QUASI-CONTRACTS (TORTS) & DAMAGES

By:

Atty. Ed Reyes III

TITLE XVII
EXTRA-CONTRACTUAL OBLIGATIONS

CHAPTER 1
Quasi-contracts

Article 2142. Certain lawful, voluntary and unilateral acts give rise to the
juridical relation of quasi-contract to the end that no one shall be unjustly
enriched or benefited at the expense of another. (n)

Article 2143. The provisions for quasi-contracts in this Chapter do not

exclude other quasi-contracts which may come within the purview of the
preceding article. (n)

SECTION 1
Negotiorum Gestio

Article 2144. Whoever voluntarily takes charge of the agency or management

of the business or property of another, without any power from the latter, is
obliged to continue the same until the termination of the affair and its
incidents, or to require the person concerned to substitute him, if the owner is
in a position to do so. This juridical relation does not arise in either of these
instances:

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 (1) When the property or business is not neglected or abandoned;

(2) If in fact the manager has been tacitly authorized by the owner.

In the first case, the provisions of articles 1317, 1403, No. 1, and 1404
regarding unauthorized contracts shall govern.

In the second case, the rules on agency in Title X of this Book shall be
applicable. (1888a)

Requisites:

1. A person voluntarily takes charge of the agency or management of the

business or property of another;
2. Without power or authority from the owner either expressly or tacitly;
3. The property or business must be neglected or abandoned;

For entitlement to reimbursement

By Officious Manager:

1. He must have acted in good faith;

2. Owner derives benefits from unauthorized management even if it is only for
mere preservation of the thing in which case reimbursement ought to be
made for necessary and useful expenses

Article 2145. The officious manager shall perform his duties with all the
diligence of a good father of a family, and pay the damages which through his
fault or negligence may be suffered by the owner of the property or business
under management.

The courts may, however, increase or moderate the indemnity according to

the circumstances of each case. (1889a)

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Article 2146. If the officious manager delegates to another person all or some
of his duties, he shall be liable for the acts of the delegate, without prejudice to
the direct obligation of the latter toward the owner of the business.

The responsibility of two or more officious managers shall be solidary, unless

the management was assumed to save the thing or business from imminent
danger. (1890a)

Article 2147. The officious manager shall be liable for any fortuitous event:

(1) If he undertakes risky operations which the owner was not

accustomed to embark upon;

(2) If he has preferred his own interest to that of the owner;

(3) If he fails to return the property or business after demand by the

owner;

(4) If he assumed the management in bad faith. (1891a)

Article 2148. Except when the management was assumed to save property or

business from imminent danger, the officious manager shall be liable for
fortuitous events:

(1) If he is manifestly unfit to carry on the management;

(2) If by his intervention he prevented a more competent person from

taking up the management. (n)

Article 2149. The ratification of the management by the owner of the business

produces the effects of an express agency, even if the business may not have
been successful. (1892a)

Article 2150. Although the officious management may not have been expressly
ratified, the owner of the property or business who enjoys the advantages of
the same shall be liable for obligations incurred in his interest, and shall
reimburse the officious manager for the necessary and useful expenses and for
the damages which the latter may have suffered in the performance of his
duties.

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The same obligation shall be incumbent upon him when the management had
for its purpose the prevention of an imminent and manifest loss, although no
benefit may have been derived. (1893)

Article 2151. Even though the owner did not derive any benefit and there has
been no imminent and manifest danger to the property or business, the owner
is liable as under the first paragraph of the preceding article, provided:

(1) The officious manager has acted in good faith, and

(2) The property or business is intact, ready to be returned to the owner.

(n)

Article 2152. The officious manager is personally liable for contracts which he

has entered into with third persons, even though he acted in the name of the
owner, and there shall be no right of action between the owner and third
persons. These provisions shall not apply:

(1) If the owner has expressly or tacitly ratified the management, or

(2) When the contract refers to things pertaining to the owner of the
business. (n)

COMMENT: No privity of contract between owner and third person.

Article 2153. The management is extinguished:

(1) When the owner repudiates it or puts an end thereto;

(2) When the officious manager withdraws from the management,

subject to the provisions of article 2144;

(3) By the death, civil interdiction, insanity or insolvency of the owner

or the officious manager. (n)

SECTION 2
Solutio Indebiti
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Article 2154. If something is received when there is no right to demand it, and
it was unduly delivered through mistake, the obligation to return it arises.
(1895)

Article 2155. Payment by reason of a mistake in the construction or

application of a doubtful or difficult question of law may come within the
scope of the preceding article. (n)

Article 2156. If the payer was in doubt whether the debt was due, he may
recover if he proves that it was not due. (n)

Article 2157. The responsibility of two or more payees, when there has been
payment of what is not due, is solidary. (n)

Article 2158. When the property delivered or money paid belongs to a third

person, the payee shall comply with the provisions of article 1984. (n)

Article 2159. Whoever in bad faith accepts an undue payment, shall pay legal
interest if a sum of money is involved, or shall be liable for fruits received or
which should have been received if the thing produces fruits.

He shall furthermore be answerable for any loss or impairment of the thing

from any cause, and for damages to the person who delivered the thing, until
it is recovered. (1896a)

Article 2160. He who in good faith accepts an undue payment of a thing

certain and determinate shall only be responsible for the impairment or loss
of the same or its accessories and accessions insofar as he has thereby been
benefited. If he has alienated it, he shall return the price or assign the action
to collect the sum. (1897)

Article 2161. As regards the reimbursement for improvements and expenses

incurred by him who unduly received the thing, the provisions of Title V of
Book II shall govern. (1898)

Article 2162. He shall be exempt from the obligation to restore who, believing
in good faith that the payment was being made of a legitimate and subsisting
claim, destroyed the document, or allowed the action to prescribe, or gave up
the pledges, or cancelled the guaranties for his right. He who paid unduly may
proceed only against the true debtor or the guarantors with regard to whom
the action is still effective. (1899)

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Article 2163. It is presumed that there was a mistake in the payment if
something which had never been due or had already been paid was delivered;
but he from whom the return is claimed may prove that the delivery was
made out of liberality or for any other just cause. (1901)

SECTION 3
Other Quasi-Contracts *

Article 2164. When, without the knowledge of the person obliged to give

support, it is given by a stranger, the latter shall have a right to claim the
same from the former, unless it appears that he gave it out of piety and
without intention of being repaid. (1894a)

Article 2165. When funeral expenses are borne by a third person, without the
knowledge of those relatives who were obliged to give support to the deceased,
said relatives shall reimburse the third person, should the latter claim
reimbursement. (1894a)

Article 2166. When the person obliged to support an orphan, or an insane or

other indigent person unjustly refuses to give support to the latter, any third
person may furnish support to the needy individual, with right of
reimbursement from the person obliged to give support. The provisions of this
article apply when the father or mother of a child under eighteen years of age
unjustly refuses to support him.

Article 2167. When through an accident or other cause a person is injured or

becomes seriously ill, and he is treated or helped while he is not in a condition
to give consent to a contract, he shall be liable to pay for the services of the
physician or other person aiding him, unless the service has been rendered out
of pure generosity.

Article 2168. When during a fire, flood, storm, or other calamity, property is

saved from destruction by another person without the knowledge of the
owner, the latter is bound to pay the former just compensation.

Article 2169. When the government, upon the failure of any person to comply
with health or safety regulations concerning property, undertakes to do the
necessary work, even over his objection, he shall be liable to pay the expenses.

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Article 2170. When by accident or other fortuitous event, movables separately
pertaining to two or more persons are commingled or confused, the rules on
co-ownership shall be applicable.

Article 2171. The rights and obligations of the finder of lost personal property
shall be governed by articles 719 and 720.

Article 2172. The right of every possessor in good faith to reimbursement for

necessary and useful expenses is governed by article 546.

Article 2173. When a third person, without the knowledge of the debtor, pays
the debt, the rights of the former are governed by articles 1236 and 1237.

Article 2174. When in a small community a majority of the inhabitants of age

decide upon a measure for protection against lawlessness, fire, flood, storm or
other calamity, any one who objects to the plan and refuses to contribute to
the expenses but is benefited by the project as executed shall be liable to pay
his share of said expenses.

Article 2175. Any person who is constrained to pay the taxes of another shall
be entitled to reimbursement from the latter.

COMMENTS:

These provisions on Quasi-Contracts under Articles 2142 to 2175 should be read in

tandem with Article 22 likewise of the Civil Code which also deals with ‘Solutio
Indebiti’. However, there could be a hairline distinction which we need to be able
to point out, thus, Article 22 provides, viz:

Article 22. Every person who through an act of performance by another, or

any other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the same to
him.

-Note- Compare with Art. 2154; Check source of rights pursuant to Article 1157 of
the law on Obligations and Contracts. The vinculum juris or sources that give rise
to obligations could be: (1) law; (2) contracts; (3) quasi-contracts; delicts or
crimes; and, (5) quasi-delicts or torts. The subject of this chapter is on nos. 3 and

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5 which serve as vinculum juris on which obligations are predicated on. Article
2154 in turn reads:

“Art. 2154. If something is received when there is no right to demand it, and it
was unduly delivered through mistake, the obligation to return it arises.”

Hence, if we juxtapose Article 22 and Article 2154, both of which in the loose
sense refer to the general doctrine known as “solutio indebiti”, it is submitted that
Article 22 on one hand and Article 2154 on the other when pitted with one another,
the key to bringing to light the distinction between the two is by locating their
respective places in the different chapters of the Civil Code. And by doing so,
given that Article 2154 is found under the chapter on “Quasi-contracts” then it is
the quintessential quasi-contract; while Article 22 is found under the chapter on
Personal Relations starting with Article 19 up to 37, hence according to the report
of the commission which drafted the Civil Code, the violations of which give rise
to ‘special torts’.

Thus: Special Torts, Articles 19 to 34, NCC. –

Note- Human relations refers to rules needed to govern the inter-relationships of

human beings in a society for the purpose of maintaining social order. As people
have diverse and different interests and desires, it is but natural that clashes of
interest arise in their interactions. To balance opposing or crisscrossing interests,
there is a need for regulation and control to secure a “rightful relationship between
human beings and for the stability of the social order” (Report, Commission, p.
39).

Then technically, the vinculum juris for Article 22 is tort and not quasi-contract.
And there lies the difference.

No Entitlement to Reimbursement
under Article 22, for Violation of
Prohibition on Aliens from Owning
Lands; Such Prohibition However,
Does not Apply to Improvements;
Conjugal Partnership Dissolution

“The issue to be resolved is not of first impression. In In Re: Petition For

Separation of Property-Elena Buenaventura Muller v. Helmut Muller the Court
had already denied a claim for reimbursement of the value of purchased parcels of
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Philippine land instituted by a foreigner Helmut Muller, against his former Filipina
spouse, Elena Buenaventura Muller. It held that Helmut Muller cannot seek
reimbursement on the ground of equity where it is clear that he willingly and
knowingly bought the property despite the prohibition against foreign ownership of
Philippine land enshrined under Section 7, Article XII of the 1987 Philippine
Constitution which reads:

Section 7. Save in cases of hereditary succession, no private lands shall be

transferred or conveyed except to individuals, corporations, or associations
qualified to acquire or hold lands of the public domain.

Undeniably, petitioner openly admitted that he “is well aware of the [above-cited]
constitutional prohibition” and even asseverated that, because of such prohibition,
he and respondent registered the subject properties in the latter’s name. Clearly,
petitioner’s actuations showed his palpable intent to skirt the constitutional
prohibition. On the basis of such admission, the Court finds no reason why it
should not apply the Muller ruling and accordingly, deny petitioner’s claim for
reimbursement.

As also explained in Muller, the time-honored principle is that he who seeks equity
must do equity, and he who comes into equity must come with clean hands.
Conversely stated, he who has done inequity shall not be accorded equity. Thus, a
litigant may be denied relief by a court of equity on the ground that his conduct has
been inequitable, unfair and dishonest, or fraudulent, or deceitful.

In this case, petitioner’s statements regarding the real source of the funds used to
purchase the subject parcels of land dilute the veracity of his claims: While
admitting to have previously executed a joint affidavit that respondent’s personal
funds were used to purchase Lot 128 he likewise claimed that his personal
disability funds were used to acquire the same.

Evidently, these inconsistencies show his untruthfulness. Thus, as petitioner has

come before the Court with unclean hands, he is now precluded from seeking any
equitable refuge.

In any event, the Court cannot, even on the grounds of equity, grant reimbursement
to petitioner given that he acquired no right whatsoever over the subject properties
by virtue of its unconstitutional purchase. It is well-established that equity as a rule
will follow the law and will not permit that to be done indirectly which, because of
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public policy, cannot be done directly. Surely, a contract that violates the
Constitution and the law is null and void, vests no rights, creates no obligations
and produces no legal effect at all. Corollary thereto, under Article 1412 of the
Civil Code, petitioner cannot have the subject properties deeded to him or allow
him to recover the money he had spent for the purchase thereof. The law will not
aid either party to an illegal contract or agreement; it leaves the parties where it
finds them. Indeed, one cannot salvage any rights from an unconstitutional
transaction knowingly entered into.

Art. 1412. If the act in which the unlawful or forbidden cause consists does not
constitute a criminal offense, the following rules shall be observed:

When the fault is on the part of both contracting parties, neither may recover what
he has given by virtue of the contract, or demand the performance of the other's
undertaking x x x x

Neither can the Court grant petitioner’s claim for reimbursement on the basis of
unjust enrichment. As held in Frenzel v. Catito, a case also involving a foreigner
seeking monetary reimbursement for money spent on purchase of Philippine land,
the provision on unjust enrichment does not apply if the action is proscribed by the
Constitution, to wit: x x x

Futile, too, is petitioner's reliance on Article 22 of the New Civil Code which
reads:

Art. 22. Every person who through an act of performance by another, or any other
means, acquires or comes into possession of something at the expense of the latter
without just or legal ground, shall return the same to him.

The provision is expressed in the maxim: "MEMO CUM ALTERIUS DETER

DETREMENTO PROTEST" (No person should unjustly enrich himself at the
expense of another). An action for recovery of what has been paid without just
cause has been designated as an accion in rem verso. This provision does not apply
if, as in this case, the action is proscribed by the Constitution or by the application
of the pari delicto doctrine. It may be unfair and unjust to bar the petitioner from
filing an accion in rem verso over the subject properties, or from recovering the
money he paid for the said properties, but, as Lord Mansfield stated in the early
case of Holman v. Johnson: "The objection that a contract is immoral or
illegal as between the plaintiff and the defendant, sounds at all times very ill in
the mouth of the defendant. It is not for his sake, however, that the objection
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is ever allowed; but it is founded in general principles of policy, which the
defendant has the advantage of, contrary to the real justice, as between him
and the plaintiff." (Citations omitted)

Nor would the denial of his claim amount to an injustice based on his foreign
citizenship. Precisely, it is the Constitution itself which demarcates the rights of
citizens and non-citizens in owning Philippine land. To be sure, the constitutional
ban against foreigners applies only to ownership of Philippine land and not to
the improvements built thereon, such as the two (2) houses standing on Lots 1
and 2142 which were properly declared to be co-owned by the parties subject
to partition. Needless to state, the purpose of the prohibition is to conserve the
national patrimony and it is this policy which the Court is duty-bound to protect.

WHEREFORE, the petition is DENIED. Accordingly, the assailed October 8, 2009

Decision and January 24, 2011 Resolution of the Court of Appeals in CA-G.R. CV
No. 01940 are AFFIRMED.Willem Beumer v. Avelina Amores, G.R. No. 195670,
December 03, 2012

Unjust Enrichment

Thus, to allow respondents to recover their monetary claims from petitioner would
necessarily result in their unjust enrichment.

There is unjust enrichment 'when a person unjustly retains a benefit to the loss of
another, or when a person retains money or property of another against the
fundamental principles of justice, equity and good conscience.' The principle of
unjust enrichment require: two conditions: (1) that a person is benefited without a
valid basis or justification, and (2) that such benefit is derived at the expense of
another. The main objective of the principle against unjust enrichment is to
prevent one from enriching himself at the expense of another without just cause or
consideration. x x x

Substantive Rights Over Technicality

"In rendering justice, courts have always been, as they ought to be, conscientiously
guided by the norm that on the balance, technicalities take a backseat against
substantive rights, and not the other way around." In short, substantive law
outweighs procedural technicalities as in this case. Indeed, where as here, there is a
strong showing that grave miscarriage of justice would result from the strict
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application of the [r]ules, we will not hesitate to relax the same in the interest of
substantial justice. It bears stressing that the rules of procedure are merely tools
designed to facilitate the attainment of justice.

They were conceived and promulgated to effectively aid the court in the
dispensation of justice. Courts are not slaves to or robots of technical rules, shorn
Of judicial discretion. In rendering justice, courts have always been as they ought
to be, conscientiously guided by the norm that on the balance, technicalities take a
backseat against substantive rights, and not the other way around. Thus, if the
application of the Rules would tend to frustrate rather than promote justice. it is
always within our power to suspend the rules or except a particular case from its
operation.-Rolando de Roca v. Eduardo C. Dabuyan et al,G.R. No. March 05,
2018

Unjust Enrichment; No Unjust

Enrichment When a Person who
will benefit has a Valid Claim to
such benefit

Every person who, through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without
just or legal ground, shall return the same to him. Unjust enrichment refers to the
result or effect of failure to make remuneration of, or for property or benefits
received under circumstances that give rise to legal or equitable obligation to
account for them. To be entitled to remuneration, one must confer benefit by
mistake, fraud, coercion, or request. Unjust enrichment is not itself a theory of
reconveyance. Rather, it is a prerequisite for the enforcement of the doctrine of
restitution. Thus, there is unjust enrichment when a person unjustly retains a
benefit to the loss of another, or when a person retains money or property of
another against the fundamental principles of justice, equity and good conscience.
The principle of unjust enrichment requires two conditions: (1) that a person is
benefited without a valid basis or justification; and (2) that such benefit is
derived at the expense of another. Conversely, there is no unjust enrichment
when the person who will benefit has a valid claim to such benefit.

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~ James Arthur T. Dubongco, Provincial Agrarian Reform Program Officer II
of Department of Agrarian Reform Provincial Office-Cavite in representation of
DARPO-Cavite and all its officials and employees Vs. Commission on Audit,
G.R. No. 237813. March 5, 2019

But—
Social Justice Principle Outweighs
Unjust Enrichment Principle

In Garcia v. Philippine Airlines, Inc. (Garcia), this Court made a pronouncement

on the matter of execution pending appeal in illegal dismissal cases, particularly on
the aspect of reinstatement pending appeal:

In other words, a dismissed employee whose case was

favorably decided by the Labor Arbiter is entitled to receive wages
pending appeal upon reinstatement, which is immediately executory.
Unless there is a restraining order, it is ministerial upon the Labor
Arbiter to implement the order of reinstatement and it is mandatory on
the employer to comply therewith.

In College of the Immaculate Conception v. NLRC, this Court held that the
subsequent reversal of the LA's findings does not mean that the employee should
reimburse petitioner all the salaries and allowances he received pending appeal.
This Court explained:

Therefore, petitioner could not validly insist that it is entitled to

reimbursement for the payment of the salaries of respondent pursuant
to the . execution of the LA' s decision by simply arguing that the
LA's order for reinstatement is incorrect. The pertinent law on the
matter is not concerned with the wisdom or propriety of the LA' s
order of reinstatement, for if it was, then it should have provided that
the pendency of an appeal should stay its execution. After all, a
decision cannot be deemed irrefragable unless it attains finality.

In the instant case, respondent received the garnished amount by reason of the
favorable judgment issued by the LA and the NLRC, which was valid at the time it
was executed. As observed by the CA, the amount was released to respondent on
June 28, 2006, six ( 6) years after she was terminated from her job. The loss of
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livelihood and earnings during this span of time would necessarily mean that
respondent would have used up the monetary award that was released to her by this
time. As such, it would be too impractical to require respondent to refund to
petitioner the garnished amount which respondent received in good faith. In
Garcia, this Court expounded on the impracticality of requiring the employee to
refund to the employer the monetary award, to wit:

Even outside the theoretical trappings of the discussion and into

the mundane realities of human experience, the "refund doctrine"
easily demonstrates how a favorable decision by the Labor Arbiter
could harm, more than help, a dismissed employee. The employee, to
make both ends meet, would necessarily have to use up the salaries
received during the pendency of the appeal, only to end up having to
refund the sum in case of a final unfavorable decision. It is mirage of
a stop-gap leading the employee to a risky cliff of insolvency.

Indeed, it is well-settled that the social justice principles of labor law outweigh or
render inapplicable the civil law doctrine of unjust enrichment. The constitutional
and statutory precepts portray the otherwise "unjust" situation as a condition
affording full protection to labor.

Considering the foregoing and taking into consideration that thirteen (13) years had
already passed when respondent received the garnished amount, it is now highly
improbable to require respondent to return the amount received by her in good
faith. To do so, would run counter to the social justice principle that those who
have less in life should have more in law. ~Loyola Plans Consolidated, Inc. Vs.
Mary Hope Q. Ayson, G.R. No. 215919. October 16, 2019

Elements of Solutio Indebiti and requisites for its procedural counterpart called
“accion in rem verso”.

Solutio Indebiti
 The case where one had paid a debt, or done an act or remitted a claim
because he thought that he was bound in law to do so, when he was not. In
such cases of mistake there is an implied obligation

Accion in Rem Verso

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  In order that accion in rem verso may prosper, the essential elements must
be present:
(1) that the defendant has been enriched,
(2) that the plaintiff has suffered a loss,
(3) that the enrichment of the defendant is without just or legal ground, and
(4) that the plaintiff has no other action based on contract, quiasi-contract,
crime or quasi-delict.

 An accion in rem verso is considered merely an auxiliary action, available

only when there is no other remedy on contract, quasi-contract, crime, and
quasi-delict. If there is an obtainable action under any other institution of
positive law, that action must be resorted to, and the principle of accion in
rem verso will not lie.

Innominate Quasi Contract

 “An obligation which law creates in the absence of agreement; it is invoked

by courts where there is unjust enrichment. Function of “quasi contract” is to
raise obligation in law where in fact the parties made no promise, and it is
not based on apparent intention of the parties”. (See p. 650, Blacks Law
Dictionary, Abridged Fifth Edition).

MORE CASES ON ‘Unjust Enrichment’

AMERICAN POWER CONVERSION CORPORATION;

AMERICAN POWER CONVERSION SINGAPORE PTE. LTD.; AMERICAN POWER
CONVERSION (A.P.C.), B.V.; AMERICAN POWER CONVERSION (PHILS.) B.V.; DAVID
W. PLUMER, JR.; GEORGE KONG; and ALICIA HENDY, Petitioners,
-versus
JASON YU LIM, Respondent

G.R. No. 214291

January 11, 2018

Facts of the case

On July 1, 1998, respondent Jason Yu Lim was hired to serve as Country Manager of
American Power Conversion Philippine Sales Office, which was not registered with the
Securities and Exchange Commission (SEC) but whose function then was to act as a liaison
office for American Power Conversion Corporation (APCC )- an American Corporation—and

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provide sales, marketing, and service support to the engaged and designing, developing,
manufacturing, and marketing of power protection and management solutions for computer,
communication, and electronic application.

The only SEC- registered corporation then was American Power Conversion (Phils.),
Inc., (A.PCPI) with manufacturing and production facilities in Cavite and Laguna. Since
American Power Conversion Philippine Sales Office was unregistered but doing business in the
country, respondent was included in the list of employees and payroll of A.PCPI. He was also
instructed to create a petty cash fund using his own personal bank account to answer for the day-
to-day operations of American Power Conversion Philippine Sales Office.

In November 2004, respondent was promoted as Regional Manager for APC Nmth
ASEAN, a division of APC ASEAN. As Regional Manager for APC North A.SEAN, he handled
sales and marketing operations for Thailand, the Philippines, Vietnam, Myanmar, Cambodia,
Laos, and Guam and reported directly to Larry Truong (Truong), Country General Manager for
the entire A.PC ASEAN ad officer of APCC.

