular collision, defendants-
appellees had no duty to show that they
exercised the diligence of a good father of
a family in providing Renante Bicomong
with a service vehicle. Thus, the trial court
did not err in holding that:
chanRoblesvirtualLawlibrary
'Under Article 2180, '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. 'In other words,
for the employer to be liable for the
damages caused by his employee, the
latter must have caused the damage in the
course of doing his assigned tasks or. in the
performance of his duties.' (Yambao vs.
Zuñiga, G.R. No. 146173, December 11,
2003.)
In this case, it is.beyond cavil that the
deceased Renante Bicong [sic] was not in
the performance of his duty on that fateful
day of February 25, 2003. In the first place
that day was a holiday; there was no work
and it was not shown that he was working
as indeed his work assignment [was as]
operations manager of the company's plant
in Cavite while the accident happened while
he was in Alaminos, Laguna on his way
home to Candelaria, Quezon. Secondly, as
an operations manager, he was issued an
executive car for his own use, a Toyota
Corolla vehicle and. he merely preferred to
use the L-300 UV when going home to his
family in Quezon. Even assuming that the
company allowed or tolerated this, by
itself, the tolerance did not make the
employer liable in the absence of showing
that he was using the vehicle in the
performance of a duty or within the scope
of his assigned tasks. But as clearly relayed
by defendant's witnesses, defendants have
no business or plant in Quezon. The L-300
vehicle was for the hauling of items
between their Pasig and Cavite offices and
was merely borrowed by Bicomong in going
to Candelaria, Quezon on that day.
The accident having occurred outside
Renante Bicomong's assigned tasks,
defendant employers cannot be held liable
to the plaintiffs, even assuming that it is
the fault of defendants' employee that was
the direct and proximate cause of their
damages.'
In sum, squarely applicable in this case is
the well-entrenched doctrine that the
assessment of the trial judge as to the
issue of credibility binds the appellate court
because he is in a better position to decide
the issue, having heard the witnesses and
observed their deportment and manner of
testifying during the trial, except when the
trial court has plainly overlooked certain
Civil Code;19 that Bicomong's negligence
WHEREFORE, the trial court's Decision was the direct and proximate eause of the
dated April 4, 2011 is affirmed. accident, in that he unduly occupied the
opposite lane which the bus was lawfully
SO ORDERED.16chanroblesvirtuallawlibrary traversing, thus resulting in the collision
with Greenstar's bus; that Bicomong's
Petitioners filed a Motion for driving on the opposite lane constituted a
Reconsideration, which the CA denied in its traffic violation, therefore giving rise to the
subsequent December 28, 2012 presumption of negligence on his part; that
Resolution. Hence, the present Petition. in view of this presumption, it became
Issues incumbent upon respondents to rebut the
same by proving that they exercised care
In a July 14, 2014 Resolution,17 this Court and diligence in the selection and
resolved to give due course to the Petition, supervision of their employees; that in
which contains the following assignment of their respective answers and motion to
errors: dismiss, respondents did not allege the
defense, which they tackled only during
chanRoblesvirtualLawlibrary trial, that since February 25, 2003 was a
I. declared national holiday, then Bicomong
was not acting within the scope of his
THE HONORABLE COURT OF APPEALS assigned tasks at the time of the collision;
ERRED IN ISSUING THE ASSAILED that for failure to plead this defense or
DECISION AND RESOLUTION THAT allegation in their respective answers and
RESPONDENTS ARE NOT LIABLE TO pleadings, it is deemed waived pursuant to
PETITIONERS FOR THE DAMAGES THEY Section 1, Rule 9 of the 1997 Rules of Civil
SUSTAINED CONSIDERING THAT THE Procedure20 (1997 Rules); that just the
ACCIDENT WAS ATTRIBUTED TO THE same, respondents failed to prove that
NEGLIGENCE OF RENANTE BICOMONG. Bicomong was not in the official
II. performance of his duties or that the URC
van was not officially issued to him at the
THE HONORABLE COURT OF APPEALS time of the accident - and for this reason,
ERRED IN ADMITTING DEFENSES NOT the presumption of negligence was not
PLEADED IN THE MOTION TO DISMISS OR overturned; and that URC should be held
IN RESPONDENTS' liable as the registered owner of the van.
ANSWER. chanroblesvirtuallawlibrary
18

facts of substance and value, that, if
considered, might affect the result of the
case, or where the assessment is clearly
shown to be arbitrary. Plaintiffs-appellants
have not shown this case to fall under the
exception.
Petitioners' Arguments
Petitioners insist that respondents should
be held liable for Bicomong's negligence
under Articles 2176, 2180, and 2185 of the
In their Reply,21 petitioners add that while
some of the issues raised in the Petition are
factual in nature, this Court must review
the case as the CA gravely erred in its
appreciation of the evidence and in
concluding that respondents are not liable.
Finally, they argue that URC should be held
liable for allowing "a non-employee to use
for his personal use the vehicle owned" by
it.
Respondents' Arguments
Pleading affirmance, respondents argue in
their Comment22 that the issues raised in
the Petition are factual in nature; that the
collision occurred on a holiday and while
Bicomong was. using the URC van for a
purely personal purpose, it should be.
sufficient to absolve respondents of liability
as evidently, Bicomong was not performing
his official duties on that day; that the
totality of the evidence indicates that it was
Sayson who was negligent in the operation
of Greenstar's bus when the collision
occurred; that Bicomong was not negligent
in driving the URC van; that petitioners'
objection - pertaining to their defense that
the collision occurred on a holiday, when
Bicomong was not considered to be at work
- was belatedly raised; and that in any
case, under Section 5, Rule 10 of the 1997
Rules,23 their pleadings should be deemed
amended to conform to the evidence
presented at the trial, which includes proof
that the accident occurred on a holiday and
while Bicomong was not in the performance
of his official tasks and instead going home
to his family in Quezon province.
Our Ruling
The Court denies the Petition.
In Caravan Travel and Tours International,
Inc. v. Abejar,24 the Court made the
following relevant pronouncement:
caused by the vehicle on the public
chanRoblesvirtualLawlibrary highways, responsibility therefor can be
The resolution of this case must fixed on a definite individual, the registered
consider two (2) rules. First, Article owner.'
2180's specification that '[e]mployers
shall be liable for the damages caused x x x x
by their employees ... acting within the
scope of their assigned tasks [.]' Aguilar, Sr. v. Commercial Savings
Second, the operation of the Bank26 recognized the seeming conflict
registered-owner rule that registered between Article 2180 and the registered-
owners are liable for death or injuries owner rule and applied the latter.
caused by the operation of their
Vehicles. x x x x
These rules appear to be in conflict when it Preference for the registered-owner rule
comes to cases in which the employer is became more pronounced in Del Carmen,
also the registered owner of a vehicle. Jr. v. Bacoy:27chanrobleslaw
Article 2180 requires proof of two things:
first, an employment relationship between x x x x
the driver and the owner; and second, that
the driver acted within the scope of his or Filcar Transport Services v.
her assigned tasks. On the other hand, Espinas28 stated that the registered owner
applying the registered-owner rule only of a vehicle can no longer use the defenses
requires the plaintiff to prove that the found in Article 2180:
defendant-employer is the registered
owner of the vehicle. chanRoblesvirtualLawlibraryx x x x
The registered-owner rule was articulated Mendoza v. Spouses Gomez29 reiterated
as early as 1957 in Erezo, et al. v. this doctrine.
Jepte,25cralawred where this court
explained that the registration of motor However, Aguilar, Sr., Del Carmen,
vehicles, as required by Section 5(a) of Filcar, and Mendoza should not be taken to
Republic Act No. 41365 the and mean that Article 2180 of the Civil Code
Transportation and Traffic Code, was should be completely discarded in cases
necessary 'not to make said registration where the registered-owner rule finds
the operative act by which ownership in application.
vehicles is transferred, ... but to permit the
use and operation of the vehicle upon any As acknowledged in Filcar, there is no
public highway[.]' Its 'main aim ... is to categorical statutory pronouncement in the
identify the owner so that if any accident Land Transportation and Traffic Code
happens, or that any damage or injury is stipulating the liability of a registered
owner. 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:
chanRoblesvirtualLawlibrary
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.
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. In light
of this, the words used in Del Carmen are
particularly notable. There, this court
stated that Article 2180 'should defer to'
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 of the van that
hit Reyes. 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. (Emphasis supplied)
In the present case, it has been established
that on the day of the collision -or on
February 25, 2003 - URC was the
registered owner of the URC van, although
it appears that it was designated for use by
NURC, as it was officially assigned to the
latter's Logistics Manager, Florante Soro-
Soro (Soro-Soro); that Bicomong was the
Operations Manager of NURC and assigned
to the First Cavite Industrial Estate; that
there was no work as the day was declared
a national holiday; that Bicomong was on
his way home to his family in Quezon
province; that the URC van was not
assigned to Bicompng as well, but solely for
Soro-Soro's official use; that the company
service vehicle officially assigned to
Bicomong was a Toyota Corolla, which he
left at the Cavite plant and instead, he used
the URC van; and that other than the
Cavite plant, there is no other NURC plant
in the provinces of Quezon, Laguna or
Bicol.
Applying the above pronouncement in
the Caravan Travel and Tours case, it must
be said that when by evidence the
ownership of the van and Bicomong's
employment were proved, the presumption
of negligence on respondents' part
attached, as the registered owner of the
van. and as Bicomong's employer. Hie
burden of proof then shifted to respondents
to show that no liability under Article 2180
arose. This may be done by proof of any of
the following:
chanRoblesvirtualLawlibrary
1. That they had no employment
relationship with Bicomong; or
2. That Bicomong acted outside the scope
of his assigned tasks; or
3. That they exercised the diligence of a
good father of a family in the selection and
supervision of Bicomong.
In denying liability, respondents claimed in
their respective answers the defense of
absence of negligence on their part. During
trial, they presented evidence to the effect
that on the day of the collision, which was
a declared national non-working holiday,
Bicomong was not perforating Ms work, but
was on his way home to Quezon on a
personal undertaking, that is, to give
money to his daughter and spend the
holiday with his family; and that the vehicle
he was driving was not an NURC vehicle,
nor was it assigned to him, but was
registered to URC and assigned to its
Logistics Manager, Soro-Soro, Petitioners
object to this, claiming that this defense
was not alleged in the respondents'
respective answers. The Court disagrees,
The failure to allege these facts in the
answers does not preclude, respondents
from proving them during trial; these facts
are precisely illustrative of their defense of
absence of negligence. Just the same,
petitioners' failure to object to the
respondents' presentation of such evidence
below is tantamount to a waiver; Section
5, Rule 10 of the 1997 Rules - on
amendments to conform to or authorize
presentation of evidence - will have to
apply, but the failure to amend the
pleadings does not affect the result of the
trial of these issues.
The failure of a party to amend a pleading
to conform to the evidence adduced during
trial does not preclude an adjudication by
the court on the basis of such evidence
which may embody new issues not raised
in the pleadings, or serve as a basis for a
higher award of damages. Although the
pleading may not have been amended to
conform to the evidence submitted during
trial, judgment may nonetheless be
rendered, not simply on the basis of the
issues alleged but also on the basis of
issues discussed and the assertions of fact
proved in the course of trial. The court may
treat the pleading as if it had been
amended to conform to the evidence,
although it had not been actually so
amended, x x x30
Respondents succeeded in overcoming the
presumption of negligence, having shown
that when the collision took place,
Bicomong was not in the performance of
his work; that he was in possession of a
service vehicle that did not belong to his
employer NURC, but to URC, and which
vehicle was not officially assigned to him,
but to another employee; that his use of
the URC van was unauthorized - even if he
had used the same vehicle in furtherance
of a personal undertaking in the past,31 this
does not amount to implied permission;
that the accident occurred on a holiday and
while Bicomong was on his way home to his
family in Quezon province; and that
Bicomong had no official business
whatsoever in his hometown in Quezon, or
in Laguna where the collision occurred, his
area of operations being limited to the
Cavite area.
On the other hand, the evidence suggests
that the collision could have been avoided
if Sayson exercised care and prudence,
given the circumstances and information
that he had immediately prior to the
accident. From the trial court's findings and
evidence on record, it would appear that
immediately prior to the collision, which
took place very early in the morning - or at
around 6:50 a.m., Sayson saw that the
URC van was traveling fast Quezon-bound
on the shoulder of the opposite lane about
250 meters away from him; that at this
point, Sayson was driving the Greenstar
bus Manila-bound at 60 kilometers per
hour; that Sayson knew that the URC van
was traveling fast as it was creating dust
clouds from traversing the shoulder of the
opposite lane; that Sayson saw the URC
van get back into its proper lane but
directly toward him; that despite being
apprised of the foregoing information,
Sayson, instead of slowing down,
maintained his speed and tried to swerve
the Greenstar bus, but found it difficult to
do so at his speed; that the collision or
point of impact occurred right in the middle
of the road;32 and that Sayson absconded
from the scene immediately after the
collision.
From the foregoing facts, one might think
that from the way he was driving
immediately before the collision took place,
Bicomong could have fallen asleep or ill at
the wheel, which led him to gradually steer
the URC van toward the shoulder of the
highway; and to get back to the road after
realizing his mistake, Bicomong must have
overreacted, thus overcompensating or
oversteering to the left, or toward the
opposite lane and right into Sayson's bus.
Given the premise of dozing off or falling ill,
this explanation is not far-fetched. The
collision occurred very early in the morning
in Alaminos, Laguna. Sayson himself
testified that he found Bicomong driving on
the service road or shoulder of the highway
250 meters away, which must have been
unpaved, as it caused dust clouds to rise on
the heels of the URC van. And these dust
clouds stole Sayson's attention, leading
him to conclude that the van was running
at high speed. At any rate, the evidence
places the point of impact very near the
middle of the road or just within Sayson's
lane. In other words, the collision took
place with Bicomong barely encroaching on
Sayson's lane. This means that prior to and
at the time of collision, Sayson did not take
any defensive maneuver to prevent the
accident and minimize the impending
damage to life and property, which resulted
in the collision in the middle of the
highway, where a vehicle would normally
be traversing. If Sayson took defensive
measures, the point of impact should have
occurred further inside his lane or not at
the front of the bus - but at its side, which
should have shown that Sayson either
slowed down or swerved to the right to
avoid a collision.
Despite having seen Bicomong drive the
URC van in a precarious manner while the
same was still a good 250 meters away
from his bus, Sayson did not take the
necessary precautions, as by reducing
speed and adopting a defensive stance to
avert any untoward incident that may occur
from Bicomong's manner of driving. This is
precisely his testimony during trial. When
the van began to swerve toward his bus, he
did not reduce speed nor swerve his bus to
avoid collision. Instead, he maintained his
current speed and course, and for this
reason., the inevitable took place: An
experienced driver who is. presented with
the same facts would have adopted an
attitude consistent with a desire to
preserve life and property; for common
carriers, the diligence demanded is of the
highest degree.
The law exacts from common carriers (i.e.,
those persons, corporations, firms, or
associations engaged in the business of
carrying or transporting passengers or
goods or both, by land, water, or air, for
compensation, offering their services to the
public) the highest degree of diligence (i.e.,
extraordinary diligence) in ensuring the
safety of its passengers. Articles 1733 and
1755 of the Civil Code
state:ChanRoblesVirtualawlibrary
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.
Art. 1755. A common carrier is bound to
carry the passengers safely as far as
human care arid foresight can provide,
using the utmost diligence of very cautious
persons, with a due regard for all the
circumstances.
In this relation, Article 1756 of the Civil
Code provides that '[i]n 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 in Articles 1733 and 1755.
xxx'33chanroblesvirtuallawlibrary
However, Sayson took no defensive
maneuver whatsoever in spite of the fact
that he saw Bicomong drive his van in a
precarious manner, as far as 250 meters
away - or at a point in time and space
where Sayson had all the opportunity to
prepare and avert a possible collision. The
collision was certainly foreseen and
avoidable but Sayson took no measures to
avoid it. Rather than exhibit concern for the
welfare of his passengers and the driver of
the oncoming vehicle, who might have
fallen asleep or suddenly fallen ill at the
wheel, Sayson coldly and uncaringly stood
his ground^ closed his eyes, and left
everything to fate, without due regard for
the consequences. Such a suicidal mindset
cannot be tolerated, for the grave danger it
poses to the public and passengers availing
of petitioners' services. To add insult to
injury, Sayson hastily fled the scene of the
collision instead of rendering assistance to
the victims - thus exhibiting a selfish, cold-
blooded attitude and utter lack of concern
motivated by the self-centered desire to
escape liability, inconvenience, and
possible detention by the authorities,
rather than secure the well-being of the
victims of his own negligent act.
x x x The doctrine of last clear chance
provides that where both parties are
negligent but the negligent act of one is
appreciably later in point of time than that
of the other, or where it is impossible to
determine whose fault or negligence
brought about the occurrence of the
incident, the one who had the last clear
opportunity to avoid the impending harm
but failed to do so, is chargeable with the
consequences arising therefrom. Stated
differently, the rule is that the antecedent
negligence of a person does not preclude
recovery of damages caused by the
supervening negligence of the latter, who
had the last fair chance to prevent the
impending harm by the exercise of due
diligence, x x x34

Petitioners might object to the treatment of

their case in the foregoing manner, what
with the additional finding that Sayson was
negligent under the circumstances. But
their Petition, "once accepted by this
Court, throws the entire case open to
review, and xxx this Court has the
authority to review matters not specifically
raised or assigned as error by the parties,
if their consideration is necessary in
arriving at a just resolution of the
case."35chanrobleslaw

WHEREFORE, the Petition is DENIED.

The September 26, 2012 Decision and
December 28, 2012 Resolution of the Court
of Appeals in CA-G.R. CV No. 96961
are AFFIRMED in toto.

SO ORDERED.chanRo
G.R. No. 188493, December 13, 2017
VIVIAN B. TORREON AND FELOMINA F.
ABELLANA, Petitioners, v. GENEROSO
APARRA, JR., FELIX CABALLES, AND
CARMELO SIMOLDE, Respondents.
DECISION
LEONEN, J.:
Lack of documentary evidence is not fatal
to a claim for the deceased's lost earning
capacity. Testimony from a competent
witness familiar with his salary is a
sufficient basis to determine the
deceased's income before his death.
This is a Petition for Review on
Certiorari1 under Rule 45 of the 1997 Rules
of Court, praying that the April 3, 2008
Decision2 and the May 28, 2009
Resolution3 of the Court of Appeals in CA-
G.R. CV No. 71090 be partially modified.
Petitioner Vivian B. Torreon (Vivian) prays
that: (1) an award of actual or
compensatory damages for loss of earning
capacity worth P2,079,675.00 be granted;
(2) the award of moral damages be
increased to P1,000,000.00; (3) the award
of exemplary damages be increased to
P1,000,000.00; and (4) the awarded
attorney's fees and litigation expenses be
increased to P100,000.00 and P50,000.00,
respectively.4
On November 1, 1989, Vivian's husband,
Rodolfo Torreon (Rodolfo), and daughters,
Monalisa Torreon (Monalisa) and Johanna
Ava Torreon (Johanna), arrived with
Felomina Abellana (Abellana) at the
municipal wharf of Jetafe, Bohol. They
came from Cebu City aboard M/B Island
Traders, a motor boat owned and operated
by Carmelo Simolde (Simolde).5
After they disembarked from the motor
boat, they looked for a vehicle that would
transport them from the wharf to the
poblacion of Jetafe. A cargo truck entered
the wharf and their fellow passengers
boarded it. Abellana, Rodolfo, and his
daughters chose not to board the already-
overcrowded truck. Instead, they waited
for a different vehicle to bring them to the
poblacion. However, they were informed
that only the cargo truck, which was also
owned and operated by Simolde, would
enter the wharf.6
Approximately 10 minutes later, the same
cargo truck returned to the wharf. Again,
fellow passengers from M/B Island Traders
started embarking it. This time, Rodolfo,
Monalisa, Johanna, and Abellana also
boarded it. Abellana was seated in front,
while Rodolfo and his daughters were with
the rest of the passengers at the back of
the truck. Because there were no proper
seats at the back of the truck, the 30 or
more passengers were either standing or
sitting on their bags.7
While passengers were getting on the
truck, Simolde called Felix Caballes
(Caballes), the official truck driver.
Caballes approached Simolde but left the
engine running. While Simolde and
Caballes were talking, Generoso Aparra, Jr.
(Aparra), Simolde's chief diesel mechanic,
started driving the truck. Upon seeing the
truck move, Caballes rushed to the truck
and sat beside Aparra. However, instead of
taking control of the vehicle, Caballes
allowed Aparra to drive.8
Shortly thereafter, Aparra maneuvered the
truck to the right side of the road to avoid
hitting a parked bicycle. But as he turned,
Aparra had to swerve to the left to avoid
hitting Marcelo Subiano, who was allegedly
standing on the side of the road. Because
the road was only four (4) meters and 24
inches wide, rough, and full of potholes,
Aparra lost control of the truck and they fell
off the wharf.9
Consequently, Rodolfo and Monalisa died
while Johanna and Abellana were injured.10
On April 3, 1990, Vivian and Abellana filed
a criminal complaint for Reckless
Imprudence resulting to Double Homicide,
Multiple Serious Physical Injuries and
Damage to Property against Aparra and
Caballes,11 docketed as Criminal Case No.
6555 before the Regional Trial Court,
Tagbilaran City, Bohol.12
On January 4, 1991, Vivian and Abellana
filed a separate complaint for damages
against Simolde, Caballes, and
Aparra13 docketed as Civil Case No. 3593
before Branch 3, Regional Trial Court,
Butuan City.14
Simolde, Caballes, and Aparra filed a
Motion to Dismiss and to Suspend
Proceedings (Motion to Dismiss) in Civil
Case No. 3593. They argued that when
Abellana instituted Criminal Case No. 6555
before the Regional Trial Court of Bohol,
she failed to make a reservation to file an
independent civil action for damages. Thus,
Abellana was barred from instituting the
civil action.15
On January 22, 1992, the Regional Trial
Court of Butuan City denied the Motion to
Dismiss. However, upon reconsideration,
the Regional Trial Court dismissed the
case, ruling that the civil action was
impliedly instituted with Criminal Case No.
6555.16
Abellana and Vivian filed a Petition for
Certiorari before the Court of Appeals,
assailing the dismissal of the case. On June
18, 1993, the Court of Appeals reinstated
Civil Case No. 3593 but only with respect
to Vivian.17
During the trial for the civil case, SPO2
Federico T. Torniado (SPO2 Torniado)
testified that he was the "acting traffic
investigator of the PNP" assigned to the
case.18 According to SPO2 Torniado, he had
previously seen the pick-up truck transport
passengers from the wharf to the
poblacion.19 The road, which was four (4)
meters wide, could only accommodate one
(1) vehicle. Other than the truck, there
were no other vehicles that came in and out
of the wharf.20 He further testified that on
the day of the accident, he asked to see
Aparra's license but Aparra only presented
a student driver's permit.21
Abellana testified that Rodolfo was the
General Manager of her businesses in
Butuan City. As manager, Rodolfo was in
charge of three (3) drugstores, an
apartment, and rice fields. He was earning
a basic salary of P1 0,000.00 and received
a 20% commission on the profit of the
businesses, thus, earning more or less
P15,000.00. Abellana claimed that she
could not present her accounting books to
the court because she had already disposed
of them.22
On November 17, 2000, the Regional Trial
Court ruled that Caballes and Aparra
committed acts constituting a quasi-
delict.23 Since these acts were the
proximate cause of the deaths of Rodolfo
and Monalisa and the injuries sustained by
Abellana and Johanna, Simolde, Caballes,
and Aparra were held liable for damages.
The dispositive portion of the trial court
Decision stated:
Wherefore, on the basis therefore of the
foregoing evidence, both [testimonial and
documentary [,] [t]his Court does hereby
render judgment in favor of the plaintiffs
and against defendants and hereby
ordering the defendants as follows:
1. To pay jointly and severally to
plaintiffs the amount of
P300,000.00 as actual damages;
2. To pay jointly and severally to
plaintiffs the sum of P50,000.00 as
moral damages; and to pay in
solidum to plaintiffs by way of
litigation expenses in the sum of
P10,000.00;
3. To pay in solidum into plaintiffs
[Vivian] Torreon and Felomina
Abellana the sum of P25,000.00 and
P10,000.00 by way of Attorney's
fees; and
4. To pay in solidum into plaintiffs the
sum of P10,000.00 as exemplary
damages.
SO ORDERED.24
Simolde, Caballes, and Aparra filed a
Notice of Appeal on November 27, 2000.25
On April 3, 2008, the Court of Appeals
promulgated a Decision26 holding Simolde
solidarity liable with Caballes and Aparra.
According to the Court of Appeals, Caballes
and Aparra were clearly negligent in
transporting the passengers. Given that
the road was narrow and fall of pot holes,
it was apparent that an experienced driver
was needed to safely navigate the vehicle
out of the wharf. In allowing Aparra to drive
the truck despite having only a student
driver's permit, Caballes risked the lives of
the passengers on board the truck. The
Court of Appeals also held Simolde
solidarity liable with his employees for
failing to exercise due diligence in
supervising them.27 However, the Court of
Appeals deleted the award of actual
damages for Rodolfo's loss of earning
capacity. According to the Court of
Appeals, documentary evidence should be
presented to substantiate a claim for loss
of earning capacity. The dispositive portion
of the Court of Appeals Decision read:
WHEREFORE, in view of the foregoing, the
decision of the Court a quo in Civil Case No.
3593 is SET ASIDE and another one is
RENDERED ordering appellants Carmelo T.
Simolde, Felix Caballes and Generoso
Aparra, Jr., to pay, solidarity, appellee
Vivian Torreon the amount of Fifty
Thousand (P50,000.00) Pesos as civil
indemnity for the death of Rod[o]lfo
Torreon; another Fifty Thousand
(P50,000.00) Pesos as civil indemnity for
the death of Monalisa Torreon; Twenty-five
Thousand (P25,000.00) Pesos as
temperate or moderate damages for
pecuniary loss sustained due to the death
of Rod[o]lfo Torreon and another Twenty-
five Thousand (P25,000.00) Pesos as
temperate or moderate damages for
pecuniary loss sustained due to the death
of Monalisa Torreon; Fifty Thousand
(P50,000.00) Pesos as moral damages;
Ten Thousand (P10,000.00) Pesos as
exemplary damages; Ten Thousand . . .
(P10,000.00) Pesos as attorney's fees and
Twenty[-]Five Thousand (P25,000.00)
Pesos as litigation expenses, with legal
interest at the rate of SIX PERCENT(6%)
per annum starting from the date of the
promulgation of the court a quo's
Decision or from 17 November 2000. A
TWELVE PERCENT (12%) interest, in lieu of
SIX PERCENT (6%), shall be imposed on
such amount upon finality of this decision
until actual payment thereof.
SO ORDERED.28 Hence, this Petition was filed before this
Vivian and Abellana filed a Motion for Court.