On December 8, 2005, respondent’s counsel proceeded to the Department of Labor and

Employment (DOLE) to verify if petitioners gave the requisite notice of termination due to
redundancy. In a Certification, the DOLE through National Capital Region Assistant Regional
Director Ma. Celeste M. Valderama confirmed that there was no record on file – from September
1, 2005 up to November 30, 2005 – of a notice of termination filed by any of the petitioners.

Respondent was paid severance pay but in a written demand, he sought reinstatement, the
payment of backwages and allowances/benefits, and damages for his claimed malicious and
illegal termination. In a written reply by APCC’s counsel, petitioners refused to accede.

Ruling of the Labor Arbiter

 On July 27, 2007, the Labor Arbiter rendered her Decision in favor of respondent, stating
thus;
From the conflicting statement of facts and evidence adduced by [the] parties in
support of their respective assertions, the issues for resolution by this Office are whether or not
he is entitled to his monetary claims.
At the outset, it must be stressed that in cases of termination of an employee, it is
the employer who has the burden of proving that the termination x x x is for a valid or
authorized cause x x x.
Further, a rule deeply entrenched in our jurisdiction is that in order to constitute a
valid dismissal, two requisites must concur: (a) the dismissal must be for any of the causes
enumerated in Art. 282 of the Labor Code, and (b) the employee must be accorded due process,
basic of which is the opportunity to be heard and to defend himself x x x
As also provided under Art. 283 of the Labor Code, as amended, redundancy,
among other grounds, is an authorized cause for termination of an employment. x x x the
Supreme Court held that redundancy exists when the service capability of the work force in
excess of what reasonably needed to meet the demands of the enterprise. A redundant position is
one rendered superfluous by any number of factors, such as over hiring of workers , decreased

16
volume of business, dropping of a particular product line previously manufactured by the
company, or phasing out of a service activity previously undertaken by the business. x x x

 The Supreme Court held that redundancy may be proven by a ‘new staffing pattern,
feasibility studies/proposal on the viability of newly created positions, job
description and approval by the management of the restructuring,’ In the instant
case, we find respondents did not present any of the foregoing evidence to establish the
supposed restructuring and/or redundancy. There was also no evidence showing the
approval of the said restructuring and/or redundancy by the directors and officers
of respondent APC BV.
What was submitted on record were the affidavits and memoranda of the
managers of respondent company on the alleged plans for restructuring which the
Supreme Court held not sufficient to substantially prove the existence of restructuring or
redundancy.

 In the absence of a clear showing of redundancy, we are inclined to give credence to the
assertion that respondents thru the initiative of respondent Kong was motivated to dismiss
complainant from the company because of the latter’s report on the former’s violations of
the APCC’s Code of Ethics. Evidently, the termination of complainant was not due to
redundancy but a retaliatory action in the guise of redundancy for purposes of dismissing
the complainant from the service. The said action is clearly an exercise of management
prerogative in bad faith. It may be true that investigation was conducted on the reported
breach of the Code of Ethics by respondent Kong, the lack of transparency on the results
thereof, however, prevents us from giving credence to said assertion.

 Thus, on the basis of the foregoing findings and pursuant to Article 279 of the Labor
Code, we find complainant entitled to reinstatement without loss of seniority rights, and
other privileges as well as to full backwages, inclusive of allowances, and to other benfits
or their monetary equivalent computed from the time of his compensation was withheld
from up to the time of his actual reinstatement less the amount already paid to him
representing separation pay and other benefits due to redundancy. Further finding the
claim of redundancy to have been merely a guise to terminate complainant, abuse of
management prerogative is established against respondent APCC which entitles
complainant to moral damages in the amount of P2,000,000.00.

Ruling of the NLRC

 NLRC ruled in favor of the petitioner.
The Labor Arbiter failed to take into consideration that the restructuring
implemented by APC was organizational, meaning it affected not only APC
(Philippines) B.V. but also APC ASEAN and APC Asia Pacific. The Labor
Arbiter failed to take into consideration the APC ASEAN organizational chart
presented by respondents, which showed that APC’s ASEAN organization was
divided into Enterprise Sales and Transactional Sales (from the former grouping
based on territorial boundaries), consistent with the organizational changes in the
APC Asia Pacific sales organization (Respondents/Appellant’s Position Paper,
Annex “7”).

17
  We rule that the circumstances cited by the Labor Arbiter in the appealed Decision do
not, under pertinent law and jurisprudence, negate the validity of the company’s
redundancy program. In dismissals due to redundancy, the Labor Code merely requires
written notice to the affected employee and to the DOLE, and payment of separation pay
thus: xx xx There is no law or jurisprudence that requires a showing of the ‘approval of
the restructuring or redundancy by the directors and officers’ of a company x x x. There
is likewise no law requiring that prior consultation be made with an enterprise’s
employees before any reorganization may be affected xx x. There is, moreover, no law
requiring the making of an announcement as regards the reorganization of a enterprise x
x x. The Labor Code again only categorically requires that notice be given to the affected
employee/s. It does not require the giving of notice to persons not otherwise affected by
the redundancy, such as for instance, the company’s other employees.

Ruling of the CA
 The petition is GRANTED and the assailed Decision of the NLRC is REVERSED and
SET ASIDE.

ISSUE OF THE CASE

I. THE COURT OF APPEALS DECIDED IN A MANNER CONTRARY TO LAW
AND LEGAL PRECEDENTS WHEN IT EXERCISED ITS CERTIORARI POWER
ABSENT ANY FINDNG THAT THE NLRC COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION.
II. THE COURT OF APPEALS DECIDED IN A MANNER CONTRARY TO THE
LEGAL PRECEDENT WHEN IT REVISITED AND REVERSED FACTUAL
FINDINGS OF THE NLRC SOLELY ON THE GROUND THAT THERE
SUPPOSEDLY IS A DIVRGENCE OF VIEWS BETWEEN THE LABOR
ARBITER AND THE NLRC.
III. IN ANY EVENT, THE NLRC DID NOT COMMIT GRAVE ABUSE OF
DISCRETIN AMOUNTING TO LACK OR EXCESSOF JURISDICTION, AND
THE COURT OF APPEALS’ FACTUAL FINDINGS WERE UNSUPPORTED BY
EVIDENCE AND ITS CONCLUSIONS CONTRARY TO LAW AND EXISTING
JURISPRUDENCE.

Ruling of the SC
The court denies the petition.
The CA committed no error in taking cognizance of respondent’s Petition for
Certiorari.
The NLRC committed an error so patent and gross as to amount to an evasion of
its positive duty to administer justice in favor of the respondent in this case. Failing in its duty to
properly appreciate the facts and evidence on record, and apply the law and decide this otherwise
simple case in favor of the party to whom justice should be served, the NLRC arrived at a
fundamentality unjust, unreasonable, and absurd pronouncement that is consequently null and
void and without force and effect. An appreciation of the copious evidence on record should lead

18
one to a single obvious inevitable legal conclusion, yet the NLRC, with its expertise and
experience as a labor tribunal, failed to arrive at such a resolution.

Under Article 2142 of the Civil Code, “[ c ]ertain lawful, voluntary and unilateral
acts give rise to the juridical relation of quasi-delict to the end that no one shall be unjustly
enriched or benefited at the expense of another.
“ There is unjust enrichment ‘when a person unjustly retains a benefit to the loss
of another, or when a person retains money or property of another against the fundamental
principles of justice, equity and good conscience.’ The principle of unjust enrichment requires
two conditions: (1) that a person is benefited without a valid basis or justification, and (2)
that such benefit is derived at the expense of another.

CONCEPTS
1. EASEMENT BY RIGHT OF WAY UNDER THE PUBLIC LAND ACT
2. ESTOPPEL BY GOVERNMENT
3. JUST COMPENSATION
4. SOLUTIO INDEBITI

FACTS:
Petitioner Danilo Bartolata acquired ownership over a 400 square meter parcel of land located in
Taguig Metro Manila by virtue of an order of award dated December 14, 1987 from the Bureau
of Lands being the sole bidder for the property during a public auction.

Sometimes in 1997, respondents acquired 223 square meters of petitioner’s property for the
development the Metro Manila SKYWAY PROJECT. The parties agreed that in exchange for
the acquisition, petitioner would be paid just compensation for the appraised value of the
property, fixed at P55,000 per square meter or an aggregate P 12,265,000 for the entire affected
area. On August 14, 1997, respondents appropriated P 1,480,000 in favor of petitioner as partial
payment.

Since the date of initial payment, petitioner had, on numerous occasions, demanded from
respondents the balance of P 10,785,000.00 but the latter refused to settle their outstanding
obligation, this prompted petitioner to file, on September 20, 2006, a complaint for a sum of
money.

RESPONDENT’S ARGUMENTS
The order of award from the Bureau of Lands granting title to petitioner over te subject property
contained a condition that:
1. The land shall be subject to the easement and servitudes provided for in section 109-114
commonwealth act no. 141, as amended; and
2. Pursuant to section 112 of commonwealth act no, 141 (ca 1410, 9 the government is
entitled to an easement of right of way not exceeding 60 meters in width, without need of
payment for just compensation, save for the value of improvements existing.

19
Therefore, based on the foregoing, any payment for the government’s use of the easement, unless
made to compensate the landowner for the value of the improvements affected, is unwarranted.
Consequently, respondents prayed, by way of counterclaim, that the P 1,480,000 partial payment
made to petitioner for the acquisition of the latter’s property, which was well within the 60-meter
threshold width, be returned to the government.

PETITIONER’S ARGUMENT:
Presidential Decree No. 2004 (pd 2004), which amended Republic Act No. 730 (RA 730),
allegedly removed the statutory lien attached to the subject property. Sec. 2 of RA 730, as
amended, now reads:

SEC.2. Lands acquired under the provisions of this act shall not be subject to any restrictions
against encumbrance or alienation before and after the issuance of the patents thereon.

RULING OF THE RTC:

The complaint was dismissed for lack of merit and insufficiency of evidence.

Defendant’s counterclaims are likewise denied and dismissed for insufficiency of evidence.

ISSUE:
1. WHETHER OR NOT THE SUBJECT PROPERTY OWNED BY PETITIONER IS
SUBJECT EASEMENT OF RIGHT OF WAY IN FAVOR OF THE
GOVERNMENT;
2. WHETHER OR NOT RESPONDENTS ARE LIABLE TO PAY JUST
COMPENSATION TO PETITIONER; AND
3. WHETHER OR NOT PETITIONER SHOULD RETURN THE INITIAL
PAYMENT MADE BY RESPONDENTS IN THE AMOUNT OF P1,480,000.

RULING:
THE PETITION IS PARTLY MERITORIOUS
ISSUE 1: YES. THE EASEMENT OF RIGHTOF WAY IN FAVOR OF THE GOVERNMENT
SUBSISTS DESPITE THE ENACTMENT OF PD 2004.

The easement of right of way under Sec. 112 of CA 141 is not subsumed in the phrase
“restrictions against encumbrance or alienation” appearing in the amendment introduced by PD
2004, this becomes obvious upon examining the original text of sec. 2 of RA 730, before PD
2004 took effect.

Sec. 2. Except in favor of the Government or any of its branches, units, or institutions, lands
acquired under the provisions of this act shall not be subject to encumbrance or alienation before
the patent is issued and for a term of ten years from the date of the issuance of such patent, nor
shall they become liable to the satisfaction of any debt contracted prior to the expiration of the
said period. No transfer or alienation made after the said period of ten years and within 15 years
from the issuance of such patent except those made by virtue of the right of succession shall be
valid unless when duly authorized by the Secretary of Agriculture and natural resources and the

20
transferee of vendee is a Filipino citizen. Every conveyance made shall be subject to repurchase
by the original purchaser or his legal heirs within a period of five years from the date of
conveyance.

Any contract or agreement made or executed in violation of this section shall be void ab initio.

Consequently, it was erroneous for petitioner to harp on sec. 2 of RA 730, as amended by PD

2004, in his bid to unshackle his property from its servient state to release it from the statutory
lien prescribed under sec. 112 of CA 141.

ISSUE 2: NO. PETITIONER IS NOT ENTITLED TO JUST COMPENSATION.

In Republic vs Andaya, the Supreme Court held that two elements must concur before the
property owner will be entitled to just compensation for the remaining property under Sec. 112
of CA 141, such as:

1. The remainder is not subject to the statutory lien of right of way; and
2. The enforcement of the right of way results in the practical destruction or material
impairment of the value remaining property, or in the property owner being dispossessed
or otherwise deprived of the normal use of the remainder.

In this case, the subject property is a 400 square meter parcel of land, the 223 square meter
portion of the subject property was traversed by respondent’s Metro Manila Skyway Project.
The subdivision plan shows that the covered area is well within the 60-meter width threshold
provided by law. Respondents are then not under any legal obligation to pay just
compensation for utilizing the 223 square meter portion pursuant to the Republic’s
right of way under Sec. 112 of CA 141, and in accordance with our ruling in Andaya.

Anent the remaining 177 square meters of the 400 square meter lot, suffice it to state that it
was never proved that the said area was not subject to the statutory lien, neither was it
established that despite not having been utilized for the Metro Manila Skyway Project, the
enforcement of the easement resulted in the “taking” of the remaining property all the same.
There is then no evidentiary basis for awarding petitioner just compensation.

ISSUE 3: NO. RESPONDENTS ARE BARRED BY ESTOPPEL FROM RECOVERING

THE INITIAL PAYMENT OF P1,480,000 FROM PETITIONER.

“Solutio indebiti” arises when something is delivered through mistake to a person who has no
right to demand it, it obligates the latter to return what has been received through mistake.

As defined in article 2154 of the Civil Code, the concept has two indispensable requisites:
(1) That something has been unduly delivered through mistake; and
(2) That something was received when there was no right to demand it.

21
These circumstances are present in this case, thus, warranting the application of solution indebiti.
However, respondent’s action to compel petitioner to return what was mistakenly delivered is
now barred by the doctrine of estoppel. The doctrine is based upon the grounds of public policy,
fair dealing, good faith and justice, and its purpose is to forbid one to speak against his own
act, representations, or commitments to the injury of one to whom they were directed and who
reasonably relied thereon. The doctrine of estoppel springs from equitable principles and the
equities in the case.

Although, as a general rule, the State cannot be barred by estoppel by the mistakes or
errors of its officials or agents, jurisprudence elucidates that the doctrine is subject to exceptions,
viz:

“Estoppels against the public are little favored, they should not be invoked except [in
rare] and unusual circumstances, and may not be invoked where they would operate to defeat the
effective operation of a policy adopted to protect the public. They must be applied with
circumspection and should be applied only in those special cases where the interests of justice
clearly require it. Nevertheless, the government must not be allowed to deal dishonorably or
capriciously with its citizens, and must not play an ignoble part or do a shabby thing; and
subject to limitations … , the doctrine of equitable estoppel may be invoked against public
authorities as well as against private individuals.” (Republic v. Court of Appeals, GR. No.
116111, January 21, 1999, 301 SCRA 366, 377).

In this case, petitioner was erroneously paid P1,480,000 on August 14, 1999 when respondents
appropriated the amount in his favor, however, because of respondents’ representation that the
amount was a mere down payment for just compensation, petitioner never objected to the taking
of his land and peacefully parted with his property, expecting to be paid in full for the value of
the taken property thereafter. However, respondents did not make good their guarantee. Instead,
they would claim for the recovery of the wrongful payment after almost twelve (12) years, on
July 9, 2009, as a counterclaim in their supplemental answer. Indubitably, respondents are barred
by estoppel from recovering from petitioner the amount initially paid. A modification of the
assailed CA ruling is therefore, in order.

THE COURT RESOLVES TO PARTIALLY GRANT THE PETITION. THE AWARD TO

RESPONDENTS FOR THE RECOVERY OF THE P1,480,000 INITIAL PAYMENT WAS
DELETED AS THEIR RIGHT TO A REFUND HAS ALREADY PRESCRIBED. DANILO
BARTOLATA v. Republic of the Philippines, Et. al. GR. No. 223334, June 7, 2017

22
 CHAPTER 2
Quasi-delicts

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.
(1902a)

Article 2177. Responsibility for fault or negligence under the preceding article

is entirely separate and distinct from the civil liability arising from negligence
under the Penal Code. But the plaintiff cannot recover damages twice for the
same act or omission of the defendant.(n)

Article 2178. The provisions of articles 1172 to 1174 are also applicable to a

quasi-delict. (n)

Article 2179. When the plaintiff's own negligence was the immediate and
proximate cause of his injury, he cannot recover damages. But if his
negligence was only contributory, the immediate and proximate cause of the
injury being the defendant's lack of due care, the plaintiff may recover
damages, but the courts shall mitigate the damages to be awarded. (n)

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

23
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. (1903a)

Article 2181. Whoever pays for the damage caused by his dependents or

employees may recover from the latter what he has paid or delivered in
satisfaction of the claim. (1904)

Article 2182. If the minor or insane person causing damage has no parents or
guardian, the minor or insane person shall be answerable with his own
property in an action against him where a guardian ad litem shall be
appointed. (n)

Article 2183. The possessor of an animal or whoever may make use of the

same is responsible for the damage which it may cause, although it may
escape or be lost. This responsibility shall cease only in case the damage
should come from force majeure or from the fault of the person who has
suffered damage. (1905)

Article 2184. In motor vehicle mishaps, the owner is solidarily liable with his
driver, if the former, who was in the vehicle, could have, by the use of the due
diligence, prevented the misfortune. It is disputably presumed that a driver
was negligent, if he had been found guilty of reckless driving or violating
traffic regulations at least twice within the next preceding two months.

24
If the owner was not in the motor vehicle, the provisions of article 2180 are
applicable. (n)

Article 2185. Unless there is proof to the contrary, it is presumed that a

person driving a motor vehicle has been negligent if at the time of the mishap,
he was violating any traffic regulation. (n)

Article 2186. Every owner of a motor vehicle shall file with the proper
government office a bond executed by a government-controlled corporation or
office, to answer for damages to third persons. The amount of the bond and
other terms shall be fixed by the competent public official. (n)

Article 2187. Manufacturers and processors of foodstuffs, drinks, toilet

articles and similar goods shall be liable for death or injuries caused by any
noxious or harmful substances used, although no contractual relation exists
between them and the consumers. (n)

Article 2188. There is prima facie presumption of negligence on the part of the

defendant if the death or injury results from his possession of dangerous
weapons or substances, such as firearms and poison, except when the
possession or use thereof is indispensable in his occupation or business. (n)

Article 2189. Provinces, cities and municipalities shall be liable for damages

for the death of, or injuries suffered by, any person by reason of the defective
condition of roads, streets, bridges, public buildings, and other public works
under their control or supervision. (n)

Article 2190. The proprietor of a building or structure is responsible for the

damages resulting from its total or partial collapse, if it should be due to the
lack of necessary repairs. (1907)

Article 2191. Proprietors shall also be responsible for damages caused:

(1) By the explosion of machinery which has not been taken care of with
due diligence, and the inflammation of explosive substances which have
not been kept in a safe and adequate place;

(2) By excessive smoke, which may be harmful to persons or property;

(3) By the falling of trees situated at or near highways or lanes, if not

caused by force majeure;

25
 (4) By emanations from tubes, canals, sewers or deposits of infectious
matter, constructed without precautions suitable to the place. (1908)

Article 2192. If damage referred to in the two preceding articles should be the
result of any defect in the construction mentioned in article 1723, the third
person suffering damages may proceed only against the engineer or architect
or contractor in accordance with said article, within the period therein fixed.
(1909)

Article 2193. The head of a family that lives in a building or a part thereof, is

responsible for damages caused by things thrown or falling from the same.
(1910)

Article 2194. The responsibility of two or more persons who are liable for
quasi-delict is solidary. (n)

COMMENTS:

1) Article 2176 is the focal point of discussion in the subject of torts and
damages. It’s core inquiry is the presence or absence of ‘negligence’ in a case
which is the triggering mechanism that sets in motion the liability for
damages as set forth in this chapter of the Civil Code.
2) What is negligence?

Negligence is the omission to do something that a reasonable man, guided upon those
considerations which ordinarily regulate a conduct of human affairs would do, or he doing
of something which a prudent man and reasonable man could not do.
Stated otherwise, negligence is want of care required by the circumstances. Negligence is
therefore a relative or comparative concept. Its application depends upon the situation the
parties are in, and the degree of care and vigilance which the prevailing circumstances
reasonably require.

Conformably with the understanding of negligence, the diligence the law requires of an
individual to observe and exercise varies according to the nature of the situation in which
she happens to be, and the importance of the act the she has to perform. ROSEMARIE B.
BINTUDAN, v. THE COMMISSION ON AUDIT, G.R. No. 211937, March 21, 2017

DEFINITION OF TORTS

26
 o The word “tort” is taken directly “from Lat. Torquere, to twist, tortus,
twisted, wrested aside”. (p. 774, Blacks Law Dictionary, Revised Fifth
Edition)
o A private or civil wrong or injury, other the breach of contract, for
which the court will provide a remedy in the form of of an action for
damages. A violation of a duty imposed by general law or otherwise
upon all persons occupying the relation to each other which is
involved in a given transaction. There must always be a violation of
some duty owing to plaintiff, and generally such duty must arise by
operation of law and not by mere agreement of the parties. (p. 774,
Blacks Law Dictionary, Revised Fifth Edition)
o Three elements of every tort action are: Existence of legal duty from
defendant to plaintiff, breach of duty, and damage as proximate result.
A legal wrong committed upon the person or property independent of
contract. It may be either (1) a direct invasion of some legal right of
the individual; (2) the infraction of some public duty by which special
damage accrues to the individual; (3) the violation of some private
obligation by which like damage accrues to the individual. (p. 774,
Blacks Law Dictionary, Revised Fifth Edition)

o It is an act or omission producing an injury to another, without any

previous existing lawful relation of which the said act or omission
may be said to be a natural outgrowth or incident. (Robles vs. Castillo,
61 O.G. 1220, 5 C.A.R. [2s] 2 1 3)

KINDS OF TORTIOUS CONDUCT

Intentional torts
 Intentional torts include conduct where the actor desires to cause the
consequences of his act or believes the consequences are substantially
certain to result from it.
 Intentional torts include assault, battery, false imprisonment,
defamation, invasion of privacy and interference of property. (See
Aquino, Reviewer on Civil Law, 2018 Edition, p. 884)

Negligence
 Negligence, on the other hand, involves voluntary acts or omissions
which result in injury to others, without intending to cause the same.
27
 Strict liability
 The actor fails to exercise due care in performing such acts or
omissions.
 There is strict liability in tort where the person is made liable
independent of fault or negligence upon submission of proof of certain
facts. (See Aquino, Reviewer on Civil Law, 2018 Edition, p. 884)



Catch –All Provisions Limitations of Articles 19, 20 and 21

 “Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith.
 Art. 20. Every person who, contrary to law, willfully or negligently causes
damage to another, shall indemnify the latter for the same.
 Art. 21. Any person who willfully causes loss or injury to another in a
manner that is contrary to morals good customs or public policy shall
compensate the latter for the damage.” (See Aquino, Reviewer on
Civil Law, 2018 Edition, p. 885)



Manuel Go Cinco v. CA et al., G.R. No. 151903, October 9, 2009

 Is not a panacea for all hurts and pains”.
 Since payment was available and was unjustifiably refused, justice and
equity demand that the spouses Go Cinco be freed from the obligation to pay
interest on the outstanding amount from the time the unjust refusal took
place; they would not have been liable for any interest from the time tender
of payment was made if the payment had only been accepted. Under Article
19 of the Civil Code

Nikko Hotel Manila Garden v. Reyes, 452 SCRA 532

 Ms. Lim not having abused her right to ask Mr. Reyes to leave the party to
which he was not invited, cannot be made liable to pay for damages under
Articles 19 and 21 of the civil code. Necessarily, neither can her employer,
Hotel Nikko, be held liable as its liability springs from that of its employee.

 Article 19 known to contain what is commonly referred to as the principle of

abuse of rights, is not a panacea for all human hurts and social grievances.

28
 Article 19 states: Art. 19. Every person must, in the exercise of his rights and
in the performances of his duties, act with justice, give everyone his due and
observe honesty and good faith.

 Elsewhere, we explained that when “a right is exercised in a manner which

does not conform with the norms enshrined in Article 19 and results in
damage to another, a legal wrong is thereby committed for which the
wrongdoer must be responsible. “The object of this article, therefor, is to set
certain standards which must be observed not only in the exercise of one’s
rights but also in the performance of one’s duties.

 Art. 21. Any person who willfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall
compensate the latter for the damage. Article 21 refers to acts contra bonus
mores and has the following elements: (1) There is an act which is legal; (2)
but which is contrary to morals, good custom, public order. Or to public
policy; and (3) it is done with intent to injure. A common theme runs
through Articles 19 and 21, and that is, the act complained of must be
intentional.

Requisites for Quasi-Delicts

 Quasi-delict is governed mainly by Article 2176 of the Civil Code, which
states that: “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 quasi-delict and is governed by the provisions
of this chapter.
 The essential requisites for a quasi-delictual action are:
(1) an act or omission constituting fault or negligence;
(2) damage caused by the said act or omission;
(3) the casual relation between the damage and the act or omission.
 It should be noted, however, that the Supreme Court added a fourth requisite
in some cases, that is, the absence of contractual relation between the
plaintiff and the defendant. Although such requirement appears to be
consistent with the language of Article 2176 of the Civil Code, it is no
longer being cited because it is now well-settled that an action based on

29
 quasi-delict can be maintained even if there is an existing contractual
relation between the parties.

Distinctions Between Culpa Aquiliana and Culpa Contractual

Culpa Aquiliana Culpa Contractual

Negligence is direct, Negligence is merely incidental
substantive and independent

No pre-existing obligation There is a pre-existing obligation

Preponderance of evidence Preponderance of evidence

Defense of good father of a family in Defense of good father of a family

the selection and supervision of in the selection and supervision of
employees is a roper and complete employees is a roper and
defense complete defense

Must prove negligence No need to prove negligence as

long as the victim proved the
existence of the contract and that
it was no carried out

JOSE CANGCO vs. MANILA RAILROAD CO

o It is important to note that the foundation of the legal liability of the

defendant is the contract of carriage, and that the obligation to respond for
the damage which plaintiff has suffered arises, if at all, from the breach of
that contract by reason of the failure of defendant to exercise due care
performance. That is to say, its liability is direct and immediate, differing
essentially, in legal viewpoint from that presumptive responsibility for the
negligence of its servants, imposed by article 1903 of the Civil Code, which
can be rebutted by proof of the exercise of due care in their selection and
supervision. Article 1903 of the Civil Code is not applicable to obligations
arising ex contractu, but only to extra-contractual obligations — or to use the
technical form of expression, that article relates only to culpa aquiliana and
not to culpa contractual.

30
 3) DOCTRINES:

DOCTRINES OF PROXIMATE CAUSE AND ASSUMPTION OF RISK

BATACLAN v MEDINA
FACTS:
Medina is the owner and operator of a bus. This bus, on September 13, 1952 around
2:00AM somewhere in Imus, Cavite, crashed and fell into a ditch. Apparently, its front
tire burst, zig-zagged and turned turtle into the ditch. Bataclan was one of the 18
passengers. Most of the passengers were able to get out, but Bataclan and 3 others were
trapped. It appears that the bus drivers and the passengers who already got out did not try
to help Bataclan et al get out, instead, about 10 of the locals in the area came to their aid,
they were carrying a burning torch for illumination, but then a fierce fire started and
engulfed the bus and killed Bataclan et al. It appears that there was a gas leak from the
bus and it caught fire from the torch the would-be rescuers were using.

The heirs of Bataclan sued Medina.

The trial court found that there was a breach of a contract of carriage where Medina
undertook to take Bataclan to his destination safely. The trial court also found that there
was negligence on the part of Medina since at the time of the blow-out, the bus was
speeding. There is no question that under the circumstances, the defendant carrier is
liable. The only question is to what degree. The trial court argued that Medina is only
liable for the injuries suffered by Bataclan and not by his death, the proximate cause of
which was the fire, which was not caused by Medina.

ISSUE:
Whether or not it was the negligence of Medina, owner of the bus company which was
the proximate cause of the death of Bataclan.

HELD: Yes. In this case, the proximate cause of the death was the overturning of the
bus, because of the overturning, it leaked gas which is not unnatural or unexpected. The
locals coming to be aid of the trapped passengers was most likely because the driver and
the conductor went out looking for help. It is only natural that the would-be rescuers
bring with them a torch because it was 2:30AM and the place was unlit. The fire could
also be attributed to the bus driver and conductor because he should have known, from
the circumstances, and because he should have been able to smell gasoline and therefore
he should have warned the rescuers not to bring the torch. Said negligence on the part of
the agents of the carrier come under the codal provisions above-reproduced, particularly,
Articles 1733, 1759 and 1763.

31
 Proximate Cause- “that cause, which, in natural and continuous sequence, unbroken by
any efficient intervening cause, produces the injury, and without which the result would
not have occurred.”

AFRICA v CALTEX
FACTS:
In the afternoon of March 18, 1984, a fire broke out at the Caltex service station at the
corner of Antipolo St. and Rizal Avenue, Manila. It started while gasoline was being
hosed from a tank truck into the underground storage, right the opening of the receiving
tank where the nozzle of the hose was inserted. The fire spread to and burned several
houses. The owners, among them petitioner spouses Africa and heirs of Ong, sued
respondents Caltex Phil., Inc., the alleged owner of the station, and Mateo Boquiren, the
agent in charge of its operation, for damages. The CFI and CA found that the petitioners
failed to prove negligence of the respondents, and that there was due care in the premises
and with respect to the supervision of their employees.

ISSUES:
Whether or not, without proof as to the cause and origin of the fire, the doctrine of res
ipsa loquitur should apply so as to presume negligence on the part of the respondents.

HELD: Yes. Res ipsa loquitur literally means “the thing or transaction speaks for itself.”
For the doctrine of res ipsa loquitur to apply, the following requisites should be present:
(a) the accident is of a kind which ordinarily does not occur in the absence of someone’s
negligence; (b) it is caused by an instrumentality within the exclusive control of the
defendant or defendants; and (c) the possibility of contributing conduct which would
make the plaintiff responsible is eliminated.

In the case at bar, the gasoline station, with all its appliances, equipment and employees,
was under the control of respondents. A fire occurred therein and spread to and burned
the neighboring houses. The persons who knew or could have known how the fire started
were respondents and their employees, but they gave no explanation thereof whatsoever.
It is a fair and reasonable inference that the incident happened because of want of care.
The negligence of the employees was the proximate cause of the fire, which in the
ordinary course of things does not happen. Therefore, the petitioners are entitled to the
award for damages.

EGG-SKULL/THIN SKULL RULE

 The “eggshell skull” or “eggshell plaintiff” rule states that someone who harms
another must pay for whatever damage the injured person suffered, even if it was
much worse than anyone would have expected. (See Aquino Reviewer in Civil
Law, 2018 edition.)

32
  The “eggshell skull” rule is named after the example frequently used in law
schools. The example describes an imaginary person who has an extremely thin
skull that is as fragile as an eggshell, even though he looks completely normal.
This person is hit in the head by someone else. A normal person would only have
been bruised by the hit, but the person with the eggshell skull dies. The “eggshell
skull” rule says that the person who hit the eggshell-skulled person is responsible
for the much greater harm caused by the death, not just the amount of harm that a
normal person would have suffered. (See Aquino Reviewer in Civil Law, 2018
edition.)

ABROGAR v COSMOS
FACTS:
To promote the sals of “Pop Cola”, defendant Cosmos, jointly with inter games, organized am
endurance running contest billed as the “1st Pop Cola Junior Marathon” scheduled to be held on
June 15, 1980. The organizers plotted a 10-kilometer course starting from the premises of the
Interim Batasang Pambansa (IBP for brevity), through public roads and streets, to end at the
Quezon Memorial Circle. Plaintiff’s son Rommel applied with the defendants to be allowed to
participate in the contest and after complying with the defendants’ requirements, his application
was accepted and he was given an official number. Consequently, on June 15, 1980 at the
designated time of the marathon, Rommel joined the other participants and ran the course plotted
by the defendants.

Rommel was bumped by a jeepney that was then running along the route of the marathon on Don
Mariano Marcos Avenue (DMMA for brevity), and in spite of medical treatment given to him at
the Ospital ng Bagong Lipunan, he died later that same day due to severe head injuries.

ISSUE:
Whether the doctrine of assumption of risk was applicable to the fatality.

HELD: No.
The doctrine requires the concurrence of three elements, namely: (1) the plaintiff must know that
the risk is present; (2) he must further understand its nature; and (3) his choice to incur it must be
free and voluntary. According to Prosser: “Knowledge of the risk is the watchword of
assumption of risk.”

The concurrence of the three elements was not shown to exist. Rommel could not have assumed
the risk of death when he participated in the race because death was neither a known nor normal
risk incident to running a race.

33
 4) DOCTRINE OF LAST CLEAR CHANCE

Doctrine of Last Clear Chance

The doctrine simply provides that NEGLIGENCE of the CLAIMANT
DOES NOT PRECLUDE a recovery for the negligence of the defendant where it
appears that the latter, by reasonable care and prudence might have avoided
injurious consequences to the claimant notwithstanding his negligence.

“Last clear chance doctrine. Under the doctrine of last clear chance, as
applied in automobile law, a plaintiff may recover from a defendant motorist for
injuries or damages suffered, notwithstanding his own contributory negligence,
where, as stated in terms of the essential elements of the doctrine, plaintiff was in a
place of peril of which he was unaware or from which he was unable to extricate
himself, the motorist discovered or had the opportunity to discover plaintiff’s peril,
and the motorist had the opportunity to avoid the accident through the exercise of
reasonable care. The last clear chance doctrine is not recognized in every
jurisdiction and is subject to limitations in others. There are many variant forms
and applications of this doctrine in the jurisdictions which apply it”. (p. 457,
Black’s Law Dictionary, Abridged Fifth Edition).

ELEMENTS of Doctrine of Last Clear Chance

The following elements must be present:

1. Plaintiff is placed in danger by his own negligent acts and he is unable

to get out from such situation by any means.
2. Defendant knows that the plaintiff is in danger and knows or should
have known that the plaintiff was unable to extricate himself
therefrom; and
3. Defendant had the last clear chance or opportunity to avoid the
accident through the exercise of ordinary care but failed to do so, and
the accident occurred as a proximate result of such failure.

34
Doctrine of Last Clear Chance when NOT APPLICABLE
A. Collapse of a building structure
o “ the proprietor of a building or structure is responsible for the damage
resulting from its total and partial collapse, it should be due to the lack
necessary repairs” – (DE ROY V. CA, 157 SCRA 757)
B. When the claim or demand of the injured passenger is the enforcement of the
carrier’s contractual obligation to bring him safely to his destination.
C. When the injury or accident cannot be avoided by application of all means at
hand after peril has been discovered.

5) DAMNUM ABSQUE INJURIA PRINCIPLE

Banks; Meticulous Care; Damnum Absque Injuria;

Moral Damages for Breach of Contract

The General Banking Act of 2000 demands of banks the highest standards of integrity and
performance. As such, the banks are under obligation to treat the accounts of their depositors
with meticulous care.

However, the banks' compliance with this degree of diligence is to be determined in accordance
with the particular circumstances of each case.

The petitioners argue that the respondent was liable for failing to observe the diligence required
from it by not doing an act from which the material damage had resulted by reason of
inexcusable lack of precaution in the performance of its duties. Hence, the respondent was guilty
of gross negligence, misrepresentation and bad faith amounting to fraud.

The petitioners' argument is unfounded.

Gross negligence connotes want of care in the performance of one's duties; it is a negligence
characterized by the want of even slight care, acting or omitting to act in a situation where there
is duty to act, not inadvertently but wilfully and intentionally, with a conscious indifference to
consequences insofar as other persons may be affected. It evinces a thoughtless disregard of
consequences without exe1iing any effort to avoid them.

In order for gross negligence to exist as to warrant holding the respondent liable therefor, the
petitioners must establish that the latter did not exert any effort at all to avoid unpleasant
consequences, or that it wilfully and intentionally disregarded the proper protocols or procedure
in the handling of US dollar notes and in selecting and supervising its employees.

35
The CA and the RTC both found that the respondent had exercised the diligence required by law
in observing the standard operating procedure, in taking the necessary precautions for handling
the US dollar bills in question, and in selecting and supervising its employees. Such factual
findings by the trial court are entitled to great weight and respect especially after being affirmed
by the appellate court, and could be overturned only upon a showing of a very good reason to
warrant deviating from them.

In this connection, it is significant that the BSP certified that the falsity of the US dollar notes in
question, which were "near perfect genuine notes," could be detected only with extreme
difficulty even with the exercise of due diligence. Ms. Nanette Malabrigo, BSP's Senior
Currency Analyst, testified that the subject dollar notes were "highly deceptive" inasmuch as the
paper used for them were similar to that used in the printing of the genuine notes. She observed
that the security fibers and the printing were perfect except for some microscopic defects, and
that all lines were clear, sharp and well defined.

Nonetheless, the petitioners contend that the respondent should be liable for moral and
exemplary damages on account of their suffering the unfortunate experience abroad brought
about by their use of the fake US dollar bills withdrawn from the latter.

The contention cannot be upheld.

The relationship existing between the petitioners and the respondent that resulted from a contract
of loan was that of a creditor-debtor. Even if the law imposed a high standard on the latter as a
bank by viriue of the fiduciary nature of its banking business, bad faith or gross negligence
amounting to bad faith was absent. Hence, there simply was no legal basis for holding the
respondent liable for moral and exemplary damages. In breach of contract, moral damages may
be awarded only where the defendant acted fraudulently or in bad faith. That was not true herein

With the respondent having established that the characteristics of the subject dollar notes had
made it difficult even for the BSP itself as the country's own currency note expert to identify the
counterfeiting with ease despite adhering to all the properly laid out standard operating
procedure and precautions in the handling of US dollar bills, holding it liable for damages in
favor of the petitioners would be highly unwarranted in the absence of proof of bad faith, malice
or fraud on its part. That it formally apologized to them and even offered to reinstate the
USD$500.00 in their account as well as to give them the all-expense-paid round trip ticket to
Hong Kong as means to assuage their inconvenience did not necessarily mean it was liable.

In civil cases, an offer of compromise is not an admission of liability, and is inadmissible as

evidence against the offeror.

Even without taking into consideration the news clippings to the effect that the US Secret
Service and Central Intelligence Agency had themselves been deceived by the 1990 series of the
US dollar notes infamously known as the "supernotes," the record had enough to show in that
regard, not the least of which was the testimony of Ms. Malabrigo as BSP's Senior Currency

36
Analyst about the highly deceptive nature of the subject US dollar notes and the possibility for
them to pass undetected.

Also, the petitioners' allegation of misrepresentation on the part of the respondent was factually
unsupported. They had been satisfied with the services of the respondent for about three years
prior to the incident in question. The incident was but an isolated one. Under the law, moral
damages for culpa contractual or breach of contract are recoverable only if the defendant acted
fraudulently or in bad faith, or is found guilty of gross negligence amounting to bad faith, or in
wanton disregard of his contractual obligations. The breach must be wanton, reckless, malicious
or in bad faith, oppressive or abusive. In order to maintain their action for damages, the
petitioners must establish that their injury resulted from a breach of duty that the respondent had
owed to them, that is, there must be the concurrence of injury caused to them as the plaintiffs and
legal responsibility on the part of the respondent. Underlying the award of damages is the
premise that an individual was injured in contemplation of law. In this regard, there must first be
a breach of some duty and the imposition of liability for that breach before damages may be
awarded; and the breach of such duty should be the proximate cause of the injury. That was not
so in this case.

It is true that the petitioners suffered embarrassment and humiliation in Bangkok. Yet, we should
distinguish between damage and injury. In The Orchard Golf & Country Club, Inc. v. Yii, the
Court has fittingly pointed out the distinction, viz.:

x x x Injury is the illegal invasion of a legal right, damage is the loss, hurt, or harm which results
from the injury; and damages are the recompense or compensation awarded for the damage
suffered. Thus, there can be damage without injury in those instances in which the loss or harm
was not the result of a violation of a legal duty. These situations are often called dmimum absque
injuria.

In every situation of damnum absque injuria, therefore, the injured person alone bears the
consequences because the law affords no remedy for damages resulting from an act that does not
amount to a legal injury or wrong. For instance, in BP I Express Card Corporation v. Court of
Appeals ,

the Court turned down the claim for damages of a cardholder whose credit card had been
cancelled after several defaults in payment, holding therein that there could be damage without
injury where the loss or harm was not the result of a violation of a legal duty towards the
plaintiff. In such situation, the injured person alone should bear the consequences because the
law afforded no remedy for damages resulting from an act that did not amount to a legal injury or
wrong. Indeed, the lack of malice in the conduct complained of precluded the recovery of
damages.

Here, although the petitioners suffered humiliation resulting from their unwitting use of the
counterfeit US dollar bills, the respondent, by virtue of its having observed the proper protocols
and procedure in handling the US dollar bills involved, did not violate any legal duty towards
them.

37
Being neither guilty of negligence nor remiss in its exercise of the degree of diligence required
by law or the nature of its obligation as a banking institution, the latter was not liable for
damages. Given the situation being one of damnum absque injuria, they could not be
compensated for the damage sustained.

WHEREFORE, the Court AFFIRMS the decision promulgated on December 7, 2006; and
ORDERS the petitioners to pay the costs of suit.
- SPS. CRISTINO & EDNA CARBONELL v. METROPOLITAN BANK AND TRUST
COMPANY, G.R. No. 178467, 26 April 2017

6) Effect of Death of Accused- Vinculum Juris arising from Crime is

Extinguished hence case solely founded on such source of obligation is
likewise extinguished. However, if the same acts of the accused who had
died, also is a breach of other sources of obligation, the case may
continue on the civil aspect thereof

Here is the teaching of the SC on such principle, to wit:

“From this lengthy disquisition, we summarize our ruling herein:

1. Death of the accused pending appeal of his conviction extinguishes his criminal liability[,] as
well as the civil liability[,] based solely thereon. As opined by Justice Regalado, in this regard,
"the death of the accused prior to final judgment terminates his criminal liability and only the
civil liability directly arising from and based solely on the offense committed, i.e., civil liability
ex delicto in senso strictiore."

2. Corollarily, the claim for civil liability survives notwithstanding the death of accused, if the
same may also be predicated on a source of obligation other than delict. Article 1157 of the Civil
Code enumerates these other sources of obligation from which the civil liability may arise as a
result of the same act or omission:

a) Law
b) Contracts
c) Quasi-contracts
d) xx x
e) Quasi-delicts

38
3. Where the civil liability survives, as explained in Number 2 above, an action for recovery
therefor may be pursued but only by way of filing a separate civil action and subject to Section 1,
Rule 111 of the 1985 Rules on Criminal Procedure as amended. This separate civil action may be
enforced either against the executor/administrator or the estate of the accused, depending on the
source of obligation upon which the same is based as explained above.

4. Finally, the private offended party need not fear a forfeiture of his right to file this separate
civil action by prescription, in cases where during the prosecution of the criminal action and
prior to its extinction, the private-offended party instituted together therewith the civil action. In
such case, the statute of limitations on the civil liability is deemed interrupted during the
pendency of the criminal case, conformably with provisions of Article 1155 of the Civil Code,
that should thereby avoid any apprehension on a possible privation of right by prescription.

Thus, upon accused-appellant's death pending appeal of his conviction, the criminal action is
extinguished inasmuch as there is no longer a defendant to stand as the accused; the civil action
instituted therein for the recovery of the civil liability ex delicto is ipso facto extinguished
grounded as it is on the criminal action. However, it is well to clarify that accused-appellant's
civil liability in connection with his acts against the victim, AAA, may be based on sources other
than delicts; in which case AAA may file a separate civil action against the estate of accused-
appellant, as may be warranted by law and procedural rules.

WHEREFORE, the Court resolves to: (a) SET ASIDE the Court's Resolution dated July 18,
2014 in connection with this case; (b) DISMISS Crim. Case No. BN-01-02-3754 before the
Regional Trial Court of Burauen, Leyte, Branch 15 by reason of the death of accused-appellant
Porferio Culas y Raga; and (c) DECLARE the instant case CLOSED and TERMINATED. No
costs.
~ PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee v. PORFERIO CULAS
y RAGA, G.R. No. 211166, 05 June 2017 ~

7) THE DOCTRINE OF VICARIOUS LIABILITY. While Philippine

jurisdiction does not adhere to the principle of ‘vicarious liability’ in
criminal cases as the liability has to be direct and personal, we however, in
civil cases appertaining to torts and damages, adopted the doctrine of
vicarious liability. Thus:

Article 2180 New Civil Code; Due Diligence in Selection and Supervision of
Employees; Defense that May be put-up by the Employer and those charged by
law to be liable vicariously for acts of their employees, agents or wards

As a general rule, one is only responsible for his own act or omission. This general
rule is laid down in Article 2176 of the Civil Code, which provides:

39
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. One exception is an employer who is made vicariously liable for the tort
committed by his employee under paragraph 5 of Article 2180. 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. It must be stressed, however, that the above rule is
applicable only if there is an employer-employee relationship.

It must be stressed, however, that the above rule is applicable only if there is an employer-
employee relationship.  This employer-employee relationship cannot be presumed but must be sufficiently proven by the plaintiff. 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  employees.

In Mamaril v. The Boy Scout of the Philippines, 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 as against BSP.  Similarly, we find no employer-employee relationship between MCS and respondent guards. The
guards were merely assigned by Grandeur to secure MCS' premises pursuant to their Contract of Guard Services. Thus, MCS cannot be held vicariously liable for
damages caused by these guards' acts or omissions.

Neither can it be said that a principal-agency relationship existed between MCS and Grandeur.
Section 8 of the Contract for Guard Services between them explicitly states:

8. LIABILITY TO GUARDS AND THIRD PARTIES

The SECURITY COMPANY is NOT an agent or employees (sic) of the CLIENT and the guards
to be assigned by the SECURITY COMP ANY to the CLIENT are in no sense employees of the
latter as they arc for all intents and purposes under contract with the SECURITY COMPANY.
Accordingly, the CLIENT shall not be responsible for any and all claims for personal injury or
death that arises of or in the course of the performance of guard duties. 32 (Emphasis in the original.)

II

On the other hand, paragraph 5 of Article 2180of the Civil Code may be applicable to Grandeur, it being undisputed that respondent
guards were its employees. When the employee causes damage due to his own negligence while performing his own duties, there arises the  Juris tantum presumption
that the employer is negligent, rebuttable only by proof of observance of the diligence of a good father of a family.  The "diligence of a good father" referred to in the
last paragraph of Article 2180 means diligence in the selection and supervision of employees. 

40
To rebut the presumption of negligence, Grandeur must prove two things: first, that it had
exercised due diligence in the selection of respondents Doctolero and Avila, and second, that
after hiring Doctolero and Avila, Grandeur had exercised due diligence in supervising them.

In Metro Manila Transit Corporation v. Court of Appeals, we held:

On the matter of selection of employees, Campo vs. Camarote, supra, lays down this admonition:

x x x In order that the owner of a vehicle may be considered as having exercised all diligence of
a good father of a family, he should not have been satisfied with the mere possession of a
professional driver's license; he should have carefully examined the applicant for
employment as to his qualifications, his experience and record of service. These steps
appellant failed to observe; he has therefore, failed to exercise all due diligence required of a
good father of a family in the choice or selection of driver.

Due diligence in the supervision of employees, on the other hand, includes the formulation of
suitable rules and regulations for the guidance of employees and the issuance of proper
instructions intended for the protection of the public and persons with whom the employer has
relations through his or its employees and the imposition of necessary disciplinary measures
upon employees in case of breach or as may be warranted to ensure the performance of acts
indispensable to the business of and beneficial to their employer. To this, we add that actual
implementation and monitoring of consistent compliance with said rules should be the constant
concern of the employer, acting through dependable supervisors who should regularly report on
their supervisory functions.  (Emphasis supplied; citations omitted.)