Partial Reconsideration,29 asking the Court Petitioner Vivian argues that the Court of
of Appeals to modify its April 3, 2008 Appeals gravely erred in deleting the
Decision by increasing the award of the compensatory damages awarded for
damages to the following amounts: Rodolfo's loss of earning capacity. 32 She
posits that Abellana's testimony is enough
(a) Php2,079,675.00, as
to prove Rodolfo's income. As Rodolfo's
compensatory damages for loss or
employer, Abellana had direct and personal
impairment of earning capacity
knowledge of the compensation that he
(lucro cesant); instead of
was receiving prior to his death; thus, she
Php25,000.00.
is qualified to testify on his
income.33 Petitioner Vivian cites Philippine
Airlines, Inc. v. Court of Appeals34 to point
(b) Php300,000.00 as actual damages out that the Court of Appeals gravely erred
for funeral and burial expenses; or in concluding that Abellana's testimony,
in the alternative, a reasonable or without any documentary evidence, did not
just amount as temperate suffice to claim damages for lack of earning
damages. capacity.35 Based on Abellana's testimony,
Rodolfo had an estimated gross monthly
income of P15,000.00 or an annual gross
income of P195,000.00.36 Using the
(c) Php1,000,000.00 as moral formula laid down in Negros Navigation
37
damages; instead of Co., Inc. v. Court of Appeals,38 Rodolfo's
Php50,000.00. lost earnings would amount to
P2,079,675.00.39
Petitioner Vivian cites four (4) reasons why
the damages awarded to her should be
(d) Php1,000,000.00 as exemplary increased. First, she points to the gravity of
damages; instead of the loss she suffered. The difficulties she
Php10,000.00. has gone through, following the death of
her husband and her young daughter, are
immeasurable and deserve a higher
compensation. Second, the degree of the
(e) Php100,000.00 and Php50,000.00
negligence committed by respondents, as
as attorney's fees and litigation
affirmed by the Court of Appeals, is gross
expenses; instead of
and inexcusable, thereby warranting
Php10,000.00 and Php25,000.00,
harsher penalties.40 Third, Simolde has an
respectively[.]30
undisputable substantial financial capacity
In its May 28, 2009 Resolution,31 the Court to pay more. Allegedly, Simolde has a
of Appeals denied the motion. "virtual monopoly of the business at Jetafe
wharf."41 He has the capacity to pay the
increased amounts petitioner Vivian is
praying for. Lastly, the length of the
litigation, which spanned almost two (2)
decades at the time this petition was filed
to this Court, has whittled down the real
value of the monetary award.42
On the other hand, respondents argue that
the Court of Appeals committed no
reversible error in the assailed Decision.
They claim that there is no sufficient proof
to sustain the award of
damages.43 Respondents also contend that
the inclusion of Abellana as a petitioner is
baseless. The Court of Appeals in CA-G.R.
SP No. 28859 already ruled that the
present case is reinstated only with respect
to Vivian.44
In its February 17, 2010 Resolution, this
Court required petitioners to file a Reply to
respondents' Comment.45
On April 28, 2010, petitioners filed their
Reply and claimed that Abellana's inclusion
as a petitioner is "a non-issue."46 Abellana
was only joined as a petitioner because she
was already a co-petitioner in the lower
courts. However, as seen "in the prayer of
the Petition for Review, Felomina Abellana
is not mentioned as being entitled [to]
payment for damages from respondents."47
The issues for this Court's resolution are as
follows:
First, whether or not actual damages for
loss of earning capacity should be awarded
to petitioner Vivian B. Torreon; and
Second, whether or not the value of the
other awarded damages should be
increased.
Before proceeding with the discussion
regarding civil damages, this Court will
briefly discuss Abellana's standing in this
case. Notably, the Court of Appeals already Except as otherwise provided in these
ruled on this matter. However, since Rules, no filing fees shall be required for
respondents raised it in their Comment,48 it actual damages.
is best to address this concern. No counterclaim, cross-claim or third-party
I complaint may be filed by the accused in
On April 3, 1990, petitioners instituted a the criminal case, but any cause of action
criminal case against respondents. which could have been the subject thereof
However, petitioner Abellana did not may be litigated in a separate civil action.
reserve her right to file a separate civil The Court of Appeals in CA-G.R. SP No.
action for damages arising from the 28859 correctly reinstated the present case
crime.49 Rule 111, Section 1(a) of the Rules only with regard to Vivian. When Abellana
of Court provides: did not reserve her right to institute a
Section 1. Institution of criminal and civil separate civil action, her cause of action for
actions. — (a) When a criminal action is damages was deemed impliedly instituted
instituted, the civil action for the recovery with the criminal case. Rule 111, Section 3
of civil liability arising from the offense of the Rules of Court prohibits offended
charged shall be deemed instituted with parties from recovering damages twice for
the criminal action unless the offended the act being prosecuted in the criminal
party waives the civil action, reserves the action.50 Thus, Abellana is now barred from
right to institute it separately or institutes instituting this case.
the civil action prior to the criminal action. This Court now moves to the discussion
The reservation of the right to institute regarding damages.
separately the civil action shall be made II
before the prosecution starts presenting its Article 2176 of the Civil Code provides that
evidence and under circumstances those who commit acts constituting a
affording the offended party a reasonable quasi-delict are liable to pay damages:
opportunity to make such reservation. Article 2176. Whoever by act or omission
When the offended party seeks to enforce causes damage to another, there being
civil liability against the accused by way of fault or negligence, is obliged to pay for the
moral, nominal, temperate, or exemplary damage done. Such fault or negligence, if
damages without specifying the amount there is no pre-existing contractual relation
thereof in the complaint or information, the between the parties, is called a quasi-delict
filing fees therefor shall constitute a first and is governed by the provisions of this
lien on the judgment awarding such Chapter.
damages. Vergara v. Court of Appeals51 enumerated
Where the amount of damages, other than the elements necessary to establish a
actual, is specified in the complaint or quasi-delict case:
information, the corresponding filing fees These requisites are: (1) damages to the
shall be paid by the offended party upon plaintiff; (2) negligence, by act or
the filing thereof in court. 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.52
This Court affirms the finding of the Court
of Appeals that Caballes and Aparra were
grossly negligent in transporting the
passengers. The Court of Appeals ruled:
Records bore that after appellant Aparra
took over the control of the wheel of the
cargo truck and drove the same, appellant
Caballes merely rushed to get on the truck
and only sat beside appellant Aparra.
Appellant Caballes, despite the fact that
appellant Aparra possessed only a student
driver's permit, allowed him to continue
driving the truck. Moreover, We cannot
glean from the records that appellant
Caballes cautioned appellant Aparra while
the latter was driving the truck. It must be
pointed out that the cargo truck had more
than thirty (30) passengers on board at its
back, who were either just standing or
sitting on their bags, with nothing to hold
on for support, while the truck was moving.
Furthermore, the road was only four (4)
meters wide, rough and with many pot
holes. Obviously, these circumstances
warrant that the driver be somebody of
competence and experience in
maneuvering a vehicle under such a
precarious condition. Therefore, the acts of
appellant Aparra in taking the wheel and of
appellant Caballes in allowing the former to
take the wheel are plain manifestations of
negligence.53
Caballes was grossly negligent in allowing
Aparra to drive the truck despite being an
inexperienced driver. Aparra's inexperience
caused the accident that led to the deaths
of Rodolfo and Monalisa. It is undisputed
that the deaths of Vivian's husband and
daughter caused damage to her. Clearly,
the requisites for a quasi-delict are present
in this case.
In addition to Caballes and Aparra, the law
also holds their employer, Simolde, liable.
Article 2180 of the Civil Code provides that
an employer is vicariously liable with his
employees for any damage they cause
while performing their duties.
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.
....
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 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)
Delsan Transport Lines, Inc. v. C & A
Construction, Inc.54 explained that when
an employee's negligence causes injury to
another, a presumption against the
employer arises. To avoid liability, the
employer must prove he exercised due
diligence in selecting as well as supervising
his employees.
Whenever an employee's negligence
causes damage or injury to another, there
instantly arises a presumption juris
tantum that the employer failed to
exercise diligentissimi patris familias in the
selection (culpa in eligiendo) or supervision
(culpa in vigilando) of its employees. To the employer.55 (Emphasis supplied,
avoid liability or a quasi-delict committed citations omitted)
by his employee, an employer must In an effort to decry liability, Simolde
overcome the presumption by presenting insists that the passengers boarded the
convincing proof that he exercised the care truck without his knowledge and despite
and diligence of a good father of a family in his objections. He testified as follows:
the selection and supervision of his
Q: You mentioned that this truck was
employee.
being used by different passengers
There is no question that petitioner, who is
to load their cargoes to different
the owner/operator of M/V Delsan Express,
destinations, and of course when
is also the employer of Capt. Jusep who at
the passengers would load their
the time of the incident acted within the
cargoes, they would join in the
scope of his duty. The defense raised by
truck?
petitioner was that it exercised due
diligence in the selection of Capt. Jusep
because the latter is a licensed and
competent Master Mariner. It should be A: It depends on the condition at their
stressed, however, that the required own risk.
diligence of a good father of a family
pertains not only to the selection, but
also to the supervision of
employees. It is not enough that the Q: Regardless whether at their own
employees chosen be competent and risk, you would admit that there
qualified, inasmuch as the employer is still was also passengers boarding the
required to exercise due diligence in truck at the same time that the
supervising its employees. cargoes are being loaded and
In Fabre, Jr. v. Court of Appeals, it was transported to their respective
held that due diligence in supervision destinations?
requires the formulation of rules and
regulations for the guidance of
employees and the issuance of proper
instructions as well as actual A: No, only cargoes, that is strictly
implementation and monitoring of given and instructed to the driver.
consistent compliance with the rules.
Corollarily, in Ramos v. Court of Appeals,
the Court stressed that once negligence
Q: Now, Mr. Simolde, you said it was
on the part of the employees is shown,
at their own risk when the
the burden of proving that he observed
passengers boarded the cargo
the diligence in the selection and
truck when this truck transported
supervision of its employees shifts to
the cargoes to their destinations,

do you mean to say that no
passengers were on board that
particular vehicle?
A: You know, you cannot, although
you try to impose this, but you
know in the provinces like that,
especially there are only few
jeepney for transportation, even
cargo trucks are being boarded by
the passengers in spite of the fact
that the driver says no passengers,
no passengers, you know, those
things are pakikisama, but my
strict implementation is that the
truck is only good for services for
the cargoes and the cargo that is
being loaded there is already
included on the freight-on-board
the vessel, so that truck is used for
servicing cargo.
Q: Based on your observations, you
mentioned that this cargo truck
picture of which has been identified
as Exh. "6", was used to transport
cargo, now, in one occasion, how
many passengers would ride
without your notice, can you make
an estimate?
A: I cannot tell you any facts about
that, because for me, I have not
received any information that the
truck has been boarded with
passengers, because by the nature
of the looks of the truck, how could
the passenger board the vehicle,
and where can they sit down on the
side, there is no bench.
Q: Let us clarify this, Mr. Simolde, you
earlier admitted that there were
occasions, because of the absence
of cargo trucks and passenger
vehicles in the area, the passengers
would board the cargo truck even
without your knowledge or your
consent?
A: Yes, sir.
Q: In other words, there were
occasions, of course you acquired
knowledge of this, when the truck
was transporting cargoes,
passengers would join in the truck?
A: No, only cargoes. I don't know if
when the truck is already out of
sight, it depends on the driver.56
Instead of helping his defense, Simolde's
testimony proves his failure to supervise
his employees. Simolde should have been
more diligent in ensuring that his
employees acted within the parameters of
their jobs. He should have taken steps to
ensure that his instructions were followed.
His failure to control the behavior of his
employees makes him liable for the
consequences of their actions. Thus,
Simolde is solidarity liable with Caballes
and Aparra for the payment of the damages
granted by law.
The Civil Code holds Simolde liable for the
damages that his actions have
caused.57 Article 2206 specifically applies
when a death occurs as a result of a crime
or a quasi-delict:
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:
(1) The defendant shall be liable
for the loss of the earning
capacity of the deceased, and
the indemnity shall be paid to the
heirs of the latter; such indemnity
shall in every case be assessed and
awarded by the court, unless the
deceased on account of permanent
physical disability not caused by
the defendant, had no earning
capacity at the time of his death;
(2) If the deceased was obliged to
give support according to the
provisions of Article 291, the
recipient who is not an heir called
to the decedent's inheritance by
the law of testate or intestate
succession, may demand support
from the person causing the death,
for a period not exceeding five

years, the exact duration to be
fixed by the court;
(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)
The same rules on damages are applicable
whether or not the death occurred as a
result of a crime or a quasi-delict. To
summarize, the heirs are entitled to
recover:
1. As indemnity for the death of the
victim of the offense — P12,000.00,
without the need of any evidence or proof
of damages, and even though there may
have been mitigating circumstances
attending the commission of the offense
[now P50,000.00].
2. As indemnity for loss of earning
capacity of the deceased — an amount to
be fixed by the court according to the
circumstances of the deceased related to
his actual income at the time of death and
his probable life expectancy, the said
indemnity to be assessed and awarded by
the court as a matter of duty, unless the
deceased had no earning capacity at said
time on account of permanent disability not
caused by the accused. If the deceased was
obliged to give support, under Art. 291,
Civil Code, the recipient who is not an heir,
may demand support from the accused for
not more than five years, the exact
duration to be fixed by the court.
3. As moral damages for mental anguish,
— an amount to be fixed by the court. This
may be recovered even by the illegitimate
descendants and ascendants of the
deceased.
4. As exemplary damages, when the
crime is attended by one or more
aggravating circumstances, — an amount
to be fixed in the discretion of the court,
the same to be considered separate from
fines.
5. As attorney's fees and expenses of
litigation, — the actual amount thereof,
(but only when a separate civil action to
recover civil liability has been filed or when
exemplary damages are awarded)
6. Interests in the proper cases.
7. It must be emphasized that the
indemnities for loss of earning
capacity of the deceased and for moral
damages are recoverable separately
from and in addition to the fixed sum
of P12,000.00 corresponding to the
indemnity for the sole fact of death,
and that these damages may, however, be
respectively increased or lessened
according to the mitigating or aggravating
circumstances, except items 1 and 4
above, for obvious reasons.58 (Emphasis
supplied)
Civil or death indemnity is mandatory and
granted to the heirs of the victim without
need of proof other than the commission of
the crime.59 Initially fixed by the Civil Code
at P3,000.00, the amount of the indemnity
is currently fixed at P50,000.00.60
Thus, respondents are liable to pay
Rodolfo's heirs P50,000.00. They are liable
to pay another P50,000.00 to answer for
the death of Monalisa.
In Pestaño v. Spouses Sumayang,61 this
Court applied Article 2206 of the Civil Code
and awarded compensation for the
deceased's lost earning capacity in addition
to the award of civil indemnity. The
indemnity for the deceased's lost earning
capacity is meant to compensate the heirs
for the income they would have received
had the deceased continued to live.62
Pleyto v. Lomboy63 provided the formula to
compute a deceased's earning capacity:
It is well-settled in jurisprudence that the
factors that should be taken into account in
determining the compensable amount of
lost earnings are: (1) the number of years
for which the victim would otherwise have
lived; and (2) the rate of loss sustained by
the heirs of the deceased. Jurisprudence
provides that the first factor, i.e., life
expectancy, is computed by applying the
formula (2/3 x [80 - age at death]) adopted
in the American Expectancy Table of
Mortality or the Actuarial Combined
Experience Table of Mortality. As to the
second factor, it is computed by multiplying
the life expectancy by the net earnings of
the deceased, i.e., the total earnings less
expenses necessary in the creation of such
earnings or income and less living and
other incidental expenses. The net earning
is ordinarily computed at fifty percent
(50%) of the gross earnings. Thus, the
formula used by this Court in computing
loss of earning capacity is: Net Earning
Capacity = [2/3 x (80 - age at time of
death) x (gross annual income -
reasonable and necessary living
expenses)].64 (Emphasis supplied,
citations omitted)
The reason behind the formula for loss of
earning capacity was discussed in Villa Rey
Transit, Inc. v. Court of Appeals:65
[The award of damages for loss of earning
capacity is] concerned with the
determination of the losses or damages
sustained by the Private respondents, as
dependents and intestate heirs of the
deceased, and that said damages consist,
not of the full amount of his earnings, but
of the support they received or would have
received from him had he not died in
consequence of the negligence of
petitioner's agent. In fixing the amount of
that support, We must reckon with the
"necessary expenses of his own living",
which should be deducted from his
earnings. Thus, it has been consistently
held that earning capacity, as an element
of damages to one's estate for his death by
wrongful act is necessarily his net earning
capacity or his capacity to acquire money,
"less the necessary expense for his own
living." Stated otherwise, the amount
recoverable is not loss of the entire
earning, but rather the loss of that portion
of the earnings which the beneficiary would
have received. In other words, only net
earnings, not gross earning, are to be
considered that is, the total of the earnings
less expenses necessary in creation of such
earnings or income and less living and
other incidental expenses.66 (Citations
omitted)
The formula provided in these cases is
presumptive, i.e., it should be applied in
the absence of proof in terms of statistics
and actuarial presented by the plaintiff.
The Court of Appeals deleted the award of
actual damages granted to petitioner for
Rodolfo's lost earnings. According to the
Court of Appeals, documentary evidence
should be presented to substantiate a claim
for the deceased's lost income.67
This Court disagrees.
In civil cases, Vivian is only required to
establish her claim by a preponderance of
evidence. Allowing testimonial evidence to
prove loss of earning capacity is consistent
with the nature of civil actions.68 Rule 133,
Section 1 of the Rules of Court provides:
Section 1. Preponderance of evidence, how
determined. — In civil cases, the party
having the burden of proof must establish
his case by a preponderance of evidence.
In determining where the preponderance
or superior weight of evidence on the
issues involved lies, the court may consider
all the facts and circumstances of the case,
the witnesses' manner of testifying, their
intelligence, their means and opportunity
of knowing the facts to which they are
testifying, the nature of the facts to which
they testify, the probability or improbability
of their testimony, their interest or want of
interest, and also their personal credibility
so far as the same may legitimately appear
upon the trial. The court may also consider
the number of witnesses, though the
preponderance is not necessarily with the
greater number.
In determining if this quantum of proof is
met, this Court is not required to
exclusively consider documentary
evidence:
Nothing in the Rules of Court requires that
only documentary evidence is allowed in
civil cases. All that is required is the
satisfaction of the quantum of evidence,
that is, preponderance of evidence. In
addition, the Civil Code does not prohibit a
claim for loss of earning capacity on the
basis that it is not proven by documentary
evidence.
Testimonial evidence, if not questioned for
credibility, bears the same weight as
documentary evidence. Testimonies given
by the deceased's spouse, parent, or child
should be given weight because these
individuals are presumed to know the
income of their spouse, child, or parent.
If the amount of income testified to seemed
incredible or unrealistic, the defense could
always raise their objections and discredit
the witness or, better yet, present evidence
that would outweigh the evidence of the
prosecution.69
This Court has previously accepted a
competent witness' testimony to determine
the deceased's income. In Pleyto v.
Lomboy,70 this Court used the testimony of
the deceased's widow as basis to estimate
his earning capacity:
Petitioners' claim that no substantial proof
was presented to prove Ricardo Lomboy's
gross income lacks merit. Failure to present
documentary evidence to support a claim
for loss of earning capacity of the deceased
need not be fatal to its cause. Testimonial
evidence suffices to establish a basis for
which the court can make a fair and
reasonable estimate of the loss of earning
capacity. Hence, the testimony of
respondent Maria Lomboy, Ricardo's
widow, that her husband was earning a
monthly income of P8,000 is sufficient to
establish a basis for an estimate of
damages for loss of earning
capacity.71 (Citation omitted)
In a torts case, this Court also accepted
testimony from co-workers of the deceased
to establish his income before his death.
The witnesses Mate and Reyes, who were
A: Yes, later, he was the general A: I have my rice fields in Los Angeles.
respectively the manager and auditor of
manager in my business in Butuan
Allied Overseas Trading Company and ....
City.
Padilla Shipping Company, were competent
to testify on matters within their personal Q: What were these business [es]? Q: Did you keep the payroll of
knowledge because of their positions, such Rod[o]lfo Torreon?
as the income and salary of the deceased, A: Three drug stores.
Nicanor A. Padilla (Sec. 30, Rule 130, Rules A: At this time, almost five years, I
of Court). As observed by the Court of Q: Can you identify the drug stores at think I have thrown that away
Appeals, since they were cross-examined that time? already, the records.
by petitioner's counsel, any objections to
their competence and the admissibility of A: Yes[,] sir. Q: From your estimate, how much
their testimonies, were deemed waived. income was he receiving?
The payrolls of the companies and the Q: What are the names?
decedent's income tax returns could, it is A: His basic salary is P10,000.00 a
A: All Farmacia Buena. Farmacia month and he is receiving 20%
true, have constituted the best evidence of
Bue[n]a located in G. Flores Ave., commission on the net profit.
his salaries, but there is no rule
Farmacia Buena located in A.D.
disqualifying competent officers of the
Curato St., and the other one in Q: How about for the other
corporation from testifying on the
Langihan. businesses, did he also receive
compensation of the deceased as an
share?
officer of the same corporation, and in
Q: What happened to these
any event, no timely objection was made
drugstores? A: Sometimes.
to their testimonies.72
If co-workers were deemed competent to A: At that time, I immediately sold my Q: How much do you think was
testify on the compensation that the store in Curato St., a few months Rod[o]lfo Torreon earning at that
deceased was receiving, all the more after the death of Rod[o]lfo time?
should an employer be allowed to testify on Torreon.
the amount she was paying her deceased A: More or less P15,000.00 and I think
employee. Q: Aside from the drug stores, what he was receiving commission from
Abellana testified that at the time of his other business you have at that the salesmen.73
death, deceased Rodolfo was earning time in 1989?
P15,000.00 per month: The simplified formula to compute loss of
A: I have an apartment. earning capacity was given in the ponencia
Q: Prior to the death of Rodolfo of People v. Wahiman:74
Torreon, do you know where he Q: And Rod[o]lfo Torreon was? [2/3 x 80 - age] x [gross annual income -
was working? necessary expenses equivalent to 50% of
A: He was the one supervising. the gross annual income]75
A: He was working under me. The concurring opinion in Wahiman was
Q: Aside from this apartment, what instructive on how to properly apply this
Q: You said he was working under else? formula:
you?
This is a step-by-step guide to compute an
award for loss of earning capacity.
(1) Subtract the age of the deceased from
80.
(2) Multiply the answer in (1) by 2, and
divide it by 3 (these operations, are
interchangeable).
(3) Multiply 50% to the annual gross
income of the deceased.
(4) Multiply the answer in (2) by the
answer in (3). This is the loss of earning
capacity to be awarded.
When the evidence on record only shows
monthly gross income, annual gross
income is derived from multiplying the
monthly gross income by 12. When the
daily wage is the only information provided
during trial, such amount may be multiplied
by 260, or the number of usual workdays
in a year, to arrive at annual gross
income.76
At the time of his death, Rodolfo was 48
years old and was earning P15,000.00
monthly.77 To determine his annual gross
income, this Court multiplied his gross
monthly income by 12 to get the result of
P180,000.00.
Computing for life expectancy, or steps 1
and 2, results:
Life Expectancy = 2/3 x (80 - 48)
Life Expectancy = 2/3 x (32)
Life Expectancy = 21.33 years
Applying his life expectancy and annual
gross income to the general formula, or
step 3:
Loss of Earning Capacity = Life Expectancy
x 1/2 annual gross income
Loss of Earning Capacity = 21.33 x
(P180,000.00/2)
Loss of Earning Capacity = 21.33 x
P90,000.00
Loss of Earning Capacity = wrongdoing.83 Specifically, in cases of
P1,919,700.00
Respondents are liable to
pay P1,919,700.00 to compensate for the
income Rodolfo's heirs would have received
had he lived.
On the other hand, Vivian failed to prove
the actual damages she suffered for the
death of her daughter, Monalisa. Vivian
merely testified as to the funeral and burial
expenses she incurred without producing
any receipt or other evidence to support
her claim.78 Consequently, she cannot be
entitled to an award of actual damages on
account of Monalisa's loss.
III
With regard to the award of moral
damages, this Court affirms the Court of
Appeals' ruling to grant it. Article 2206 of
the Civil Code expressly grants moral
damages in addition to the award of civil
indemnity.79
In her petition, Vivian maintains that the
amount of moral damages granted her
should be increased. This Court is not
convinced. Although the Civil Code80 grants
compensation for the mental anguish
suffered by the heirs for the loss of their
loved one, this award is not meant to
enrich the petitioner at the expense of the
respondents.81
The Court of Appeals correctly granted
P50,000.00 as moral damages to the heirs
of Rodolfo. An award of P50,000.00 is also
awarded to the heirs of Monalisa.
In addition, this Court affirms the award for
exemplary damages. Exemplary damages
are imposed by way of example or to
correct a wrongful conduct.82 It is imposed
as a punishment for highly reprehensible
conduct, meant to deter serious
quasi-delicts, it is granted if the respondent
acted with gross negligence.84
Kierulf v. Court of Appeals85 summarized
the requirements for exemplary damages
to be awarded:
Exemplary damages are designed to permit
the courts to mould behavior that has
socially deleterious consequences, and its
imposition is required by public policy to
suppress the wanton acts of an offender.
However, it cannot be recovered as a
matter of right. It is based entirely on the
discretion of the court. Jurisprudence sets
certain requirements before exemplary
damages may be awarded, to wit:
(1) (T)hey may be imposed by way of
example or correction only in addition,
among others, to compensatory damages,
and cannot be recovered as a matter of
right, their determination depending upon
the amount of compensatory damages that
may be awarded to the claimant;
(2) the claimant must first establish his
right to moral, temperate, liquidated or
compensatory damages; and
(3) the wrongful act must be accompanied
by bad faith, and the award would be
allowed only if the guilty party acted in a
wanton, fraudulent, reckless, oppressive or
malevolent manner.86 (Citations omitted)
The Court of Appeals correctly imposed
exemplary damages against respondents.
Each respondent clearly acted with gross
negligence. Aparra drove without a license
and jeopardized the life of the cargo truck
passengers. Caballes not only allowed
Aparra to drive on a perilous road but he
also permitted passengers to board the
cargo truck despite knowing that the
vehicle was not designed to transport
people. Simolde was also grossly negligent
for tolerating his employees' negligent
behaviors. Had Simolde been more diligent
in supervising his employees, his driver
would not have allowed passengers to
board the truck and his mechanic would not
have attempted to drive a vehicle he was
not equipped to handle.
Thus, to ensure that such behavior will not
be repeated, respondents are directed to
pay P10,000.00 as exemplary damage to
the heirs of Rodolfo and Monalisa.
With respect to the award of litigation
expenses and attorney's fees, the Civil
Code allows attorney's fees to be awarded
if, as in this case, exemplary damages are
imposed.
Considering the protracted litigation of this
dispute, an award of P100,000.00 as
attorney fees and P50,000.00 for litigation
expenses are awarded to Vivian.
Finally, there is a need to modify the
interest imposed by the Court of Appeals.
In its Decision, the Court of Appeals
imposed 6% interest on the award of
damages and a 12% interest on the
judgment award:
In addition, We impose the legal interest at
the rate of SIX PERCENT (6%) per annum
of the total amount of damages awarded by
this Court in the amount of Two Hundred
Forty Five Thousand (P245,000.00) Pesos,
starting from the date of the promulgation
of the court a quo's Decision or from 17
November 2000 and the rate of TWELVE
PERCENT (12%) interest per annum, in lieu
of SIX PERCENT (6%), upon finality of the
decision of this Court. This is in line with
the ruling of the Supreme Court in Eastern
Shipping Lines, Inc. versus Court of
Appeals[.]87
The Court of Appeals used as a
guide Eastern Shipping v. Court of
Appeals,88 which provided:
II. With regard particularly to an
award of interest in the concept of
actual and compensatory damages,
the rate of interest, as well as the
accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it
consists in the payment of a sum of money,
i.e., a loan or forbearance of money, the
interest due should be that which may have
been stipulated in writing. Furthermore,
the interest due shall itself earn legal
interest from the time it is judicially
demanded. In the absence of stipulation,
the rate of interest shall be 12% per annum
to be computed from default, i.e., from
judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of
the Civil Code.
2. When a[n] 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 of 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 of 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 12% per
annum from such finality until its
satisfaction, this interim period being
deemed to be by then an equivalent to a
forbearance of credit.89 (Emphasis
supplied, citations omitted)
Interest by way of damages, also known as
moratory interest, is allowed in actions for
breach of contract or tort.90 Since the
obligation in this case stems from a quasi-
delict and not from a loan or forbearance of
money, the interest awarded falls under
the second paragraph illustrated in Eastern
Shipping. This is in line with Article 2211 of
the Civil Code which states that this Court
may impose "interest as a part of the
damages" in quasi-delict cases.91 Awarding
this interest is discretionary upon the
courts.92
This is different from interest on interest
imposed under Article 221293 of the Civil
Code. Interest on interest is mandatory
and is imposed as penalty for the delay in
the payment of a sum of money.94
Guided by Eastern Shipping, the Court of
Appeals imposed a 6% interest on the
award of damages starting from November
17, 2000, the date of the promulgation of
the Regional Trial Court Decision. However,
this award is not proper.
Generally, the Civil Code does not allow
interest upon unliquidated claims or
damages to be recovered unless they can
be established with reasonable
certainty.95 The rationale for this is
because it would be unfair to require the
liable person to pay interest on a sum that
is yet to be determined. However, the
courts, in the interest of justice, may
impose interest on unliquidated claims or
damages upon judgment.
In this case, there is no need to impose a
moratory interest. Actual damages to
compensate for the deceased's lost
earnings are already granted. Payment for
Rodolfo's lost earning capacity should be
enough to cover the actual damages
suffered by his heirs.
On the other hand, pursuant to Eastern
Shipping, the Court of Appeals correctly
imposed an interest on the judgment
award. However, the 12% interest should
be modified. Following Bangko Sentral ng
Pilipinas- Monetary Board Circular No. 796
dated May 16, 2013, the rate of legal
interest is now 6%. Nacar v. Gallery
Frames96 is instructive:
Recently, however, the Bangko Sentral ng
Pilipinas Monetary Board (BSP-MB), in its
Resolution No. 796 dated May 16, 2013,
approved the amendment of Section 2 of
Circular No. 905, Series of 1982 and,
accordingly, issued Circular No. 799, Series
of 2013, effective July 1, 2013, the
pertinent portion of which reads:
The Monetary Board, in its Resolution No.
796 dated 16 May 2013, approved the
following revisions governing the rate of
interest in the absence of stipulation in loan
contracts, thereby amending Section 2 of
Circular No. 905, Series of 1982:
Section 1. The rate of interest for the loan
or forbearance of any money, goods or
credits and the rate allowed in judgments,
in the absence of an express contract as to
such rate of interest, shall be six percent
(6%) per annum.
Section 2. In view of the above, Subsection
X305.1 of the Manual of Regulations for
Banks and Sections 4305Q.1, 4305S.3 and
4303P.1 of the Manual of Regulations for
Non-Bank Financial Institutions are hereby
amended accordingly.
This Circular shall take effect on 1 July
2013.
Thus, from the foregoing, in the absence of
an express stipulation as to the rate of
interest that would govern the parties, the
rate of legal interest for loans or
forbearance of any money, goods or credits
and the rate allowed in judgments shall no
longer be twelve percent (12%) per annum
— as reflected in the case of Eastern
Shipping Lines and Subsection X305.1 of
the Manual of Regulations for Banks and
Sections 4305Q.I, 4305S.3 and 4303P.1 of
the Manual of Regulations for Non-Bank
Financial Institutions, before its
amendment by BSP-MB Circular No. 799 —
but will now be six percent (6%) per annum
effective July 1, 2013. It should be noted,
nonetheless, that the new rate could only
be applied prospectively and not
retroactively. Consequently, the twelve
percent (12%) per annum legal interest
shall apply only until June 30, 2013. Come
July 1, 2013 the new rate of six percent
(6%) per annum shall be the prevailing
rate of interest when
applicable. (Citations omitted)
97
Consequently, the guidelines laid down
in Eastern Shipping have been amended as
follows:
I. When an obligation, regardless of its
source, i.e., law, contracts, quasi-
contracts, delicts or quasi-delicts is
breached, the contravenor can be held
liable for damages. The provisions under
Title XVIII on "Damages" of the Civil Code
govern in determining the measure of
recoverable damages.
II. With regard particularly to an award of
interest in the concept of actual and
compensatory damages, the rate of
interest, as well as the accrual thereof, is
imposed, as follows:
1. When the obligation is breached, and it
consists in the payment of a sum of money,
i.e., a loan or forbearance of money, the
interest due should be that which may have
been stipulated in writing. Furthermore,
the interest due shall itself earn legal
interest from the time it is judicially
demanded. In the absence of stipulation,
the rate of interest shall be 6% per annum
to be computed from default, i.e., from
judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of
the Civil Code.
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 a. P50,000.00 as civil indemnity for
(Art. 1169, Civil Code), but when such the death of Rodolfo Torreon;
certainty cannot be so reasonably b. P50,000.00 as civil indemnity for
established at the time the demand is the death of Monalisa Torreon;
made, the interest shall begin to run only c. P1,919,700.00 as actual damages
from the date the judgment of the court is for Rodolfo Torreon's lost earning
made (at which time the quantification of capacity;
damages may be deemed to have been d. P100,000.00 as moral damages
reasonably ascertained). The actual base composed of P50,000.00 for
for the computation of legal interest shall, Rodolfo Torreon's heirs and
in any case, be on the amount finally P50,000.00 for Monalisa Torreon's
adjudged. heirs;
3. When the judgment of the court e. P10,000.00 as exemplary damages;
awarding a sum of money becomes f. P100,000.00 as attorney fees; and
final and executory, the rate of legal g. P50,000.00 as litigation expenses.
interest, whether the case falls under An interest at the legal rate of six percent
paragraph 1 or paragraph 2, above, (6%) per annum shall also be imposed on
shall be 6% per annum from such the total judgment award computed from
finality until its satisfaction, this the finality of this decision until its actual
interim period being deemed to be by payment.
then an equivalent to a forbearance of SO ORDERED.
credit.98 (Emphasis supplied)
Since the judgment of this Court has not
yet become final and executory, the
interest rate applicable to the judgment
award is 6% and not 12% as imposed by
the Court of Appeals.
The interest on the judgment award
discussed in Eastern Shipping is reckoned
from finality of the judgment until full
payment. It is designed to penalize non-
payment of the judgment award. Thus, if
the liable party immediately pays, no
interest will be imposed.
WHEREFORE, the April 3, 2008 Decision
of the Court of Appeals in CA-G.R. CV No.
71090 is MODIFIED. Respondents
Carmelo T. Simolde, Felix Caballes, and
Generoso Aparra, Jr., are ORDERED to
pay solidarity petitioner Vivian B. Torreon
the amounts of:
G.R. No. 155990 September 12, (Universal Aquarius Chapter), hereinafter
2007 referred to as Obrero Filipino, sent a Notice
UNIVERSAL AQUARIUS, INC. and of Strike to Universal.
CONCHITA TAN, petitioners, On the same date, Resources informed the
vs. Regional Office of the Department of Labor
Q.C. HUMAN RESOURCES and Employment that the officers and
MANAGEMENT members of Obrero Pilipino are its
CORPORATION, respondent *. employees and not employees of Universal.
DECISION Five days later, or on December 19, 2000,
AUSTRIA-MARTINEZ, J.: Capocyon and 36 other union officers and
Before the Court is a Petition for Review members3 of Obrero Pilipino, picketed,
on Certiorari under Rule 45 of the Rules of barricaded and obstructed the entry and
Court assailing the Decision1 dated August exit of Universal's Antipolo City chemical
23, 2002 of the Court of Appeals (CA) in plant and intercepted Universal's delivery
CA-G.R. SP No. 65570 and the CA trucks thereby disrupting its business
Resolution2 dated October 22, 2002 which operations. Marman's depot, which
denied petitioners' Motion for adjoined Universal's plant, suffered a
Reconsideration. similar fate.
The facts: On December 27, 2000, Universal and Tan
Universal Aquarius, Inc. (Universal) is filed a Complaint against the strikers and
engaged in the manufacture and Resources before the Regional Trial Court,
distribution of chemical products in Metro Branch 74, Antipolo City (RTC) for breach
Manila. It operates a chemical plant in of contract and damages suffered due to
Antipolo City. Conchita Tan (Tan), as a the disruption of their respective business
proprietor under the name and style of operations, docketed as Civil Case No. 00-
Marman Trading (Marman), is engaged in 6029.4 The Complaint alleges, in part:
the trading, delivery and distribution of (17) On December 19, 2000, at about 2:00
chemical products in Metro Manila, with a o'clock in the morning, in gross violation of
depot in Antipolo City adjoining Universal's all applicable laws, rules and regulations,
chemical plant. defendants Capocyan, et al., willfully,
Q.C. Human Resources Management unlawfully and feloniously picketed,
Corporation (Resources) is engaged in barricaded and otherwise obstructed entry
supplying manpower to various and exit to and from the main gate of
establishments. It supplied Universal with plaintiff Universal's plant; x x x
about seventy-four (74) temporary (23) In a parallel move, and a companion
workers to assist Universal in the operation activity to their unlawful obstruction of
of its chemical plant in Antipolo City. plaintiff Universal's premises, Capocyan, et
On December 13, 2000, Rodolfo Capocyan al., likewise picketed , obstructed and
(Capocyan), claiming to be the general otherwise barricaded the premises of
counsel/national president of the labor plaintiff Marman, whose depot adjoined
organization called Obrero Pilipino that of plaintiff Universal; x x x
(26) As a consequence of the companion
blockade on plaintiff Marman's premises,
its business operations were paralyzed;
(27) Plaintiff Universal's and plaintiff
Marman's operations continue to be at a
standstill, causing damages in the form of
unearned sales x x x
(31) Defendant Resources represented
itself to be able to provide temporary
workers who are competent to assist in
plaintiff Universal's plant operations; it held
itself out as a manpower firm with a pool of
what can generally be described as law-
abiding workers, as that is essential in its
business of job-contracting;
(32) Defendant Resources instead sent a
band of scoundrels who allowed
themselves to be misdirected and
misguided by Capocyan, an attorney (?),
and "national president" of Obrero Pilipino
(?)
x x x5
On January 3, 2001, Universal forged an
Agreement (To End Labor Dispute)
with Obrero Pilipino.6 Thus, the strike
which affected the business operations of
Universal and Marman ended. Universal
and Tan then filed a Notice of Dismissal as
against the strikers.7
On January 8, 2001, Resources filed a
Motion to Dismiss on the grounds that the
complaint stated no cause of action against
it; that, assuming the existence of such
cause of action, the same was lost upon
dismissal of the case against the individual
defendants; and lack of jurisdiction.8
In an Order dated February 2, 2001, the
RTC denied the Motion to
Dismiss. Resources filed a Motion for
9
Reconsideration10 but it was denied by the
RTC in its Order dated May 11, 2001.11
On July 11, 2001, Resources filed a petition
for certiorari and prohibition with the
CA.12 On August 23, 2002, the CA rendered
a Decision which set aside the Orders dated
February 2, 2001 and May 11, 2001 of the
RTC and dismissed the complaint for lack
of cause of action.13 The CA held that:
It was very clear from the allegations in the
complaint that the claims of plaintiffs
(private respondents in this case) stemmed
from the strike, which resulted in the
disruption of their business operations.
From the four corners of the complaint, it
was apparent that the right of the plaintiffs
to operate their business was violated
when the defendants, Rodolfo Capocyan
and company, staged the strike in the
premises of Universal Aquarius and
Marman, thereby disrupting the plant's
operations. Q.C. Human Resources
Management Corporation (the petitioner in
this case) was made defendant in the
complaint only because it was the employer
of the strikers. However, subsequent
events erased the cause of action of
plaintiffs, that is, when Universal Aquarius
agreed to end the dispute by giving
financial assistance to the striking workers
and the dismissal of the case against them.
With this turn of events, the trial court had
no more issue to resolve, and the dismissal
of the complaint against the strikers
necessarily warranted the dismissal of the
complaint against Q.C. Human Resources
Management Corporation because plaintiffs
had no more cause of action against it.14
Universal and Tan filed a Motion for
Reconsideration15 but it was denied by the
CA in its Resolution dated October 22,
2002.16
The present petition is anchored on the
following grounds:
The Honorable Court of Appeals seriously
erred in dismissing Civil Case No. 00-6829
for lack of cause of action.
The Honorable Court of Appeals seriously
erred in holding that the lower court
committed grave abuse of discretion
tantamount to lack of jurisdiction when he
denied the motion to dismiss filed by
respondent Resources.17
Universal and Tan aver that the complaint
stated a cause of action against Resources
that would warrant cognizance by the RTC;
the allegations of the complaint clearly
point out that Universal is suing Resources
for the latter's failure to supply the former
with temporary workers who will help in its
business.
On the other hand, Resources contends
that the complaint stated no cause of
action against it since there is nothing in
the allegations thereof that it participated
in the acts committed by its employees.
The petition is partly impressed with merit.
Section 1(g) Rule 1618 of the 1997 Rules of
Civil Procedure makes it clear that failure
to make a sufficient allegation of a cause of
action in the complaint warrants the
dismissal thereof. Section 2, Rule 2 of the
1997 Rules of Civil Procedure defines a
cause of action as the act or omission by
which a party violates the right of another.
It is the delict or the wrongful act or
omission committed by the defendant in
violation of the primary right of the
plaintiff.19 Its essential elements are as
follows:
1. A right in favor of the plaintiff by
whatever means and under whatever law it
arises or is created;
2. An obligation on the part of the named
defendant to respect or not to violate such
right; and
3. Act or omission on the part of such
defendant in violation of the right of the
plaintiff or constituting a breach of the
obligation of the defendant to the plaintiff
for which the latter may maintain an action
for recovery of damages or other
appropriate relief.20
It is only upon the occurrence of the last
element that a cause of action arises,
giving the plaintiff the right to maintain an
action in court for recovery of damages or
other appropriate relief.21
In Hongkong and Shanghai Banking
Corporation Limited v. Catalan, this Court
22
held:
The elementary test for failure to state a
cause of action is whether the complaint
alleges facts which if true would justify the
relief demanded. Stated otherwise, may
the court render a valid judgment upon the
facts alleged therein? The inquiry is into the
sufficiency, not the veracity of the material
allegations. If the allegations in the
complaint furnish sufficient basis on which
it can be maintained, it should not be
dismissed regardless of the defense that
may be presented by the defendants.23
Verily, it is beside the point whether or not
the allegations in the complaint are true,
for with a motion to dismiss complaint
based on lack of cause of action, the
movant only hypothetically admits the
truth of the facts alleged in the complaint;
that is, assuming arguendo that the facts
alleged are true, those allegations are
insufficient for the court to render a valid
judgment upon the same in accordance
with the prayer of the complaint.24
The complaint does not have to establish or
allege facts proving the existence of a
cause of action at the outset; this will have
to be done at the trial on the merits of the
case.25 To sustain a motion to dismiss for
lack of cause of action, the complaint must
show that the claim for relief does not
exist, rather than that a claim has been
defectively stated, or is ambiguous,
indefinite or uncertain.26
Anent Universal's claim for breach for
contract and damages, the Court is
convinced that the Complaint sufficiently
states a cause of action against Resources.
The Complaint alleged that Universal had a
contract of employment of temporary
workers with Resources; and that
Resources violated said contract by
supplying it with unfit, maladjusted
individuals who staged a strike and
disrupted its business operations. Given
these hypothetically admitted facts, the
RTC, in the exercise of its original and
exclusive jurisdiction,27 could have
rendered judgment over the dispute.
However, with regard to Tan's claim for
damages, the Court finds that she has no
cause of action against Resources. A
thorough reading of the allegations of the
Complaint reveals that Tan's claim for
damages clearly springs from the strike
effected by the employees of Resources. It
is settled that an employer's liability for
acts of its employees attaches only when
the tortious conduct of the employee
relates to, or is in the course of, his
employment.28 The question then is
whether, at the time of the damage or
injury, the employee is engaged in the
affairs or concerns of the employer or,
independently, in that of his own. An
employer incurs no liability when an
employee’s conduct, act or omission is
beyond the range of
employment.29 Unquestionably, when
Resources' employees staged a strike, they
were acting on their own, beyond the range
of their employment. Thus, Resources
cannot be held liable for damages caused
by the strike staged by its employees.
WHEREFORE, the petition is PARTLY
GRANTED. The Decision dated August 23,
2002 and Resolution dated October 22,
2002 of the Court of Appeals in CA-G.R. SP
No. 65570 are REVERSED and SET
ASIDE insofar only as the dismissal of the
complaint in Civil Case No. 00-6029 for lack
of cause of action of Universal Aquarius,
Inc. against Q.C. Human Resources
Management Corporation is concerned.
The complaint against the latter
is REINSTATED. The Regional Trial Court,
Branch 74, Antipolo City is DIRECTED to
continue with the proceedings on the cause
of action of Universal Aquarius, Inc. against
Q.C. Human Resources Management
Corporation.
The dismissal of the complaint in Civil Case
No. 00-6029 for lack of cause of action of
Conchita Tan against Q.C. Human
Resources Management Corporation
is AFFIRMED.
SO ORDERED.
G.R. No. 119121 August 14, 1998
NATIONAL POWER
CORPORATION, petitioner,
vs.
COURT OF APPEALS, Fifteenth Division
and PHESCO
INCORPORATED, respondents.
ROMERO, J.:
On July 22, 1979, a convoy of four (4)
dump trucks owned by the National Power
Corporation (NPC) left Marawi city bound
for Iligan city. Unfortunately, enroute to its
destination, one of the trucks with plate no
RFT-9-6-673 driven by a certain Gavino
Ilumba figured in a head-on-collision with
a Toyota Tamaraw. The incident resulted in
the death of three (3) persons riding in the
Toyota Tamaraw, as well as physical
injuries to seventeen other passengers.
On June 10, 1980, the heirs of the victims
filed a complaint for damages against
National Power Corporation (NPC) and
PHESCO Incorporated (PHESCO) before the
then Court of First Instance of Lanao del
Norte, Marawi City. When defendant
PHESCO filed its answer to the complaint it
contended that it was not the owner of the
dump truck which collided with the Toyota
Tamaraw but NPC. Moreover, it asserted
that it was merely a contractor of NPC with
the main duty of supplying workers and
technicians for the latter's projects. On the
other hand, NPC denied any liability and
countered that the driver of the dump truck
was the employee of PHESCO.
After trial on the merits, the trial court
rendered a decision dated July 25, 1988
absolving NPC of any liability. The
dispositive portion reads:
Consequently, in view of the foregoing
consideration, judgment is hereby
rendered ordering PHESCO, Inc. and
Gavino Ilumba upon receipt hereof:
1. To pay jointly and severally the plaintiffs
thru the Dansalan College the sum of
P954,154.55 representing the actual or
compensatory damages incurred by the
plaintiffs; and
2. To pay the sum of P50,000.00
representing Attorney's fees.
SO ORDERED.
Dissatisfied, PHESCO appealed to the Court
of Appeals, which on November 10, 1994
reversed the trial court's judgment. We
quote the pertinent portion of the decision:
A "labor only" contractor is considered
merely as an agent of the employer
(Deferia vs. National Labor Relations
Commission, 194 SCRA 525). A finding that
a contractor is a "labor only" contractor is
equivalent to a finding that there is an
employer-employee relationship between
the owner of the project and the employees
of the "labor only" contractor (Industrial
Timer Corporation vs. National Labor
Relations Commission, 202 SCRA 465). So,
even if Phesco hired driver Gavino Ilumba,
as Phesco is admittedly a "labor only"
contractor of Napocor the statute itself
establishes an employer-employee
relationship between the employer
(Napocor) and the employee (driver
Ilumba) of the labor only contractor
(Phesco). (Ecal vs. National Labor Relations
Commission, 195 SCRA 224).
Consequently, we hold Phesco not liable for
the tort of driver Gavino Ilumba, as there
was no employment relationship between
Phesco and driver Gavino Ilumba. Under
Article 2180 of the Civil Code, to hold the
employer liable for torts committed by his
employees within the scope of their
assigned task, there must exist an
employer-employee relationship. (Martin
vs. Court of Appeals, 205 SCRA 591).
WHEREFORE, we REVERSE the appealed
decision. In lieu thereof, the Court renders
judgment sentencing defendant National
Power Corporation to pay plaintiffs the sum
of P174,889.20 plus P20,000.00 as
attorney's fees and costs.
SO ORDERED.
Chagrined by the sudden turnaround, NPC
filed a motion for reconsideration of said
decision which was, however, denied on
February 9, 1995. 1 Hence, this petition.
The principal query to be resolved is, as
between NPC and PHESCO, who is the
employer of Ilumba, driver of the
dumptruck which figured in the accident
and which should, therefore, would be
liable for damages to the victims.
Specifically, NPC assigns the sole error
that:
THE COURT OF APPEALS DECISION
FINDING THAT PETITIONER NPC AS THE
EMPLOYER OF THE DRIVER GAVINO
ILUMBA, AND CONSEQUENTLY
SENTENCING IT TO PAY THE ACTUAL AND
COMPENSATORY DAMAGES SUSTAINED BY
COMPLAINTS, IS NOT IN ACCORD WITH
THE LAW OR WITH THE APPLICABLE
RULINGS OF THIS HONORABLE COURT. 2
As earlier stated, NPC denies that the
driver of the dump truck was its employee.
It alleges that it did not have the power of
selection and dismissal nor the power of
control over Ilumba. 3 PHESCO,
meanwhile, argues that it merely acted as
a "recruiter" of the necessary workers for
and in behalf of NPC. 4
Before we decide who is the employer of
Ilumba, it is evidently necessary to
ascertain the contractual relationship
between NPC and PHESCO. Was the
relationship one of employer and job
(independent) contractor or one of
employer and "labor only" contractor?
Job (independent) contracting is present if
the following conditions are met: (a) the
contractor carries on an independent
business and undertakes the contract work
on his own account under his own
responsibility according to his own manner
and method, free from the control and
direction of his employer or principal in all
matters connected with the performance of
the work except to the result thereof; and
(b) the contractor has substantial capital or
investments in the form of tools,
equipment, machineries, work premises
and other materials which are necessary in
the conduct of his business. 5 Absent these
requisites, what exists is a "labor only"
contract under which the person acting as
contractor is considered merely as an agent
or intermediary of the principal who is
responsible to the workers in the same
manner and to the same extent as if they
had been directly employed by
him. 6 Taking into consideration the above
distinction and the provisions of the
"Memorandum of Understanding" entered
into by PHESCO and NPC, we are convinced
that PHESCO was engaged in "labor only"
contracting.
It must be noted that under the
Memorandum, NPC had mandate to
approve the "critical path network and rate
of expenditure to be undertaken by
PHESCO. 7 Likewise, the manning schedule
and pay scale of the workers hired by
PHESCO were subject to confirmation by
NPC. 8 Then too, it cannot be ignored that
if PHESCO enters into any sub-contract or
lease, again NPC's concurrence is
needed. 9 Another consideration is that
even in the procurement of tools and
equipment that will be used by PHESCO,
NPC's favorable recommendation is still
necessary before these tools and
equipment can be purchased. 10
Notably, it
is NPC that will provide the money or
funding that will be used by PHESCO to
undertake the project. 11 Furthermore, it
must be emphasized that the project being
undertaken by PHESCO, i.e., construction
of power energy facilities, is related to
NPC's principal business of power
generation. In sum, NPC's control over
PHESCO in matters concerning the
performance of the latter's work is evident.
It is enough that NPC has the right to wield
such power to be considered as the
employer. 12
Under this factual milieu, there is no doubt
that PHESCO was engaged in "labor-only"
contracting vis-à-vis NPC and as such, it is
considered merely an agent of the latter. In
labor-only contracting, an employer-
employee relationship between the
principal employer and the employees of
the "labor-only" contractor is created.
Accordingly, the principal employer is
responsible to the employees of the "labor-
only" contractor as if such employees had
been directly employed by the principal
employer. 13 Since PHESCO is only a
"labor-only" contractor, the workers it
supplied to NPC, including the driver of the
ill-fated truck, should be considered as
employees of NPC. 14 After all, it is
axiomatic that any person (the principal
employer) who enters into an agreement
with a job contractor, either for the
performance of a specified work or for the
supply of manpower, assumes
responsibility over the employees of the
latter. 15
However, NPC maintains that even
assuming that a "labor only" contract exists
between it and PHESCO, its liability will not
extend to third persons who are injured
due to the tortious acts of the employee of
the "labor-only" contractor. 16 Stated
otherwise, its liability shall only be limited
to violations of the Labor Code and not
quasi-delicts.
To bolster its position, NPC cites Section
9(b), Rule VII, Book III of the Omnibus
Rules Implementing the Labor Code which
reads:
(b) Labor only contracting as defined
herein is hereby prohibited and the person
acting as contractor shall be considered
merely as an agent or intermediary of the
employer who shall be responsible to the
workers in the same manner and extent as
if the latter were directly employed by him.
In other words, NPC posits the theory that
its liability is limited only to compliance
with the substantive labor provisions on
working conditions, rest periods, and
wages and shall not extend to liabilities
suffered by third parties, viz.:
Consequently, the responsibilities of the
employer contemplated in a "labor only"
contract, should, consistent with the terms
expressed in the rule, be restricted "to the
workers." The same can not be expanded
to cover liabilities for damages to third
persons resulting from the employees'
tortious acts under Article 2180 of the Civil
Code. 17
The reliance is misplaced. It bears
stressing that the action was premised on
the recovery of damages as a result of
quasi-delict against both NPC and PHESCO,
hence, it is the Civil Code and not the Labor
Code which is the applicable law in
resolving this case.
To be sure, the pronouncement of this
Court in Filamer Christian Institute v.
IAC, 18 is most instructive:
The present case does not deal with a labor
dispute on conditions of employment
between an alleged employee and an
alleged employer. It invokes a claim
brought by one for damages for injury
caused by the patently negligent acts of a
person, against both doer-employee and
his employer. Hence, the reliance on the
implementing rule on labor to disregard the
primary liability of an employer under
Article 2180 of the Civil Code is misplaced.
An implementing rule on labor cannot be
used by an employer as a shield to avoid
liability under the substantive provisions of
the Civil Code.
Corollarily from the above doctrine, the
ruling in Cuison v. Norton & Harrison
Co., 19 finds applicability in the instant
case, viz.:
It is well to repeat that under the civil law
an employer is only liable for the
negligence of his employees in the
discharge of their respective duties. The
defense of independent contractor would
be a valid one in the Philippines just as it
would be in the United States. Here Ora
was a contractor, but it does not
necessarily follow that he was an
independent contractor. The reason for this
distinction is that the employer retained
the power of directing and controlling the
work. The chauffeur and the two persons
on the truck were the employees of Ora,
the contractor, but Ora, the contractor, was
an employee of Norton & Harrison Co.,
charged with the duty of directing the
loading and transportation of the lumber.