In the earlier case of Central Taxicab Corp. v. Ex-Meralco Employees Transportation Co., the Court
held that there was no hard-and-fast rule on the quantum of evidence needed to prove due observance of all the diligence of a good father of a family as would
constitute a valid defense to the legal presumption of negligence on the part of an employer or master whose employee has, by his negligence, caused damage to
another. Jurisprudence nevertheless shows that testimonial evidence, without more, is insufficient to meet the required quantum of proof.38

In Metro Manila Transit Corporation v. Court of Appeals, the Court found that "[p]etitioner's
attempt to prove its diligentissimi patris familias in the selection and supervision of
employees through oral evidence must fail as it was unable to buttress the same with any other
evidence, object or documentary, which might obviate the apparent biased nature of the
testimony." There, the supposed clearances, results of seminars and tests which Leonardo
allegedly submitted and complied with were never presented in court despite the fact that, if true,
then they were obviously in the possession and control of Metro Manila Transit Corporation
(MMTC). Subsequently, in a different case also involving MMTC, the Court held that "in a trial
involving the issue of vicarious liability, employers must submit concrete proof, including
documentary evidence." 

Here, both the R TC and the CA found that Grandeur was able to sufficiently prove, through
testimonial and documentary evidence, that it had exercised the diligence of a good father of a
family in the selection and hiring of its security guards. As testified to by its HRD head Ungui,

41
and corroborated by documentary evidence including clearances from various government
agencies, certificates, and favorable test results in medical and psychiatric examinations,
Grandeur's selection and hiring procedure was outlined as follows:

1. Initial screening;

2. Submission of personal bio-data;

3. Submission of the following documents and clearances: (1) NBI Clearance; (2) PDICE
Clearance; (3) Barangay Clearance; (4) PNP Clearance; (5) Birth Certificate; (6) High
School Diploma/Transcript/College Diploma; (7) Reserved Officers Training Corps or
Citizens Army Training ce1iificate; (8) Court Clearances; and (9) resignation or
clearance from previous employment;

4. Pre-licensing training (15 days or 150 hours) for those without experience or pre-
training course (56 hours) for applicants with working experience as security guard;

5. Undergo neuro-psychiatric examination, drug testing and physical examination;

6. Submit and secure a security license before being given an application form;

7. Series of Interviews by Grandeur's Recruiting Officer, Personnel Clerk, Head of

Human Resources Department, Operation Department or Security Officer, Senior
Security Officer, Chief Security Officer, Assistant Vice President for Operations,
Assistant Vice President for Accounting, and recommending approval by the Vice
President and the President.

8. The applicant undergoes on-the-job training (OJT) for seven days assigned in the field
or within Grandeur's office; and

9. The applicant then undergoes a probationary period of six months after which the
employee automatically becomes regular upon meeting the company standards. 

Unlike in the aforecited MMTC cases, the evidence presented by Grandeur consists not only in
the testimony of its HRD head but also by documentary evidence showing respondents
Doctolero's and Avila's compliance with the above hiring and selection process consisting of
their respective: (1) private security licenses; 42 (2) NBI Clearances;43 (3) Medical Certificates; 44 (4) Police Clearances; 45 (5)
Certificate of Live Birth46/Certification issued by the Local Civil Registrar appertaining to date of birth;  47 (6) Certificates issued by the Safety Vocational and
Training Center for satisfactory completion of the Pre-Licensing Training Course;48 (7) High School Diplomas;49 (8) SSS Personal Data Records;50 (9) Barangay
Clearances;51 (10) Court Clearance; 52 (11) Neuro-psychiatric result issued by Goodwill Medical Center, Inc. for Doctolero's pre-employment screening as Security
Guard 53 /Evaluation Report by Office Chief Surgeon Army, Headquarters, Phil. Army, Fort Bonifacio Metro-Manila for Avila showing an above-average result and
no psychotic ideations;54 (12) Certification from Varsitarian Security and Investigation Agency, Inc. that Doctolero has been employed with said agency; 55 (13)
Ce1iificate issued by Cordova High School showing that Doctolero had completed the requirements of the courts of Institution in Citizen Army Training-I ; 56 (14)
Certification by Grandeur that Doctolero has submitted the requirements for his application for the post of Security Guard. 57 Thus, we agree with the RTC and CA's
evaluation that Grandeur was able to satisfactorily prove that it had exercised due diligence in the selection of respondents Doctolero and Avila.

42
O

the former arc 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 clone properly pertains, in which case what is provided in Article 2176 shall be
applicable. Lastly, teachers or heads or establishments or 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 or a good father or a family to prevent
damage. (Emphasis supplied.)
Grandeur was able to satisfactorily prove that it had exercised due diligence in the selection of
respondents Doctolcro and Avila. 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.

B.

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. 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. Grandeur also submitted as evidence certificates of
attendance to various seminars and the memorandum commending respondents for their good
works and reprimanding them for violations of various company policies. 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 A vi la.
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 . ~JOHN
E.R. REYES and MERWIN JOSEPH REYES, v. ORICO DOCTOLERO, ROMEO A VILA,
GRANDEUR SECURITY AND SERVICES CORPORATION, and MAKATI CINEMA
SQUARE, G.R. No. 185597, August 22, 2017

VICARIOUS LIABILITY
as provided under Art. 2180

43
Art. 2180. The obligation imposed by Article 2176 is demandable not only for
one’s own acts or omissions, bu 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 and 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.

44
VICARIOUS LIABLITY OR IMPUTED LIABILITY

It provides that one is not only liable for his own quasi-delictual acts but also for
those persons for whom he is responsible under the law.

Basis: Pater Familias, wherein the reason for the master’s liability is the
negligence in the supervision of his subordinates. However, the master can be
freed from liability if he can prove that he observed all the diligence of a good
father of the family to prevent the damage.

Nature of responsibility: Primary and direct

Para 2. VICARIOUS OR IMPUTED LIABLITY OF PARENTS

Requisites
1. The child is below 21 years old
2. He committed a tortious act
3. He lives in the company of parent concerned whether single or married

Art. 221: of the Family Code: Parents and other persons exercising parental
authority shall be civilly liable for the injuries and damages caused by the acts or
omissions of their unemancipated children living their company and under their
parental authority subject to the appropriate defenses provide by law.

Art. 236: emancipation for any cause shall terminate parental authority over the
person and property of the child who shall then be qualified and responsible for all
acts of civil life.

Minor – refers to 21 yrs. old and below and not to those below 18 yrs. old, since
the law reducing the majority age for 21 to 28 yrs. old did not amend these
paragraphs.

45
  When the accused was a minor under parental authority of the parents,
the latter are primarily and directly liable for the damages sustained
by the heirs of the victim.

 The actual tortfeasor (minor) who actually committed the delictual

acts is not exempt from liability when the person responsible proves
that he exercise the diligence of a good father of a family or when the
same has no parents or guardians.

 The same rule applies to judicially adopted children and to illegitimate

child acknowledged and recognized by the father.

Para 3. VICARIOUS OR IMPUTED LIABILITY OF GUARDIANS

Requisites of Employer’s Liability:

1. That the employee was chosen by the employer personally or through

another;
2. That the service is to be rendered in accordance 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 the reason of
the functions entrusted to him.

Para 4. REFERS TO VICARIOUS LIABILITY OF OWNERS AND

MANAGERS OF ESTABLISHMENTS AND ENTERPRISES WHO HAVE
EMPLOYEES UNDER THEM

- It applies to all those who by their industry or profession or other

enterprise have other persons in their service or under their supervision.

46
Para 5. VICARIOUS OR IMPUTED LIABILITY OF EMPLOYERS

It covers employers not engaged in business. It covers tortious acts of household

helpers like family cooks, gardeners, yayas, servants.

Employees must be in the performance of his assigned task when the injurious act
was committed.

Para 6. STATE’S IMPUTED LIABLITY

The State is only liable for the negligence of its officers and employees when it
acts through a special agent.

Special agent – a public officer is acting in an order foreign to the exercise of the
ordinary duties of his office.

Two situations in Para. 6:

1. When the State acts through a special agent

- the State is liable

2. When the act is performed by an official “upon whom previously devolved

the duty of doing the act performed.”
- it is the official, not the State, who is liable for damages caused by his
acts

Para 7. LIABILITY OF TEACHERS AND HEADS OF SCHOOLS

If the school is academic -– the teacher-in-charge is liable

If it is a school of arts and trades – it is the Head who is liable

47
Limitation to such liability: they are only liable if the students should remain in
schools. If they are no longer in school, their responsibility shall attach no more.

Rationale for their Responsibility: Teachers and Heads of Schools stand in loco
parentis and are called upon to exercise reasonable supervision over the conduct of
the child.

CUADRA v. MONFORT
Liability of Parents
Facts: Maria Teresa Cuadra and Maria Teresa Monfort were both classmates in Mabini
Elementary School Bacolod City. Their teacher assigned the class to weed the school premises.
While they were doing so, MT Monfort found a headband and she jokingly shouted it as an
earthworm and thereafter tossed it at MT Cuadra who was hit in her eye. MT Cuadra’s eye got
infected. She was brought to the hospital. Her eyes were attempted to be surgically repaired but
she nevertheless got blind in her right eye. MT Cuadra’s parents sued Alfonso Monfort (MT
Monfort’s father) based on Article 2180 of Civil Code. The lower court ruled that Monfort
should pay for actual damages (cost of hospitalization), moral damages and attorney’s fees.

ISSUE: whether or not Monfort is liable under Article 2180.

HELD: No. Article 2180 provides that the father, in case of his incapacity order, the mother, is
responsible for the damages caused by the minor children who live in their company. The basis
of this vicarious, although primary, liability is fault or negligence, which is presumed from that
which accompanied causative act or omission. The presumption is merely prima facie and may
therefore be rebutted. This is the clear and logical interference that maybe drawn from the last
paragraph of Article 2180, which states “that the responsibility treated of in this Article shall
cease when the person herein mentioned prove that they observed all the diligence of a good
father of a family to prevent damage.”

In the case at bar there is nothing from which it may be inferred that Alfonso Monfort could
have prevented the damage by the observance of due care, or that he was in any way remiss
in the exercise of his parental authority in failing to foresee such damage, or the act which
caused it. On the contrary, his child was at school, where it was his duty to send her in where
she was, as he had the right to expect her to be, under the care and supervision of the teacher. As
far as the act which caused the injury was concerned, it was an innocent prank not unusual
among children at play and which no parent, however careful, could have any special reason to
anticipate much less guard against. Nor did it reveal any mischievous propensity, or indeed any
trait in the child’s character which would reflect unfavorably on her upbringing and for which
the blame could be attributed to her parents.

JOHN E.R. REYES AND MERWIN JOSEPH REYES Petitioners, v. ORICO DOCTOLERO,
ROMEO AVILA, GRANDEUR SECURITY AND SERVICES

48
Facts: The case arose from an altercation between respondent Orico Doctolero a security guard
of respondent Grandeur Security and Services Corporation (Grandeur) and petitioners John E.R.
Reyes and Mervin Joseph Reyes in te parking area of respondent Makati Cinema Square (MCS).
Petitioners, John and Melvin Reyes filed with the RTC of Makati a complaint for damages
against respondents Doctolero and Avila and their employer Grandeur, charging the latter with
negligence in the selection and supervision of its employees. They likewise impleaded MCS on
the ground that it was negligent in getting Grandeur’s services. In their complaint, petitioners
prayed that respondents be ordered, jointly and severally, to pay them actual, moral, and
exemplary damages, attorney’s fees and litigation costs.
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.
RTC: It rendered judgment against respondents Doctolero and Avila, finding them responsible
for the injuries sustained by petitioners and 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.
Grandeur filed an MR and reconsidered its decision.
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.

CA: affirmed RTC’s decision

ISSUE: Whether Grandeur and MCS may be held vicariously liable for the damages caused by
respondents Doctolero and Avila to petitioners John and Mervin Reyes.

HELD: As a general rule, one is only responsible for his own act or omission as provided under
Article 2176 of the Civil Code.

Art. 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a quasi-delict and is governed by the
provisions of this chapter.

EXCEPTION: it makes certain persons liable for the act or omission of another such as when an
employer who is made vicariously liable for the tort committed by his employee under
paragraph 5 or Article 2180. Here, 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 author.
It must be stressed, however, that the above rule is applicable only if there is an employer-
employee relationship. This employer-employee relationship cannot be presumed but must be
sufficiently proven by the plaintiff. The plaintiff must also show that the employee was acting

49
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 employees.
1.) On the part of, we find no employer-employee relationship between MCS and respondent
guards MCS. The guards were merely assigned by Grandeur to secure MCS’ premises
pursuant to their Contract of Guard Services. Thus, MCS cannot be held vicariously
liable for damages caused by these guards’ acts or omissions.

Neither can it be said that a principal-agency relationship existed between MCS and
Grandeur.
2.) On the other hand, paragraph 5 of Article 2180 of the Civil Code may be applicable
to Grandeur, it being undisputed that respondent guards were its employees. When the
employee causes damage due to his own negligence while performing his own duties,
there arises the juris tantum presumption that the employer is negligent, rebuttable only
by proof of observance of the diligence of a good father of a family. The “diligence of a
good father” referred to in the last paragraph of Article 2180 means diligence in the
selection and supervision of employees.

To rebut the presumption of negligence, Grandeur must prove two things: first, that it
had exercise due diligence in the selection of respondents Doctolero and Avila, and
second, that after hiring Doctolero and Avila, Grandeur had exercised due diligence in
supervising them.
Here, both the RTC and the CA found that Grandeur was able to sufficiently prove,
through testimonial and documentary evidence, that it had exercised the diligence of
a good father of a family in the selection and hiring of its security guards. As
testified to by its HRD head Ungui, and corroborated by documentary evidence including
clearances from various government agencies, certificates, and favorable test results in
medical and psychiatric examinations.

Grandeur also submitted as evidence certificates of attendance to various seminars and

the memoranda both those commending respondents for their good works and
reprimanding them for violations of various company policies. 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.

50
DEFENSES IN NEGLIGENCE CASES:

1. Contributory Negligence
2. Doctrine of Assumption of Risk

Illuminating cases:

NATIONAL POWER CORPORATION

-versus-
HEIRS OF NOBLE CASIONAN
G.R. No. 165969
November 27, 2008

FACTS:
 A trail leading to Sanglio, Itogon, existed in Dalicno and this trail was regularly used by
members of the community. Sometime in the 1970s, petitioner NPC installed high-
tension electrical transmission lines of 69 kilovolts (KV) traversing the trail. Eventually,
some of the transmission lines sagged and dangled reducing their distance from the
ground to only about eight to ten feet. This posed a great threat to passerby who were
exposed to the danger of electrocution especially during the wet season.
 On June 27, 1995, Noble and his co-pocket miner, Melchor Jimenez, were at Dalicno.
They cut two bamboo poles for their pocket mining. One was 18 to 19 feet long and the
other was 14 feet long. Each man carried one pole horizontally on his shoulder; Noble
carried the shorter pole while Melchor carried the longer pole. Noble walked ahead as
both passed up through the trail underneath the NPC high tension transmission lines on
their way to their work place.
 As Noble was going uphill and turning left on a cuve, the tip of the bamboo pole he was
carrying touched one of the dangling high tension wires. Melchor, who was walking
behind him, narrated that he heard a buzzing sound when the tip of Noble’s pole touched
the wire for only about one or two seconds. Thereafter, he saw Noble fall to the ground.
Melchor rushed to Noble and shock him but the latter was already dead.

Consequently, the heirs of the deceased Noble filed a claim for damages against the NPC before
the Regional Trial Court (RTC) un Benguet. In this answer, NPC denied being negligent in
maintaining the safety of the high tension transmission lines. It averred that there were danger
and warning signs installed nut these were stolen by children. Excavations were also made to
increase the necessary clearance from the ground to about 17 to 18 feet but some towers or poles
sank due to pocket mining in the area.

51
  At the trial, NPC witnesses testified that the cause of death could not have been
electrocution because the victim did not suffer extensive burns despite the strong 69 KV
carried by the transmission lines. NPC argued that if Noble did die by electrocution, it
was due to his own negligence.
 On February 17, 1998, the RTC decided in favor of respondents.
 Disagreeing with the ruling of the trial court, NPC elevated the case to the CA. in its
appeal, it argued that the RTC erred in ruling that NPC was liable for Noble’s death.
Further, even assuming that Noble died of electrocution, the RTC erred in not finding that
he was guilty of contributory negligence and in awarding excessive damages.

 On June 30, 2004, the CA promulgated its decision, disposing as follows:

WHEREFORE, the appealed Decision is hereby AFFIRMED, with the

MODIFICATION that the amount of moral damages is REDUCED to Fifty
Thousand Pesos (P50,000.00); and the award of attorney’s fees in the sum of
Twenty Thousand Pesos (P20,000.00) is DELETED.

ISSUE:
Whether the award for damages should be deleted in view of the contributory negligence of the
victim.

RULING:
 Petitioner contends that the mere presence of the high tension wires above the trail did
not cause the victims death. Instead, it was Noble’s negligent carrying of the bamboo
pole caused his death. It insists that Noble was negligent when he allowed the bamboo
pole he was carrying to touch the high tension wires. This is especially true because other
people traversing the trail have not been similarly electrocuted.
 Petitioner’s contentions are absurd.
 The sagging high tension wires were an accident waiting to happen. As established
during trial, the lines were sagging around 8 to 10 feet in violation of the required
distance of 18 to 20 feet. If the transmission lines were properly maintained by petitioner,
the bamboo pole carried by Noble would not have touched the wires. He would not have
been electrocuted
 Petitioner cannot excuse itself from its failure to properly maintain the wires by
attributing negligence to the victim. In Ma-ao Sugar Central Co., Inc. v. Court of
Appeals, this Court held that the responsibility of maintaining the rails for the prpose of
preventing derailment accidents belonged to the company. The company should not have
been negligent in ascertaining that the rails were fully connected that to wait until a life
was lost due to an accident.
 Moreover, we find no contributory negligence on Noble’s part.
 Negligence is the failure to observe, for the protection of the interest of another person,
that degree of care, precaution, and vigilance which the circumstances justly demand,
whereby such other person suffers injury. On the other hand, 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 which he is required to conform for his own

52
 protection. There is contributory negligence when the party’s act showed lack ordinary
care and foresight that such act could cause him harm or put his life in danger. It is an act
or omission amounting to want of ordinary care on the part of the person injured which,
concurring with the defendant’s negligence, is the proximate cause of the injury.
 The underlying precept on contributory negligence is that a plaintiff who is partly
responsible for his own injury should not be entitled to recover damages in full but must
bear the consequences of his own negligence. If indeed there was contributory negligence
on the part of the victim, then it is proper to reduce the award for damages. This is in
consonance with the Civil Code provision that liability will be mitigated in consideration
of the contributory negligence of the injured party. Article 2179 of the Civil Code is
explicit on this score:
 When the plaintiffs own negligence was the immediate and proximate cause of his injury,
he cannot recover damages. But if his negligence was only contributory, the immediate
and proximate cause of the injury being the defendants lack of due care, the plaintiff may
recover damages, but the courts shall mitigate the damages to be awarded.
 In Ma-ao Sugar Central, it was held that to hold a person as having contributed to his
injuries, it must be shown that he performed an act that brought about his injuries in
disregard of warnings or signs on an impending danger to health.
 In this case, the trail where Noble was electrocuted was regularly used by members of the
community. There were no warning signs to inform passerby of the impending danger to
their lives should they accidentally touch the high tension wires. Also, the trail was the
only viable way from Dalicon to ltogon. Hence, Noble should not be faulted for simply
doing what was ordinary routine to other workers in the area.
 Petitioner further the victim in engaging in pocket mining, which is prohibited by the
prohibited by the Petitioner further the victim in engaging in pocket mining, which is
prohibited by the prohibited by the in the area.
 In Aonuevo v. Court of Appeals, this Court ruled that the violation of a statute is not
sufficient to hold that the violation of was the proximate cause of the injury that
happened was precisely what was intended to be prevented by the statute.
 That the pocket miners were unlicensed was not a justification for petitioner to leave their
transmission lines dangling.

PHIL. COMMERCIAL INTL. BANK

(formerly INSULAR BANK OF ssASIA
AND AMERICA)
-versus-
COURT OF APPEALS, et. al.
G.R. No. 121413
January 29, 2001

FACTS:
 Ford Philippines drew and issued Citibank Check No. SN-04867 on October 19, 1977,
Citibank Check No. SN-10597 on July 16, 1978 and Citibank No. SN-16508 on April 20,

53
 1979, all in favor of the Commissioner of Internal Revenue (CIR) for payment of its
percentage taxes. The checks were crossed and deposited with the IBAA, now PCIB,
BIR’s authorized collecting bank. The first check was cleared containing an endorsement
that “all prior endorsements and/or lack of endorsements guaranteed”. The same,
however, was replaced with two (2) IBAA’s manager’s checks based on a call and letter
request made by Godofredo Rivera, Ford’s General Ledger Accountant, on an alleged
error in the computation of the tax due without IBAA verifying the authority of Rivera.
 These manager’s checks were later deposited in another bank and misappropriated by the
syndicate. The last two checks were cleared by the Citibank but failed to discover that the
clearing stamps do not bear any initials. The proceeds of the checks were also illegally
diverted or switched by officers of PCIB—members of the syndicate, who eventually
encashed them. Ford, which was compelled to pay anew the percentage taxes, sued in
two actions for collection against the two banks on January 20, 1983, barely six years
from the date the first check was returned to the drawer. The direct perpetrators of the
crime are now fugitives from justice.

DECISION OF LOWER COURTS:

1st case:
 Trial Court: Citibank and IBAA were jointly and severally liable for the checks
 CA: only IBAA (PCIB) solely liable for the amount of the first check

2nd case:
 Trial Court: absolved PCIB from liability and held that only the Citibank is liable for the
checks issued by Ford
 Court of Appeals: held both banks liable for negligence in the selection and supervision
of their employees resulting in the erroneous encashment of the checks.

ISSUE:
Whether or not petitioner Ford had the right to recover from the collecting bank (PCIBank) and
the drawee bank (Citibank) the value of the checks intended as payment to the Commissioner of
Internal Revenue.

RULING:
A.) Citibank Check No. SN-04867

 FORD
 Ford, is guilty of the “imputed contributory negligence” that would defeat its claim for
reimbursement, bearing in mind that its employees, Godofredo Rivera and Alexis
Marindo, were among the members of the syndicate.
 Although the employees of Ford initiated the transactions attributable to an organized
syndicate, in our view, their actions were not the proximate cause of encashing the checks

54
 payable to the CIR. The degree of Ford’s negligence, if any, could not be characterized as
the proximate cause of the injury to the parties.
 IBAA/PCIB
 As agent of the BIR (the payee of the check), defendant IBAA should receive instructions
only from its principal BIR and not from any other person especially so when that person
is not known to the defendant. It is very imprudent on the part of the defendant IBAA to
just rely on the alleged telephone call of one (Godofredo Rivera and his signature to the
authenticity of such signature considering that plaintiff is not a client of the defendant
IBAA.”
 Even considering arguendo, that the diversion of the amount of a check payable to the
collecting bank in behalf of the designated payee may be allowed, still such diversion
must be properly authorized by the payor. Otherwise stated, the diversion can be justified
only by proof of authority from the drawer, or that the drawer has clothed his agent with
apparent authority to receive the proceeds of such check.