And it was the negligence in loading the
lumber and the use of minors on the truck
which caused the death of the unfortunate
boy. On the facts and the law, Ora was not
an independent contractor, but was the
servant of the defendant, and for his
negligence defendant was responsible.
Given the above considerations, it is
apparent that Article 2180 of the Civil Code
and not the Labor Code will determine the
liability of NPC in a civil suit for damages
instituted by an injured person for any
negligent act of the employees of the "labor
only" contractor. This is consistent with the
ruling that a finding that a contractor was
a "labor-only" contractor is equivalent to a
finding that an employer-employee
relationship existed between the owner
(principal contractor) and the "labor-only"
contractor, including the latter's
workers. 20
With respect to the liability of NPC as the
direct employer, Article 2180 of the Civil
Code explicitly provides:
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.
In this regard, NPC's liability is direct,
primary and solidary with PHESCO and the
driver. 21 Of course, NPC, if the judgment
for damages is satisfied by it, shall have
recourse against PHESCO and the driver
who committed the negligence which gave
rise to the action. 22
Finally, NPC, even if it truly believed that it
was not the employer of the driver, could
still have disclaimed any liability had it
raised the defense of due diligence in the
selection or supervision of PHESCO and
Ilumba. 23 However, for some reason or
another, NPC did not invoke said defense.
Hence, by opting not to present any
evidence that it exercised due diligence in
the supervision of the activities of PHESCO
and Ilumba, NPC has foreclosed its right to
interpose the same on appeal in conformity
with the rule that points of law, theories,
issues of facts and arguments not raised in
the proceedings below cannot be ventilated
for the first time on
appeal. 24 Consequently, its liability
stands.
WHEREFORE, in view of the foregoing, the
assailed decision of the Court of Appeals
dated November 10, 1994 and its
accompanying resolution dated February 9,
1995 are AFFIRMED without prejudice to
the right of NPC to demand from PHESCO
and Ilumba reimbursement of the damages
it would be adjudged to pay to
complainants. No costs.
SO ORDERED.
G.R. No. 115024 February 7,
1996
MA. LOURDES VALENZUELA, petitioner,
vs.
COURT OF APPEALS, RICHARD LI and
ALEXANDER COMMERCIAL,
INC., respondents.
x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-
x-x-x-x-x-x-x-x-x-x-x-x-x
G.R. No. 117944 February 7,
1996
RICHARD LI, petitioner,
vs.
COURT OF APPEALS and LOURDES
VALENZUELA, respondents.
DECISION
KAPUNAN, J.:
These two petitions for review
on certiorari under Rule 45 of the Revised
Rules of Court stem from an action to
recover damages by petitioner Lourdes
Valenzuela in the Regional Trial Court of
Quezon City for injuries sustained by her in
a vehicular accident in the early morning of
June 24, 1990. The facts found by the trial
court are succinctly summarized by the
Court of Appeals below:
This is an action to recover damages based
on quasi-delict, for serious physical injuries
sustained in a vehicular accident.
Plaintiff's version of the accident is as
follows: At around 2:00 in the morning of
June 24, 1990, plaintiff Ma. Lourdes
Valenzuela was driving a blue Mitsubishi
lancer with Plate No. FFU 542 from her
restaurant at Marcos highway to her home
at Palanza Street, Araneta Avenue. She
was travelling along Aurora Blvd. with a
companion, Cecilia Ramon, heading
towards the direction of Manila. Before
reaching A. Lake Street, she noticed
something wrong with her tires; she
stopped at a lighted place where there
were people, to verify whether she had a
flat tire and to solicit help if needed. Having
been told by the people present that her
rear right tire was flat and that she cannot
reach her home in that car's condition, she
parked along the sidewalk, about 1-1/2
feet away, put on her emergency lights,
alighted from the car, and went to the rear
to open the trunk. She was standing at the
left side of the rear of her car pointing to
the tools to a man who will help her fix the
tire when she was suddenly bumped by a
1987 Mitsubishi Lancer driven by defendant
Richard Li and registered in the name of
defendant Alexander Commercial, Inc.
Because of the impact plaintiff was thrown
against the windshield of the car of the
defendant, which was destroyed, and then
fell to the ground. She was pulled out from
under defendant's car. Plaintiff's left leg
was severed up to the middle of her thigh,
with only some skin and sucle connected to
the rest of the body. She was brought to
the UERM Medical Memorial Center where
she was found to have a "traumatic
amputation, leg, left up to distal thigh
(above knee)". She was confined in the
hospital for twenty (20) days and was
eventually fitted with an artificial leg. The
expenses for the hospital confinement
(P120,000.00) and the cost of the artificial
leg (P27,000.00) were paid by defendants
from the car insurance.
In her complaint, plaintiff prayed for moral
damages in the amount of P1 million,
exemplary damages in the amount of
P100,000.00 and other medical and related
expenses amounting to a total of
P180,000.00, including loss of expected
earnings.
Defendant Richard Li denied that he was
negligent. He was on his way home,
travelling at 55 kph; considering that it was
raining, visibility was affected and the road
was wet. Traffic was light. He testified that
he was driving along the inner portion of
the right lane of Aurora Blvd. towards the
direction of Araneta Avenue, when he was
suddenly confronted, in the vicinity of A.
Lake Street, San Juan, with a car coming
from the opposite direction, travelling at 80
kph, with "full bright lights". Temporarily
blinded, he instinctively swerved to the
right to avoid colliding with the oncoming
vehicle, and bumped plaintiff's car, which
he did not see because it was midnight blue
in color, with no parking lights or early
warning device, and the area was poorly
lighted. He alleged in his defense that the
left rear portion of plaintiff's car was
protruding as it was then "at a standstill
diagonally" on the outer portion of the right
lane towards Araneta Avenue (par. 18,
Answer). He confirmed the testimony of
plaintiff's witness that after being bumped
the car of the plaintiff swerved to the right
and hit another car parked on the sidewalk.
Defendants counterclaimed for damages,
alleging that plaintiff was reckless or
negligent, as she was not a licensed driver.
The police investigator, Pfc. Felic Ramos,
who prepared the vehicular accident report
and the sketch of the three cars involved in
the accident, testified that the plaintiff's car
was "near the sidewalk"; this witness did
not remember whether the hazard lights of
plaintiff's car were on, and did not notice if
there was an early warning device; there
was a street light at the corner of Aurora
Blvd. and F. Roman, about 100 meters
away. It was not mostly dark, i.e. "things
can be seen" (p. 16, tsn, Oct. 28, 1991).
A witness for the plaintiff, Rogelio
Rodriguez, testified that after plaintiff
alighted from her car and opened the trunk
compartment, defendant's car came
approaching very fast ten meters from the
scene; the car was "zigzagging". The rear
left side of plaintiff's car was bumped by
the front right portion of defendant's car;
as a consequence, the plaintiff's car
swerved to the right and hit the parked car
on the sidewalk. Plaintiff was thrown to the
windshield of defendant's car, which was
destroyed, and landed under the car. He
stated that defendant was under the
influence of liquor as he could "smell it very
well" (pp. 43, 79, tsn, June 17, 1991).
After trial, the lower court sustained the
plaintiff's submissions and found defendant
Richard Li guilty of gross negligence and
liable for damages under Article 2176 of
the Civil Code. The trial court likewise held
Alexander Commercial, Inc., Li's employer,
jointly and severally liable for damages
pursuant to Article 2180. It ordered the
defendants to jointly and severally pay the
following amounts:
1. P41,840.00, as actual damages,
representing the miscellaneous expenses
of the plaintiff as a result of her severed left
leg;
2. The sums of (a) P37,500.00, for the
unrealized profits because of the stoppage
of plaintiff's Bistro La Conga restaurant
three (3) weeks after the accident on June
24, 1990; (b) P20,000.00, a month, as
unrealized profits of the plaintiff in her
Bistro La Conga restaurant, from August,
1990 until the date of this judgment and
(c) P30,000.00, a month for unrealized
profits in plaintiff's two (2) beauty salons
from July, 1990 until the date of this
decision;
3. P1,000,000.00, in moral damages;
4. P50,000.00, as exemplary damages;
5. P60,000.00, as reasonable attorney's
fees; and
6. Costs.
As a result of the trial court's decision,
defendants filed an Omnibus Motion for
New Trial and for Reconsideration, citing
testimony in Criminal Case O.C. No.
804367 (People vs. Richard Li), tending to
show that the point of impact, as depicted
by the pieces of glass/debris from the
parties' cars, appeared to be at the center
of the right lane of Aurora Blvd. The trial
court denied the motion. Defendants
forthwith filed an appeal with the
respondent Court of Appeals. In a Decision
rendered March 30, 1994, the Court of
Appeals found that there was "ample basis
from the evidence of record for the trial
court's finding that the plaintiff's car was
properly parked at the right, beside the
sidewalk when it was bumped by
defendant's car."1 Dismissing the
defendants' argument that the plaintiff's
car was improperly parked, almost at the
center of the road, the respondent court
noted that evidence which was supposed to
prove that the car was at or near center of
the right lane was never presented during
the trial of the case.2 The respondent court
furthermore observed that:
Defendant Li's testimony that he was
driving at a safe speed of 55 km./hour is
self serving; it was not corroborated. It was
in fact contradicted by eyewitness
Rodriguez who stated that he was outside
his beerhouse located at Aurora Boulevard
after A. Lake Street, at or about 2:00 a.m.
of June 24, 1990 when his attention was
caught by a beautiful lady (referring to the
plaintiff) alighting from her car and opening
the trunk compartment; he noticed the car
of Richard Li "approaching very fast ten
(10) meters away from the scene";
defendant's car was zigzagging", although
there were no holes and hazards on the
street, and "bumped the leg of the plaintiff"
who was thrown against the windshield of
defendant's care, causing its destruction.
He came to the rescue of the plaintiff, who
was pulled out from under defendant's car
and was able to say "hurting words" to
Richard Li because he noticed that the
latter was under the influence of liquor,
because he "could smell it very well" (p.
36, et. seq., tsn, June 17, 1991). He knew
that plaintiff owned a beerhouse in Sta.
Mesa in the 1970's, but did not know either
plaintiff or defendant Li before the
accident.
In agreeing with the trial court that the
defendant Li was liable for the injuries
sustained by the plaintiff, the Court of
Appeals, in its decision, however, absolved
the Li's employer, Alexander Commercial,
Inc. from any liability towards petitioner
Lourdes Valenzuela and reduced the
amount of moral damages to P500,000.00.
Finding justification for exemplary
damages, the respondent court allowed an
award of P50,000.00 for the same, in
addition to costs, attorney's fees and the
other damages. The Court of Appeals,
likewise, dismissed the defendants'
counterclaims. 3
Consequently, both parties assail the
respondent court's decision by filing two
separate petitions before this Court.
Richard Li, in G.R. No. 117944, contends
that he should not be held liable for
damages because the proximate cause of
the accident was Ma. Lourdes Valenzuela's
own negligence. Alternatively, he argues
that in the event that this Court finds him
negligent, such negligence ought to be
mitigated by the contributory negligence of
Valenzuela.
On the other hand, in G.R. No. 115024, Ma.
Lourdes Valenzuela assails the respondent
court's decision insofar as it absolves
Alexander Commercial, Inc. from liability
as the owner of the car driven by Richard
Li and insofar as it reduces the amount of
the actual and moral damages awarded by
the trial court.4
As the issues are intimately related, both
petitions are hereby consolidated.
It is plainly evident that the petition for
review in G.R. No. 117944 raises no
substantial questions of law. What it, in
effect, attempts to have this Court review
are factual findings of the trial court, as
sustained by the Court of Appeals finding
Richard Li grossly negligent in driving the
Mitsubishi Lancer provided by his company
in the early morning hours of June 24,
1990. This we will not do. As a general rule,
findings of fact of the Court of Appeals are
binding and conclusive upon us, and this
Court will not normally disturb such factual
findings unless the findings of fact of the
said court are palpably unsupported by the
evidence on record or unless the judgment
itself is based on a misapprehension of
facts.5
In the first place, Valenzuela's version of
the incident was fully corroborated by an
uninterested witness, Rogelio Rodriguez,
the owner-operator of an establishment
located just across the scene of the
accident. On trial, he testified that he
observed a car being driven at a "very fast"
speed, racing towards the general direction
of Araneta Avenue.6 Rodriguez further
added that he was standing in front of his
establishment, just ten to twenty feet away
from the scene of the accident, when he
saw the car hit Valenzuela, hurtling her
against the windshield of the defendant's
Mitsubishi Lancer, from where she
eventually fell under the defendant's car.
Spontaneously reacting to the incident, he
crossed the street, noting that a man
reeking with the smell of liquor had
alighted from the offending vehicle in order
to survey the incident.7 Equally important,
Rodriguez declared that he observed
Valenzuela's car parked parallel and very
near the sidewalk,8 contrary to Li's
allegation that Valenzuela's car was close
to the center of the right lane. We agree
that as between Li's "self-serving"
asseverations and the observations of a
witness who did not even know the
accident victim personally and who
immediately gave a statement of the
incident similar to his testimony to the
investigator immediately after the incident,
the latter's testimony deserves greater
weight. As the court emphasized:
The issue is one of credibility and from Our
own examination of the transcript, We are
not prepared to set aside the trial court's
reliance on the testimony of Rodriguez
negating defendant's assertion that he was
driving at a safe speed. While Rodriguez
drives only a motorcycle, his perception of
speed is not necessarily impaired. He was
subjected to cross-examination and no
attempt was made to question .his
competence or the accuracy of his
statement that defendant was driving "very
fast". This was the same statement he gave
to the police investigator after the incident,
as told to a newspaper report (Exh. "P").
We see no compelling basis for
disregarding his testimony.
The alleged inconsistencies in Rodriguez'
testimony are not borne out by an
examination of the testimony. Rodriguez
testified that the scene of the accident was
across the street where his beerhouse is
located about ten to twenty feet away (pp.
35-36, tsn, June 17, 1991). He did not
state that the accident transpired
immediately in front of his establishment.
The ownership of the Lambingan se
Kambingan is not material; the business is
registered in the name of his mother, but
he explained that he owns the
establishment (p. 5, tsn, June 20, 1991).
Moreover, the testimony that the
streetlights on his side of Aurora Boulevard
were on the night the accident transpired
(p. 8) is not necessarily contradictory to
the testimony of Pfc. Ramos that there was
a streetlight at the corner of Aurora
Boulevard and F. Roman Street (p. 45, tsn,
Oct. 20, 1991).
With respect to the weather condition,
Rodriguez testified that there was only a
drizzle, not a heavy rain and the rain has
stopped and he was outside his
establishment at the time the accident
transpired (pp. 64-65, tsn, June 17, 1991).
This was consistent with plaintiff's
testimony that it was no longer raining
when she left Bistro La Conga (pp. 10-11,
tsn, April 29, 1991). It was defendant Li
who stated that it was raining all the way
in an attempt to explain why he was
travelling at only 50-55 kph. (p. 11, tsn,
Oct. 14, 1991). As to the testimony of Pfc.
Ramos that it was raining, he arrived at the
scene only in response to a telephone call
after the accident had transpired (pp. 9-10,
tsn, Oct. 28, 1991). We find no substantial
inconsistencies in Rodriguez's testimony
that would impair the essential integrity of
his testimony or reflect on his honesty. We
are compelled to affirm the trial court's
acceptance of the testimony of said
eyewitness.
Against the unassailable testimony of
witness Rodriguez we note that Li's
testimony was peppered with so many
inconsistencies leading us to conclude that
his version of the accident was merely
adroitly crafted to provide a version,
obviously self-serving, which would
exculpate him from any and all liability in
the incident. Against Valenzuela's
corroborated claims, his allegations were
neither backed up by other witnesses nor
by the circumstances proven in the course
of trial. He claimed that he was driving
merely at a speed of 55 kph. when "out of
nowhere he saw a dark maroon lancer right
in front of him, which was (the) plaintiff's
car". He alleged that upon seeing this
sudden "apparition" he put on his brakes to
no avail as the road was slippery.9
One will have to suspend disbelief in order
to give credence to Li's disingenuous and
patently self-serving asseverations. The
average motorist alert to road
conditions will have no difficulty applying
the brakes to a car traveling at the speed
claimed by Li. Given a light rainfall, the
visibility of the street, and the road
conditions on a principal metropolitan
thoroughfare like Aurora Boulevard, Li
would have had ample time to react to the
changing conditions of the road if he were
alert - as every driver should be - to those
conditions. Driving exacts a more than
usual toll on the senses. Physiological "fight
or flight" 10 mechanisms are at work,
provided such mechanisms were not dulled
by drugs, alcohol, exhaustion, drowsiness,
etc.11 Li's failure to react in a manner which
would have avoided the accident could
therefore have been only due to either or
both of the two factors: 1) that he was
driving at a "very fast" speed as testified by
Rodriguez; and 2) that he was under the
influence of alcohol.12 Either factor working
independently would have diminished his
responsiveness to road conditions, since
normally he would have slowed down prior
to reaching Valenzuela's car, rather than be
in a situation forcing him to suddenly apply
his brakes. As the trial court noted (quoted
with approval by respondent court):
Secondly, as narrated by defendant
Richard Li to the San Juan Police
immediately after the incident, he said that
while driving along Aurora Blvd., out of
nowhere he saw a dark maroon lancer right
in front of him which was plaintiff's car,
indicating, again, thereby that, indeed, he
was driving very fast, oblivious of his
surroundings and the road ahead of him,
because if he was not, then he could not
have missed noticing at a still far distance
the parked car of the plaintiff at the right
side near the sidewalk which had its
emergency lights on, thereby avoiding
forcefully bumping at the plaintiff who was
then standing at the left rear edge of her
car.
Since, according to him, in his narration to
the San Juan Police, he put on his brakes
when he saw the plaintiff's car in front of
him, but that it failed as the road was wet
and slippery, this goes to show again, that,
contrary to his claim, he was, indeed,
running very fast. For, were it otherwise,
he could have easily completely stopped
his car, thereby avoiding the bumping of
the plaintiff, notwithstanding that the road
was wet and slippery. Verily, since, if,
indeed, he was running slow, as he
claimed, at only about 55 kilometers per
hour, then, inspite of the wet and slippery
road, he could have avoided hitting the
plaintiff by the mere expedient or applying
his brakes at the proper time and distance.
It could not be true, therefore, as he now
claims during his testimony, which is
contrary to what he told the police
immediately after the accident and is,
therefore, more believable, that he did not
actually step on his brakes but simply
swerved a little to the right when he saw
the on-coming car with glaring headlights,
from the opposite direction, in order to
avoid it.
For, had this been what he did, he would
not have bumped the car of the plaintiff
which was properly parked at the right
beside the sidewalk. And, it was not even
necessary for him to swerve a little to the
right in order to safely avoid a collision with
the on-coming car, considering that Aurora
Blvd. is a double lane avenue separated at
the center by a dotted white paint, and
there is plenty of space for both cars, since
her car was running at the right lane going
towards Manila on the on-coming car was
also on its right lane going to Cubao.13
Having come to the conclusion that Li was
negligent in driving his company-issued
Mitsubishi Lancer, the next question for us
to determine is whether or not Valenzuela
was likewise guilty of contributory
negligence in parking her car alongside
Aurora Boulevard, which entire area Li
points out, is a no parking zone.
We agree with the respondent court that
Valenzuela was not guilty of contributory
negligence.
Contributory negligence is conduct on the
part of the injured party, contributing as a
legal cause to the harm he has suffered,
which falls below the standard to which he
is required to conform for his own
protection.14 Based on the foregoing
definition, the standard or act to which,
according to petitioner Li, Valenzuela ought
to have conformed for her own protection
was not to park at all at any point of Aurora
Boulevard, a no parking zone. We cannot
agree.
Courts have traditionally been compelled to
recognize that an actor who is confronted
with an emergency is not to be held up to
the standard of conduct normally applied to
an individual who is in no such situation.
The law takes stock of impulses of
humanity when placed in threatening or
dangerous situations and does not require
the same standard of thoughtful and
reflective care from persons confronted by
unusual and oftentimes threatening
conditions. 15
Under the "emergency rule" adopted by
this Court in Gan vs. Court of Appeals,16 an
individual who suddenly finds himself in a
situation of danger and is required to act
without much time to consider the best
means that may be adopted to avoid the
impending danger, is not guilty of
negligence if he fails to undertake what
subsequently and upon reflection may
appear to be a better solution, unless the
emergency was brought by his own
negligence.17
Applying this principle to a case in which
the victims in a vehicular accident swerved
to the wrong lane to avoid hitting two
children suddenly darting into the street,
we held, in Mc Kee vs. Intermediate
Appellate Court,18 that the driver therein,
Jose Koh, "adopted the best means
possible in the given situation" to avoid
hitting the children. Using the "emergency
rule" the Court concluded that Koh, in spite
of the fact that he was in the wrong lane
when the collision with an oncoming truck
occurred, was not guilty of negligence.19
While the emergency rule applies to those
cases in which reflective thought, or the
opportunity to adequately weigh a
threatening situation is absent, the conduct
which is required of an individual in such
cases is dictated not exclusively by the
suddenness of the event which absolutely
negates thoroughful care, but by the over-
all nature of the circumstances. A woman
driving a vehicle suddenly crippled by a flat
tire on a rainy night will not be faulted for
stopping at a point which is both
convenient for her to do so and which is not
a hazard to other motorists. She is not
expected to run the entire boulevard in
search for a parking zone or turn on a dark
street or alley where she would likely find
no one to help her. It would be hazardous
for her not to stop and assess the
emergency (simply because the entire
length of Aurora Boulevard is a no-parking
zone) because the hobbling vehicle would
be both a threat to her safety and to other
motorists. In the instant case, Valenzuela,
upon reaching that portion of Aurora
Boulevard close to A. Lake St., noticed that
she had a flat tire. To avoid putting herself
and other motorists in danger, she did what
was best under the situation. As narrated
by respondent court: "She stopped at a
lighted place where there were people, to
verify whether she had a flat tire and to
solicit help if needed. Having been told by
the people present that her rear right tire
was flat and that she cannot reach her
home she parked along the sidewalk, about
1 1/2 feet away, behind a Toyota Corona
Car."20 In fact, respondent court noted, Pfc.
Felix Ramos, the investigator on the scene
of the accident confirmed that Valenzuela's
car was parked very close to the
sidewalk.21 The sketch which he prepared
after the incident showed Valenzuela's car
partly straddling the sidewalk, clear and at
a convenient distance from motorists
passing the right lane of Aurora Boulevard.
This fact was itself corroborated by the
testimony of witness Rodriguez.22
Under the circumstances described,
Valenzuela did exercise the standard
reasonably dictated by the emergency and
could not be considered to have
contributed to the unfortunate
circumstances which eventually led to the
amputation of one of her lower extremities.
The emergency which led her to park her
car on a sidewalk in Aurora Boulevard was
not of her own making, and it was evident
that she had taken all reasonable
precautions.
Obviously in the case at bench, the only
negligence ascribable was the negligence
of Li on the night of the accident.
"Negligence, as it is commonly understood
is conduct which creates an undue risk of
harm to others."23 It is the failure to
observe that degree of care, precaution,
and vigilance which the circumstances
justly demand, whereby such other person
suffers injury.24 We stressed, in Corliss
vs. Manila Railroad Company,25 that
negligence is the want of care required by
the circumstances.
The circumstances established by the
evidence adduced in the court below plainly
demonstrate that Li was grossly negligent
in driving his Mitsubishi Lancer. It bears
emphasis that he was driving at a fast
speed at about 2:00 A.M. after a heavy
downpour had settled into a drizzle
rendering the street slippery. There is
ample testimonial evidence on record to
show that he was under the influence of
liquor. Under these conditions, his chances
of effectively dealing with changing
conditions on the road were significantly
lessened. As Presser and Keaton
emphasize:
[U]nder present day traffic conditions, any
driver of an automobile must be prepared
for the sudden appearance of obstacles and
persons on the highway, and of other
vehicles at intersections, such as one who
sees a child on the curb may be required to
anticipate its sudden dash into the street,
and his failure to act properly when they
appear may be found to amount to
negligence.26
Li's obvious unpreparedness to cope with
the situation confronting him on the night
of the accident was clearly of his own
making.
We now come to the question of the liability
of Alexander Commercial, Inc. Li's
employer. In denying liability on the part of
Alexander Commercial, the respondent
court held that:
There is no evidence, not even defendant
Li's testimony, that the visit was in
connection with official matters. His
functions as assistant manager sometimes
required him to perform work outside the
office as he has to visit buyers and
company clients, but he admitted that on
the night of the accident he came from BF
Homes Paranaque he did not have
"business from the company" (pp. 25-26,
ten, Sept. 23, 1991). The use of the
company car was partly required by the
nature of his work, but the privilege of
using it for non-official business is a
"benefit", apparently referring to the fringe
benefits attaching to his position.
Under the civil law, an employer is liable for
the negligence of his employees in the
discharge of their respective duties, the
basis of which liability is not respondeat
superior, but the relationship of pater
familias, which theory bases the liability of
the master ultimately on his own
negligence and not on that of his servant
(Cuison v. Norton and Harrison Co., 55 Phil.
18). Before an employer may be held liable
for the negligence of his employee, the act
or omission which caused damage must
have occurred while an employee was in
the actual performance of his assigned
tasks or duties (Francis High School vs.
Court of Appeals, 194 SCRA 341). In
defining an employer's liability for the acts
done within the scope of the employee's
assigned tasks, the Supreme Court has
held that this includes any act done by an
employee, in furtherance of the interests of
the employer or for the account of the
employer at the time of the infliction of the
injury or damage (Filamer Christian
Institute vs. Intermediate Appellate Court,
212 SCRA 637). An employer is expected
to impose upon its employees the
necessary discipline called for in the
performance of any act "indispensable to
the business and beneficial to their
employer" (at p. 645).
In light of the foregoing, We are unable to
sustain the trial court's finding that since
defendant Li was authorized by the
company to use the company car "either
officially or socially or even bring it home",
he can be considered as using the company
car in the service of his employer or on the
occasion of his functions. Driving the
company car was not among his functions
as assistant manager; using it for non-
official purposes would appear to be a
fringe benefit, one of the perks attached to
his position. But to impose liability upon the
employer under Article 2180 of the Civil
Code, earlier quoted, there must be a
showing that the damage was caused by
their employees in the service of the
employer or on the occasion of their
functions. There is no evidence that
Richard Li was at the time of the accident
performing any act in furtherance of the
company's business or its interests, or at
least for its benefit. The imposition of
solidary liability against defendant
Alexander Commercial Corporation must
therefore fail.27
We agree with the respondent court that
the relationship in question is not based on
the principle of respondeat superior, which
holds the master liable for acts of the
servant, but that of pater familias, in which
the liability ultimately falls upon the
employer, for his failure to exercise the
diligence of a good father of the family in
the selection and supervision of his
employees. It is up to this point, however,
that our agreement with the respondent
court ends. Utilizing the bonus pater
familias standard expressed in Article 2180
of the Civil Code, 28 we are of the opinion
that Li's employer, Alexander Commercial,
Inc. is jointly and solidarily liable for the
damage caused by the accident of June 24,
1990.
First, the case of St. Francis High School
vs. Court of Appeals29 upon which
respondent court has placed undue
reliance, dealt with the subject of a school
and its teacher's supervision of students
during an extracurricular activity. These
cases now fall under the provision on
special parental authority found in Art. 218
of the Family Code which generally
encompasses all authorized school
activities, whether inside or outside school
premises.
Second, the employer's primary liability
under the concept of pater
familias embodied by Art 2180 (in relation
to Art. 2176) of the Civil Code is quasi-
delictual or tortious in character. His
liability is relieved on a showing that he
exercised the diligence of a good father of
the family in the selection and supervision
of its employees. Once evidence is
introduced showing that the employer
exercised the required amount of care in
selecting its employees, half of the
employer's burden is overcome. The
question of diligent supervision, however,
depends on the circumstances of
employment.
Ordinarily, evidence demonstrating that
the employer has exercised diligent
supervision of its employee during the
performance of the latter's assigned tasks
would be enough to relieve him of the
liability imposed by Article 2180 in relation
to Article 2176 of the Civil Code. The
employer is not expected to exercise
supervision over either the employee's
private activities or during the performance
of tasks either unsanctioned by the former
or unrelated to the employee's tasks. The
case at bench presents a situation of a
different character, involving a practice
utilized by large companies with either
their employees of managerial rank or their
representatives.
It is customary for large companies to
provide certain classes of their employees
with courtesy vehicles. These company
cars are either wholly owned and
maintained by the company itself or are
subject to various plans through which
employees eventually acquire their
vehicles after a given period of service, or
after paying a token amount. Many
companies provide liberal "car plans" to
enable their managerial or other
employees of rank to purchase cars, which,
given the cost of vehicles these days, they
would not otherwise be able to purchase on
their own.
Under the first example, the company
actually owns and maintains the car up to
the point of turnover of ownership to the
employee; in the second example, the car
is really owned and maintained by the
employee himself. In furnishing vehicles to
such employees, are companies totally
absolved of responsibility when an accident
involving a company-issued car occurs
during private use after normal office
hours?
Most pharmaceutical companies, for
instance, which provide cars under the first
plan, require rigorous tests of road
worthiness from their agents prior to
turning over the car (subject of company
maintenance) to their representatives. In
other words, like a good father of a family,
they entrust the company vehicle only after
they are satisfied that the employee to
whom the car has been given full use of the
said company car for company or private
purposes will not be a threat or menace to
himself, the company or to others. When a
company gives full use and enjoyment of a
company car to its employee, it in effect
guarantees that it is, like every good
father, satisfied that its employee will use
the privilege reasonably and responsively.
In the ordinary course of business, not all
company employees are given the privilege
of using a company-issued car. For large
companies other than those cited in the
example of the preceding paragraph, the
privilege serves important business
purposes either related to the image of
success an entity intends to present to its
clients and to the public in general, or - for
practical and utilitarian reasons - to enable
its managerial and other employees of rank
or its sales agents to reach clients
conveniently. In most cases, providing a
company car serves both purposes. Since
important business transactions and
decisions may occur at all hours in all sorts
of situations and under all kinds of guises,
the provision for the unlimited use of a
company car therefore principally serves
the business and goodwill of a company
and only incidentally the private purposes
of the individual who actually uses the car,
the managerial employee or company sales
agent. As such, in providing for a company
car for business use and/or for the purpose
of furthering the company's image, a
company owes a responsibility to the public
to see to it that the managerial or other
employees to whom it entrusts virtually
unlimited use of a company issued car are
able to use the company issue capably and
responsibly.
In the instant case, Li was an Assistant
Manager of Alexander Commercial, Inc. In
his testimony before the trial court, he
admitted that his functions as Assistant
Manager did not require him to
scrupulously keep normal office hours as
he was required quite often to perform
work outside the office, visiting prospective
buyers and contacting and meeting with
company clients. 30 These meetings,
clearly, were not strictly confined to routine
hours because, as a managerial employee
tasked with the job of representing his
company with its clients, meetings with
clients were both social as well as work-
related functions. The service car assigned
to Li by Alexander Commercial, Inc.
therefore enabled both Li - as well as the
corporation - to put up the front of a highly
successful entity, increasing the latter's
goodwill before its clientele. It also
facilitated meeting between Li and its
clients by providing the former with a
convenient mode of travel.
Moreover, Li's claim that he happened to be
on the road on the night of the accident
because he was coming from a social visit
with an officemate in Paranaque was a bare
allegation which was never corroborated in
the court below. It was obviously self-
serving. Assuming he really came from his
officemate's place, the same could give rise
to speculation that he and his officemate
had just been from a work-related function,
or they were together to discuss sales and
other work related strategies.
In fine, Alexander Commercial, inc. has not
demonstrated, to our satisfaction, that it
exercised the care and diligence of a good
father of the family in entrusting its
company car to Li. No allegations were
made as to whether or not the company
took the steps necessary to determine or
ascertain the driving proficiency and
history of Li, to whom it gave full and
unlimited use of a company car.31 Not
having been able to overcome the burden
of demonstrating that it should be absolved
of liability for entrusting its company car to
Li, said company, based on the principle
of bonus pater familias, ought to be jointly
and severally liable with the former for the
injuries sustained by Ma. Lourdes
Valenzuela during the accident.
Finally, we find no reason to overturn the
amount of damages awarded by the
respondent court, except as to the amount
of moral damages. In the case of moral
damages, while the said damages are not
intended to enrich the plaintiff at the
expense of a defendant, the award should
nonetheless be commensurate to the
suffering inflicted. In the instant case we
are of the opinion that the reduction in
moral damages from an amount of
P1,000,000.00 to P800,000,00 by the
Court of Appeals was not justified
considering the nature of the resulting
damage and the predictable sequelae of
the injury.
As a result of the accident, Ma. Lourdes
Valenzuela underwent a traumatic
amputation of her left lower extremity at
the distal left thigh just above the knee.
Because of this, Valenzuela will forever be
deprived of the full ambulatory functions of
her left extremity, even with the use of
state of the art prosthetic technology. Well
beyond the period of hospitalization (which
was paid for by Li), she will be required to
undergo adjustments in her prosthetic
devise due to the shrinkage of the stump
from the process of healing.
These adjustments entail costs, prosthetic
replacements and months of physical and
occupational rehabilitation and therapy.
During her lifetime, the prosthetic devise
will have to be replaced and re-adjusted to
changes in the size of her lower limb
effected by the biological changes of
middle-age, menopause and aging.
Assuming she reaches menopause, for
example, the prosthetic will have to be
adjusted to respond to the changes in bone
resulting from a precipitate decrease in
calcium levels observed in the bones of all
post-menopausal women. In other words,
the damage done to her would not only be
permanent and lasting, it would also be
permanently changing and adjusting to the
physiologic changes which her body
would normally undergo through the
years. The replacements, changes, and
adjustments will require corresponding
adjustive physical and occupational
therapy. All of these adjustments, it has
been documented, are painful.
The foregoing discussion does not even
scratch the surface of the nature of the
resulting damage because it would be
highly speculative to estimate the amount
of psychological pain, damage and injury
which goes with the sudden severing of a
vital portion of the human body. A
prosthetic device, however technologically
advanced, will only allow a reasonable
amount of functional restoration of the
motor functions of the lower limb. The
sensory functions are forever lost. The
resultant anxiety, sleeplessness,
psychological injury, mental and physical
pain are inestimable.
As the amount of moral damages are
subject to this Court's discretion, we are of
the opinion that the amount of
P1,000,000.00 granted by the trial court is
in greater accord with the extent and
nature of the injury - physical and
psychological - suffered by Valenzuela as a
result of Li's grossly negligent driving of his
Mitsubishi Lancer in the early morning
hours of the accident.
WHEREFORE, PREMISES CONSIDERED, the
decision of the Court of Appeals is modified
with the effect of REINSTATING the
judgment of the Regional Trial Court.
SO ORDERED.
G.R. No. 214567
DRA. MERCEDES OLIVER, Petitioner,
vs.
PHILIPPINE SAVINGS BANK and LILIA
CASTRO, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review
on certiorari seeking to reverse and set
aside the October 25, 2013 Decision1 and
the September 12, 2014 Resolution2 of the
Court of Appeals (CA) in CA-G.R. CV No.
95656, which reversed the July 22, 2010
Order3 of the Regional Trial Court, Branch
276, Muntinlupa City (RTC) in Civil Case
No. 99-278, a case for injunction and
damages.
Petitioner Mercedes Oliver (Oliver) was a
depositor of respondent Philippine Savings
Bank (PSBank) with account number
2812-07991-6. dent Lilia
Castro (Castro) was the Assistant Vice
President of the Acting Branch
Manager of PSBank San Pedro, Laguna.
Oliver’s Position
In her Complaint,4 dated October 5, 1999,
Oliver alleged that sometime in 1997, she
made an initial deposit of P12 million into
her PSBank account. During that time,
Castro convinced her to loan out her
deposit as interim or bridge financing for
the approved loans of bank borrowers who
were waiting for the actual release of their
loan proceeds.
Under this arrangement, Castro would first
show the approved loan documents to
Oliver. Thereafter, Castro would withdraw
the amount needed from Oliver’s account.
Upon the actual release of the loan by
PSBank to the borrower, Castro would then
charge the rate of 4% a month from the
loan proceeds as interim or bridge
financing interest. Together with the
interest income, the principal amount
previously withdrawn from Oliver’s bank
account would be deposited back to her
account. Meanwhile, Castro would earn a
commission of 10% from the interest.
Their arrangement went on smoothly for
months. Due to the frequency of bank
transactions, Oliver even entrusted her
passbook to Castro. Because Oliver earned
substantial profit, she was further
convinced by Castro to avail of an
additional credit line in the amount of P10
million. The said credit line was secured by
a real estate mortgage on her house and
lot in Ayala Alabang covered by Transfer
Certificate of Title (TCT) No. 137796.5
Oliver instructed Castro to pay P2 million
monthly to PSBank starting on September
3, 1998 so that her credit line for P10
million would be fully paid by January 3,
1999.
Beginning September 1998, Castro
stopped rendering an accounting for Oliver.
The latter then demanded the return of her
passbook. When Castro showed her the
passbook sometime in late January or early
February 1995, she noticed several
erasures and superimpositions therein. She
became very suspicious of the many
erasures pertaining to the December 1998
entries so she requested a copy of her
transaction history register from PSBank.
When her transaction history register6 was
shown to her, Oliver was surprised to
discover that the amount of P4,491,250.00
(estimated at P4.5 million) was entered
into her account on December 21, 1998.
While a total of P7 million was withdrawn
from her account on the same day, Oliver
asserted that she neither applied for an
additional loan of P4.5 million nor
authorized the withdrawal of P7 million.
She also discovered another loan for
P1,396,310.45, acquired on January 5,
1999 and allegedly issued in connection
with the P10 million credit line.
In Oliver’s passbook, 7 there were no
entries from December 17, 1998 to
December 27, 1998. The transaction
history register, however, showed several
transactions on these very same dates
including the crediting of P4.5 million and
the debiting of P7 million on December 21,
1998. Oliver then learned that the
additional P4.5 million and P1,396,310.45
loans were also secured by the real estate
mortgage,8 dated January 8, 1998,
covering the same property in Ayala
Alabang. Oliver received two collection
letters,9 dated May 13, 1999 and June 18,
1999, from PSBank referring to the non-
payment of unpaid loans, to wit: (1)
P4,491,250.00 from the additional loan and
(2) P1,396,310.45 from the P10 million
credit line.10 In response, Oliver protested
that she neither availed of the said loans
nor authorized the withdrawal of P7 million
from her account.11 She also claimed that
the P10 million loan from her credit line was
already paid in full.12
On July 14, 1999, a final demand
letter13 was sent to Oliver by PSBank,
requiring her to pay the unpaid loans.
Oliver, however, still refused to pay.
Subsequently, Oliver received a notice of
sale14 involving the property in Ayala
Alabang, issued by Notary Public Jose
Celestino Torres on September 15, 1999.
The said notice informed her of the
impending extra-judicial foreclosure and
sale of her house and lot to be held on
October 21, 1999.
As a result, Oliver filed the subject
complaint against PSBank and Castro.
Castro’s Position
In her Answer,15 Castro admitted that she
and Oliver agreed that the latter would lend
out money to borrowers at 4% to 5%
interest per month provided that the
former would screen them. She also
acknowledged having been instructed by
Oliver to pay the bank P2 million every
month to settle the P10 million credit line.
Nonetheless, Castro informed Oliver that
the payment thereof was subject to the
availability of funds in her account. She
disclosed that she made some alterations
and erasures in Oliver’s passbook so as to
reconcile the passbook with the computer
printout of the bank, but denied any
attempt to hide the passbook as she was
able to return it sometime in January 1999.
Castro also denied the deceit imputed
against her. She asserted that their
arrangement was not "interim or bridge
financing" inasmuch as the loans were
entirely new and distinct from that granted
by PSBank. When Oliver’s clients
multiplied, Castro advised her to apply for
a credit line of P10 million. The said credit
line was first approved in December 1997
with a term of one year.16
Sometime in August 1998, Castro informed
Oliver about the impending expiration of
her credit line. Subsequently, Oliver
applied for another loan in the amount of
P4.5 million as evidenced by a promissory
note,17 dated December 21, 1998. On
January 5, 1999, another promissory
note18 was executed by Oliver to cover a
loan in the amount of P1,396,310.45.
Castro asserted that, on December 21,
1998, upon Oliver’s instruction, a total of
P7 million was withdrawn from the latter’s
account and was then deposited to the
account of one Ben Lim (Lim) on the same
date. Lim was a businessman who
borrowed money from Oliver. Castro knew
him because he was also a depositor and
borrower of PSBank San Pedro Branch.19
As to the amount of P1,396,310.45, Castro
explained that it was a separate and
personal loan obtained by her from Oliver.
To secure the payment of such obligation,
Castro mortgaged a property located in
Camella Homes III in Tunasan, Muntinlupa
City.
Castro admitted that on October 19, 1999,
she was terminated by PSBank because of
certain problems regarding client
accommodation and loss of confidence.20
PSBank’s Position
In its defense, PSBank averred that Oliver
applied for a credit line of P10 million which
was granted by the bank and which
secured by a real estate mortgage.
Because Oliver failed to pay the P10 million
loan, she obtained another loan in the
amount of P4.5 million, as evidenced by a
promissory note. Days later, she again
acquired a separate loan amounting to
P1,396,310.45 as shown by another
promissory note. Both loans were secured
by a real estate mortgage, dated January
8, 1998, and the proceeds thereof were
issued as proved by the release
tickets,21 dated December 21, 1998 and
January 5, 1999, respectively.22
The RTC Decision
In its March 30, 2010 Decision,23 the RTC
dismissed the complaint and rendered
judgment in favor of PSBank and Castro.
According to the RTC, PSBank and Castro
should not be held liable for the loan of
P4.5 million and the withdrawal of the P7
million. Castro was able to submit the Debit
Credit Memo24 and the Savings Account
Check Deposit Slip25 to prove that there
were some previous loan transactions
between Oliver and Lim. Considering that
neither PSBank nor Castro obtained the P7
million, there was no obligation on their
part to return the amount.
Moreover, the trial court stated that Oliver
failed to controvert PSBank’s allegation
that she had unpaid loan obligations. Thus,
it concluded that PSBank had the right to
foreclose the mortgaged property.
The fallo reads:
WHEREFORE, finding lack of merit, the
instant case is hereby DISMISSED.
Accordingly, the Writ of Preliminary
Injunction is hereby LIFTED and SET
ASIDE.
SO ORDERED.26
Oliver seasonably filed her motion for
reconsideration.27 She insisted that the P7
million was unlawfully withdrawn. She
claimed that what happened in this case
was a "cash savings withdrawal" and
that there should have been a
corresponding withdrawal slip for such
transaction. Also, if indeed the P7 million
was withdrawn from her account and was
credited to the account of Lim, the deposit
slip for his account should have been
presented.
The RTC Order
On July 22, 2010, the RTC resolved the
motion and issued an order reversing its
earlier decision. According to the RTC,
Oliver’s assertion that the withdrawal was
made without her consent prevailed in the
absence of any proof to the contrary.
The cash savings withdrawal slips should
have been offered in evidence by either
PSBank or Castro to settle the issue of
whether the amount of P7 million was
actually withdrawn by Oliver or by her
authorized representative or agent.
The RTC also rejected the position of
PSBank and Castro that the erasures and
alterations in Oliver’s passbook were made
simply to reconcile the same with the
transaction history register of the bank
because even after the alleged corrections,
the said documents still contained different
entries. Although Oliver and Lim had
previous transactions, none of them
pertained to the P7 million purportedly
transferred on December 21, 1998.
With regard to PSBank, the RTC stated that
it failed to exercise utmost diligence in
safekeeping Oliver’s deposit. Had it not
been for the unauthorized, withdrawal
which was attributable to the bank and
Castro, the P4.5 million and the
P1,396,310.45 loans would not have
remained outstanding, considering that the
improperly withdrawn P7 million was more
than sufficient to discharge those
liabilities.28 The dispositive portion of the
order reads:
WHEREFORE, premises considered, the
Motion for Reconsideration is hereby
GRANTED. The Decision dated March 30,
2010 is hereby reconsidered and set aside.
In lieu thereof, a new one is hereby
rendered ordering the defendants Lilia
Castro and Philippine Savings Bank to
jointly and solidarily pay plaintiff Dra.
Mercedes Oliver, the sums of
1. P1,111,850.77 as actual damages;
2. P100,000.00 as moral damages;
3. P100,000.00 as attorney’s fees; and
4. P100,000.00 as exemplary damages
Moreover, the Writ of Preliminary
Injunction is hereby made permanent.
SO ORDERED.29
Aggrieved, Castro and PSBank appealed
before the CA.
The CA Decision
On October 25, 2013, the CA granted the
appeal. It reversed the July 22, 2010 of the
RTC order and reinstated its March 30,
2010 decision. The appellate court found
no compelling evidence to prove that fraud
attended the processing and release of the
P4.5 million loan as well as the withdrawal
of P7 million from Oliver’s account. The CA
found that Oliver admitted signing the loan
documents, the promissory notes and the
release tickets pertaining to the obligations
that she had contracted with PSBank. In
addition, the CA stated that Oliver also
failed to establish her assertion that she
was manipulated and defrauded into
signing the said loan documents.
The CA also found that PSBank exercised
extraordinary diligence in handling Oliver’s
account, thus, the awards of damages were
deleted. The dispositive portion of the CA
decision reads:
WHEREFORE, the Appeal is hereby
GRANTED. The Order dated 22 July 2010 of
the Regional Trial Court of Muntinlupa City,
Branch 276, is REVERSED and SET ASIDE,
and another one entered REINSTATING the
Decision dated March 30, 2010, in Civil
Case No. 99-278.
SO ORDERED.30
Oliver filed her motion for reconsideration
but the same was denied in the CA
Resolution, dated September 12, 2014.
Hence, this petition.
ISSUES
I
WHETHER OR NOT THE COURT OF
APPEALS GRAVELY ERRED IN RULING
THAT THE PETITIONER FAILED TO
SHOW COMPELLING EVIDENCE TO
PROVE THAT FRAUD ATTENDED THE
PROCESSING AND RELEASE OF THE
LOAN OF P4.5 MILLION AS WELL AS
THE WITHDRAWAL OF P7 MILLION
PESOS FROM HER ACCOUNT.
II
WHETHER OR NOT THE COURT OF
APPEALS GRAVELY ERRED WHEN IT
RULED THAT THERE WAS NO
EVIDENCE TO PROVE THAT THE SUM
OF P7 MILLION WAS DEBITED FROM
THE ACCOUNT OF PETITIONER SANS
HER AUTHORIZATION.
III
WHETHER OR NOT THE COURT OF
APPEALS GRAVELY ERRED WHEN IT
RULED THAT THE RESPONDENTS
TREATED THE PETITIONER’S ACCOUNT
WITH EXTRAORDINARY DILIGENCE.
IV
WHETHER OR NOT THE COURT OF
APPEALS GRAVELY ERRED WHEN IT
FAILED TO HOLD THAT THE
RESPONDENTS ARE JOINTLY AND
SEVERALLY LIABLE TO THE
PETITIONER FOR DAMAGES. 31
In her petition for review,32 Oliver insisted
that she had no knowledge of any loan
released because she never availed of any
new loan from PSBank. Neither the P4.5
million loan nor the cash withdrawal of P7
million was reflected in her passbook.
Oliver further argued that the burden of
proving that the withdrawal was made with
her authority would lie on the part of
PSBank and Castro. The cash savings
withdrawal slip containing the signature of
Oliver should have been presented in court.
While the respondents claimed that the
amount withdrawn was lent to Lim, the
latter was never called to the witness stand
as PSBank and Castro opted not to present
him in court. Castro, aside from her self-
serving testimony, failed to present any
concrete proof to show that Oliver indeed
lent the withdrawn P7 million cash to Lim.
Finally, Oliver averred that the erasures
and alterations in her passbook undeniably
established that Castro manipulated the
same to conceal the loan release and the
cash withdrawal from her account.
In her Comment,33 Castro countered that
the CA had more opportunity and facilities
to examine the facts. Hence, there was no
reason to depart from the rule that the
findings of fact of the CA were final and
conclusive and could not be reviewed on
appeal. She asserted that there was no
proof that the P7 million was withdrawn
without Oliver’s authority. She added that
Oliver was an astute businesswoman who
knew her clients and bank deposits and
who was knowledgeable of her bank
transactions and was aware of her loaned
amounts from the bank.
In its Comment,34 PSBank asserted that
the issues and arguments propounded by
Oliver had been judiciously passed upon.
On the stated facts alone, the petition,
which was akin to a motion for
reconsideration, should be denied outright
for being pro forma.
In her Reply,35 Oliver faulted PSBank and
Castro for failing to present the cash
withdrawal slip which would show her
signature to prove that the money was
withdrawn with her authority. She also
reiterated that Lim should have been
presented as a witness to substantiate their
defense that he actually received the
amount of P7 million.
The Court’s Ruling
The petition is impressed with merit.
There was an implied agency
between Oliver and Castro; the
loans were properly acquired
A contract of agency may be inferred from
all the dealings between Oliver and Castro.
Agency can be express or implied from the
acts of the principal, from his silence or lack
of action, or his failure to repudiate the
agency knowing that another person is
acting on his behalf without
authority.36 The question of whether an
agency has been created is ordinarily a
question which may be established in the
same way as any other fact, either by
direct or circumstantial evidence. The
question is ultimately one of intention.37
In this case, Oliver and Castro had a
business agreement wherein Oliver would
obtain loans from the bank, through the
help of Castro as its branch manager; and
after acquiring the loan proceeds, Castro
would lend the acquired amount to
prospective borrowers who were waiting
for the actual release of their loan
proceeds. Oliver would gain 4% to 5%
interest per month from the loan proceeds
of her borrowers, while Castro would earn
a commission of 10% from the interests.
Clearly, an agency was formed because
Castro bound herself to render some
service in representation or on behalf of
Oliver, in the furtherance of their business
pursuit.38
For months, the agency between Oliver and
Castro benefited both parties. Oliver,
through Castro’s representations, was able
to obtain loans, relend them to borrowers,
and earn interests; while Castro acquired
commissions from the transactions. Oliver
even gave Castro her passbook to facilitate
the transactions.
Accordingly, the laws on agency apply to
their relationship. Article 1881 of the New
Civil Code provides that the agent must act
within the scope of his authority. He may
do such acts as may be conducive to the
accomplishment of the purpose of the
agency. Thus, as long as the agent acts
within the scope of the authority given by
his principal, the actions of the former shall
bind the latter.
Oliver claims that the P4.5 million loan,
released on December 21, 1998, and the
P1,396,310.45 loan, released on January
5, 1999, were not acquired with her
consent. Castro and PSBank, on the other
hand, countered that these loans were
obtained with Oliver’s full consent. The
Court finds that the said loans were
acquired with Oliver’s authority. The
promissory notes39 and the release
tickets for the said loans bore her
40
signatures. She failed to prove that her
signatures appearing on the loan
documents were forged. Hence, the loan
documents were reliable and these proved
that the loans were processed by Castro
within the scope of her authority. As the
loans were validly obtained, PSBank
correctly stated that Oliver had incurred a
debt of P4.5 million and P1,396,310.45, or
a total of P5,888,149.33.
P7 million was
improperly withdrawn;
agent acted beyond her
scope of authority
Although it was proven that Oliver
authorized the loans, in the aggregate
amount of P5,888,149.33, there was
nothing in the records which proved that
she also allowed the withdrawal of P7
million from her bank account. Oliver
vehemently denied that she gave any
authority whatsoever to either Castro or
PSBank to withdraw the said amount. In
her judicial affidavit before the RTC, Castro
initially claimed that Oliver authorized the
withdrawal of P7 million from her bank
account, to wit:
Q: Do you know when was this 4.5 million
pesos loan was credited to plaintiff’s
deposit account?
A: Based on the Transaction Ledge of PS
Bank, the 4.5 million pesos was credit to
plaintiff’s deposit account on 21 December
21 1998
Q: What happened after the 4.5 million
pesos loan was credited to plaintiff’s
account?
A: Upon plaintiff’s instruction, 7 million
was withdrawn from her account including
her loaned amount to be deposited at Mr.
Ben Lim’s account at PS Bank, San Pedro
Branch.41
[Emphasis Supplied]
During her cross-examination, however,
Castro could no longer remember whether
Oliver gave her the authority to withdraw
the P7 million from her account. The
transcript of stenographic notes reads:
Q: You said here, your statement here,
"Upon Plaintiff’s instruction". So, my
question is, who did the Plaintiff instruct
you, was it you?
A: I cannot remember, sir.
Q: You are not definite? Your statement
here it is categorical. It’s on page 9 of 17
in the Judicial Affidavit, the question is
"What happened after the 4.5 million Pesos
loan was credited to the Plaintiff’s account"
And your answer was, "Upon Plaintiff’s
instruction Seven (7) million was
withdrawn from her account. My question
is, this phrase, upon plaintiff’s instruction,
who did the Plaintiff’s (sic) instruct, was it
you?
A: I cannot remember, sir because I still
have other officers other than me, who
were assisting me during that time, so it
could be the instruction even I said upon
the instruction of the plaintiff, but I
cannot remember if I was the one who
received the instruction from the
plaintiff. It could be other officers of
mine during that time, sir.
Q: May I remind you, this is Seven (7)
million Pesos?
A: Yes, sir.42
[Emphasis Supplied]
Verily, Castro, as agent of Oliver and as
branch manager of PS Bank, utterly failed
to secure the authorization of Oliver to
withdraw such substantial amount. As a
standard banking practice intended
precisely to prevent unauthorized and
fraudulent withdrawals, a bank manager
must verify with the client-depositor to
authenticate and confirm that he or she has
validly authorized such withdrawal.43
Castro’s lack of authority to withdraw the
P7 million on behalf of Oliver became more
apparent when she altered the passbook to
hide such transaction. It must be
remembered that Oliver entrusted her
passbook to Castro. In the transaction
history register for her account, it was clear
that there was a series of dealings from
December 17, 1998 to December 23, 1998.