B.) Citibank Check Nos. SN-10597 and 16508

 PCIBank
 Section 5 31 of Central Bank Circular No. 580, Series of 1977 provides that any theft
affecting items in transit for clearing, shall be for the account of sending bank, which in
this case is PCIBank.
 Citibank
 Negligent in the performance of its duties. Citibank failed to establish that its payment of
Ford’s checks were made in due course and legally in order. In its defense, Citibank
claims the genuineness and due execution of said checks, considering that Citibank (1)
has no knowledge of any infirmity in the issuance of the checks in question (2) coupled
by the fact that said checks were sufficiently funded and (3) the endorsement of the payee
or lack thereof was guaranteed by PCIBank (formerly IBAA), thus, it has the obligation
to honor and pay the same.
 As the drawee bank breached its contractual obligation with Ford and such degree of
culpability contributed to the damage caused to the latter. It failed to perform what was
incumbent upon it, which is to ensure that the amount of the checks should be paid only
to its designated payee.
 Invoking the doctrine of comparative negligence, we are of the view that both PCIBank
and Citibank failed in their respective obligations and both were negligent in the selection
and supervision of their employees resulting in the encashment of Citibank Check Nos.
SN-10597 and 16508. Thus, we are constrained to hold them equally liable for the loss of
the proceeds of said checks issued by Ford in favor of the CIR. Time and again, we have
stressed that banking business is so impressed with public interest where the trust and
confidence of the public and general is of paramount important such that the appropriate
standard of diligence must be very high, if not the highest, degree of diligence.
 CONTRIBUTORY NEGLIGENCE OF PLAINTIFF SHALL REDUCE DAMAGES HE
MAY RECOVER. – Finally, we also find that Ford is not completely blameless in its
failure to detect the fraud. Failure of the part of the depositor to examine its passbook,
statement of account, and cancel checks and to give notice within a reasonable time (or as
required by statute) of any discrepancy which is may they exercise of due care and
diligence find therein, serves to mitigate the bank’s reliable by reducing the awards of

55
 interest from twelve percent (12%) to six percent (6%) per annum. As provided in Article
1172of the Civil Code of the Philippines, responsibility arising from negligence in the
performance of every kind of obligation is also demandable, but such reliability maybe
regulated by the courts, according to the circumstances. In quai-delicts, the contributory
negligence of the plaintiff shall reduce damages that he may recover.

Doctrine of Assumption Risk

 The precept that denotes that a person who knows and comprehends the peril and
voluntarily exposes himself or herself to it, although not negligent in so doing, is
regarded engaging in an assumption of risk and is precluded from a recovery from an
injury ensuing therefrom. Also called doctrine volenti non fir injuria.
 This is a voluntary assumption of risk of a harm by the defendant. Presupposes an
intentional exposure to unknown peril. The assumption may express or implied. It is
expressed when stated explicitly in a contract, and implied when based on the conduct of
the plaintiff.

56
 SEBASTIAN SIGA-AN -versus- ALICIA
VILLANUEVA
G.R. No. 173227, January 30, 2009

FACTS:
On 30 March 1998, respondent Alicia Villanueva filed a complaint for sum of money
against petitioner Sebastian Siga-an before the Las Piñas City Regional Trial Court. Respondent
alleged that she was a businesswoman engaged in supplying office materials and equipment to
the Philippine Navy Office (PNO) located at Fort Bonfacio, Taguig City, while petitioner was a
military officer and comptroller of the PNO. Respondent claimed that sometime in 1992,
petitioner approached her inside the PNO and offered to loan her the amount of P540,000.00.
Since she needed capital for her business transactions with the PNO, she accepted petitioners
proposal. The loan agreement was not reduced in writing. Also, there was no stipulation as to
the payment of interest for the loan.
Respondent issued a check worth P500,000.00 to petitioner as partial payment of the loan. She
issued another check in the amount of P200,000.00 to petitioner as payment of the remaining
balance of the loan. Petitioner told her that since she paid a total amount of P700,000.00 for
the P540,000.00 worth of loan, the excess amount of P160,000.00 would be applied as
interest for the loan. Not satisfied with the amount applied as interest, petitioner pestered her t
pay additional interest. Petitioner threatened to block or disapprove her transactions with the
PNO if she would not comply with his demand. Thus, she paid additional amounts in cash and
checks as interests for the loan. According to her computation, the total amount she paid to
petitioner for the loan and interest accumulated to P1,200,000.00.

RTC RULING: respondent made an overpayment of her loan obligation to petitioner and that the
latter should refund the excess amount to the former and must be returned pursuant to the
principle of solution indebiti.

CA RULING: Affirmed RTC decision

ISSUE: W/N RTC AND THE COURT OF APPEALS ERRED IN APPLYING THE
PRINCIPLE OF SOLUTIO INDEBITI.
RULING: No. Under Article 1960 of the Civil Code, if the borrower of loan pays interest when
there has been no stipulation the provisions of the Civil Code concerning solution indebiti shall
be applied. The principle of solution indebiti provides that if something is received when there is
no right to demand it, and it was unduly delivered through mistake, the obligation to return it
arises. In such a case, a creditor-debtor relationship is created under a quasi-contract whereby the
payor becomes the creditor who then has the right to demand the return of payment made by
mistake, and the person who has no right to receive such payment becomes obligated to return
the same.

CONTINENTAL CEMENT CORPORATION vs ASEA BROWN BOVERI, INC. BBC

BROWN BOVERI, CORP., AND TORD B. ERIKSON

57
FACTS:
Continental Cement Corporation (petitioner) a corporation engaged in the business of
producing cement obtained the services of respondents Asea Brown Boveri, Inc. (ABB) and
BBC Brown Brown Boveri, Corp. to repair its 160 KW Kiln DC Drive Motor. Due to the
repeated failure of respondents to repair the Kiln Drive Motor petitioner filed with the RTC a
complaint for sum of money and damages against respondents corporations and respondent Tord
B Eriksson (Eriksson), Vice-President of the Service Division of the respondent ABB.
Respondents, however, claimed that under Clause 7 of the General Conditions, attached to the
letter of offer issued by respondent ABB to petitioner, the liability of respondent ABB does not
extend to consequential damages either direct or indirect.
RTC Ruling: In favor of the petitioner. The RTC rejected the defense of limited liability
interposed by respondents since they failed to prove that petitioner received a copy of the
General Conditions. Consequently, the RTC granted petitioners claims for production los, labor
cost and rental of crane, and attorney’s fees.

CA RULING: Reversed the decision of the RTC.

ISSUE:
1. W/N the CA erred in applying the terms of the General Conditions of Purchase Orders.
2. W/N CA erred applying the concepts of implied warranty and warranty against hidden
defects of the New Civil code in order to exculpate the respondents.

RULING:
Petitioner and respondent ABB entered into a contract for the repair of petitioners Kiln
Drive Motor, evidenced by Purchase Order, Respondent ABB, however, not only incurred delay
in performing its obligation but likewise failed to sue for damages. Furthermore, Clause 7 of thr
general condition is not binding on the petitioner because respondents failed to show that
petitioner was duly furnished with a copy of said General Conditions. Having breached the
contract it entered with petitioner, respondent ABB is liable for damages pursuant to Articles
1167, 1170, and 2201 of the Civil Code. Moreover, Respondent Eriksson cannot be made jointly
and severally liable for the penalties.

SHINRYO (PHILIPPINES) COMPANY, INC. –versus-

RRN INCORPORATED
G.R. No. 172525, October 20, 2010
FACTS:
Shinryo (Philippines) Company, Inc. (hereinafter petitioner) is a domestic corporation
organized under Philippine laws. Private respondent RRN Incorporated is likewise a domestic
corporation organized under Philippine laws. Respondent filed a claim for arbitration against
petitioner before CIAC for recovery of unpaid account which consists of unpaid portions of the
sub-contract, variations and unused materials. It was shown that petitioner and respondent
executed an agreement. Respondent signified its willingness to accept and perform for petitioner

58
in any of its projects. Respondent was not able to finish the entire works with petitioner due to
financial difficulties. Petitioner claimed material back charges but respondent only acknowledge
P2,371,895.33 as material back charges. Respondent, through its new counsel, advised petitioner
of their intention to submit the matter to arbitration. Respondents sent another letter to petitioner
regarding the cost of equipment rental and the use of scaffolding.

RULING OF CIAC:
Rendered in favor of the claimant and respondent is ordered to pay claimant its unpaid account
plus legal interest.

ISSUE:
W/N the CA committed grave reversible error when it denied petitioner claim for man-lift
equipment rental despite the evidence on record that the respondent actually used and benefited
therefrom.
*Petitioner relied on the principle of unjust enrichment.

SUPREME COURT RULING:

Petitioner’s reliance on the principle of unjust enrichment is misplaced. The essential
elements must be present: (1) that the defendant has been enriched. (2) that the plaintiff has
suffered a loss, (3) that the enrichment of the defendant is without just or legal ground, and (4)
that the plaintiff has no other action based on contract, quasi-contract, crime or quasi-delict. Both
the CIAC and affirmed by the CA, petitioner failed to prove that respondent’s free use of the
man-lift was without legal ground based on the provisions of their contract. Thus, the third
requisite, that the enrichment of respondent is without just or legal ground, is missing. In
addition, petitioner’s claim is based on contract, quasi-contract, crime or quasi-delict – is also
absent. Clearly, the principle of unjust enrichment is not applicable in this case.

UNIVERSITY OF THE PHILIPPINES

vs. PHILAB INDUSTRIES, INC.,
G.R. No. 152411. September 29, 2004

FACTS:
Sometime in 1979, the University of the Philippines (UP) decided to construct an
integrated system of research organization known as the Research Comples. As part of the
project, laboratory equipment and furniture were ourchased for the National Institute of
Biotechnology and Applied Microbiology (BIOTECH) at the UP Los Baños. Providentially, the
Ferdinand E. Marcos Foundation (FEMF) came forward and agreed to fund the acquisition of the
laboratory furniture, including the fabrication thereof. University of the Philippines and FEHM
executed a Memorandum of Agreement (MOA
) in which FEMF agreed to grant financial support and donate sums of money to UP for the
construction of buildings, installation of laboratory and other capitalization for the project.
PHILAB submitted to BIOTECH Invoice No. 01643 in the amount of P702,939.40 for the final
payment of laboratory furniture. However, FEHM failed to pay the bill despite demand.

59
ISSUE:

THE COURT OF APPEALS ERRED IN APPLYING THE LEGAL PRINCIPLE OF UNJUST

ENRICHMENT WHEN IT HELD THAT THE UNIVERSITY AND NOT THE MARCOS
FOUNDATION IS LIABLE TO PHILAB.

RULING:

No. Article 22 of the New Civil Code reads:

Every person who, through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just or legal ground,
shall return the same to him.

The essential requisites for the application of Article 22 of the New Civil Code do not obtain in
this case. The respondent had a remedy against the FEMF via an action based on an implied-in-
fact contract with the FEMF for the payment of its claim. The petitioner legally acquired the
laboratory furniture under the MOA with FEMF, hence, it is entitled to keep the laboratory
furniture.

Twin Doctrines Of Apparent Authority and Doctrine of Corporate

Responsibility in hospital setting can be pertinently illustrated in the case
Professional Services, Inc. vs. Agana., G.R. No. 126296, February 2, 2010.

As regards corporate responsibility, decisional law teaches that while it recognizes the
importance of corporate responsibility, it does not deny the economic viability and survival of a
hospital as a business entity: This is exemplified in the case Manila Doctors Hospital v. So Un
Chua, et al. G.R. 150355, July 31, 2006.

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 Professional Services, Inc (PSI) vs.
Agana, G.R. No. 126297, February 2, 2010

Background of the Case:

This is an En Banc Case decided by the Supreme Court. The records of the case would
reveal following facts of the case. With prior leave of court, petitioner Professional Services, Inc.
(PSI), owner of Medical City General Hospital, filed a second motion for reconsideration urging
referral thereof to the Court en banc and seeking modification of the decision dated January 31,
2007 and resolution dated February 11, 2008 which affirmed its vicarious and direct liability for
damages to respondents Enrique Agana and the heirs of Natividad Agana (Aganas).
 Manila Medical Services, Inc. (MMSI), Asian Hospital, Inc. (AHI), and Private Hospital
Association of the Philippines (PHAP) all sought to intervene in these cases invoking the
common ground that, unless modified, the assailed decision and resolution will
jeopardize the financial viability of private hospitals and jack up the cost of health care.
 The Special First Division of the Court granted the motions for intervention of MMSI,
AHI and PHAP (intervenors), and referred en consulta to the Court en banc the motion
for prior leave of court and the second motion for reconsideration of PSI
 Due to paramount public interest, the Court en banc accepted the referral and heard the
parties on oral arguments on one particular issue:

Whether a hospital may be held liable for the negligence of physicians-consultants is

allowed to practice in its premises.

 On April 4, 1984, Natividad Agana was rushed to the Medical City General Hospital
(Medical City Hospital) because of difficulty of bowel movement and bloody anal
discharge. After a series of medical examinations, Dr. Miguel Ampil, diagnosed her to be
suffering from “cancer of the sigmoid.”
 On April 11, 1984, Dr. Ampil, assisted by the medical staff of the Medical City Hospital,
performed an interior resection surgery on Natividad. He found that the malignancy in
her sigmoid area spread on her left ovary, necessitating the removal of certain portions of
it. Thus Dr. Ampil obtained the consent of Natividad’d husband, Enrique Agana, to
permit Dr. Juan Fuentes, respondent in to perform hysterectomy on her.
 After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took over, completed the
operation and closed the incision.

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Salient facts:
 PSI, together with Dr. Miguel Ampil (Dr. Ampil) and Dr. Juan Fuentes (Dr. Fuentes),
was impleaded by Enrique Agana and Natividad Agana (later substituted by her heirs), in
a complaint for damages filed in the Regional Trial Court (RTC) of Quezon City, Branch
96, for the injuries suffered by Natividad when Dr. Ampil and Dr. Fuentes neglected to
remove from her body two gauzes which were used in the surgery they performed on her
on April 11, 1984 at the Medical City General Hospital. PSI was impleaded as owner,
operator and manager of the hospital.

The direct liability of PSI and Dr. Ampil to the Aganas are premised on the following facts and
the law:
 Existence of an Employer-employee relationship
 Doctrine of Apparent Authority.

PSI was liable for negligence of Dr. Ampil, “by accrediting Dr. Ampil and
advertising his qualifications, PSI created the public impression that he was
its agent.”

Enrique testified that it was on account of Dr. Ampil’s accreditation with PSI that he conferred
with said doctor about his wife’s (Natividad’s) condition. After his meeting with dr. Ampil,
Enrique asked Natividad to personally consult Dr. Ampil. In effect, when Enrique and Natividad
engaged the services of Dr. Ampil, at the back of their minds was that the latter was a staff
member of a prestigious hospital. Thus, under the doctrine of apparent authority applied in
Nogales, et al. v. Capitol Medical center, et al., PSI was liable for the negligence of Dr. Ampil.

 RTC Decision
In a decision dated March 17, 1993, the RTC held PSI solidarily liable with Dr.
Ampil and Dr. Fuentes for damages.

 CA Decision
On appeal, the Court of appeals (CA), absolved Dr. Fuentes but affirmed the
liability of Dr. Ampil and PSI, subject to the right of PSI to claim reimbursement
from Dr. Ampil.

 SC Decision
On petition for review, Supreme court, in its January 31, 2007 decision, affirmed
the CA decision. PSI filed a motion for reconsideration (MR) but the Court denied
it in a resolution dated February 11, 2008.

II. On Doctrine Of Apparent Authority

Respondents Aganas engaged Dr. Miguel Ampil as their doctor and did not primarily and
specifically look to the Medical City Hospital (PSI) for medical care and support; otherwise
62
stated, respondents Aganas did not select Medical City Hospital (PSI) to provide medical care
because of any apparent authority of Dr. Miguel Ampil as its agent since the latter was chosen
primarily and specifically based on his qualifications and being friend and neighbor.

II. Corporate responsibility

PSI cannot be liable under doctrine of corporate negligence since the proximate cause of
Mrs. Agana’s injury was the negligence of Dr. Ampil, which is an element of the principle of
corporate negligence.
 Corporate Responsibility. Breach of Corporate Responsibility.

As owner and operator of Medical City General Hospital, PSI was bound by its duty to
provide comprehensive medical services to Natividad Agana, to exercise reasonable care to
protect her from harm, to oversee or supervise all persons who practiced medicine within its
walls, and to take active steps in fixing any form of negligence committed within its premises. PI
committed a serious breach of its corporate duty when it failed to conduct an immediate
investigation into the reported missing gauzes.

 Now in its Second Motion for Reconsideration, PSI is now asking this Court of
reconsider the foregoing rulings for these reasons:

On the doctrine of apparent authority

 Also referred to as the “holding out” theory or doctrine of ostensible agency. The
principal’s liability is limited only to third persons who, in good faith, believed that actual
authority exists. Below are the pertinent articles in the New Civil Code dealing with the
Doctrine of Apparent Authority
 Article 1431. Through estoppel an admission or representation is rendered conclusive
upon the person making it, and cannot be denied or disproved as against the person
relying thereom.
 Article 1869. Agency may 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 in his behalf without authority.

The SC En Banc ruled in favor of the Aganas, not under the principle of respondeat
superior for lack of evidence of an employment relationship with Dr. Ampil but under
the principle of ostensible agency for the negligence of Dr. Ampil and, pro hac vice,
under the principle of corporate negligence for its failure to perform its duties as a
hospital.

The Decision in Professional Services, Inc. v. Court of Appeals reads;

63
 “While the theory a hospital as a juridical entity cannot practice medicine,
in reality it utilizes doctors, surgeons and medical practitioners in the conduct of its
business of facilitating medical and surgical treatment….Where an employment
relationship exists, the hospital may be held vicariously liable under Article 2176 in
relation to Article 2180 of the Civil Code or the principle of respondeat superior. Even
when no employment relationship exists but it is shown that the hospital holds out to
the patient that the doctor is its agent, the hospital may still be vicariously liable under
Arrticle 2176 in relation to Article 1431 and Article 1869 of the Civil Code or the
principle of apparent authority. Moreover, regardless of its relationship with the doctor,
the hospital may be held directly liable to the patient for its own negligence or failure to
follow established standard of conduct to which it should conform as a corporation.”

Apparent or Ostensible Authority

When it is conferred by words, conduct or even by silence of the principal (See

Article 1869) which causes a third person reasonably to believe tha a particular person,
who may or may not be the principal’s agent, has actual authority by estoppel (See
Article 1431) or a species of the doctrine of estoppel. It is also an implied authority but
only in the sense that it is not expressly conferred. The apparent authority of an agent can
only arise by acts or conducts of the principal giving rise to an appearance of authority
and making the principal responsible for certain agent’s actions that were not really
authorized at all. There is an apparent authority when an agent has authority if it that
appears reasonable from the viewpoint of the third party.

 The Court ruled that there is “ample evidence that the hospital (PSI) held out to the
patient (Natividad) that the doctor (Dr. Ampil) was its agent. Present are the two factors
that determine apparent authority: first, the hospital’s agent; and second, the patient’s
reliance upon the conduct of the hospital and the doctor, consistent with ordinary
care and prudence.”

 The reason for choosing Dr. Ampil as physician in the testimony of Enrique, the husband;

 Atty. Agcaoili

 Q. On that particular occasion, April 2, 1984, what was your reason for choosing Dr.
Ampil to contact with in connection with your wife’s illness?

 A. First, before that, I have known him to be a specialist on that part of the body as a
surgeon, second, I have known him to be a staff member of the Medical city which is a
prominent and known hospital. And third, because he is a neighbor, I expect more than
the usual medical service to be given to us, that his ordinary patients.

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  Clearly, the decision made by Enrique for Natividad to consult Dr. Ampil was
significantly influenced by the impression that Dr. Ampil was a staff member of
Medical City General Hospital, and that said hospital was well known and prominent.
Enrique looked upon dr. Ampil not as independent of but as integrally related to
Medical city.

 Moreover, the consent form for hospital care for the surgery of Natividad reinforced
Enrique’s view that Dr. Ampil was a physician of its hospital, rather than one
independently practicing in it; that the medications and treatments he prescribed were
necessary and desirable; and that the hospital staff was prepared to carry them out.

 The Court has maintained in the Second Resolution the ruling that PSI is
vicariously liable for the negligence of Dr. Ampil as its ostensible agent.

Doctrine of Corporate Responsibility

Corporate governance reforms of recent times, that gave birth to stakeholders theory (i.e.
that in addition to just maximizing profits for the benefit of the stockholders, public-held
corporations or those who operate an enterprise that is deemed with public interest, to assume
certain possibilities to all stakeholders who are affected by its business enterprise), have begun to
recognize the principle of “corporate social responsibility.” It was the Bangko Sentral ng
Pilipinas that first adopted within the banking industry the version of Corporate Social
Responsibility (SCR), referred to as “Stakeholder Theory,” that prescribes that corporate
managers should be concerned not only with maximizing the values of stockholders’ equity, but
also with the interest groups who have legitimate stake in the corporation (Villanueva, p.1062)
Business corporations should have “social conscience.”

 In Professional Services, Inc. vs Court of Appeals and Natividad and Enrique Agana,
G.R. No. 126297, February 2, 2010, the Supreme Court began to recognize that
corporation which operate enterprise vested with public interest such as that of operating
a hospital, assume certain legal relationship with members of the public whom they invite
to use their facilities, and thereby become responsible for the negligent acts of even their
contractors, such as doctors, who treat them in their facilities. In Professional Services,
the court held that apart from the professional between a doctor and his patient, and the
relationship between the hospital and the doctor who uses the hospital’s facilities, there is
a separate legal relationship that is created between the hospital and the patient, for which
the hospital would owe a certain degree of responsibility of prudence.

 While the prevailing doctrine was that the hospitals cannot be held for the medical
malpractice o independent doctors who merely use their facilities by their treating their
patients unless there has been representation to the patient that the doctor was an
employee of the hospital, the Court began to recognize in Professional Services the

65
 corporate social responsibility assumed by the hospitals for what goes in within its
facilities.

 “While in theory a hospital as a juridical entity cannot practice medicine, in reality it

utilizes doctors, surgeons and medical practitioners in the conduct of its business of
facilitating medical and surgical treatment. Within that reality, three legal relationships
crisscross: (1) between the hospital and the doctor practicing within its premises; (2)
between the hospital and the patient being treated or examined within its premises and (3)
between the patient and the doctor. The exact nature of each relationship determines the
basis and extent of the liability of the hospital for the negligence of the doctor.

 ….Moreover, regardless of its relationship with the doctor, the hospital may be held
directly liable to the patient for its own negligence or failure to follow established
standard of conduct to which it should conform as a corporation.

 In an earlier resolution, the Court had invoked the “doctrine of corporate responsibility,”
when it held that “the challenged Decision- making the hospital liable for the malpractice
of physician- also anchors its ruling on the doctrine of corporate responsibility. The duty
of providing quality medical service is no longer the sole prerogative and responsibility
of the physician. This is because the modern hospital now tends to organize a highly-
professional medical staff whose competence and performance need also to be monitored
by the hospital commensurate with its inherent responsibility to provide quality medical
care. Such responsibility includes the proper supervision of the members of its medical
staff. Accordingly, the hospital has the duty to make reasonable effort to monitor and
oversee the treatment prescribed and the administered by the physicians practicing in its
premises” (Villanueva, pp. 42-43).

 In the Motion for Reconsideration, the PSI made judicial admission that “defined the
standards of its corporate conduct under the circumstances of this case, specifically: (a)
that it had a corporate duty to Natividad even after her operation to ensure her safety as a
patient; (b) that its corporate duty was not limited to having its nursing staff note or
record the two missing gauzes and (c) that its corporate duty extended to determining Dr.
Ampil’s role in it, bringing the matter to his attention, and correcting his negligence.

 And finally, by such admission, PSI barred itself from arguing in its second motion for
reconsideration that the concept of corporate responsibility was not yet in existence at the
time Natividad underwent treatment; and that if it had any corporate responsibility, the
same was limited to reporting the missing gauzes and did not include taking an active
step in fixing the negligence committed. An admission made in the pleading cannot be
controverted by the party making such admission and is conclusive as to him, and all

66
 proofs submitted by him contrary thereto or inconsistent therewith should be ignored,
whether or not objection is interposed by a party.”

 The Court ruled that the duty to initiate review what transpired during the
operation is the responsibility of PSI and such duty is non-delegable.