When compared with Oliver’s passbook,
the latter showed that the next transaction
from December 16, 1998 was on December
28, 1998. It was also obvious to the naked
eye that the December 28, 1998 entry in
the passbook was altered. As aptly
observed by the RTC, nowhere in the
testimony of Castro could be gathered that
she made a detailed, plausible and
acceptable explanation as to why she had
to make numerous corrections in the
entries in the passbook.44 Even after the
corrections allegedly done to reconcile the
records, the passbook and the transaction
history register still contained different
entries.
Curiously, though she asserts that Oliver
obtained a loan of P4.5 million and
authorized the withdrawal of P7
million,45 Castro could not explain why
these transactions were not reflected in the
passbook which was in her possession.
Bearing in mind that the alleged
unauthorized withdrawal happened on
December 21, 1998, while Castro was
questionably withholding the passbook, the
Court is of the impression that she
manipulated the entries therein to conceal
the P7 million withdrawal.
Further, Castro claims that Oliver
instructed her to withdraw the P7 million
from her bank account and to deposit the
same in Lim’s account. Glaringly, Lim was
not presented as a witness to substantiate
her defense. Even though she testified that
the P7 million transfer from Oliver’s
account to Lim’s was duly documented,
Castro never presented a single
documentary proof of that specific
transaction.
The Court is convinced that Castro went
beyond the scope of her authority in
withdrawing the P7 million from Oliver’s
bank account. Her flimsy excuse that the
said amount was transferred to the account
of a certain Lim deserves scant
consideration. Hence, Castro must be held
liable for prejudicing Oliver.46
PSBank failed to
exercise the highest
degree of diligence
required of banking
institutions
Aside from Castro, PSBank must also be
held liable because it failed to exercise
utmost diligence in the improper
withdrawal of the P7 million from Oliver’s
bank account.
In the case of banks, the degree of
diligence required is more than that of a
good father of a family. Considering the
fiduciary nature of their relationship with
their depositors, banks are duty bound to
treat the accounts of their clients with the
highest degree of care. The point is that as
a business affected with public interest and
because of the nature of its functions, the
bank is under obligation to treat the
accounts of its depositors with meticulous
care, always having in mind the fiduciary
nature of their relationship.47
In Simex International v. Court of
Appeals,48 the Court held that the
depositor expected the bank to treat his
account with the utmost fidelity, whether
such account consisted only of a few
hundred pesos or of millions. The bank
must record every single transaction
accurately, down to the last centavo, and
as promptly as possible. This has to be
done if the account is to reflect at any given
time the amount of money the depositor
can dispose of as he sees fit, confident that
the bank will deliver it as and to whomever
he directs. A blunder on the part of the
bank, such as the dishonor of a check
without good reason, can cause the
depositor not a little embarrassment if not
also financial loss and perhaps even civil
and criminal litigation.49
Time and again, the Court has emphasized
that the bank is expected to ensure that the
depositor’s funds shall only be given to him
or his authorized representative.
In Producers Bank of the Phil. v. Court of
Appeals,50 the Court held that the usual
banking procedure was that withdrawals of
savings deposits could only be made by
persons whose authorized signatures were
in the signature cards on file with the bank.
In the said case, the bank therein allowed
an unauthorized person to withdraw from
its depositor’s savings account, thus, it
failed to exercise the required diligence of
banks and must be held liable.
With respect to withdrawal slips, the Court
declared in Philippine National Bank v.
Pike51 that "[o]rdinarily, banks allow
withdrawal by someone who is not the
account holder so long as the account
holder authorizes his representative to
withdraw and receive from his account by
signing on the space provided particularly
for such transactions, usually found at the
back of withdrawal slips." There, the bank
violated its fiduciary duty because it
allowed a withdrawal by a representative
even though the authorization portion of
the withdrawal slip was not signed by the
depositor.
Finally, in Cagungun v. Planters
Development Bank,52 a case very similar to
the present one, the depositors therein
entrusted their passbook to the bank
employees for some specific transactions.
The bank employees went beyond their
authority and were able to withdraw from
the depositors’ account without the latter’s
consent. The bank was held liable therein
for the acts of its employees because it
failed to safeguard the accounts of its
depositors.
In the case at bench, it must be determined
whether the P7 million was withdrawn from
the bank with the authority of Oliver. As
testified to by Castro, every withdrawal
from the bank was duly evidenced by a
cash withdrawal slip, a copy of which is
given both to the bank and to its
client.53 Contrary to the position of the CA
and that of the respondents, Oliver cannot
be required to produce the cash withdrawal
slip for the said transaction because,
precisely, she consistently denied
giving authority to withdraw such
amount from her account.
Necessarily, the party that must have
access to such crucial document would
either be PSBank or Castro. They must
present the said cash withdrawal slip, duly
signed by Oliver, to prove that the
withdrawal of P7 million was indeed
sanctioned. Unfortunately, both PSBank
and Castro failed to present the cash
withdrawal slip.
During the trial, the counsel of PSBank
conceded that the cash withdrawal slip for
the P7 million transaction could not be
located, to quote:
ATTY DEJARESCO: Your Honor, excuse me
just a comment for the record we asked for
two (2) years, Your Honor to subpoena this
from the bank, the bank never produce
(sic) the withdrawal slip two (2) years (sic),
Your Honor, this case was delayed by the
previous Court for two (2) years. Your
Honor, no withdrawal slip was produced by
the bank, Your Honor. I would just like to
place it on record.
COURT: Were there subpoenas issued by
the bank, was there an order?
ATTY. DEJARESCO: Yes Your Honor, I think
the good counsel was the counsel at that
time would you able to confirm that it took
us two (2) years to subpoena and
subpoena (sic) this withdrawal slip because
there must be an authority to withdraw,
and it there is a signature of the plaintiff,
we will admit that.
ATTY. CORPUZ: I remember having
manifested that the withdrawal slip
cannot be located.
ATTY. DEJARESCO: Let’s put that on
record, Your Honor.
ATTY. CORPUS: (sic) I remember having
made that manifestation, Your Honor.
COURT: That’s the reason why no
document was produced in Court by the PS
Bank?
ATTY. CORPUS: (sic) With respect to the
withdrawal slip only, Your Honor on
December 21.
ATTY. DEJARESCO: Of that Seven (7)
million from the account.
COURT: Make that on record.
ATTY. CORPUS: Yes, Your Honor.54
[Emphasis Supplied]
Castro, as agent of Oliver, could not
produce either the said withdrawal slip
allegedly authorizing the withdrawal of the
P7 million, her testimony is quoted as
follows:
ATTY. DEJARESCO:
Q: Can you show poof of the withdrawal
slip?
A: The withdrawal slip.
Q: I’m asking you do you have proof?
A: None, sir.
Q: You cannot produce in Court in
support of your Judicial Affidavit?
A: None.
Q: And you cannot produce that in Court?
A: As far as the withdrawal slip as for
myself, none.55
[Emphasis Supplied]
From the foregoing, there was a clear
showing of PSBank’s failure to exercise the
degree of diligence that it ought to have
exercised in dealing with its clients. It could
not prove that the withdrawal of P7 million
was duly authorized by Oliver. As a banking
institution, PSBank was expected to ensure
that such substantial amount should only
be transacted with the consent and
authority of Oliver. PSBank, however,
reneged on its fiduciary duty by allowing an
encroachment upon its depositor’s account
without the latter’s permission. Hence,
PSBank must be held liable for such
improper transaction.
PSBank and Castro
failed to discharge their
burden and must be held
solidarily liable
The party who alleges a fact has the burden
of proving it. Section 1, Rule 131 of the
Rules of Court defines "burden of proof" as
"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." In civil cases, the burden
of proof rests upon the plaintiff, who is
required to establish his case by a
preponderance of evidence. Once the
plaintiff establishes his case, the burden of
evidence shifts to the defendant, who, in
turn, bears the burden to establish his
defense.56
Here, Oliver alleged that she did not
authorize the withdrawal of P7 million from
her account. To establish her allegation,
Oliver presented the following: (1) the
transaction history register which showed
the withdrawal of P7 million from her
account on December 21, 1998; (2) the
passbook which contained alterations to
conceal the withdrawal on December 21,
1998 while in the possession of Castro; and
(3) testimonial evidence that she did not
allow the withdrawal of the said
amount.57 The Court is of the view that
Oliver had sufficiently discharged her
burden in proving that P7 million was
withdrawn from her account without her
authorization. Hence, the burden was
shifted to the respondents to refute the
allegation of Oliver.
As discussed above, both Castro and
PSBank failed to establish the burden of
their defense. They failed to present proof
that Oliver authorized the said transaction.
They could have presented either the cash
withdrawal slip for the P7 million on
December 21, 1999 or Lim’s testimony to
prove the transfer of funds to the latter’s
account, but they did neither. Without an
iota of proof to substantiate the validity of
the said transaction, the respondents
unlawfully deprived Oliver of her funds.
Indeed, the bank should be solidarily liable
with its employee for the damages
committed to its depositor.58 Under Article
2180 of the Civil Code, employers shall be
held primarily and solidarily liable for
damages caused by their employees acting
within the scope of their assigned tasks.
Castro, as acting branch manager of
PSBank ,was able to facilitate the
questionable transaction as she was also
entrusted with Oliver’s passbook. In other
words, Castro was the representative of
PSBank, and, at the same time, the agent
of Oliver, earning commissions from their
transactions. Oddly, PSBank, either
consciously or through sheer negligence,
allowed the double dealings of its employee
with its client. Such carelessness and lack
of protection of the depositors from its own
employees led to the unlawful withdrawal
of the P7 million from Oliver’s account.
Although Castro was eventually terminated
by PSBank because of certain problems
regarding client accommodation and loss of
confidence, the damage to Oliver had
already been done. Thus, both Castro and
PSBank must be held solidarily liable.
Award of damages;
invalid foreclosure
To recapitulate, the loans of Oliver from
PSBank which were secured by real estate
mortages amounted to P5,888,149.33.
Finding PSBank and Castro solidarily liable
to Oliver in the amount of P7 million
because it was improperly withdrawn from
her bank account, the Court agrees with
the RTC that had it not been for the said
unauthorized withdrawal, Oliver’s debts
amounting to P5,888,149.33 would have
been satisfied.
Consequently, PSBank’s foreclosure of the
real estate mortgage covering the two (2)
loans in the total amount of P5,888,149.33
was improper. With PSBank being found
liable to Oliver for P7 million, after
offsetting her loans would have PSBank
and Castro still owing her P1,111,850.77, persons. A decreased amount of
which must be suitably paid in the form of P50,000.00 attorney's fees should be
actual damages. sufficient.
The award of moral damages must also be WHEREFORE, the petition
upheld. Specifically, in culpa contractual or is GRANTED. The October 25, 2013
breach of contract, like in the present case, Decision and the September 12, 2014
moral damages are recoverable only if the Resolution of the Court of Appeals in CA-
defendant has acted fraudulently or in bad G.R. CV No. 95656 are REVERSED and
faith, or is found guilty of gross negligence SET ASIDE. The July 22, 2010 Order of the
amounting to bad faith, or in wanton Regional Trial Court, Branch 276,
disregard of his contractual obligations. Muntinlupa City in Civil Case No. 99-278 is
Verily, the breach must be wanton, hereby REINSTATED with
reckless, malicious, or in bad faith, the MODIFICATION that the award of
oppressive or abusive.59 exemplary damages and attorney's fees be
Here, Castro and PSBank were utterly decreased to P50,000.00 each.
reckless in allowing the withdrawal of a All awards shall earn interests at the rate
huge amount from Oliver's account without of six percent (6%) per annum from the
her consent.1âwphi1 The bank's finality of this decision.
negligence is a result of lack of due care SO ORDERED.
and caution required of managers and
employees of a firm engaged in a business
so sensitive and demanding.60 Hence, the
award of Pl00,000.00 as moral damages is
warranted.
The award of exemplary damages is also
proper due to the failure of Castro and
PSBank to prevent the unauthorized
withdrawal from Oliver's account. The law
allows the grant of exemplary damages to
set an example for public good.61 The
Court, however, finds that the amount of
exemplary damages must be decreased to
P50,000.00.
Finally; the Court agrees with the RTC that
Castro and PSBank should be held solidarily
liable for attorney's fees. Article 2208 of
the Civil Code is clear that attorney's fees
may be recovered when exemplary
damages are awarded or when the plaintiff,
through the defendant's act or omission,
has been compelled to litigate with thirds
G.R. No. L-11154 March 21, 1916
E. MERRITT, plaintiff-appellant,
vs.
GOVERNMENT OF THE PHILIPPINE
ISLANDS, defendant-appellant.
Crossfield and O'Brien for plaintiff.
Attorney-General Avanceña for defendant..
TRENT, J.:
This is an appeal by both parties from a
judgment of the Court of First Instance of
the city of Manila in favor of the plaintiff for
the sum of P14,741, together with the
costs of the cause.
Counsel for the plaintiff insist that the trial
court erred (1) "in limiting the general
damages which the plaintiff suffered to
P5,000, instead of P25,000 as claimed in
the complaint," and (2) "in limiting the time
when plaintiff was entirely disabled to two
months and twenty-one days and fixing the
damage accordingly in the sum of P2,666,
instead of P6,000 as claimed by plaintiff in
his complaint."
The Attorney-General on behalf of the
defendant urges that the trial court erred:
(a) in finding that the collision between the
plaintiff's motorcycle and the ambulance of
the General Hospital was due to the
negligence of the chauffeur; (b) in holding
that the Government of the Philippine
Islands is liable for the damages sustained
by the plaintiff as a result of the collision,
even if it be true that the collision was due
to the negligence of the chauffeur; and (c)
in rendering judgment against the
defendant for the sum of P14,741.
The trial court's findings of fact, which are
fully supported by the record, are as
follows:
It is a fact not disputed by counsel for the
defendant that when the plaintiff, riding on
a motorcycle, was going toward the
western part of Calle Padre Faura, passing
along the west side thereof at a speed of
ten to twelve miles an hour, upon crossing
Taft Avenue and when he was ten feet from
the southwestern intersection of said
streets, the General Hospital ambulance,
upon reaching said avenue, instead of
turning toward the south, after passing the
center thereof, so that it would be on the
left side of said avenue, as is prescribed by
the ordinance and the Motor Vehicle Act,
turned suddenly and unexpectedly and
long before reaching the center of the
street, into the right side of Taft Avenue,
without having sounded any whistle or
horn, by which movement it struck the
plaintiff, who was already six feet from the
southwestern point or from the post place
there.
By reason of the resulting collision, the
plaintiff was so severely injured that,
according to Dr. Saleeby, who examined
him on the very same day that he was
taken to the General Hospital, he was
suffering from a depression in the left
parietal region, a would in the same place
and in the back part of his head, while
blood issued from his nose and he was
entirely unconscious.
The marks revealed that he had one or
more fractures of the skull and that the
grey matter and brain was had suffered
material injury. At ten o'clock of the night
in question, which was the time set for
performing the operation, his pulse was so
weak and so irregular that, in his opinion,
there was little hope that he would live. His
right leg was broken in such a way that the
fracture extended to the outer skin in such
manner that it might be regarded as double
and the would be exposed to infection, for
which reason it was of the most serious
nature.
At another examination six days before the
day of the trial, Dr. Saleeby noticed that
the plaintiff's leg showed a contraction of
an inch and a half and a curvature that
made his leg very weak and painful at the
point of the fracture. Examination of his
head revealed a notable readjustment of
the functions of the brain and nerves. The
patient apparently was slightly deaf, had a
light weakness in his eyes and in his mental
condition. This latter weakness was always
noticed when the plaintiff had to do any
difficult mental labor, especially when he
attempted to use his money for
mathematical calculations.
According to the various merchants who
testified as witnesses, the plaintiff's mental
and physical condition prior to the accident
was excellent, and that after having
received the injuries that have been
discussed, his physical condition had
undergone a noticeable depreciation, for he
had lost the agility, energy, and ability that
he had constantly displayed before the
accident as one of the best constructors of
wooden buildings and he could not now
earn even a half of the income that he had
secured for his work because he had lost
50 per cent of his efficiency. As a
contractor, he could no longer, as he had
before done, climb up ladders and
scaffoldings to reach the highest parts of
the building.
As a consequence of the loss the plaintiff
suffered in the efficiency of his work as a
contractor, he had to dissolved the
partnership he had formed with the
engineer. Wilson, because he was
incapacitated from making mathematical
calculations on account of the condition of
his leg and of his mental faculties, and he
had to give up a contract he had for the
construction of the Uy Chaco building."
We may say at the outset that we are in full
accord with the trial court to the effect that
the collision between the plaintiff's
motorcycle and the ambulance of the
General Hospital was due solely to the
negligence of the chauffeur.
The two items which constitute a part of
the P14,741 and which are drawn in
question by the plaintiff are (a) P5,000, the
award awarded for permanent injuries, and
(b) the P2,666, the amount allowed for the
loss of wages during the time the plaintiff
was incapacitated from pursuing his
occupation. We find nothing in the record
which would justify us in increasing the
amount of the first. As to the second, the
record shows, and the trial court so found,
that the plaintiff's services as a contractor
were worth P1,000 per month. The court,
however, limited the time to two months
and twenty-one days, which the plaintiff
was actually confined in the hospital. In
this we think there was error, because it
was clearly established that the plaintiff
was wholly incapacitated for a period of six
months. The mere fact that he remained in
the hospital only two months and twenty-
one days while the remainder of the six
months was spent in his home, would not
prevent recovery for the whole time. We,
therefore, find that the amount of damages
sustained by the plaintiff, without any fault
on his part, is P18,075.
As the negligence which caused the
collision is a tort committed by an agent or
employee of the Government, the inquiry
at once arises whether the Government is
legally-liable for the damages resulting
therefrom.
Act No. 2457, effective February 3, 1915,
reads:
An Act authorizing E. Merritt to bring suit
against the Government of the Philippine
Islands and authorizing the Attorney-
General of said Islands to appear in said
suit.
Whereas a claim has been filed against the
Government of the Philippine Islands by
Mr. E. Merritt, of Manila, for damages
resulting from a collision between his
motorcycle and the ambulance of the
General Hospital on March twenty-fifth,
nineteen hundred and thirteen;
Whereas it is not known who is responsible
for the accident nor is it possible to
determine the amount of damages, if any,
to which the claimant is entitled; and
Whereas the Director of Public Works and
the Attorney-General recommended that
an Act be passed by the Legislature
authorizing Mr. E. Merritt to bring suit in
the courts against the Government, in
order that said questions may be decided:
Now, therefore,
By authority of the United States, be it
enacted by the Philippine Legislature, that:
SECTION 1. E. Merritt is hereby authorized
to bring suit in the Court of First Instance
of the city of Manila against the
Government of the Philippine Islands in
order to fix the responsibility for the
collision between his motorcycle and the
ambulance of the General Hospital, and to
determine the amount of the damages, if
any, to which Mr. E. Merritt is entitled on
account of said collision, and the Attorney-
General of the Philippine Islands is hereby
authorized and directed to appear at the
trial on the behalf of the Government of
said Islands, to defendant said Government
at the same.
SEC. 2. This Act shall take effect on its
passage.
Enacted, February 3, 1915.
Did the defendant, in enacting the above
quoted Act, simply waive its immunity from
suit or did it also concede its liability to the
plaintiff? If only the former, then it cannot
be held that the Act created any new cause
of action in favor of the plaintiff or
extended the defendant's liability to any
case not previously recognized.
All admit that the Insular Government (the
defendant) cannot be sued by an individual
without its consent. It is also admitted that
the instant case is one against the
Government. As the consent of the
Government to be sued by the plaintiff was
entirely voluntary on its part, it is our duty
to look carefully into the terms of the
consent, and render judgment accordingly.
The plaintiff was authorized to bring this
action against the Government "in order to
fix the responsibility for the collision
between his motorcycle and the ambulance
of the General Hospital and to determine
the amount of the damages, if any, to
which Mr. E. Merritt is entitled on account
of said collision, . . . ." These were the two
questions submitted to the court for
determination. The Act was passed "in
order that said questions may be decided."
We have "decided" that the accident was
due solely to the negligence of the
chauffeur, who was at the time an
employee of the defendant, and we have
also fixed the amount of damages
sustained by the plaintiff as a result of the
collision. Does the Act authorize us to hold
that the Government is legally liable for
that amount? If not, we must look
elsewhere for such authority, if it exists.
The Government of the Philippine Islands
having been "modeled after the Federal
and State Governments in the United
States," we may look to the decisions of the
high courts of that country for aid in
determining the purpose and scope of Act
No. 2457.
In the United States the rule that the state
is not liable for the torts committed by its
officers or agents whom it employs, except
when expressly made so by legislative
enactment, is well settled. "The
Government," says Justice Story, "does not
undertake to guarantee to any person the
fidelity of the officers or agents whom it
employs, since that would involve it in all
its operations in endless embarrassments,
difficulties and losses, which would be
subversive of the public interest."
(Claussen vs. City of Luverne, 103 Minn.,
491, citing U. S. vs. Kirkpatrick, 9 Wheat,
720; 6 L. Ed., 199; and Beers vs. States,
20 How., 527; 15 L. Ed., 991.)
In the case of Melvin vs. State (121 Cal.,
16), the plaintiff sought to recover
damages from the state for personal
injuries received on account of the
negligence of the state officers at the state
fair, a state institution created by the
legislature for the purpose of improving
agricultural and kindred industries; to
disseminate information calculated to
educate and benefit the industrial classes;
and to advance by such means the material
interests of the state, being objects similar
to those sought by the public school
system. In passing upon the question of
the state's liability for the negligent acts of
its officers or agents, the court said:
No claim arises against any government is
favor of an individual, by reason of the
misfeasance, laches, or unauthorized
exercise of powers by its officers or agents.
(Citing Gibbons vs. U. S., 8 Wall., 269;
Clodfelter vs. State, 86 N. C., 51, 53; 41
Am. Rep., 440; Chapman vs. State, 104
Cal., 690; 43 Am. St. Rep., 158; Green vs.
State, 73 Cal., 29; Bourn vs. Hart, 93 Cal.,
321; 27 Am. St. Rep., 203; Story on
Agency, sec. 319.)
As to the scope of legislative enactments
permitting individuals to sue the state
where the cause of action arises out of
either fort or contract, the rule is stated in
36 Cyc., 915, thus:
By consenting to be sued a state simply
waives its immunity from suit. It does not
thereby concede its liability to plaintiff, or
create any cause of action in his favor, or
extend its liability to any cause not
previously recognized. It merely gives a
remedy to enforce a preexisting liability
and submits itself to the jurisdiction of the
court, subject to its right to interpose any
lawful defense.
In Apfelbacher vs. State (152 N. W., 144,
advanced sheets), decided April 16, 1915,
the Act of 1913, which authorized the
bringing of this suit, read:
SECTION 1. Authority is hereby given to
George Apfelbacher, of the town of
Summit, Waukesha County, Wisconsin, to
bring suit in such court or courts and in
such form or forms as he may be advised
for the purpose of settling and determining
all controversies which he may now have
with the State of Wisconsin, or its duly
authorized officers and agents, relative to
the mill property of said George
Apfelbacher, the fish hatchery of the State
of Wisconsin on the Bark River, and the mill
property of Evan Humphrey at the lower
end of Nagawicka Lake, and relative to the
use of the waters of said Bark River and
Nagawicka Lake, all in the county of
Waukesha, Wisconsin.
In determining the scope of this act, the
court said:
Plaintiff claims that by the enactment of
this law the legislature admitted liability on
the part of the state for the acts of its
officers, and that the suit now stands just
as it would stand between private parties.
It is difficult to see how the act does, or was
intended to do, more than remove the
state's immunity from suit. It simply gives
authority to commence suit for the purpose
of settling plaintiff's controversies with the
estate. Nowhere in the act is there a
whisper or suggestion that the court or
courts in the disposition of the suit shall
depart from well established principles of
law, or that the amount of damages is the
only question to be settled. The act opened
the door of the court to the plaintiff. It did
not pass upon the question of liability, but
left the suit just where it would be in the
absence of the state's immunity from suit.
If the Legislature had intended to change
the rule that obtained in this state so long
and to declare liability on the part of the
state, it would not have left so important a
matter to mere inference, but would have
done so in express terms. (Murdock Grate
Co. vs. Commonwealth, 152 Mass., 28; 24
N.E., 854; 8 L. R. A., 399.)
In Denning vs. State (123 Cal., 316), the
provisions of the Act of 1893, relied upon
and considered, are as follows:
All persons who have, or shall hereafter
have, claims on contract or for negligence
against the state not allowed by the state
board of examiners, are hereby authorized,
on the terms and conditions herein
contained, to bring suit thereon against the
state in any of the courts of this state of
competent jurisdiction, and prosecute the
same to final judgment. The rules of
practice in civil cases shall apply to such
suits, except as herein otherwise provided.
And the court said:
This statute has been considered by this
court in at least two cases, arising under
different facts, and in both it was held that
said statute did not create any liability or
cause of action against the state where
none existed before, but merely gave an
additional remedy to enforce such liability
as would have existed if the statute had not
been enacted. (Chapman vs. State, 104
Cal., 690; 43 Am. St. Rep., 158; Melvin vs.
State, 121 Cal., 16.)
A statute of Massachusetts enacted in 1887
gave to the superior court "jurisdiction of
all claims against the commonwealth,
whether at law or in equity," with an
exception not necessary to be here
mentioned. In construing this statute the
court, in Murdock Grate Co. vs.
Commonwealth (152 Mass., 28), said:
The statute we are discussing disclose no
intention to create against the state a new
and heretofore unrecognized class of
liabilities, but only an intention to provide
a judicial tribunal where well recognized
existing liabilities can be adjudicated.
In Sipple vs. State (99 N. Y., 284), where
the board of the canal claims had, by the
terms of the statute of New York,
jurisdiction of claims for damages for
injuries in the management of the canals
such as the plaintiff had sustained, Chief
Justice Ruger remarks: "It must be
conceded that the state can be made liable
for injuries arising from the negligence of
its agents or servants, only by force of
some positive statute assuming such
liability."
It being quite clear that Act No. 2457 does
not operate to extend the Government's
liability to any cause not previously
recognized, we will now examine the
substantive law touching the defendant's
liability for the negligent acts of its officers,
agents, and employees. Paragraph 5 of
article 1903 of the Civil Code reads:
The state is liable in this sense when it acts
through a special agent, but not when the
damage should have been caused by the
official to whom properly it pertained to do
the act performed, in which case the
provisions of the preceding article shall be
applicable.
The supreme court of Spain in defining the
scope of this paragraph said:
That the obligation to indemnify for
damages which a third person causes to
another by his fault or negligence is based,
as is evidenced by the same Law 3, Title
15, Partida 7, on that the person obligated,
by his own fault or negligence, takes part
in the act or omission of the third party who
caused the damage. It follows therefrom
that the state, by virtue of such provisions
of law, is not responsible for the damages
suffered by private individuals in
consequence of acts performed by its
employees in the discharge of the functions
pertaining to their office, because neither
fault nor even negligence can be presumed
on the part of the state in the organization
of branches of public service and in the
appointment of its agents; on the contrary,
we must presuppose all foresight humanly
possible on its part in order that each
branch of service serves the general weal
an that of private persons interested in its
operation. Between these latter and the
state, therefore, no relations of a private
nature governed by the civil law can arise
except in a case where the state acts as a
judicial person capable of acquiring rights
and contracting obligations. (Supreme
Court of Spain, January 7, 1898; 83 Jur.
Civ., 24.)
That the Civil Code in chapter 2, title 16,
book 4, regulates the obligations which
arise out of fault or negligence; and
whereas in the first article thereof. No.
1902, where the general principle is laid
down that where a person who by an act or
omission causes damage to another
through fault or negligence, shall be
obliged to repair the damage so done,
reference is made to acts or omissions of
the persons who directly or indirectly cause
the damage, the following articles refers to
this persons and imposes an identical
obligation upon those who maintain fixed
relations of authority and superiority over
the authors of the damage, because the
law presumes that in consequence of such
relations the evil caused by their own fault
or negligence is imputable to them. This
legal presumption gives way to proof,
however, because, as held in the last
paragraph of article 1903, responsibility for
acts of third persons ceases when the
persons mentioned in said article prove
that they employed all the diligence of a
good father of a family to avoid the
damage, and among these persons, called
upon to answer in a direct and not a
subsidiary manner, are found, in addition
to the mother or the father in a proper
case, guardians and owners or directors of
an establishment or enterprise, the state,
but not always, except when it acts through
the agency of a special agent, doubtless
because and only in this case, the fault or
negligence, which is the original basis of
this kind of objections, must be presumed
to lie with the state.
That although in some cases the state
might by virtue of the general principle set
forth in article 1902 respond for all the
damage that is occasioned to private
parties by orders or resolutions which by
fault or negligence are made by branches
of the central administration acting in the
name and representation of the state itself
and as an external expression of its
sovereignty in the exercise of its executive
powers, yet said article is not applicable in
the case of damages said to have been
occasioned to the petitioners by an
executive official, acting in the exercise of
his powers, in proceedings to enforce the
collections of certain property taxes owing
by the owner of the property which they
hold in sublease.
That the responsibility of the state is
limited by article 1903 to the case wherein
it acts through a special agent (and a
special agent, in the sense in which these
words are employed, is one who receives a
definite and fixed order or commission,
foreign to the exercise of the duties of his
office if he is a special official) so that in
representation of the state and being
bound to act as an agent thereof, he
executes the trust confided to him. This
concept does not apply to any executive
agent who is an employee of the acting For the foregoing reasons, the judgment
administration and who on his own appealed from must be reversed, without
responsibility performs the functions which costs in this instance. Whether the
are inherent in and naturally pertain to his Government intends to make itself legally
office and which are regulated by law and liable for the amount of damages above set
the regulations." (Supreme Court of Spain, forth, which the plaintiff has sustained by
May 18, 1904; 98 Jur. Civ., 389, 390.) reason of the negligent acts of one of its
That according to paragraph 5 of article employees, by legislative enactment and
1903 of the Civil Code and the principle laid by appropriating sufficient funds therefor,
down in a decision, among others, of the we are not called upon to determine. This
18th of May, 1904, in a damage case, the matter rests solely with the Legislature and
responsibility of the state is limited to that not with the courts.
which it contracts through a special agent,
duly empowered by a definite order or
commission to perform some act or
charged with some definite purpose which
gives rise to the claim, and not where the
claim is based on acts or omissions
imputable to a public official charged with
some administrative or technical office who
can be held to the proper responsibility in
the manner laid down by the law of civil
responsibility. Consequently, the trial court
in not so deciding and in sentencing the
said entity to the payment of damages,
caused by an official of the second class
referred to, has by erroneous
interpretation infringed the provisions of
articles 1902 and 1903 of the Civil Code.
(Supreme Court of Spain, July 30, 1911;
122 Jur. Civ., 146.)
It is, therefore, evidence that the State
(the Government of the Philippine Islands)
is only liable, according to the above
quoted decisions of the Supreme Court of
Spain, for the acts of its agents, officers
and employees when they act as special
agents within the meaning of paragraph 5
of article 1903, supra, and that the
chauffeur of the ambulance of the General
Hospital was not such an agent.
G.R. No. L-20322 May 29, 1968
REPUBLIC OF THE
PHILIPPINES, petitioner,
vs.
HON. PERFECTO R. PALACIO, as Judge
of the Court of First Instance of
Camarines Sur,
MACARIO M. OFILADA, as ex-officio
Sheriff of Manila, and ILDEFONSO
ORTIZ, respondents.
Office of the Solicitor General for petitioner.
Luis Contreras for respondents.
REYES, J.B.L., J.:
This is a petition for review of the decision
of the Court of Appeals (in CA-G.R. No.
30915), dismissing the original action for
certiorari and prohibition filed with said
Court by herein petitioner Republic of the
Philippines, to restrain the enforcement of
a writ of execution (issued by the Court of
First Instance of Camarines Sur in its Civil
Case No. 4886) on the trust fund in the
account of the Irrigation Service Unit with
the Philippine National Bank.
There is no controversy as to the following
facts:
On April 2, 1960, Ildefonso Ortiz instituted
in the Court of First Instance of Camarines
Sur Civil Case No. 4886, against the
Handong Irrigation Association, Inc., a
corporation with principal place of business
in Libmanan, Camarines Sur, and the
Irrigation Service Unit, an office or agency
under the Department of Public Works and
Communications, to recover possession,
with damages, of a 958 square meter-lot
located in Handong, San Juan, Libmanan,
Camarines Sur, which the Irrigation
Association allegedly entered and
occupied, at the instance of its co-
defendant. For failure to appear and
answer the complaint, therein defendant
Irrigation Service Unit was declared in
default.
On June 3, 1960, the Republic of the
Philippines, through the Solicitor General,
moved for the dismissal of the complaint,
claiming that defendant Irrigation Service
Unit has no juridical personality to sue and
be sued. By order of June 11, 1960, this
motion was denied, on the ground that the
said defendant although a mere agency of
the Republic of the Philippines, is engaged
in the private business of selling irrigation
pumps and construction materials on
installment plan. The Solicitor General's
motion for reconsideration of the aforesaid
order was also denied on July 19, 1960. No
appeal appears to have been taken.
On January 29, 1962, the Solicitor General
was served with copy of the writ of
execution issued by the court against the
defendants in the above-mentioned civil
case; and, on February 16, 1962, an order
of garnishment was served by the Sheriff
of Manila against the deposits and/or pump
irrigation trust fund in the account of the
Irrigation Service Unit at the Philippine
National Bank, Manila, to cover the sum of
P14,874.40.1
On March 8, 1962, the Solicitor General, on
behalf of the Republic of the Philippines,
filed with the lower court an urgent motion
to lift the order of garnishment, for the
reason that the funds subject matter
thereof are public funds and exempt from
attachment or execution. Upon denial of
this motion, as well as of the motion for
reconsideration of said denial, the Solicitor
General commenced the present certiorari
and prohibition proceeding in the Court of
Appeals.1ªvvphi1.nêt
In its decision of August 21, 1962, the
appellate court sustained the propriety of
the disputed garnishment-order, and
dismissed the Government's petition, on
the basis of the finding by the trial court
that the Irrigation Service Unit, "formerly
an office under the Department of
Agriculture and Natural Resources created
by virtue of a 'Memorandum of Agreement
on the Irrigation Pump Program of the
Philippines', signed by the Chairman of the
PHILCUSA (now NEC), Chief of the MSA
Mission (now AID) and the Secretary of
Agriculture and Natural Resources, and
presently under the Department of Public
Works and Communications to which it was
transferred", is engaged in a private
business of purchase and sale of irrigation
pumps and systems. Consequently,
according to the Court of Appeals, and
following the ruling in the case of National
Airports Corporation vs. Teodoro, et al., L-
5122, April 30, 1952 (91 Phil. 203), by thus
engaging in private business, the
Government, through the Irrigation Service
Unit, had actually consented to the suit.
Hence, the present petition for review filed
by the Republic of the Philippines.
The issue presented by this case is whether
or not the pump irrigation trust fund,
deposited with the Philippine National Bank
in the account of the Irrigation Service
Unit, may be garnished to satisfy a money-
judgment against the latter. This issue in
turn calls for a determination of the nature
of said trust fund, i.e., whether it is a fund
belonging to the National Government
(which was not a party to Civil Case No.
4886), as maintained by herein petitioner,
or purely the proceeds of a private venture
by the government, as claimed by the
respondents.
For a better understanding of the nature,
function and operation of the Irrigation
Service Unit (ISU) which is necessary for
the proper resolution of the issue herein
involved, it is worthwhile to recall that this
office was originally created under the
Department of Agriculture and Natural
Resources by virtue of a Memorandum
Agreement between the governments of
the Philippines and the United States,
dated August 13, 1952. It was later
transferred to the Department of Public
Works and Communications as an office
directly under the Office of the Secretary,
"to prosecute to completion the
rehabilitation of pump systems transferred
from the former Irrigation Pump
Administration of the Department of
Agriculture and Natural
Resources,2 including the settlement of the
obligations of said administration." The
budgetary requirements to carry out the
objectives of the project were to be
financed by withdrawals from the
Counterpart Fund-Special Account.
(Memorandum Agreement of June, 1954.)
This Counterpart Fund-Special Account
referred to above was established in the
Central Bank by the Government of the
Philippines and made up of deposits in
pesos commensurate with the indicated
dollar cost to the Government of the United
States of economic and technical
assistance made available to the
Philippines, pursuant to the Bilateral
Agreement between the Philippines and the
United States of April 27, 1951; of deposits
accruing to it (Philippine government) from
the sale of commodities or services
supplied under the Agreement or otherwise
accruing to it as a result of the import of
such commodities or service; and of any
advance deposits which the Philippine
government may make in the Special
Account (Sec. 1, paragraphs 2[a], [b] and
[c], Annex to Memo. Agreement of April 27,
1951). Later, on the basis of a
supplemental agreement (No. 2,
Counterpart Project No. 409 — Pump
Irrigation), the Pump Irrigation Trust Fund
was established in the Philippine National
Bank, to which all authorized releases to
the ISU3 from the Counterpart Fund —
Special Account, to finance the peso-cost of
the Irrigation Pump Project, were
transferred. This is the fund on which the
disputed writ of execution for money
judgment rendered against the ISU, is
being enforced.
A reading of the records and documents
submitted to the Court of Appeals will
readily show that the sales of irrigation
pumps to farmers by ISU are governed by
the terms of the Supplemental Agreement
No. 2 to Counterpart Project No. 409
(signed by representatives of the Philippine
and U. S. governments) hereunder copied
in full:
C. Disposition of Proceeds from Payments
under Contracts of Sale
1. Under the Guiding Principles of the
Irrigation Pump Project, pumps are sold to
farmers' associations under conditional
sales contracts. Periodic payments to ISU
by each association are required. The total
payment required under the contract is
stated in the contract and is equal to the
sum of (a) the landed cost of equipment at
the installation site, (b) the cost of
installation and construction including
survey and design, (c) the cost of fuel and
oil financed for the first crop season, if any,
(d) ten per cent of the total of a and b to
cover the cost of administration, technical
assistance furnished by the ISU, inspection
and collection, and (e) the compensating
use tax to the Philippine Government.
Interest is also payable under each
contract at the rate of six percent per
annum on any unpaid balance of the total
amount of the contract.
2. All principal and interest payments
received by the ISU from farmers'
associations shall be deposited
immediately in the Trust Fund. The
separate account established by the project
agreement for Counterpart Project 409,
entitled "Irrigation Pump Sales Proceeds
Account" is hereby abolished and any
deposits therein will be immediately
transferred to the Trust Fund.
3. Whenever the total value of all deposits
made to the Trust Fund from contract
principal and interest payments exceeds
the value of total releases made to the
Trust Fund from the Counterpart Fund-
Special Account, these excess deposits
shall be transferred from the Trust Fund to
the Counter Fund-Special Account. Such
transfers shall be considered as "proceeds
of sale" and "advance deposits" as provided
in Annex Section 1, (b) and (c) of the
Bilateral Agreement between the Republic
of the Philippines and the United States of
America.
It was also provided therein that the
payments by the farmers' associations on
conditional sales agreements specified in
paragraph C-2, above, will be considered in
the preparation, and shall form part, of the
ISU annual budget, which will finance the
costs of supply and equipment purchases,
the installation and construction of pump
units, and the operating expenses of ISU
for which appropriated funds are not
available. (Para. B-1).
It is clear from the foregoing that the ISU
is not only an office in the Government of
the Republic of the Philippines, created to
promote a specific economic policy of said
government, but also that its activity (of
selling irrigation pumps to farmers on
installment basis) is not intended to earn
profit or financial gain to its operator. The
mere fact that interests are being collected
on the balance of the unpaid cost of the
purchased pumps does not convert this
economic project of the government into a
corporate activity. As previously pointed
out, the installment payments and
interests receivable from the farmers are to
be used to replenish the counterpart funds
utilized in furtherance of the operation of
the project.
Although evidently acknowledging the
nature of the Pump Irrigation Trust Fund as
a public fund, the Court of Appeals
nevertheless sustained the garnishment
order, on the ground that the ISU, by
engaging in the private business of
purchasing and selling irrigation pumps on
installment basis, has waived its
governmental immunity and, by
implication, consented to the suit.
It is apparent that this decision of the Court
of Appeals suffers from the erroneous
assumption that because the State has
waived its immunity, its property and funds
become liable to seizure under the legal
process. This emphatically is not the law
(Merritt vs. Insular Government, 34 Phil.
311).
Even though the rule as to immunity of a of the Civil Code of the Philippines, that the
state from suit is relaxed, the power of the State is liable only for torts caused by its
courts ends when the judgment is special agents, specially commissioned to
rendered. Although the liability of the state carry out the acts complained of outside of
has been judicially ascertained, the state is such agent's regular duties (Merritt vs.
at liberty to determine for itself whether to Insular Government, supra; Rosete vs.
pay the judgment or not, and execution can Auditor General, 81 Phil. 453). There being
not issue on a judgment against the state. no proof that the making of the tortious
Such statutes do not authorize a seizure of inducement was authorized, neither the
state property to satisfy judgments State nor its funds can be made liable
recovered, and only convey implication therefor.
that the legislature will recognize such WHEREFORE, the decision of the Court of
judgment as final and make provision for Appeals under review is reversed and set
the satisfaction thereof. (49 Am. Jur., Sec. aside, and the order of garnishment issued
104, pp. 312-320.) by the Sheriff of Manila on the Pump
Judgments against a state, in cases where Irrigation Trust Fund in the account of the
it has consented to be sued, generally Irrigation Service Unit, with the Philippine
operate merely to liquidate and establish National Bank, is hereby declared null and
plaintiff's claim in the absence of express void. The writ of preliminary injunction
provision; otherwise they can not be heretofore issued is made permanent. No
enforced by processes of law; and it is for costs.
the legislature to provide for their payment
in such manner as it sees fit. (59 C.J. sec.
501, p. 331; 81 C.J.S., sec. 232, p. 1343.)
It needs no stressing that to allow the
levying under execution of the ISU funds
would amount to diverting them from the
purpose originally contemplated by the
P.I.U.S. Bilateral Agreement, and would
amount to a disbursement without any
proper appropriation as required by law.
A second infirmity of the decision under
appeal originates from its ignoring the fact
that the initial complaint against the
Irrigation Service Unit was that it had
induced the Handong Irrigation
Association, Inc., to invade and occupy the
land of the plaintiff Ildefonso Ortiz. The ISU
liability thus arose from tort and not from
contract; and it is a well-entrenched rule in
this jurisdiction, embodied in Article 2180
G.R. No. 167797 June 15, 2015
METRO MANILA TRANSIT
CORPORATION, Petitioner,
vs.
REYNALDO CUEVAS and JUNNEL
CUEVAS, represented by REYNALDO
CUEVAS, Respondents.
DECISION
BERSAMIN, J.:
The registered owner of a motor vehicle
whose operation causes injury to another is
legally liable to the latter. But it is error not
to allow the registered owner to recover
reimbursement from the actual and
present owner by way of its cross-claim.
Antecedents
Metro Manila Transit Corporation (MMTC)
and Mina's Transit Corporation (Mina's
Transit) entered into an agreement to sell
dated August 31, 1990,1 whereby the latter
bought several bus units from the former
at a stipulated price. They agreed that
MMTC would retain the ownership of the
buses until certain conditions were met,
but in the meantime Mina's Transit could
operate the buses within Metro Manila.
On October 14, 1994, one of the buses
subject of the agreement to sell, bearing
plate number NXM-449-TB-pil 94, hit and
damaged a Honda Motorcycle owned by
Reynaldo and driven by Junnel. Reynaldo
and Junnel sued MMTC and Mina’s Transit
for damages in the Regional Trial Court
(RTC) in Cavite, docketed as Civil Case No.
N-6127, pertinently alleging and praying as
follows:
5. Defendants Metro Manila Transit
Corporation and Mina’s Transit are
registered joint-owners or operators of an
MMTC/Minas Transit passenger bus with
Plate No. NXM-449-TB-pil 94, and is the
employers (sic) of the driver Jessie Rillera
y Gaceta.
6. On October 14, 1994, at around 7:45
P.M., while Plaintiff was riding on a Honda
Motocycle, with a companion at the back,
along South Superhighway, in front of
Magallanes Supermarket in Makati, Metro
Manila, a few meters away from the
approaches of Magallanes Overpass
complex, coming from the South and
heading toward the North, the defendants’
driver Jessie Rillera Y Gaceta, driving the
MMTC/Mina’s Transit Passenger bus with
Plate No. NXM-449-TB-pil 94, heading in
the same direction and following Plain tiff’s
motorcycle, recklessly and carelessly
attempted to overtake Plaintiff’s Motorcycle
on the right side of the lane, in the course
of which the said Jessie Rillera side swiped
the Plaintiff as the said Jessie Rillera
accelerated speed;
7. As a result, plaintiff Junnel Cuevas and
his companion were thrown to the road and
Plaintiff’s right leg was severely fractured,
and the Honda Motorcycle owned by
plaintiff Reynaldo Cuevas was extensively
damaged;
8. Plaintiff Junnel Cuevas and his
companion were then brought to the
Philippine General Hospital along Taft
Avenue in Manila, where the said Plaintiff
had to undergo several operations on his
right leg; but in spite of the several
operations which he had undergone,
Plaintiff Junnel Cuevas, even up to now, is
unable to walk on his own without the aid
of crutches and is still scheduled for more
operations; a xerox copy of his medical
certificate is hereto attached as Annex A
hereof;2
WHEREFORE, it is most respectfully prayed
that after notice and hearing a judgment be
rendered ordering the defendants jointly
and severally to pay Plaintiffs the following
sums of money:
1) ₱200,000.00 more or less, representing
actual medical expenses;
2) ₱18,940.00 representing the cost of
repair of the damaged motorcycle
3) ₱300,000.00 as moral damage(s)
4) ₱100,000.00 as exemplary damage(s)
5) ₱50,000.00 as nominal damage(s)
6) ₱15,000.00 as litigation expenses
7) ₱30,000.00 as attorney’s fees
8) to pay the cost of the suit.3
In its answer with compulsory counterclaim
and cross-claim,4 MMTC denied liability,
and averred that although it retained the
ownership of the bus, the actual operator
and employer of the bus driver was Mina’s
Transit; and that, in support of its cross-
claim against Mina’s Transit, a provision in
the agreement to sell mandated Mina ’s
Transport to hold it free from liability
arising from the use and operation of the
bus units.5
On its part, Mina’s Transit contended that
it was not liable because: (a) it exercised
due diligence in the selection and
supervision of its employees; (b) its bus
driver exercised due diligence; and (c)
Junnel’s negligence was the cause of the
accident.
Meanwhile, Mina’s Transit filed a third-
party complaint against its insurer, Perla
Compania de Seguros, Inc. (Perla), seeking
reimbursement should it be adjudged
liable, pursuant to its insurance policy
issued by Perla with the following
coverage: (a) third-party liability of
₱50,000.00 as the maximum amount; and
(b) third-party damage to property of
₱20,000.00 as the maximum amount.6
In its answer to the third-party complaint,
Perla denied liability as insurer because
Mina’s Transit had waived its recourse by
failing to notify Perla of the incident within
one year from its occurrence, as required
by Section 384 of the Insurance Code.7 It
submitted that even assuming that the
claim had not yet prescribed, its liability
should be limited to the maximum of
₱50,000.00 for third-party liability and
₱20,000.00 for third-party damage.8
After trial, the RTC rendered judgment in
favor of the respondents on September 17,
19999 ordering petitioner Metro Manila
Transit Corporation (MMTC) and its co-
defendant Mina’s Transit Corporation
(Mina’s Transit) to pay damages in favor of
respondents Reynaldo Cuevas and Junnel
Cuevas to wit:
WHEREFORE, premises considered,
defendants Metro Manila Transit
Corporation and Mina’s Transit Corporation
are hereby held solidarily liable for the
payment to the plaintiffs of the following:
a. ₱115,436.50 as actual damages;
b. ₱100,000.00 as moral damages
c. ₱50,000.00 as exemplary damages; and
d. ₱20,000.00 as attorney’s fees.
Costs are also adjudged against
defendants.
SO ORDERED.10
The RTC concluded that the proximate
cause of the mishap was the negligence of
the bus driver; that following Article 2180
of the Civil Code, his employers should be
solidarily liable; that MMTC and Mina’s
Transit, being the joint owners of the bus,
were liable; and that the third-party
complaint was dismissed because no
evidence was presented to prove it. The
RTC, however, did not rule on the propriety
of the cross-claim.
On appeal, the CA affirmed the RTC’s
decision.11
Issue
Hence, this appeal, in which MMTC posits
the sole issue of whether or not it was liable
for the injuries sustained by the
respondents despite the provision in the
agreement to se ll that shielded it from
liability.
Ruling of the Court
The appeal is partly meritorious.
MMTC urges the revisit of the register ed-
owner rule in order to gain absolution from
liability. It contends that although it
retained ownership of the bus at the time
of the vehicular accident, the actual
operation was transferred to Mina’s
Transit; that for it to be held liable for the
acts of the bus driver, the existence of an
employer-employee relationship between
them must be established; and that
because the bus driver was not its
employee, it was not liable for his negligent
act.
The contentions of MMTC cannot persuade.
In view of MMTC’s admission in its
pleadings that it had remained the
registered owner of the bus at the time of
the incident, it could not escape liability for
the personal injuries and property damage
suffered by the Cuevases. This is because
of the registered-owner rule, whereby the
registered owner of the motor vehicle
involved in a vehicular accident could be
held liable for the consequences. The
registered-owner rule has remained good
law in this jurisdiction considering its
impeccable and timeless rationale, as
enunciated in the 1957 ruling in Erezo, et
al. v. Jepte,12 where the Court pronounced:
Registration is required not to make said
registration the operative act by which
ownership in vehicles is transferred, as in
land registration cases, because the
administrative proceeding of registration
does not bear any essential relation to the
contract of sale between the parties
(Chinchilla vs. Rafael and Verdaguer, 39
Phil. 888), but to permit the use and
operation of the vehicle upon any public
highway (section 5 [a], Act No. 3992, as
amended.) 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
therefore 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.
"‘One of the principal purposes of motor
vehicles legislation is identification of the
vehicle and of the operator, in case of
accident; and another is that the
knowledge that means of detection are
always available may act as a deterrent
from lax observance of the law and of the
rules of conservative and safe operation.
Whatever purpose there may be in these
statutes, it is subordinate at the last to the
primary purpose of rendering it certain that
the violator of the law or of the rules of
safety shall not escape because of lack of
means to discover him.’ The purpose of the
statute is thwarted, and the displayed
number becomes a ‘snare and delusion,’ if
courts would entertain such defenses as
that put forward by appellee in this case.
No responsible person or corporation could
be held liable for the most outrageous acts
of negligence, if they should be allowed to
place a ‘middleman’ between them and the
public, and escape liability by the manner
in which they recompense their servants."
(King vs. Brenham Automobile Co., 145
S.W. 278, 279.)
The Court has reiterated the registered-
owner rule in other rulings, like in Filcar
Transport Services v. Espinas ,13 to wit:
It is well settled that in case of motor
vehicle mishaps, the registered owner of
the motor vehicle is considered as the
employer of the tortfeasor-driver , and is
made primarily liable for the tort
committed by the latter under Article 2176,
in relation with Article 2180, of the Civil
Code.
In Equitable Leasing Corporation v. Suyom,
we ruled that in so far as third persons are
concerned, the registered owner of the
motor vehicle is the employer of the
negligent driver, and the actual employer
is considered merely as an agent of such
owner .
In that case, a tractor registered in the
name of Equitable Leasing Corporation (
Equitable ) figured in an accident, killing
and seriously injuring several persons. As
part of its defense, Equitable claimed that
the tractor was initially leased to Mr. Edwin
Lim under a Lease Agreement, which
agreement has been overtaken by a Deed
of Sale entered into by Equitable and
Ecatine Corporation (Ecatine). Equitable
argued that it cannot be held liable for
damages because the tractor had already
been sold to Ecatine at the time of the
accident and the negligent driver was not
its employee but of Ecatine.
In upholding the liability of Equitable, as
registered owner of the tractor, this Court
said that "regardless of sales made of a
motor vehicle, the registered owner is the
lawful operator insofar as the public and
third persons are concerned; consequently,
it is directly and primarily responsible for
the consequences of its operation." The
Court further stated that " [i]n
contemplation of law, the owner/operator
of record is the employer of the driver, the
actual operator and employer being
considered as merely its agent. " Thus,
Equitable, as the registered owner of the
tractor, was considered under the law on
quasi delict to be the employer of the
driver, Raul Tutor; Ecatine, Tutor’s actual
employer, was deemed merely as an agent
of Equitable.
Thus, it is clear that for the purpose of
holding the registered owner of the motor
vehicle primarily and directly liable for
damages under Article 2176, in relation
with Article 2180, of the Civil Code, the
existence of an employer-employee
relationship, as it is understood in labor
relations law, is not required. It is sufficient
to establish that Filcar is the registered
owner of the motor vehicle causing damage
in order that it may be held vicariously
liable under Article 2180 of the Civil Code.
Indeed, MMTC could not evade liability by
passing the buck to Mina’s Transit. The
stipulation in the agreement to sell did not
bind third parties like the Cuevases, who
were expected to simply rely on the data
contained in the registration certificate of
the erring bus.
Although the registered-owner rule might
seem to be unjust towards MMTC, the law
did not leave it without any remedy or
recourse.1âwphi1 According to Filcar
Transport Services v. Espinas ,14 MMTC
could recover from Mina’s Transit, the
actual employer of the negligent driver,
under the principle of unjust enrichment,
by means of a cross-claim seeking
reimbursement of all the amounts that it
could be required to pay as damages
arising from the driver’s negligence. A
cross-claim is a claim by one party against
a co-party arising out of the transaction or
occurrence that is the subject matter either
of the original action or of a counterclaim
therein, and may include a claim that the
party against whom it is asserted is or may
be liable to the cross-claimant for all or part
of a claim asserted in the action against the
cross-claimant.15
MMTC set up its cross-claim against Mina's
Transit precisely to ensure that Mina's
Transit would reimburse whatever liability
would be adjudged against MMTC. Yet, it is
a cause of concern for the Court that the
RTC ignored to rule on the propriety of
MMTC's cross-claim. Such omission was
unwarranted, inasmuch as Mina's Transit
did not dispute the cross-claim, or did not
specifically deny the agreement to sell with
MMTC, the actionable document on which
the cross-claim was based. Even more
telling was the fact that Mina's Transit did
not present controverting evidence to
disprove the cross-claim as a matter of
course if it was warranted for it to do so.