 “While Dr. Ampil may have had the primary responsibility of notifying Natitvidad about
the missing gauzes, PSI imposed upon itself the separate and independent responsibility
of initiating the inquiry into the missing gauzes. The purpose of the first would have been
to apprise Natividad of what transpired during her surgery, while the purpose of the
second would have been to pinpoint any lapse in procedure that led to the gauze count
discrepancy, so as to prevent a recurrence thereof and to determine corrective measures
that would ensure the safety of Natividad. That Dr. Ampil negligently failed to notify
Natividad did not release PSI from its self-imposed separate responsibility.

 …As it happened, PSI took no heed of the record of operation and consequently did not
initiate a review of what transpired during Natividad’s operation. Rather, it shirked its
responsibility and passed it on to others to Dr. Ampil whom it expected to inform
Natividad, and to Natividad herself to complain before it took any meaningful step. By its
inaction, therefore, PSI failed its own standard of hospital care. It committed corporate
negligence.

 It should be borne in mind that the corporate negligence ascribed to PSI is different from
the medical negligence attributed to Dr. Ampil. The duties of the hospital are distinct
from those of the doctor-consultant practicing within its premises in relation to the
patient; hence, the failure of PSI to fulfill its duties as a hospital corporation gave rise to a
direct liability to the Aganas distinct from that of Dr. Ampil.

 All this notwithstanding, the Court makes it clear that PSIs hospital liability based on
ostensible agency and corporate negligence applies only to this case, pro hac vice. It is
not intended to set a precedent and should not serve as a basis to hold hospitals liable for
every form of negligence of their doctors-consultants under any and all circumstances.
The ruling is unique to this case, for the liability of PSI arose from an implied agency
with Dr. Ampil and an admitted corporate duty to Natividad.

In another case Mamila Doctors Hospital v. So Un Chua, et al. G.R. no. 150355, July 31,
2006, the Supreme Court says that while it recognizes the importance of corporate
responsibility, it does not deny the economic viability and survival of a hospital as a
business entity.
Background of the case:

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 This case originated drom an action for damages (moral and exemplary) filed with
the RTC by respondents So Un Chua and Vicky Ty against petitioner Manila Doctors
Hospital. The complaint is premised on the alleged unwarranted actuations of the
petitioner towards its patient, respondent So Un Chua (Chua), who was confined for
hypertension, diabetes, and related illnesses.

On December 13, 1993, respondents filed a Complaint averring that on October 30, 1990,
respondent Chua, the mother of respondents Vicky Ty, was admitted in petitioner
hospital for hypertension and diabetes. While respondent Chua was confined, Judith
Chua, the sister of respondent Ty, had been likewise confined for injuries suffered in a
vehicular accident. Partial payments of the hospital bills were made, totaling P435,
800.00.

 During pre-trial, the parties stipulated on the following issues: First, whether the
respondents are liable to the petitioner to pay the hospital bills arising from the
hospitalization of respondent Chua and Judith Chua; and second, whether the parties are
entitled to their respective claims for damages.
 Furthermore, the parties stipulated on the following facts: a) Judith Chua was confined
from June 14, 1991 to May 2, 1992; b) respondents failed to pay the balance despite
repeated reminders; c) the said reminders referred to the hospital bills of respondent Chua
and Judith Chua; d) one of the attending physicians of respondent Chua was Dr. Rody Sy;
and e) the petitioner ordered the removal of the facilities in question from the room of its
patient, respondent Chua, with the qualification that they were constrained to discontinue
the same after the representative of respondent Chua refused to update the hospital bills
or refused to transfer her to semi-deluxe room or ward to lessen costs.

RTC Decision:
 On September 30, 1997, the RTC rendered its Decision ordering the petitioner, Manila
doctors Hospital to pay the respondents, Chuas for moral and exemplary damages and
attorneys fees and litigation costs. The RTC held:
 That the removal of the facilities of the room triggered the hypertension of
respondent Chua;
 That the petitioner acted in bad faith in removing the facilities without bprior notice;
 That her condition was aggravated by the pressure employed by the administration upon
her to pay the hospital bills;
 That the food always came late as compared to the other patients;
 That the beddings and clothes of respondent Chua were no longer changed and as a
result, bed sores emerged on her body.
 That there was an utter lack of medical attendance;
 That, because of these, respondent Chua suffered from self-pity and depression;
 That petitioner clearly discriminated against the respondents;

68
  That respondent Ty had no choice but to sign the promissory notes in order to secure the
release of her mother, respondent Chua;
 That the foregoing actuations (1-9) constitute an abuse of rights;
 That petitioner (MDH) failed to establish the pecuniary loss it suffered and, hence, it is
not entitled to compensatory damages;
 And that, since the promissory note is a contract of adhesion, the petitioner is not entitled
to the award of attorney’s fees as stipulated thereon.

CA Decision:
On appeal of the CA, the appealed decision is hereby affirmed but reduced the award of
damages, the CA affirmed all salient portions of the RTC Decision and declined to disturb
the findings of fact.

SC Decision:
The SC found the petition of MDH impressed with merit. The Court said that “as a rule,
only questions of law may be raised in a petition for review on certiorari under Rule 45,
under certain exceptions, the Court may re-examine the evidence presented by the parties
during the trial. At least four exceptions exist in this case, namely: (a) when the conclusion
is a finding grounded entirely on speculation, surmises, or conjectures; (b) when the
judgment is based on a misapprehension of facts; (c) when the findings of fact are
premised on the supposed absence of evidence and contradicted by the evidence on
record; and (d) when the courts a quo manifestly overlooked certain relevant facts not
disputed by the parties and which, if properly considered, would justify a different
conclusion.
 The court ruled that the actuations of the petitioner do not amount to actionable
wrongs. Moreover, the counterclaims of the petitioner can be backed up by the
measure of preponderant evidence.
 It is to be noted that the courts a quo concurred in the holding:
 That the petitioner and its staff failed to take into consideration the physical condition
of its patient, respondent Chua, when it removed the facilities provided in her room;
 That the removal of these facilities, namely, the air-conditioner, telephone lines,
television, and refrigerator, aggravated the condition of the patient, triggered her
hypertension, and caused her blood pressure to fluctuate, considering that there was
no proper ventilation in the room.
 In view of the foregoing, the courts a quo concluded that the actuations of the
petitioner were oppressive, unnecessary, and anti-social, done in bad faith without
proper notice, with no intention other than to harass or irritate the respondents, all of
which constitute an abuse of rights.
 The Supreme Court considers the conclusions of the courts a quo as either hapahazard
conjectures, or founded on a misapprehension of facts. The record is replete with
evidence that justifies a different conclusion. The Court said:

69
  "Indeed the operation of private pay hospitals and medical clinics is impressed with
public interest and imbued with a heavy social responsibility. But the hospital is also a
business, and, as a business, it has a right to institute all measures of efficiency
commensurate to the ends for which it is designed, especially to ensure its economic
viability and survival. And in the legitimate pursuit of economic considerations, the
extent to which the public may be served and cured is expanded, the pulse and life of the
medical sector quickens, and the regeneration of the people as a whole becomes more
visibly attainable. In the institution of cost-cutting measures, the hospital has a right to
reduce the facilities and services that are deemed to be non- essential, such that their
reduction or removal would not be detrimental to the medical condition of the patient."

 The Court considered the issue whether the subject facilities are indeed non-essential the
air-conditioner, telephone, television, and refrigerator the removal of which would cause
the adverse health effects and emotional trauma the respondents so claimed. Did the
hospital exercise the diligence of a good father of the family in the course of ascertaining
the possible repercussions of the removal of the facilities prior to the removal itself and
for a reasonable time thereafter, with a view to prevent damage?

 The Court found the courts a quo conclusions as having devoid of probative value and
held that the respondents failed to prove the damages so claimed.

 The evidence in the record frimly establishes that the staff of the petitioner MDH took
proactive steps to inform the relatives of respondent Chua of the removal of facilities
prior thereto, and to carry out the necessary precautionary measures to ensure that her
health and well-being would not be adversely affected .

 "it is also undisputed that the hospital administrator , Sister Galeno, prior to the removal
of the facilities, consulted the attending physician, Dr. Sy. To Sister Galeno, also a
registered nurse, the matter of removal and its possible repercussions on the health of the
patient, as a matter of hospital policy, is a critical and sensitive maneuver, and, hence, it
is carried out only after discussing with the doctors to evaluate all important factors.

 The fact of prior consultation as well as the medical determination to the effect that it was
safe to remove the facilities and would cause no harmful effect had been amply
corroborated by respondent Chuas own doctor himself. When Dr. Sy testified as rebuttal
witness for the respondents themselves and whose credibility respondents failed to
impeach, he categorically stated that he consented to the removal since the removal of the

70
 said facilities would not by itself be detrimental to the health of his patient, respondent
Chua.

 And in this respect, he had been advising respondent Ty, the daughter of the patient, that
the facilities, such as the air-conditioner, television, refrigerator, and telephone, are not
absolutely necessary, and, that although they may add to the comfort of the patient, if
absent, they will not cause any significant deterioration of her condition, given that, in his
experience as a cardiologist, and after personally attending respondent Chua on a daily
basis before, during, and after the removal and even up to the time of her actual
discharge, he concluded that many hypertensive and diabetic patients, as in her case, do
not at all need in particular an air-conditioning unit, among the other facilities
aforementioned."

 Thus, the Court rules that the evidence would prove that the hospital committed no
negligence and that the removal of the facilities mentioned do not amount to actionable
wrong contrary to the findings and conclusions of the RTC and CA, which would warrant
damages:

 "The evidence in the record overwhelmingly demonstrates that respondent Chua had been
adequately attended to, and this Court cannot understand why the courts a quo had
declared that there was an utter lack of medical attendance, or that her health suffered
during the period after the removal of the facilities. The Court finds that the facilities in
question are non-essential for the care of respondent Chua and, hence, they may be
lessened or removed by the petitioner for the sake of economic necessity and survival.

 Though human experience would show that the deactivation of the air-conditioner may
cause a temperature differential that may trigger some physical discomfort, or that the
removal of entertainment facilities such as the television set, or the disconnection of
communication devices such as the telephone, may cause some exasperation on the part
of the one who benefits from these, nevertheless, all things considered, and given the
degree of diligence the petitioner duly exerted, not every suppression of the things that
one has grown accustomed to enjoy amounts to an actionable wrong, nor does every
physical or emotional discomfort amount to the kind of anguish that warrants the award
of moral damages under the general principles of tort.

 The underlying basis for the award of tort damages is the premise that an individual was
injured in contemplation of law. Thus, there must first be the breach of some duty and the
imposition of liability for that breach before damages may be awarded; it is not sufficient

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 to state that there should be tort liability merely because the plaintiff suffered some pain
and suffering.

Teacher-in-charge Doctrine Business Tort

Product Liability

Teacher-in-charge

 The teacher-in-charge is the one designated by the dean, principal, or other administrative
superior to exercise supervision over the pupils in the specific classes or sections to
which they are assigned.

Amadora-vs-Court of Appeals

- Alfredo Amadora, 17 years old, was looking forward to the commencement exercises
where he would ascend the stage and in the presence of his relatives and friends receive
his high school diploma. However, fate did intervene and deny him of that awaited
experience.
- While they were in the auditorium of their school, Colegio de San Jose Recoletos, a
classmate, Pablito Daffon, fired a gun that mortally hit Alfredo, ending all his
expectations and his life.

Amadora vs CA

 ISSUE:
 Whether or not Colegio de San Jose-Recoletos, an academic school, is liable under
Article 2180 of the Civil Code for the tortuous act of its student.

Amadora vs CA

Rules:
1. Art.2180 makes teachers and heads liable for acts of students and apprentices whether the
latter are minors or not.
2. The teacher-in-charge is liable for the acts of his students. The school and administrators
are not liable.

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 3. By way of exception, it is only the head of the school, not the teacher, who is held liable
where the injury is caused in a school of arts and trade.
4. The liability of the teacher subsists whether the school is academic or non-academic.
5. Liability is imposed only if the pupil is already in the custody of the teacher or head. The
student is in the custody of the school authorities as long as he is under the control, and
influence of the school and within its premises, whether the semester has not yet begun or
has already ended.

The Court concluded.

 At the time Alfredo Amadora was fatally shot, he was still in the custody of the
authorities of Colegio de San Jose Recoletos notwithstanding that the fourth year classes
had formally ended.
 The director, the high school principal and the dean of boys cannot be held liable because
none of them was the teacher-in-charge, as each of them was exercising only a general
authority over the student body.
 Assuming that Dicon was the teacher-in-charge, there is no showing that he was
negligent in enforcing discipline upon Daffon or that he had waived observance of the
rules and regulations of the school or condoned their non-observance.
 Private respondents have proved that they had exercised due diligence, through the
enforcement of the regulations, in maintaining that discipline.
 In the absence of the teacher-in-charge, it is probably the dean of boys who should be
held liable in view of the unrefuted evidence that he had confiscated an unlicensed gun
from one of the students and returned the same later to him without taking disciplinary
action, however, it does not necessarily link him to the shooting of Amador.
 The Colegio de San Jose Recoletos cannot be held directly liable because only the teacher
or the head of the school of the arts and trades is made responsible for the damage caused
by the student or apprentice.

BUSINESS TORTS

It deals with:

 Interference with contractual relations

 Interference with prospective advantage
 Unfair competition
 Securities related fraud

BUSINESS TORTS

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  Sometimes in the nature of non-possessory invasion of the interest of another.
 One becomes liable in an action for damages if:
 The other has property rights and privileges with respect to the use or enjoyment
interfered with.
 Invasion is substantial
 Defendant’s conduct is a legal cause of invasion
 Invasion is intentional or unreasonable

Interference with Contractual Relations

General Rule: Only the parties to a contract are bound by the terms of the contract and only a
party can file an action for breach of contract or rescission or annulment thereof.

XPN: Contracts containing a stipulation in favor of a third person and contracts intended to
defraud creditors.

However, a contracting party may sue a third person not for breach of contract, but for inducing
another to commit such breach.

Interference with Contractual Relations

→Art.1314. Any third person who induces another to violate his contract shall be liable for
damages to the other contracting party.

 It violates the rights of the contracting parties to fulfill the contract and to have it
fulfilled, to reap the profits resulting therefrom, and to compel the performance by the
other party.

Elements of the Tort of Interference

 Existence of a valid contract

 Knowledge on the part of the third person of the existence of the contract
 Interference of the third person without legal justification

×No tort is committed if the party had already broken the contract and offers to contract
with the defendant.

Gilchrist vs Cuddy

→The petitioner, a proprietor of a theatre in Iloilo City contracted with respondent Cuddy for the
exhibition of a certain film, Later, Respondent Espejo was also granted by Cuddy the right to
exhibit the same film.

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→The Court observed that the only motive for the interference was a desire to make profit and
there was no malice beyond this desire. However, the Court said that this fact does not relieve
the respondent of the legal liability. Zaldarriaga and Espejo are guilty of interference with
contractual relations even if at the time they offered to lease the film from the defendant Cuddy,
they did not know the identity of the lease (Gilchrist).

Gilchrist vs Cuddy

→The Court concluded that the issuance of a preliminary injunction which prohibited the
respondent from exhibiting the same film during the week that the petitioner desired to exhibit it,
was justified.

Extent of Liability

 The rule is that the defendant found guilty of interference with contractual relations
cannot be held liable for more than the amount for which the party who was induced to
break the contract can be held liable.

 Art.2202.The defendant in quasi-delict cases is liable for all the atural and probable
consequences of his act or omission whether the same is foreseen or unforeseen.

UNFAIR COMPETITION

 Art 28 of the New Civil Code provides that unfair competition in agricultural,
commercial, or industrial enterprise, or in labor through the use of force, intimidation,
deceit, machination or any other unjust, oppressive or highhanded method shall give rise
to a right of action by the person who thereby suffers damage.

 It covers even cases of discovery of trade secrets of a competitor, bribery of his

employees, misrepresentations of all kinds, interference with the fulfillment of a
competitor’s contracts, or any malicious interference with the latter’s business.

Unfair Competition

 In order to qualify the competition as “unfair”

 It must involve an injury to a competitor or trade rival
 It must involve acts which are characterized as “contrary to good conscience”, or
“shocking to judicial sensibilities”, or otherwise unlawful.

Passing off and Disparagement of Products

Under the Intellectual Property Rights

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Section 168. Unfair Competition, Rights, Regulation and Remedies.

168.1. A person who has identified in the mind of the public the goods he manufactures or deals
in, his business or services from those of others, whether or not a registered mark is employed,
has a property right in the goodwill of the said goods, business or services so identified, which
will be protected in the same manner as other property rights.

Passing off and Disparagement of Products

168.2. Any person who shall employ deception or any other means contrary to good faith by
which he shall pass off the goods manufactured by him or in which he deals, or his
business, or services for those of the one having established such goodwill, or who shall
commit any acts calculated to produce said result, shall be guilty of unfair competition, and shall
be subject to an action therefor.

Passing off and Disparagement of Products

168.3. In particular, and without in any way limiting the scope of protection against unfair
competition, the following shall be deemed guilty of unfair competition:

→ (a) Any person, who is selling his goods and gives them the general appearance of goods of
another manufacturer or dealer, either as to the goods themselves or in the wrapping of the
packages in which they are contained, or the devices or words thereon, or in any other feature of
their appearance, which would be likely to influence purchasers to believe that the goods
offered are those of a manufacturer or dealer, other than the actual manufacturer or
dealer, or who otherwise clothes the goods with such appearance as shall deceive the public and
defraud another of his legitimate trade, or any subsequent vendor of such goods or any agent of
any vendor engaged in selling such goods with a like purpose;

→ (b) Any person who by any artifice, or device, or who employs any other means calculated to
induce the false belief that such person is offering the services of another who has identified
such services in the mind of the public; or

→ (c) Any person who shall make any false statement in the course of trade or who shall
commit any other act contrary to good faith of a nature calculated to discredit the goods,
business or services of another.

Section 168.2 and 168.3 (a) and (b) specifies the different situations constitutive of the unfair
competition known as “passing off” of one’s product as that of another.

Section 168.3 (c) contemplates the tort of disparagement of products.

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 R.A. 10667- Philippine Competition Act

 Antitrust laws, also referred to as “competition laws”, are statutes developed to protect
consumers from predatory business practices by ensuring that fair competition exists in
an open-market economy.

 With the key objective of regulating and prohibiting monopolies and combinations in
restraint of trade or unfair competition to improve the overall welfare of consumers by
giving them more choices at possibly lower prices.

Key Features of the PCA

 Prohibition on: (1) anti-competitive agreements, (2) abuse of dominant position, and
(3) anti-competitive mergers and acquisitions
 The creation of the Philippine Competition Commission, the regulatory body tasked with
the enforcement of the PCA
 Establishment of a framework for compulsory notification of mergers and acquisitions
wherein the value of the transaction exceeds PHP 1 billion
 Development of a system of fines and penalties for violations of the provisions of the
PCA

Who or What is covered by the PCA?

 The provisions of the PCA are applicable to any individual or entity engaged in trade,
industry and commerce in the Philippines. It is likewise applicable to international trade,
industry or commerce or acts done outside the Philippines if the same can reasonably
have a direct impact on trade, industry and commerce in the Philippines. Hence, the acts
punishable under the PCA may be committed by both domestic and foreign entities.

Product Liability

→Art.2187. Manufacturers and processors of foodstuffs, drinks, toilet articles and similar
goods shall be liable for death or injuries caused by any noxious or harmful substances
used, although no contractual relation exists between them and the consumers.

-Imposes liability for death or injuries without fault or negligence on the part of the
manufacturers or processors and without private of contract between them and the consumers.

Coca-Cola Bottlers Phils-vs-Court of Appeals

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→Respondent Lydia Geronimo was the proprietess of Kindergarten Wonderland Canteen,
engaged in the sale of soft drinks and other goods to the students of Kindergarten Wonderland
and to the public. Some parents of the students complained that the Coke and Sprite soft drinks
contained fiber-like matter and other foreign substances. She discovered the presence of some
fiber-like substances in the contents of some unopened Coke bottles and a plastic matter in the
contents of an unopened Sprite bottle. The Department of Health informed her that the samples
she submitted are adulterated.

Coca-Cola Bottlers Phils-vs-Court of Appeals

→She demanded from the petitioner the payment of damages but was rebuffed by it. Hence, she
filed a complaint before the RTC of Dagupan City.

→RTC of Dagupan City, however granted the motion to dismiss filed by petitioner, on the
ground that the complaint is based on contract, and not on quasi-delict, as there exists pre-
existing contractual relation between the parties.

→The CA reversed the RTC decision and held that Geronimo’s complaint is one for quasi-delict
because of petitioner’s act of negligently manufacturing adulterated food items intended to be
sold for public consumption.

ISSUE:

Whether or not the action for damages by the proprietess against the soft drinks manufacturer
should be treated as one for breach of implied warranty against hidden defects,or one for quasi-
delict.

Ruling:

The action in based on quasi-delict, therefore, it prescribes in four years. The allegation in the
complaint makes a reference to the reckless and negligent manufacture of “adulterated food
items intended to be sold for public consumption.” The vendee’s remedies are not limited to
those prescribe in Article 1567 of Civil Code. The vendor could be liable for quasi-delict under
Article 2176, and an action based thereon may be brought by the vendee.

→The existence of a contract between the parties does not bar the commission of a tort by the
one against the other and the consequent recovery of damages therefor. Liability for quasi-delict
may still exist despite the presence of contractual relations.

Republic Act 7394

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→Article97. Liability for the Defective Products. –Any Filipino or foreign manufacturer,
producer, and any importer, shall be liable for redress, independently of fault, for damages
caused to consumers by defects resulting from design, manufacture, construction, assembly and
erection, formulas and handling and making up, presentation or packing of their products, as well
as for the insufficient or inadequate information on the use and hazards thereof.

→A product is defective when it does not offer the safety rightfully expected of it, taking
relevant circumstances into consideration, including but not limited to:

→a) presentation of product;

→b) use and hazards reasonably expected of it;
→c) the time it was put into circulation.
A product is not considered defective because another better quality product has been
placed in the market.

The manufacturer, builder, producer or importer shall not be held liable when it evidences:

→a) that it did not place the product on the market;

→b) that although it did place the product on the market such product has no defect;
→c) the consumer or a third party is solely at fault.

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 SUBSIDIARY LIABILITY OF PARENTS

ART.218

o The school, its administrator, and teacher or the individual, entity or institution engaged
in child care shall have special parental authority and responsibility over the minor child
while under their supervision, instruction or custody,
o Authority and responsibility shall apply only to all authorized activities whether inside or
outside of the premises of the school, entity or institution

ART. 219

o Those given the authority and responsibility under the preceding article shall be primarily
and solidarily liable for the damages caused by the acts or omissions of the
unemancipated minor. The parents, judicial guardians or the persons exercising substitute
parental authority over the said minors shall be subsidiarily liable.
o The respective liabilities of those referred to in the preceding paragraph shall not apply if
it is proved that the proper diligence was exercised.

ST. JOSEPH’S COLLEGE vs. JAYSON MIRANDA

G.R.NO. 182353

FACTS OF THE CASE

While inside the premises of St. Joseph’s College, the class were respondent Miranda belonged
was conducting a science experiment about fusion of sulphur powder and iron fillings under the
tutelage of Rosalinda Tabugo, she being the teacher and the employee, while the adviser is
Estafania Abdan. Tabugo left her class while it was doing the experiment without having
adequately secured it from any untoward incident or occurrence.

In the middle of the experiment, [Jayson], who was the assistant leader of one of the class
groups, checked the result of the experiment by looking into the test tube with magnifying glass.
The test tube was being held by one of his group mates who moved it close and towards the eye
of [Jayson]. At that instance, the compound in the test tube spurted out and several particles of
which hit [Jayson’s] eye and the different parts of the bodies of some of his group mates.