Under the circumstances, the RTC should
have granted the cross-claim to prevent
the possibility of a multiplicity of suits, and
to spare not only the MMTC but also the
other parties in the case from further
expense and bother. Compounding the
RTC's uncharacteristic omission was the
CA's oversight in similarly ignoring the
cross-claim. The trial and the appellate
courts should not forget that a cross-claim
is like the complaint and the counterclaim
that the court must rule upon.
WHEREFORE, the Court AFFIRMS the
decision promulgated on June 28, 2004
subject to the MODIFICATION that the
cross-claim of Metro Manila Transit
Corporation against Mina's Transit
Corporation is GRANTED, and,
ACCORDINGLY, Mina's Transit Corporation
is
ORDERED to reimburse to Metro Manila
Transit Corporation whatever amounts the
latter shall pay to the respondents
pursuant to the judgment of the Regional
Trial Court in Civil Case No. N-6127.
No pronouncement on costs of suit.
SO ORDERED.
G.R. No. 174156 June 20, 2012
FILCAR TRANSPORT
SERVICES, Petitioner,
vs.
JOSE A. ESPINAS, Respondent.
DECISION
BRION, J.:
We resolve the present petition for review
on certiorari1 filed by petitioner Filcar
Transport Services (Filcar), challenging the
decision2 and the resolution3 of the Court of
Appeals (CA) in CA-G.R. SP No. 86603.
The facts of the case, gathered from the
records, are briefly summarized below.
On November 22, 1998, at around 6:30
p.m., respondent Jose A. Espinas was
driving his car along Leon Guinto Street in
Manila. Upon reaching the intersection of
Leon Guinto and President Quirino Streets,
Espinas stopped his car. When the signal
light turned green, he proceeded to cross
the intersection. He was already in the
middle of the intersection when another
car, traversing President Quirino Street and
going to Roxas Boulevard, suddenly hit and
bumped his car. As a result of the impact,
Espinas’ car turned clockwise. The other
car escaped from the scene of the incident,
but Espinas was able to get its plate
number.
After verifying with the Land
Transportation Office, Espinas learned that
the owner of the other car, with plate
number UCF-545, is Filcar.
Espinas sent several letters to Filcar and to
its President and General Manager Carmen
Flor, demanding payment for the damages
sustained by his car. On May 31, 2001,
Espinas filed a complaint for damages
against Filcar and Carmen Flor before the
Metropolitan Trial Court (MeTC) of Manila,
and the case was raffled to Branch 13. In
the complaint, Espinas demanded that
Filcar and Carmen Flor pay the amount of
₱97,910.00, representing actual damages
sustained by his car.
Filcar argued that while it is the registered
owner of the car that hit and bumped
Espinas’ car, the car was assigned to its
Corporate Secretary Atty. Candido Flor, the
husband of Carmen Flor. Filcar further
stated that when the incident happened,
the car was being driven by Atty. Flor’s
personal driver, Timoteo Floresca.
Atty. Flor, for his part, alleged that when
the incident occurred, he was attending a
birthday celebration at a nearby hotel, and
it was only later that night when he noticed
a small dent on and the cracked signal light
of the car. On seeing the dent and the
crack, Atty. Flor allegedly asked Floresca
what happened, and the driver replied that
it was a result of a "hit and run" while the
car was parked in front of Bogota on Pedro
Gil Avenue, Manila.
Filcar denied any liability to Espinas and
claimed that the incident was not due to its
fault or negligence since Floresca was not
its employee but that of Atty. Flor. Filcar
and Carmen Flor both said that they always
exercised the due diligence required of a
good father of a family in leasing or
assigning their vehicles to third parties.
The MeTC Decision
The MeTC, in its decision dated January 20,
2004,4 ruled in favor of Espinas, and
ordered Filcar and Carmen Flor, jointly and
severally, to pay Espinas ₱97,910.00 as
actual damages, representing the cost of
repair, with interest at 6% per annum from
the date the complaint was filed;
₱50,000.00 as moral damages;
₱20,000.00 as exemplary damages; and
₱20,000.00 as attorney’s fees. The MeTC
ruled that Filcar, as the registered owner of
the vehicle, is primarily responsible for
damages resulting from the vehicle’s
operation.
The RTC Decision
The Regional Trial Court (RTC) of Manila,
Branch 20, in the exercise of its appellate
jurisdiction, affirmed the MeTC
decision.5 The RTC ruled that Filcar failed to
prove that Floresca was not its employee
as no proof was adduced that Floresca was
personally hired by Atty. Flor. The RTC
agreed with the MeTC that the registered
owner of a vehicle is directly and primarily
liable for the damages sustained by third
persons as a consequence of the negligent
or careless operation of a vehicle registered
in its name. The RTC added that the victim
of recklessness on the public highways is
without means to discover or identify the
person actually causing the injury or
damage. Thus, the only recourse is to
determine the owner, through the vehicle’s
registration, and to hold him responsible
for the damages.
The CA Decision
On appeal, the CA partly granted the
petition in CA-G.R. SP No. 86603; it
modified the RTC decision by ruling that
Carmen Flor, President and General
Manager of Filcar, is not personally liable to
Espinas. The appellate court pointed out
that, subject to recognized exceptions, the
liability of a corporation is not the liability
of its corporate officers because a
corporate entity – subject to well-
recognized exceptions – has a separate and
distinct personality from its officers and
shareholders. Since the circumstances in
the case at bar do not fall under the
exceptions recognized by law, the CA
concluded that the liability for damages
cannot attach to Carmen Flor.
The CA, however, affirmed the liability of
Filcar to pay Espinas damages. According
to the CA, even assuming that there had
been no employer-employee relationship
between Filcar and the driver of the
vehicle, Floresca, the former can be held
liable under the registered owner rule.
The CA relied on the rule that the
registered owner of a vehicle is directly and
primarily responsible to the public and to
third persons while the vehicle is being
operated. Citing Erezo, et al. v. Jepte, 6 the
CA said that the rationale behind the rule is
to avoid circumstances where vehicles
running on public highways cause
accidents or injuries to pedestrians or other
vehicles without positive identification of
the owner or drivers, or with very scant
means of identification. In Erezo, the Court
said that the main aim of motor vehicle
registration is to identify the owner, so that
if a vehicle causes damage or injury to
pedestrians or other vehicles, responsibility
can be traced to a definite individual and
that individual is the registered owner of
the vehicle.7
The CA did not accept Filcar’s argument
that it cannot be held liable for damages
because the driver of the vehicle was not
its employee. In so ruling, the CA cited the
case of Villanueva v. Domingo8 where the
Court said that the question of whether the
driver was authorized by the actual owner
is irrelevant in determining the primary and
direct responsibility of the registered owner
of a vehicle for accidents, injuries and
deaths caused by the operation of his
vehicle.
Filcar filed a motion for reconsideration
which the CA denied in its Resolution dated
July 6, 2006.
Hence, the present petition.
The Issue
Simply stated, the issue for the
consideration of this Court is: whether
Filcar, as registered owner of the motor
vehicle which figured in an accident, may
be held liable for the damages caused to
Espinas.
Our Ruling
The petition is without merit.
Filcar, as registered owner, is deemed the
employer of the driver, Floresca, and is
thus vicariously liable under Article 2176 in
relation with Article 2180 of the Civil Code
It is undisputed that Filcar is the registered
owner of the motor vehicle which hit and
caused damage to Espinas’ car; and it is on
the basis of this fact that we hold Filcar
primarily and directly liable to Espinas for
damages.
As a general rule, one is only responsible
for his own act or omission.9 Thus, a person
will generally be held liable only for the
torts committed by himself and not by
another. This general rule is laid down in
Article 2176 of the Civil Code, which
provides to wit:
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.
Based on the above-cited article, the
obligation to indemnify another for damage
caused by one’s act or omission is imposed
upon the tortfeasor himself, i.e., the
person who committed the negligent act or
omission. The law, however, provides for
exceptions when it makes certain persons
liable for the act or omission of another.
One exception is an employer who is made
vicariously liable for the tort committed by
his employee. Article 2180 of the Civil Code
states:
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.
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.
Under Article 2176, in relation with Article
2180, of the Civil Code, an action
predicated on an employee’s act or
omission may be instituted against the
employer who is held liable for the
negligent act or omission committed by his
employee.
Although the employer is not the actual
tortfeasor, the law makes him vicariously
liable on the basis of the civil law principle
of pater familias for failure to exercise due
care and vigilance over the acts of one’s
subordinates to prevent damage to
another.10 In the last paragraph of Article
2180 of the Civil Code, the employer may
invoke the defense that he observed all the
diligence of a good father of a family to
prevent damage.
As its core defense, Filcar contends that
Article 2176, in relation with Article 2180,
of the Civil Code is inapplicable because it
presupposes the existence of an employer-
employee relationship. According to Filcar,
it cannot be held liable under the subject
provisions because the driver of its vehicle
at the time of the accident, Floresca, is not
its employee but that of its Corporate
Secretary, Atty. Flor.
We cannot agree. It is well settled that in
case of motor vehicle mishaps, the
registered owner of the motor vehicle is
considered as the employer of the
tortfeasor-driver, and is made primarily
liable for the tort committed by the latter
under Article 2176, in relation with Article
2180, of the Civil Code.
In Equitable Leasing Corporation v.
Suyom,11 we ruled that in so far as third
persons are concerned, the registered
owner of the motor vehicle is the employer
of the negligent driver, and the actual
employer is considered merely as an agent
of such owner.
In that case, a tractor registered in the
name of Equitable Leasing Corporation
(Equitable) figured in an accident, killing
and seriously injuring several persons. As
part of its defense, Equitable claimed that
the tractor was initially leased to Mr. Edwin
Lim under a Lease Agreement, which
agreement has been overtaken by a Deed
of Sale entered into by Equitable and
Ecatine Corporation (Ecatine). Equitable
argued that it cannot be held liable for
damages because the tractor had already
been sold to Ecatine at the time of the
accident and the negligent driver was not
its employee but of Ecatine.
In upholding the liability of Equitable, as
registered owner of the tractor, this Court
said that "regardless of sales made of a
motor vehicle, the registered owner is the
lawful operator insofar as the public and
third persons are concerned; consequently,
it is directly and primarily responsible for
the consequences of its operation."12 The
Court further stated that "[i]n
contemplation of law, the owner/operator
of record is the employer of the driver, the
actual operator and employer being
considered as merely its agent."13 Thus,
Equitable, as the registered owner of the
tractor, was considered under the law on
quasi delict to be the employer of the
driver, Raul Tutor; Ecatine, Tutor’s actual
employer, was deemed merely as an agent
of Equitable.
Thus, it is clear that for the purpose of
holding the registered owner of the motor
vehicle primarily and directly liable for
damages under Article 2176, in relation
with Article 2180, of the Civil Code, the
existence of an employer-employee
relationship, as it is understood in labor
relations law, is not required. It is sufficient
to establish that Filcar is the registered
owner of the motor vehicle causing damage
in order that it may be held vicariously
liable under Article 2180 of the Civil Code.
Rationale for holding the registered owner
vicariously liable
The rationale for the rule that a registered
owner is vicariously liable for damages
caused by the operation of his motor
vehicle is explained by the principle behind
motor vehicle registration, which has been
discussed by this Court in Erezo, and cited
by the CA in its decision:
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. [emphasis ours]
Thus, whether there is an employer-
employee relationship between the
registered owner and the driver is
irrelevant in determining the liability of the
registered owner who the law holds
primarily and directly responsible for any
accident, injury or death caused by the
operation of the vehicle in the streets and
highways.
As explained by this Court in Erezo, the
general public policy involved in motor
vehicle registration is the protection of
innocent third persons who may have no
means of identifying public road
malefactors and, therefore, would find it
difficult – if not impossible – to seek
redress for damages they may sustain in
accidents resulting in deaths, injuries and
other damages; by fixing the person held
primarily and directly liable for the
damages sustained by victims of road
mishaps, the law ensures that relief will
always be available to them.
To identify the person primarily and directly
responsible for the damages would also
prevent a situation where a registered
owner of a motor vehicle can easily escape
liability by passing on the blame to another
who may have no means to answer for the
damages caused, thereby defeating the
claims of victims of road accidents. We take
note that some motor vehicles running on
our roads are driven not by their registered
owners, but by employed drivers who, in
most instances, do not have the financial
means to pay for the damages caused in
case of accidents.
These same principles apply by analogy to
the case at bar. Filcar should not be
permitted to evade its liability for damages
by conveniently passing on the blame to
another party; in this case, its Corporate
Secretary, Atty. Flor and his alleged driver,
Floresca. Following our reasoning in
Equitable, the agreement between Filcar
and Atty. Flor to assign the motor vehicle
to the latter does not bind Espinas who was
not a party to and has no knowledge of the
agreement, and whose only recourse is to
the motor vehicle registration.
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.1awp++i1 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.
The public interest involved in this case
must not be underestimated. Road safety
is one of the most common problems that
must be addressed in this country. We are
not unaware of news of road accidents
involving reckless drivers victimizing our
citizens. Just recently, such pervasive
recklessness among most drivers took the
life of a professor of our state
university.14 What is most disturbing is that
our existing laws do not seem to deter
these road malefactors from committing
acts of recklessness.
We understand that the solution to the
problem does not stop with legislation. An
effective administration and enforcement
of the laws must be ensured to reinforce
discipline among drivers and to remind
owners of motor vehicles to exercise due
diligence and vigilance over the acts of
their drivers to prevent damage to others.
Thus, whether the driver of the motor
vehicle, Floresca, is an employee of Filcar
is irrelevant in arriving at the conclusion
that Filcar is primarily and directly liable for
the damages sustained by Espinas. 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. This interpretation is
consistent with the strong public policy of
maintaining road safety, thereby
reinforcing the aim of the State to promote
the responsible operation of motor vehicles
by its citizens.
This does not mean, however, that Filcar is
left without any recourse against the actual
employer of the driver and the driver
himself. Under the civil law principle of
unjust enrichment, the registered owner of
the motor vehicle has a right to be
indemnified by the actual employer of the
driver of the amount that he may be
required to pay as damages for the injury
caused to another.
The set-up may be inconvenient for the
registered owner of the motor vehicle, but
the inconvenience cannot outweigh the
more important public policy being
advanced by the law in this case which is
the protection of innocent persons who
may be victims of reckless drivers and
irresponsible motor vehicle owners.
WHEREFORE, the petition is DENIED. The
decision dated February 16, 2006 and the
resolution dated July 6, 2006 of the Court
of Appeals are AFFIRMED. Costs against
petitioner Filcar Transport Services.
SO ORDERED.
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 21801 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
Decision8 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 Trial Court granted her Motion.29
avoid an incoming vehicle, the van swerved
to its left and hit Reyes.14 Alex Espinosa After trial, the Regional Trial Court found
(Espinosa), a witness to the accident, went that Bautista was grossly negligent in
to her aid and loaded her in the back of the driving the vehicle.30 It awarded damages
van.15 Espinosa told the driver of the van, in favor of Abejar, as follows:
Jimmy Bautista (Bautista), to bring Reyes chanRoblesvirtualLawlibrary
to the hospital.16 Instead of doing so, WHEREFORE, considering that the
Bautista appeared to have left the van [respondent] was able to provide by
parked inside a nearby subdivision with preponderance of evidence her cause of
Reyes still in the van.17 Fortunately for action against the defendants, judgment is
Reyes, an unidentified civilian came to help hereby rendered ordering defendants
and drove Reyes to the hospital.18 JIMMY BAUTISTA and CARAVAN TRAVEL
and TOURS[,] INC., to jointly and solidarity
Upon investigation, it was found that the pay the plaintiff, the following, to wit:
registered owner of the van was chanRoblesvirtualLawlibrary
Caravan.19 Caravan is a corporation 1. The amount of P35,000.00 representing
engaged in the business of organizing actual damages;
travels and tours.20 Bautista was Caravan's
employee assigned to drive the van as its 2. The amount of P300,000.00 as moral
service driver.21 damages;
Caravan shouldered the hospitalization 3. The amount of P30,000.00 as exemplary
expenses of Reyes.22 Despite medical damages;
attendance, Reyes died two (2) days after
the accident.23 4. The amount of P50,000.00 as and by
way of attorney's fees; and
Respondent Ermilinda R. Abejar (Abejar),
Reyes' paternal aunt and the person who 5. The cost of suit.
raised her since she was nine (9) years SO
old,24 filed before the Regional Trial Court ORDERED.31ChanRoblesVirtualawlibrary
of Parañaque a Complaint25 for damages Caravan's Motion for Reconsideration32 was
against Bautista and Caravan. In her denied through the October 20, 2003
Complaint, Abejar alleged that Bautista Order33 of the Regional Trial Court.
was an employee of Caravan and that
Caravan is the registered owner of the van The Court of Appeals affirmed with
that hit Reyes.26 modification the Regional Trial Court's July
31, 2003 Decision and October 20, 2003
Summons could not be served on Order, as follows:
Bautista.27 Thus, Abejar moved to drop chanRoblesvirtualLawlibrary
Bautista as a defendant.28 The Regional
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
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 21801 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
Decision8 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 Trial Court granted her Motion.29
avoid an incoming vehicle, the van swerved
to its left and hit Reyes.14 Alex Espinosa After trial, the Regional Trial Court found
(Espinosa), a witness to the accident, went that Bautista was grossly negligent in
to her aid and loaded her in the back of the driving the vehicle.30 It awarded damages
van.15 Espinosa told the driver of the van, in favor of Abejar, as follows:
Jimmy Bautista (Bautista), to bring Reyes chanRoblesvirtualLawlibrary
to the hospital.16 Instead of doing so, WHEREFORE, considering that the
Bautista appeared to have left the van [respondent] was able to provide by
parked inside a nearby subdivision with preponderance of evidence her cause of
Reyes still in the van.17 Fortunately for action against the defendants, judgment is
Reyes, an unidentified civilian came to help hereby rendered ordering defendants
and drove Reyes to the hospital.18 JIMMY BAUTISTA and CARAVAN TRAVEL
and TOURS[,] INC., to jointly and solidarity
Upon investigation, it was found that the pay the plaintiff, the following, to wit:
registered owner of the van was chanRoblesvirtualLawlibrary
Caravan.19 Caravan is a corporation 1. The amount of P35,000.00 representing
engaged in the business of organizing actual damages;
travels and tours.20 Bautista was Caravan's
employee assigned to drive the van as its 2. The amount of P300,000.00 as moral
service driver.21 damages;
Caravan shouldered the hospitalization 3. The amount of P30,000.00 as exemplary
expenses of Reyes.22 Despite medical damages;
attendance, Reyes died two (2) days after
the accident.23 4. The amount of P50,000.00 as and by
way of attorney's fees; and
Respondent Ermilinda R. Abejar (Abejar),
Reyes' paternal aunt and the person who 5. The cost of suit.
raised her since she was nine (9) years SO
old,24 filed before the Regional Trial Court ORDERED.31ChanRoblesVirtualawlibrary
of Parañaque a Complaint25 for damages Caravan's Motion for Reconsideration32 was
against Bautista and Caravan. In her denied through the October 20, 2003
Complaint, Abejar alleged that Bautista Order33 of the Regional Trial Court.
was an employee of Caravan and that
Caravan is the registered owner of the van The Court of Appeals affirmed with
that hit Reyes.26 modification the Regional Trial Court's July
31, 2003 Decision and October 20, 2003
Summons could not be served on Order, as follows:
Bautista.27 Thus, Abejar moved to drop chanRoblesvirtualLawlibrary
Bautista as a defendant.28 The Regional
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.
I Article 216 of the Family Code identifies the
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:
chanRoblesvirtualLawlibrary
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.
persons who exercise substitute parental
authority:
chanRoblesvirtualLawlibrary
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:
chanRoblesvirtualLawlibrary
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 22061 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 217671 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:
chanRoblesvirtualLawlibrary
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:
chanRoblesvirtualLawlibrary
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:
chanRoblesvirtualLawlibrary
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:
chanRoblesvirtualLawlibrary
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:
chanRoblesvirtualLawlibrary
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 Registration105 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 requirements have been satisfied. Mere
....
disavowals are not proof that suffice to
On the second, petitioner was unable to overturn a presumption. To this end,
prove that Bautista was not acting within evidence must be adduced. However, Q : Do you recall what kind of
the scope of his assigned tasks at the time petitioner presented no positive evidence driver's license is this?
of the accident. When asked by the court to show that Bautista was acting in his
why Bautista was at the place of the private capacity at the time of the incident.
accident when it occurred, Sally Bellido, A : The Land Transportation
petitioner's accountant and On the third, petitioner likewise failed to Office.
supervisor, 109
testified that she did not prove that it exercised the requisite
"have the personal capacity to answer [the diligence in the selection and supervision of
Q : Is it a professional driver's
question]"110 and that she had no Bautista.
license or non-proffesional
knowledge to answer it:
[sic] driver's license?
chanRoblesvirtualLawlibrary In its selection of Bautista as a service
driver, petitioner contented itself with
COURT : Madam Witness, do you
Bautista's submission of a non- A : Non-professional.
know the reason why
professional driver's license. 112
Hence, in
your driver, Jimmy
Sally Balledo's cross-examination:
Bautista, at around
chanRoblesvirtualLawlibrary Q : You are not sure?
10:00 o' clock in the
morning of July 13, 2000 Q : . . . when he was promoted
was in the vicinity of as service driver, of course, COURT : Non professional,
Barangay Marcelo Green, there were certain professional?
United Parañaque requirements and among
Subdivision 4? other else, you made
mention about a driver's A : It's a non-
license. professional.113 (Emphasis
WITNESS : I don't have the personal supplied)
capacity to answer that,
Sir. A : Yes, Sir. Employing a person holding a non-
professional driver's license to operate
another's motor vehicle violates Section 24
Q : So you don't have any Q : Would you be able to show of the Land Transportation and Traffic
knowledge why he was to this Honorable Court Code, which provides:
there? whether indeed this person chanRoblesvirtualLawlibrary
did submit a driver's license SEC. 24. Use of driver's license and badge.
to your company? — ...
A : Yes, Sir.111 (Emphasis
supplied) . . . .
A : Yes, Sir.
Sally Bellido's testimony does not affect the
presumption that Article 2180's 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 In order that the defense of due diligence
driver. in the selection and supervision of
Evidently, petitioner did not only fail to employees may be deemed sufficient and
exercise due diligence when it selected plausible, it is not enough to emptily
Bautista as service driver; it also invoke the existence of said company
committed an actual violation of law. guidelines and policies on hiring and
supervision. As the negligence of the
To prove that it exercised the required employee gives rise to the presumption of
diligence in supervising Bautista, petitioner negligence on the part of the employer, the
presented copies of several memoranda latter has the burden of proving that it has
and company rules.114 These, however, are been diligent not only in the selection of
insufficient because petitioner failed to employees but also in the actual
prove actual compliance. Metro Manila supervision of their work. The mere
Transit Corporation v. Court of allegation of the existence of hiring
Appeals115 emphasized that to establish procedures and supervisory policies,
diligence in the supervision of employees, without anything more, is decidedly not
the issuance of company policies must be sufficient to overcome presumption.
coupled with proof of compliance:
chanRoblesvirtualLawlibrary We emphatically reiterate our holding, as a
Due diligence in the supervision of warning to all employers, that "(t)he mere
employees, on the other hand, includes the formulation of various company policies on
formulation of suitable rules and safety without showing that they were
regulations for the guidance of employees being complied with is not sufficient to
and the issuance of proper instructions exempt petitioner from liability arising from
intended for the protection of the negligence of its employees. It is
public and persons with whom the incumbent upon petitioner to show that in
employer has relations through his or its recruiting and employing the erring driver
employees and the imposition of necessary the recruitment procedures and company
disciplinary measures upon employees in policies on efficiency and safety were
case of breach or as may be warranted to followed." Paying lip-service to these
ensure the performance of acts injunctions or merely going through the
indispensable to the business of and motions of compliance therewith will
beneficial to their employer. To this, we warrant stern sanctions from the
add that actual implementation and Court. 116
(Emphasis supplied, citations
monitoring of consistent compliance with omitted)
said rules should be the constant concern For failing to overturn the presumption that
of the employer, acting through the requirements of Article 2180 have been
dependable supervisors who should satisfied, petitioner must be held liable.
regularly report on their supervisory III
functions.
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:
chanRoblesvirtualLawlibrary
[ATTY. Did you incur any expenses?
LIM] :
A: Meron po.
Q: How much did you spend for
the death of Jesmarian [sic]
Reyes?
 court unless they are patently unsupported
A: 'Yun pong P35,000.00 na Q: Did you see him sign this?
by evidence or unless the judgment is
pagpapalibing at saka...
grounded on a misapprehension of
A: Opo.128 (Emphasis supplied) facts.130 Considering that petitioner has not
Q: You said that you spent presented any evidence disputing the
Respondent had personal knowledge of the findings of the lower courts regarding
P35,000.00. Do you have any
facts sought to be proved by the Bautista's negligence, these findings
evidence or proof that you
Certificate, i.e. that she spent P35,000.00 cannot be disturbed in this appeal. The
spent that amount?
for the funeral expenses of Reyes. Thus, evidentiary bases for the award of civil
the Certificate that she identified and indemnity and exemplary damages stand.
A: Meron po. testified to is not hearsay. It was not an As such, petitioner must pay the exemplary
error to admit this Certificate as evidence damages arising from the negligence of its
and basis for awarding P35,000.00 as driver.131 For the same reasons, the award
Q: Showing to you this sort of actual damages to respondent. of P50,000.00 by way of civil indemnity is
certification. What relation
justified.132
has this... The Court of Appeals likewise did not err in
awarding civil indemnity and exemplary The award of moral damages is likewise
damages. proper.
A: 'Yan po' yung contractor
nagumawa.
Article 2206 of the Civil Code provides: Article 2206(3) of the Civil Code provides:
chanRoblesvirtualLawlibrary chanRoblesvirtualLawlibrary
Q: Contractor of what? ARTICLE 2206. The amount of damages for ARTICLE 2206. The amount of damages
death caused by a crime or quasi- for death caused by a crime or quasi-
delict shall be at least three thousand delict shall be at least three thousand
A: 'Yan po' yung mismong pesos, even though there may have been pesos, even though there may have been
binilhan ko ng lupa at nitso. mitigating circumstances[.] mitigating circumstances. In addition:
Further, Article 2231 of the Civil Code
provides: . . . .
.... chanRoblesvirtualLawlibrary
ARTICLE 2231. In quasi-delicts, exemplary
damages may be granted if the defendant (3) The spouse, legitimate and
ATTY. There is a signature at the top
acted with gross negligence. illegitimate descendants and
LIM : of the printed name Julian
Both the Court of Appeals and the Regional ascendants of the deceased may
Penalosa [sic]. Whose
Trial Court found Bautista grossly negligent demand moral damages for mental
signature is this?
in driving the van and concluded that anguish by reason of the death of
Bautista's gross negligence was the the deceased. (Emphasis supplied)
A: 'Yan po' yung mismong proximate cause of Reyes' death.
For deaths caused by quasi-delict, the
contractor. Negligence and causation are factual
recovery of moral damages is limited to the
issues.129 Findings of fact, when
spouse, legitimate and illegitimate
established by the trial court and affirmed
.... descendants, and ascendants of the
by the Court of Appeals, are binding on this
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 is rightly entitled to attorney's fees. 144
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
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.cralawlawlibrary