As a result thereof, [Jayson’s] eye were chemically burned, particularly his left eye, for which he
had to undergo surgery and had to spend for his medication. Upon filing of this case [in] the
lower court, his wound had not completely healed and still had to undergo another surgery. Upon
learning of the incident and because of the need for finances, [Jayson’s] mother, who was
working abroad, had to rush back home for which she spent P36,070.00 for her fares and had to

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forego her salary from November23, 1994 to December 26, 1994, in the amount of at least
P40,000.00

Jayson and his parents suffered sleepless nights, mental anguish and wounded feelings as a result
of his injury due to the petitioner’s fault and failure to exercise the degree of care and diligence
incumbent upon each one of them. Thus, they should be held liable for moral damages.

ISSUE OF THE CASE

Whether the school should be held liable for the accident

RULING OF THE COURT

Yes. As found by both lower courts, proximate cause of the Jayson’s injury was the concurrent
failure of petitioner’s to prevent to foreseeable mishap that occurred during the conduct of the
science experiment. Petitioners were negligent by failing to exercise the higher degree of care,
caution and foresight incumbent upon the school, its administrators and teachers.

The defense of due diligence of a good father of a family raised by [petitioner] St. Joseph
College will not exculpate it from liability because it has been shown that it was guilty of
inexcusable laxity in the supervision of its teachers (despite an apparent rigid screening process
for hiring) and in the maintenance of what should have been a safe and secured environment for
conducting dangerous experiments.

[Petitioner] school is still liable for the wrongful acts of the teachers and employees because it
had full information on the nature of dangerous science experiments but did not take affirmative
steps to avert damage and injury to students. The fact that there has never been any accident in
the past during the conduct of science experiments is not a justification to be complacent in just
preserving the status quo and do away with creative foresight to install safety measures to protect
the students.

School should not simply install safety reminders and distribute safety instructional manuals.
More importantly, schools should provide protective gears and devices to shield students from
expected risks and anticipated dangers.

AQUINAS SCHOOL vs. SPS. JOSE INTON AND MA. VICTORIA S. INTON
G.R. No. 184202 (January 26, 2011)

FACTS OF THE CASE

This case is about the private school’s liability for the outside catechist’s act of shoving a
student and kicking him on the legs when he disobeyed her instruction to remain in his seat and

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not move around the classroom. In 1998, Jose Luis Inton (Jose Luis) was a grade three student at
Aquinas School (Aquinas). Respondent Sister Margarita Yamyamin (Yamyamin), a religion
teacher who began teaching at that school only in June of that year, taught Jose Luis’ grade three
religion class.

Jose Luis left his seat and went over to a classmate to play a joke of surprising him. Yamyamin
noticed this and sent him back to his seat. After a while, Jose Luis got up again and went over the
same classmate. Yamyamin approached the Jose Luis and kicked him on the legs several times.
She also pulled and shoved his head on the classmate’s seat. She also made the child copy the
notes on the blackboard while seating on the floor.

Respondents Jose and Victoria Inton (the Intons) filed an action for damages on behalf of their
son Jose Luis against Yamyamin and Aquinas before the Regional Trial Court (RTC) of Pasig
City in Civil Case 67427. The Intons also filed a criminal action against Yamyamin for violation
of Republic Act 7610 to which she pleaded guilty and was sentenced accordingly. With regard to
the action for damages, the Intons sought to recover actual, moral, and exemplary damages, as
well as attorney’s fees, for the hurt that Jose Luis and his mother Victoria suffered.

The RTC dismissed Victoria’s personal claims but ruled in Jose Luis’ favor, holding Yamyamin
liable to him for moral damages of P25,000.00, exemplary damages of P25,000.00, and
attorney’s fees of P10,000.00 plus the costs of suit. They elevate the case to the CA to increase
the award of damages and hold Aquinas solidarily liable with Yamyamin.

ISSUE OF THE CASE

Whether or not the CA was correct in holding Aquinas solidarily liable with Yamyamin for the
damages awarded to Jose Luis.

RULING

No. The Court of Appeals is not correct. The school directress testified that Aquinas had an
agreement with a congregation of sisters under which, in order to fulfill its ministry, the
congregation would send religion teachers to Aquinas to provide catechesis to its student.
Aquinas insists that it was not the school but Yamyamin’s religious congregation that chose her
for the task of catechizing the school’s grade three students, much like the way bishops designate
the catechists who would teach religion in public schools. Aquinas did not have control over
Yamyamin’s teaching methods. The Intons had not refuted the school directress’ testimony in
this regard. Aquinas still had the responsibility of taking steps to ensure that only qualified
outside catechists are allowed to teach its young students. In this regard, it cannot be said that
Aquinas took no steps to avoid the occurrence of improper conduct towards the students by their
religion teacher.

They showed records, certificates and diploma that Yamyamin is qualified to teach. There is no
question that she came from a legitimate congregation of sisters. They provided Faculty Staff
Manual in handling the students. They pre-approved the content of the course she wanted to

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teach. They have a classroom evaluation program for her unfortunately, she was new, therefore
do not have sufficient opportunity to observe her.

PNOC SHIPPING AND TRANSPORT CORPORATION vs. HONORABLE COURT OF

APPEALS and MARIA EFIGENIA FISHING CORPORATION

G.R. No. 107518, October 8, 1998

(profit-earning chattels)

FACTS

 M/V Maria Efigenia XV, owned by Maria Efigenia Fishing Corporation, collided with
the vessel Petroparcel, owned by PNOC shipping and Transport Corporation, causing the
former to sink.
 After investigation, Petroparcel was found to be at fault.
 Maria Efigenia Fishing Corporation filed a suit, praying for an award of P692, 680.00,
allegedly representing the value of the fishing nets, boat equipment, and cargoes of M/V
Maria Efigenia XV.
 The RTC decided in favor of the plaintiff and ordered defendant to pay:
-P6,438,048.00 representing the value of the fishing boat with interest from the date of
the complaint at the rate of 6% per annum
-P50,000.00 as attorney’s fees
-Costs of suit
 The RTC based its decision on price quotations submitted by the plaintiff.

RULING

 Actual or compensatory damages are those awarded in satisfaction of, or in recompense

for, loss or injury sustained.
 They are designed to repair the wrong that has been done, to compensate for the injury
inflicted and NOT to impose a penalty.

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  In actions based on tort or quasi-delicts, actual damages include all the natural and
probable consequences of the act or omission complained of.

2 KINDS OF ACTUAL DAMAGES

1. Loss of what a person already possess (dano emergente)

2. Failure to receive as a benefit that which would have pertained to him (lucro cesante)

RULING
 Where goods are destroyed by the wrongful act of the defendant, the plaintiff is entitled
to their value at the time of destruction, that is, normally, the sum of money which he
would have to pay in the market for identical or essentially similar goods, plus in a proper
case damages for the loss of use during the period before replacement.
 In other words, in the case of profit-earning chattels, what has to be assessed is the value
of the chattel to its owner as a going concern at the time and place of the loss, and this
means, at least in the case of ships, that regard must be had to existing and pending
engagements.

RULING
 If the market value of the ship reflects the fact that it is in any case virtually certain of
profitable employment, then nothing can be added to that value in respect of charters
actually lost, for to do so would be pro tanto to compensate the plaintiff twice over.
 On the other hand, if the ship is valued without reference to its actual future engagements
and only in the light of its profit-earning potentiality, then it may be necessary to add to
the value thus assessed the anticipated profit on a charter or other engagement which it
was unable to fulfill.
 What the court has to ascertain in each case is the capitalized value of the vessel as a
profit-earning machine not in the abstract but in view of the actual circumstances,
without, of course, taking into account considerations which were too remote at the time
of the loss.

RULING
 Evidence of the plaintiff (price quotation) was considered as hearsay.
 Damages may not be awarded on the basis of hearsay evidence.
 Nevertheless, in the absence of competent proof on the actual damage suffered, plaintiff
is still entitled to nominal damages.

 NOMINAL DAMAGES → awarded in every obligation arising from law, contracts,

quasi-contracts, acts or omissions punished by law, and quasi-delicts, or in every case
where property right has been invaded.

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 ALFREDO CHING vs. THE HONORABLE COURT OF APPEALS & PEDRO
ASEDILLO

G.R.No. L-59731, January 11, 1990

(damage to or loss of real property)

FACTS
 Ching Leng bought a parcel of land.
 He died in the United States of America.
 His son, Alfredo Ching, filed a petition for the settlement of his estate.
 Thirteen years after Ching Leng’s death, a suit against him was commenced by Pedro
Asedillo for reconveyance of the abovesaid property.
 The title over the property in the name of Ching Leng was cancelled and a new TCT
issued in favor of Pedro Asedillo.
 Alfredo Ching learned about the decision and filed a petition to set it aside as null and
avoid for lack of jurisdiction.

RULING
 An action to redeem, or to recover title to or possession of, real property is not an action
in rem or an action against the whole world; it is an action in personam, so much so that a
judgement therein is binding only upon the parties properly impleaded and duly heard or
given an opportunity to be heard.
 The action for reconveyance and cancellation of title being in personam, the judgement in
question is null and void for lack of jurisdiction over the person of the deceased
defendant Ching Leng. The decision of the lower court insofar as the deceased is
concerned, is void for lack jurisdiction over his person. He was not, and he could not
have been validly served with summons. He had no more civil personality. His juridical
personality, that is fitness to be subject of legal reactions, was lost through death.

What then is the remedy of the landowner whose property has been wrongfully or erroneously
registered in another’s name?

 The sole remedy of the landowner whose property has been wrongfully or erroneously
registered in another’s name—after one year from the date of the decree—is not to set
aside the decree, but respecting the decree as incontrovertible and no longer open to
review, to bring an ordinary action in the ordinary court of justice for damages if the
property has passed unto the hands of an innocent purchaser for value.

SPOUSES DIONISIO ESTRADA and JOVITA R. ESTRADA vs. PHILIPPINE RABBIT

BUS LINES, INC. and EDUARDO R. SA YLAN

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 G.R.No. 203902, July 19, 2017

(instances when moral damages can be awarded in an action for breach of contract)

FACTS
 A vehicle collision occurred involving a passenger bus and an Isuzu truck.
 Dionisio Estrada, one of the passengers of the bus, was injured on the right arm as a
consequence of the accident.
 He now claims for moral damages of P500,000.00, actual damages of P60,000.00, and
attorney’s fees of P25,000.00

RULING
 Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury. Though incapable of pecuniary computation, moral damages may be recovered if
they are the proximate result of the defendant’s wrongful act or omission.

Requisites for the award of moral damages:

1. There must be an injury clearly sustained by the claimant, whether physical, mental or
psychological
2. There must be a culpable act or omission factually established
3. The wrongful act or omission of the defendant is the proximate cause of the injury
sustained by the claimant
4. The award for damages is predicated on any of the cases stated in Article 2219 of the
Civil Code

ARTICLE 2219, CIVIL CODE

Moral damages may be recovered in the following and analogous cases:

1. A criminal offense resulting in physical injuries.

2. Quasi-delicts causing physical injuries
3. Seduction, abduction, rape or other lascivious acts
4. Adultery or concubinage
5. Illegal or arbitrary detention or arrest
6. Illegal search
7. Libel, slander, or any other form of defamation
8. Malicious prosecution
9. Acts mentioned in Article 309

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 10. Acts and action referred to in Articles 21,26,27,28,29,30,32,34, and 35

RULING
 Since breach of contract is NOT one of the items enumerated under Article 2219, moral
damages, as a general rule, are not recoverable in actions for damages predicated on
the breach of contract.

EXCEPTIONS:
1. In cases in which the mishap results in the DEATH of a passenger
2. In cases in which the carrier is guilty of FRAUD or BAD FAITH

RULING
 In this case, moral damages are not recoverable.
-Petitioner did not die.
-There was no fraud or bad faith on the part of Philippine Rabbit Bus Lines.
 Actual damages are also not recoverable.
-Petitioner failed to present competent proof substantiating his actual income.
 In lieu thereof, temperate damages may be awarded.
-It was established that Petitioner lost his right arm.

 TEMPERATE 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.

MEDICAL MALPRACTICE

A particular form of negligence which consists in the failure of a physician or surgeon to apply
to his practice of medicine that degree of care and skill which is ordinarily employed by the
profession generally, under similar conditions and in like surrounding circumstances. In order to
successfully pursue such a claim, a patient must prove that the physician or surgeon either failed
to do something which a reasonably prudent physician or surgeon would have done, or that he or
she did something that reasonably prudent physician or surgeon would not have done, and that
the failure or action caused injury to the patient. There are thus four elements involved in
medical negligence cases, namely: duty, breach, injury, and proximate causation.

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Captain of the ship doctrine is the legal doctrine which holds that, during an operation in an
operating room, a surgeon of record is liable for all actions conducted in the course of the
operation. The operating surgeon is the person in complete charge of the surgery room and all
personnel connected with the operation. Their duty is to obey his orders.

Nilo B. Rosit v Davao Doctor’s Hospital (2015)

FACTS:

 On January 15, 1999, Rosit figured in a motorcycle accident resulting to a fractured jaw.
 He was operated in Davao Doctors Hospital (DDH) by Dr. Rolando Gestuvo (Gestuvo).
 Had a second operation due to the fact that the second operation was improperly done.
(Dr. Pangan)
 Rosit demanded 190k in total for all the expenses from Dr. Gestuvo.
 The RTC adjudged Dr. Gestuvo negligent applying the doctrine of res ipsa loquitur but
freed DDH.
 On appeal, the CA reversed the decision stating that the doctrine of res ipsa loquitur was
not applicable and expert testimony was necessary.
 The CA also gave credence to Dr. Pangan’s letter stating the opinion that Dr. Gestuvo did
not commit gross negligence in his emergency management of Rosit’s fractured
mandible.

ISSUE:

Whether or not the appellate court correctly absolved Dr. Gestuvo from liability.

RULING:

There are four elements involved in a medical negligence case, namely:

1. Duty
2. Breach
3. Injury
4. Proximate causation

 The doctrine of Res Ipsa Loquitur is applicable

General Rule:

Expert testimony is required to define the standard of behavior by which the court may
determine whether the physician has properly performed the requisite duty toward the patient.

Exception:

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When the application of the principle of res ipsa loquitur is warranted.
 The injury itself provides the proof of negligence
 Leaving of a foreign object in the body of the patient after an operation, injuries sustained
on a healthy part of the body which was not under, or in the area, of treatment, removal
of the wrong part of the body when another part was intended, knocking a tooth while a
patient’s jaw was under anesthetic for the removal of his tonsils, and loss of an eye while
the patient plaintiff was under the influence of anesthetic, during or following an
operation for appendicitis, among others.

 Essential Requisites:

(1.) The accident was of a kind that does not ordinarily occur unless someone is negligent;
(2.) The instrumentality or agency that caused the injury was under the exclusive control
of the person charged; and
(3.) The injury suffered must not have been due to any voluntary action or contribution of
the person injured.

 The Doctrine of Informed Consent

The physician has a duty to disclose what a reasonably prudent physician in the medical
community in the exercise of reasonable care would disclose to his patient as to whatever grave
risks of injury might be incurred from a proposed course of treatment, so that a patient,
exercising ordinary care for his own welfare, and faced with a choice of undergoing the proposed
treatment, or alternative treatment, or none at all, may intelligently exercise his judgment by
reasonably balancing the probable risks against the probable benefits.

 Essential Elements:

(1.) The physician had a duty to disclose material risks;

(2.) He failed to disclose or inadequately disclosed those risks;
(3.) As a direct and proximate result of the failure to disclose, the patient consented to
treatment she otherwise would not have consented to; and
(4.) Plaintiff was injured by the proposed treatment.

*The plaintiff must point to significant undisclosed information relating to the treatment which
would have altered her decision to undergo it.

 Dr. Pangan’s affidavit is not admissible

The letter signed by Dr. Pangan who stated the opinion that Dr. Gestuvo did not commit gross
negligence in his emergency management of Mr. Rosit’s fractured mandible is HEARSAY.

*an affidavit is merely hearsay evidence where it is affiant/maker did not take the witness stand.

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*erred when it considered the affidavit of Dr. Pangan, moreso for considering the same expert
testimony.

 Courts are not bound by expert testimony

The belief of Dr. Pangan whether Dr. Gestuvo is guilty of negligence or not will bind the Court.
The Court must weigh and examine such testimony and decide for itself the merits thereof

Reyes vs Sisters of Mercy Hospital (2000)

FACTS:
 Jorge Reyes had been suffering from a recurring fever with chills five days before his
death.
 He was taken to Mercy Community Clinic by his wife on January 8, 1987 and was
attended to by respondent Dr. Marlyn Rico.
 Dr. Rico ordered a Widal Test, result of the test showed that Jorge tested positive for
Typhoid Fever.
 Jorge was indorsed to Dr. Marvie Blanes at the end of Dr. Rico’s shift.
 Dr. Blanes ordered that a compatibility test with the antibiotic chloromycetin be done on
Jorge and two doses were later administered on Jorge before 12mn.
 Jorge experienced chills and exhibited respiratory distress, nausea, vomiting, and
convulsions at 1:00 AM
 When he regained consciousness, the patient was asked by Dr. Blanes whether he had a
previous heart ailment or had suffered from chest pains in the past.
 After about 15 minutes, however, Jorge again started to vomit, showed restlessness, and
his convulsions returned.
 Jorge did not respond to the treatment and slipped into cyanosis and eventually died.
 The cause of his death was Ventricular Arrythemia Secondary to Hyperpyrexia and
typhoid fever.
 Filed a case for damages contending that Jorge did not die of typhoid fever. Instead, his
death was due to the wrongful administration of chloromycetin.
 They charged respondent clinic and its directress, Sister Rose Palacio, with negligence in
failing to provide adequate facilities and in hiring negligent doctors and nurses
 The trial court rendered its decision absolving respondents from the charges of
negligence and dismissing petitioner action for damages. It dismissed respondents
counterclaim, holding that, in seeking damages from respondents, petitioners were
impelled by the honest belief that Jorge’s death was due to the latter’s negligence.
 The Court of Appeals affirmed the decision of the trial court.

ISSUE:

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Whether or not Sisters of Mercy Hospital is liable for the death of Jorge Reyes.

RULING:

The doctrine of Res Ipsa Loquitor not applicable

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.

*Petitioners contend that all requisites for the application of res ipsa loquitur were present
*There is really nothing unusual or extraordinary about his death.
*The failure to observe due care was not immediately apparent to a layman so as to justify
application of res ipsa loquitur.

 As held in Ramos vs CA

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. 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 a surgeon which involves the merits of a diagnosis or of a scientific
treatment. 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

 Specific Acts of Negligence

(1.) Dr. Marlyn Rico hastily and erroneously relied upon the Widal test, diagnosed Jorges
illness as typhoid fever, and immediately prescribed the administration of the
antibiotic chloromycetin; and
(2.) Dr. Marvie Blanes erred in ordering the administration of the second dose of 500
milligrams of chloromycetin barely three hours after the first was given.

 First
Although petitioners presented Dr. Apolinar Vacalares as an expert witness who performed an
autopsy on the body of Jorge Reyes who testified that, based on his findings during the autopsy,
Jorge Reyes did not die of typhoid fever but of shock undetermined, which could be due to
allergic reaction or chloromycetin overdose, the court did not find him to be so as he is not a
specialist on infectious diseases like typhoid fever.

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  Second
 On the other hand, the two doctors presented by respondents clearly were experts on the
subject. They vouched for the correctness of Dr. Marlyn Ricos diagnosis.
 Third
Chloromycetin was likewise a proper prescription is best established by medical authority. The
dosage likewise including the first administration of five hundred milligrams (500 mg.) at around
nine o’clock in the evening and the second dose at around 11:30 the same night was still within
medically acceptable limits, since the recommended dose of chloromycetin is one (1) gram every
six (6) hours. As regards anaphylactic shock, the usual way of guarding against it prior to the
administration of a drug, is the skin test of which, however, it has been observed.

 Fourth
Petitioners correctly observe that the medical profession is one which, like the business of a
common carrier, is affected with public interest.
However, the standard of extraordinary diligence is peculiar to common carriers.

The practice of medicine is a profession engaged in only by qualified individuals. It is a right

earned through years of education, training, and by first obtaining a license from the state
through professional board examinations. Such license may, at any time and for cause, be
revoked by the government.

Given these safeguards, there is no need to expressly require of doctors the observance of
extraordinary diligence. As it is now, the practice of medicine is already conditioned upon the
highest degree of diligence.

 Standard of Care
Indeed, the standard contemplated is not what is actually the average merit among all known
practitioners from the best to the worst and from the most to the least experienced, but the
reasonable average merit among the ordinarily good physicians. That is reasonable diligence for
doctors or, as the Court of Appeals called it, the reasonable skill and competence that a physician
in the same or similar locality should apply.

Cruz v CA (1997)
FACTS:
 Prior to March 22, 1991, Lydia Umali was examined by the petitioner Dr. Ercillo who
found a myoma in her uterus, and scheduled her for a hysterectomy operation on March
23, 1991
 On March 22, 1991, Rowena Umali De Ocampo, accompanied her mother, Lydia Umali,
to the Perpetual Help Clinic and General Hospital situated in Balagtas Street, San Pablo
City, Laguna.
 Rowena noticed that the clinic was untidy and the window and the floor were very dusty
so she tried to persuade her mother not to proceed with the operation.

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  The following day, before her mother was wheeled into the operating room, Rowena
asked the petitioner if the operation could be postponed. The petitioner (surgeon), Dr.
Cruz, called Lydia into her office and the two had a conversation. Lydia then informed
Rowena that the petitioner told her that she must be operated on as scheduled.
 In the midst of the operation, Dr. Ercillo (anesthesiologist) went out of the operating
room and instructed them to buy tagamet ampules which Rowena’s sisters immediately
bought.
 About one hour had passed when Dr. Ercillo came out again this time to ask them to buy
blood for Lydia.
 After the lapse of a few hours, the petitioner informed them that the operation was
finished.
 Some thirty minutes after, Lydia was brought out of the operating room in a stretcher and
the petitioner asked Rowena and the other relatives to buy additional blood for Lydia.
 Rowena then noticed her mother, who was attached to an oxygen tank, gasping for
breath. Apparently the oxygen supply had run out and Rowena’s husband together with
the driver of the accused had to go to the San Pablo District Hospital to get oxygen.
 But at around 10:00 o’clock P.M. she went into shock and her blood pressure dropped to
60/50. Lydia’s unstable condition necessitated her transfer to the San Pablo District
Hospital so she could be connected to a respirator and further examined.
 The transfer to the San Pablo City District Hospital was without the prior consent of
Rowena nor of the other relatives present who found out about the intended transfer only
when an ambulance arrived to take Lydia to the San Pablo District Hospital.
 Upon Lydia’s arrival at the San Pablo District Hospital, she was wheeled into the
operating room and the petitioner and Dr. Ercillo re-operated on her because there was
blood oozing from the abdominal incision.
 While petitioner was closing the abdominal wall, the patient died with “shock” as the
immediate cause of death and “Disseminated Intravascular Coagulation (DIC)” as the
antecedent cause.
 A case for reckless imprudence and negligence resulting to homicide was filed against
Dr. Cruz due to the negligent, careless, imprudent, and incompetent manner, and failing
to supply or store sufficient provisions and facilities necessary to meet any and all
exigencies apt to arise before, during and/or after a surgical operation causing by such
negligence, carelessness, imprudence, and incompetence, and causing by such failure,
including the lack of preparation and foresight needed to avert a tragedy, the untimely
death of said Lydia Umali on the day following said surgical operation.
 The MTCC found the petitioner negligent in the performance of the operation.
 Likewise, the CA affirmed the decision of the RTC.

ISSUE:

Whether or not petitioner, Dr. Cruz, has been negligent which cause the death of Lydia Umali.

RULING:

The court found the circumstances insufficient to sustain a judgment of conviction against the
petitioner for the crime of reckless imprudence resulting in homicide.
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  Elements of reckless imprudence
(1) That the offender does or fails to do an act;
(2) That the doing or the failure to do that act is voluntary;
(3) That it be without malice;
(4) That material damage results from the reckless imprudence; and
(5) That there is inexcusable lack of precaution on the part of the offender, taking into
consideration his employment or occupation, degree of intelligence, physical condition,
and other circumstances regarding persons, time and place.

 Absence of expert testimony

Expert testimony is essential to establish not only the standard of care of the profession but also
that the physician’s conduct in the treatment and care falls below such standard. Further,
inasmuch as the causes of the injuries involved in malpractice actions are determinable only in
the light of scientific knowledge, it has been recognized that expert testimony is usually
necessary to support the conclusion as to causation.

The prosecution’s expert witnesses in the persons of Dr. Floresto Arizala and Dr. Nieto Salvador,
Jr. of the National Bureau of Investigation (NBI) only testified as to the possible cause of death
but did not venture to illuminate the court on the matter of the standard of care that petitioner
should have exercised.

 While it may be true that the circumstances point out by the lower courts seemed beyond
cavil to constitute reckless imprudence on the part of the surgeon, this conclusion is still
best arrived at not through the educate surmises nor conjectures of layman, including
judges, but by the unquestionable knowledge of expert witnesses.
 Expert testimony should have been offered to prove that the circumstances cited by the
courts below are constitutive of conduct falling below the standard of care employed by
other physicians in good standing when performing the same operation.
 Circumstances such as the inadequacy of the facilities of the clinic and its intidiness; the
lack of provisions such as blood, oxygen, and certain medicines; the failure to subject the
patient to a cardio-pulmonary test prior to the operation; the omission of any form of
blood typing before transfusion; and even the subsequent transfer of Lydia to the San
Pablo Hospital and the reoperation performed on her by the petitioner.
 When the qualification of a physician are admitted, as in the instant case, there is an
inevitable presumption that in proper cases he takes the necessary precaution and
employs the best of his knowledge and skill in attending to his clients, unless the contrary
is sufficiently established. This presumption is rebuttable by expert opinion which is so
sadly lacking in the case at bench.
 No cogent proof exists that any of these circumstances caused petitioner’s death. Thus,
the absence of the fourth element of reckless imprudence: that the injury to the person or
property was a consequence of the reckless imprudence.
 In litigations involving medical negligence, the plaintiff has the burden of establishing
appellant’s negligence and for a reasonable conclusion of negligence, there must be proof

94
 of breach of duty on the part of the surgeon as well as casual connection of such breach
and the resulting death of his patient.
 The negligence must be the proximate cause of the injury
 Findings of all three doctors do not preclude the probability that DIC caused the
hemorrhage and consequently, Lydia’s death. DIC which is a clotting defect creates a
serious bleeding tendency and when massive DIC occurs as a complication of surgery
leaving raw surface, major hemorrhage occurs. And as testified to by defense witness, Dr.
Castro, hemorrhage due to DIC “cannot be prevented, it will happen to anyone, anytime.
 The court relied on the expert testimonies rendered by both prosecution and defense
witnesses that substantiate rather than contradict petitioner’s allegation that the cause of
Lydia’s death was DIC which, as attested to by an expert witness, cannot be attributed to
the petitioner’s fault or negligence. The probability that Lydia’s death was caused by DIC
was unrebutted during trial and has engendered in the mind of the Court a reasonable
doubt as to the petitioner’s guilt.
 Court found the petitioner civilly liable for the death of Lydia Umali, for while a
conviction of a crime requires proof beyond reasonable doubt, only a preponderance of
evidence is required to establish civil liability.

Legal Basis of Liability

 Culpa Criminal
There can be no crime unless there is a law clearly punishing the act.
 Culpa Aquiliana
There can be a quasi-delict as long as there is fault or negligence resulting in damage or injury to
another.
 Culpa Contractual
The obligation arises from the breach of the contract because of defendant’s failure to exercise
due care in its performance.

Distinctions

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Nature of Negligence

• Culpa Criminal
Direct, Substantive and Independent
• Culpa Aquiliana
Direct, Substantive and Independent
• Culpa Contractual
Incidental to the performance of an existing obligation based on a contract.
Distinctions
Criminal Intent

 Culpa Criminal
Essential for criminal liability to exist
 Culpa Aquiliana
Not necessary. Fault or negligence without intent will suffice.
 Culpa Contractual
Not necessary

Distinctions
Proof Needed

 Culpa Criminal
Proof beyond reasonable doubt
 Culpa Aquiliana
Preponderance of evidence
 Culpa Contractual
Preponderance of evidence

Distinctions

Pre-Existing Contractual Obligation

 Culpa Criminal
No pre-existing contractual obligation
 Culpa Aquiliana
No pre-existing contractual obligation
 Culpa Contractual
There is a pre-existing express/implied contractual obligation

Distinctions

“Good Father of a Family” as Defense

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• Culpa Criminal
Cannot be interposed, if the employee is insolvent, the employer is liable.
• Culpa Aquiliana
A complete and proper defense insofar as parents, guardians and employees are concerned.
• Culpa Contractual
Not a complete and proper defense in the selection and supervision of employees but can
mitigate liability for damages.
Distinctions

Presumption of Negligence

 Culpa Criminal
The innocence of the accused is presumed until the contrary is proven.
 Culpa Aquiliana
No presumption of negligence. The injured party must prove the negligence of the defendant,
otherwise the complainant of the injured party will be dismissed.
 Culpa Contractual
There is presumption of negligence as long as it can be proved that there was breach of contract.

Defendant must prove that there was no negligence in the performance of the contract.

Distinctions

Nature of the right violated

• Culpa Criminal
Public right.

A crime is a wrong against the State.

• Culpa Aquiliana
Private right.

It is a wrongful act against a private individual.

• Culpa Contractual
Private right.

Distinctions

Governing Law

 Culpa Criminal
Governed by Art.365 of the Reversed Penal Code
 Culpa Aquiliana
Governed by Art.2176 NCC; Arts.1172-1174 NCC are also applicable

97
  Culpa Contractual
Governed by Arts.1170-1174 of the Civil Code.

Far East and Trust Co. v. Court of Appeals, 240 SCRA 348

 Culpa Aquiliana distinguished from Crimes

 Concurrence of Causes of Action of Tort, Crime and Contract

Far East and Trust Co. v. Court of Appeals, 240 SCRA 348

In culpa contractual, moral damages may be recovered where the defendant is shown to have
acted in bad faith or with malice in the breach of the contract.

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

Far East and Trust Co. v. Court of Appeals, 240 SCRA 348
Bad faith, in this context, includes gross, but not simple negligence

Malice or bad faith implies a conscious and intentional design to do a wrongful act for a
dishonest purpose or moral obliquity; it is different from the negative idea of negligence in
that malice or bad faith contemplates a state of mind affirmatively operating with furtive design
or ill will.

Far East and Trust Co. v. Court of Appeals, 240 SCRA 348

Art.21. Any person who willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.
a) Contemplates a conscious act to cause harm
b) Its application can be warranted only when the defendant’s disregard of his contractual
obligation is so deliberate as to approximate a degree of misconduct certainly no less
worse than fraud or bad faith.
c) Mere declaration of a general principle in human relations that clearly must, in any
case, give way to the specific provision of Article 2220 of the Civil Code authorizing the
grant of moral damages in culpa contractual solely when the breach is due to fraud or bad
faith.

Far East and Trust Co. v. Court of Appeals, 240 SCRA 348

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Moral damages are not recoverable in damage actions predicated on a breach of the contract of
transportation, in view of Articles 2219 and 2220 of the new Civil Code (Justice Jose B.L.
Reyes, in his ponencia in Fores vs. Miranda)

Art. 2219 Moral damages may be recovered in the following and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
XXX XXX XXX

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

Far East and Trust Co. v. Court of Appeals, 240 SCRA 348

a) In case of breach of contract (including one of transportation) proof of bad faith or fraud
(dolus), i.e., wanton or deliberately injurious conduct, is essential to justify an award of
moral damages; and

b) That a breach of contract cannot be considered included in the descriptive term

“analogous cases” used in Art. 2219; not only because Art. 2220 specifically provides for
the damages that are caused contractual breach, but because the definition of quasi-delict
in Art. 2176 of the Code expressly excludes the cases where there is a “pre-existing
contractual relations between the parties.”

Far East and Trust Co. v. Court of Appeals, 240 SCRA 348

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.

To award moral damages for breach of contract, therefore, without proof of bad faith or malice
on the part of the defendant, as required by Art.2220, would be to violate the clear provisions of
the law, and constitute unwarranted judicial legislation.

Far East and Trust Co. v. Court of Appeals, 240 SCRA 348

The distinction between fraud, bad faith or malice in the sense of deliberate or wanton wrong
doing and negligence (as mere carelessness) is too fundamental in our law to be ignored

Contracts and quasi-contracts

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

Fraud, bad faith, malice or wanton attitude

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

Far East and Trust Co. v. Court of Appeals, 240 SCRA 348

The Court has not in the process overlooked another rule that a quasi-delict can be the cause for
breaching a contract that might thereby permit the application of applicable principles on tort9
even where there is a pre-existing contract between the plaintiff and the defendant (Phil. Airlines
vs. Court of Appeals, 106 SCRA 143; Singson vs. Bank of Phil. Islands, 23 SCRA 1117; and Air
France vs. Carrascoso, 18 SCRA 155).

Far East and Trust Co. v. Court of Appeals, 240 SCRA 348

The test (whether a quasi-delict can be deemed to underlie the breach of a contract) can be stated
thusly:

Where, without a pre-existing contract between two parties, an act or omission can nonetheless
amount to an actionable tort by itself, the fact that the parties are contractually bound is no
bar to the application of quasi-delict provisions to the case. Here, private respondent’s
damage claim is predicated solely on their contractual relationship; without such agreement, the
act or omission complained of cannot by itself be held to stand as a separate cause of action or as
an independent actionable tort.

LIGHT RAIL TRANSIT AUTHORITY v. Marjorie Navidad, G.R. No. 145804

 Culpa Aquiliana distinguished from Crimes

 Concurrence of Causes of Action of Tort, Crime and Contract

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, vs. MARJORIE

NAVIDAD

Liability of LRTA

Founded on the contract of carriage and its obligation to indemnify the victim arises from the
breach of contract by reason of its failure to exercise the high diligence required of the common
carrier.

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In the discharge of its commitment to ensure the safety of passengers, a carrier may choose to
hire its own employees or avail itself of the services of an outsider or an independent firm to
undertake the task.
In either case, the common carrier is not relieved of its responsibilities under the contract of
carriage.

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, vs. MARJORIE

NAVIDAD

Liability of Prudent Security Agency

If at all, that liability could only be for tort under the provisions of Article 2176[12] and related
provisions, in conjunction with Article 2180,[13] of the Civil Code.

The premise for the employee liability is negligence or fault on the part of the employee. Once
such fault is established, the employer can then be made liable on the basis of the presumption
juris tantum that the employer failed to exercise diligentissimi patris families in the selection and
supervision of its employees.

The liability is primary and can only be negated by showing due diligence in the selection and
supervision of the employee, a factual matter that has not been shown.

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, vs. MARJORIE

NAVIDAD

Liability of Common Carrier and the Independent Contractor Solidary

A contractual obligation can be breached by tort and when the same act or omission causes the
injury, one resulting in culpa contractual and the other in culpa aquiliana, Article 2194 of the
Civil Code can well apply

Liability for tort may arise even under a contract, where tort is that which breaches the contract.

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, vs. MARJORIE

NAVIDAD

Liability of Common Carrier and the Independent Contractor Solidary

When an act which constitutes a breach of contract would have itself constituted the source of a
quasi-delictual liability had no contract existed between the parties, the contract can be said to
have been breached by tort, thereby allowing the rules on tort to apply.

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 SPS. CRISTINO & EDNA CARBONELL -versus- METROPOLITAN BANK AND
TRUST COMPANY

Banks; Meticulous Care;

Damnum Absque Injuria;
Moral Damages for Breach of Contract

SPS. CRISTINO & EDNA CARBONELL -versus- METROPOLITAN BANK AND

TRUST COMPANY

Banks; Meticulous Care

The General Banking Act of 2000 demands of banks the highest standards of integrity and
performance. As such, the banks are under obligation to treat the accounts of their depositors
with meticulous care.

However, the banks’ compliance with this degree of diligence is to be determined in accordance
with the particular circumstances of each case.

SPS. CRISTINO & EDNA CARBONELL -versus- METROPOLITAN BANK AND

TRUST COMPANY

Petitioner’s Argument: Respondent was guilty of gross negligence, misrepresentation and bad
faith amounting to fraud.

 Respondent was liable for failing to observe the diligence required from it by not doing
an act from which the material damage had resulted by reason of inexcusable lack of
precaution in the performance of its duties.

Court: Argument is unfounded.

SPS. CRISTINO & EDNA CARBONELL -versus- METROPOLITAN BANK AND

TRUST COMPANY

Gross negligence connotes want of care in the performance of one’s duties; it is a negligence
characterized by the want of even slight care, acting or omitting to act in a situation where there
is duty to act, not inadvertently but willfully and intentionally, with a conscious indifference
to consequences insofar as other persons may be affected. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them.

Petitioners must establish that the latter:

A. Did not exert any effort at all to avoid unpleasant consequences; or

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 B. Willfully and intentionally disregarded the proper protocols or procedure in
 The handling of US dollar notes
 Selecting and supervising its employees.

SPS. CRISTINO & EDNA CARBONELL -versus- METROPOLITAN BANK AND

TRUST COMPANY

Damnum Absque Injuria; Moral Damages for Breach of Contract

Moral damages for culpa contractual or breach of contract are recoverable only if the defendant
acted fraudulently or in bad faith, or is found guilty of gross negligence amounting to bad
faith, or in wanton disregard of his contractual obligations.

The breach must be wanton, reckless, malicious or in bad faith, oppressive or abusive.

SPS. CRISTINO & EDNA CARBONELL -versus- METROPOLITAN BANK

AND TRUST COMPANY

In order to maintain their action for damages, the petitioners must establish that their injury
resulted from a breach of duty that the respondent had owed to them, that is, there must be the
concurrence of injury caused to them as the plaintiffs and legal responsibility on the part of the
respondent.

Underlying the award of damages is the premise that an individual was injured in contemplation
of law.
 In this regard, there must first be a breach of some duty and the imposition of liability
for that breach before damages may be awarded; and the breach of such duty should be
the proximate cause of the injury.

SPS. CRISTINO & EDNA CARBONELL -versus- METROPOLITAN BANK AND

TRUST COMPANY

Damnum Absque Injuria

x x x Injury is the illegal invasion of a legal right, damage is the loss, hurt, or harm which results
from the injury; and damages are the recompense or compensation awarded for the damage
suffered. Thus, there can be damage without injury in those instances in which the loss or harm
was not the result of a violation of a legal duty. Orchard Golf & Country Club, Inc., v. Yu

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 SPS. CRISTINO & EDNA CARBONELL -versus- METROPOLITAN BANK AND
TRUST COMPANY

Here, although the petitioners suffered humiliation resulting from their unwitting use of the
counterfeit US dollar bills, the respondent, by virtue of its having observed the proper protocols
and procedure in handling the US dollar bills involved, did not violate any legal duty towards
them.

Being neither guilty of negligence nor remiss in its exercise of the degree of diligence required
by law or the nature of its obligation as a banking institution, the latter was not liable for
damages.

Given the situation being one of damnum absque injuria, they could not be compensated for the
damage sustained.

PROSCRIPTION AGAINST DOUBLE RECOVERY

 Art. 2177. Responsibility for fault or negligence under the preceding article is entirely
separate and distinct from the civil liability arising from negligence under the Penal
Code. But the plaintiff cannot recover damages twice for the same act or omission of
the defendant.

 RPC, Art. 100. Every person criminally liable for a felony is also civilly liable.

 Lim vs Co, GR 175256, Aug. 23, 2012

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A single act or omission that causes damage to an offended party may give rise to two separate
civil liabilities on the part of the offender-
(1) Civil liability ex delicto, that is, civil liability arising from the criminal offense under
Article 100 of the Revised Penal Code, and
(2) Independent civil liability, that is, civil liability that may be pursued independently of the
criminal proceedings.

 Santos vs Pizardo GR 151452, July 29, 2005

An act or omission causing damage to another may give rise to two separate civil liabilities on
the part of the offender, i.e.,
(1) Civil liability ex delicto, under Article 100 of the Revised Penal Code; and
(2) Independent civil liabilities, such as those

(a) Not arising from an act or omission complained of as a felony, e.g., culpa contractual or
obligations arising from law under Article 31 of the Civil Code, intentional torts under
Articles 32 and 34, and culpa aquiliana under Article 2176 of the Civil Code; or
(b) Where the injured party is granted a right to file an action independent and distinct from
the criminal action under Article 33 of the Civil Code.

 Either of these liabilities may be enforced against the offender subject to the caveat
under Article 2177 of the Civil Code that the plaintiff cannot recover damages twice
for the same act or mission of the defendant and the similar proscription against double
recovery under the Rules above-quoted.

 Santos vs Pizardo GR 151452, July 29, 2005

At the time of the filing of the complaint for damages in this case, the cause of action ex quasi
delicto had already prescribed. Nonetheless, petitioners can pursue the remaining avenue
opened for them by their reservation, i.e., the surviving cause of action ex delicto. This is so
because as a bar to an action to enforce the civil liability arising from crime especially as the
latter action had been expressly reserved.

 Lim vs Co, GR 175256, Aug. 23,2012

Because of the distinct and independent nature of the two kinds of civil liabilities, jurisprudence
holds that the offended party may pursue the two types of civil liabilities simultaneously or
cumulatively, without offending the rules on forum shopping, litis pendentia, or res judicata.
Xxx Both cases can proceed to their final adjudication, subject to the prohibition on double
recovery under Article 2177 of the Civil Code.

NEGLIGENCE

 Negligence is the omission to do something which a reasonable man, guided by those

considerations which ordinarily regulate the conduct of human affairs, would do, or the

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 doing of something which a prudent and reasonable man would not do [Layugan v. IAC,
G.R. No. 73998 (1988)].
 Negligence is defined as the failure to observe for the protection of the interests of
another person that degree of care, precaution, and vigilance which the circumstances
justly demand, whereby such other person suffers injury.
Dy Teban Trading, Inc. vs Ching, GR 161803, Feb. 4, 2008

TEST OF NEGLIGENCE

 The test by which to determine the existence or negligence in a particular case may be
stated as follows: Did the defendant in doing the alleged negligent act use that reasonable
care and caution which an ordinary person would have used in the same situation? If not,
then he is guilty of negligence. (Picart vs Smith)

 The test of negligence is objective. We measure the act or omission of the tortfeasor
with that of an ordinary reasonable person in the same situation. The test, as applied to
this case, is whether Limbaga, in parking the prime mover, used that reasonable care and
caution which an ordinary reasonable person would have used in the same situation.
Dy Teban Trading, Inc. vs Ching GR 161803, Feb. 4, 2008

 The diligence with which the law requires the individual to at all times govern his
conduct varies with the nature of the situation in which he is placed and the importance of
the act which he is to perform [Jorge v Sicam, G.R. No. 159617 (2007)].

PHILIPPINE HAWK CORP. V. VIVIAN TAN LEE; G.R.NO. 166869 FEB 16, 2010

 FACTS:

Vivian Tan Lee filed a complaint against the petitioner (a bus company) and Margarito Avila
(driver) for damages based on quasi delict arising from vehicular accident which resulted in the
death of Lee’s husband, and caused her physical injuries.

The RTC, as affirmed by the CA, found Avila guilty of simple of negligence. Phil Hawk
was likewise held liable for failing to exercise the diligence of a good father of the family in the
selection and supervision of Avila. Damages were therefore awarded to Lee.

 ISSUE:

WON petitioner’s driver was negligent, and whether the negligence on his part is the proximate
cause of the accident resulting to the death of Lee’s husband, and causing her physical injuries.

 RULING:

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Avila is negligent. Foreseeability is the fundamental test of negligence. To be negligent, a
defendant must have acted or failed to act in such a way that an ordinary reasonable man would
have realized that certain interests of certain persons were unreasonably subjected to a general
but definite class of risks.

In this case, the bus driver, who was driving on the right side of the road, already saw the
motorcycle on the left side of the road before the collision. However, he did not take the
necessary precaution to slow down, but drove on and bumped the motorcycle, and also the
passenger jeep parked on the left side of the road, showing that the bus was negligent in veering
to the left lane, causing it to hit the motorcycle and the passenger jeep.

As to Phil. Hawk’s liability:

 Whenever an employee’s negligence causes damage or injury to another, there instantly

arises a presumption that the employer failed to exercise the due diligence of a good
father of the family in the selection or supervision of its employees. To avoid liability for
a quasi-delict committed by his employee, an employer must overcome the presumption
by presenting convincing proof that he exercised the care and diligence of a good father
of a family in the selection and supervision of his employee.
 Phil. Hawk failed to exercise the diligence of a good father of the family in the selection
and supervision of its bus driver, Margarito Avila, for having failed to sufficiently
inculcate in him discipline and correct behavior on the road. Indeed, petitioner’s tests
were concentrated on the ability to drive and physical fitness to do so. It also did not
know that Avila had been previously involved in sideswiping incidents.

CRESENCIA ACHEVARA VS ELVERA RAMOS, GR 175172, SEP. 29, 2009

 FACTS:

Elvera Ramos filed a complaint for damages against petitioners Cresencia Achevara, Alfredo
Achevara and Benigno Valdez for the death of Arnulfo Ramos, husband of Elvera, in a vehicular
accident.

The trial court, as affirmed by the CA, held that the driver of the passenger jeep, Benigno
Valdez, having seen the risk exhibited by the wiggling of the front wheels of the owner-type
jeep, causing it to run in a zigzag manner, should have parked his vehicle on the right shoulder of
the road so that the mishap could have been prevented. Since he ignored to take this reasonable
precaution, the omission and/or breach of this duty on his part was the constitutive legal cause of
the mishap. Further, the trial court held that the evidence of the Spouses Achevara failed to show
that they exercised due diligence in the selection and supervision of Benigno Valdez as driver of
their passenger jeep.
Damages were therefore awarded in favor of Elvera Ramos.

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  ISSUE:

The main issue is when or not petitioners are liable to respondents for damages incurred as a
result of the vehicular accident.

 RULING:

The petitioners are not liable. The Court of Appeals correctly held that Benigno Valdez was
guilty of inexcusable negligence by neglecting to take such precaution, which a reasonable and
prudent man would ordinarily have done under the circumstances and which proximately caused
injury to another. On the other hand, the Court also finds Arnulfo Ramos guilty of gross
negligence for knowingly driving a defective jeep on the highway. An ordinarily prudent man
would know that he would be putting himself and other vehicles he would encounter on the road
at risk for driving a mechanically defective vehicle.

 In this case, both Arnulfo Ramos and Benigno Valdez failed to exercise reasonable care
and caution that an ordinarily prudent man would have taken to prevent the vehicular
accident. Since the gross negligence of Arnulfo Ramos and the inexcusable negligence of
Benigno Valdez were the proximate cause of the vehicular accident, respondent Ramos
cannot recover damages pursuant to Article 2179 of the Civil Code which provides that:

When the plaintiff’s own negligence was the immediate and proximate cause of his injury, he
cannot recover damages. But if his negligence was only contributory, the immediate and
proximate cause of the injury being the defendant’s lack of due care, the plaintiff may recover
damages, but the courts shall mitigate the damages to be awarded

Burden of proof in negligence cases

 In quasi-delict cases, it is incumbent upon the injured party to prove the damage sustain,
the negligence of the defendant, as well as the connection of such negligence to the injury
sustained.

Quantum of proof Required

 The quantum of evidence required in torts or quasi-delict is only preponderance of

evidence.

Presumptions

 Article 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if
the former, who was in the vehicle, could have, by the use of the due diligence, prevented
the misfortune. It is disputably presumed that a driver was negligent, if he had been found

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 guilty of reckless driving or violating traffic regulations at least twice within the next
preceding two months.
 If the owner was not in the motor vehicle, the provisions of article 2180 are applicable.(n)
 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.

Article2180.
 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 pertain, 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.
(1903a)

 Article 2185. Unless there is proof to the contrary, it is presumed that a person driving a
motor vehicle has been negligent if at the time of the mishap, he was violating any traffic
regulation. (n)

Anonuevo v. CA, G.R. No. 130003, October 20, 2004

 FACTS: Villagracia was traveling along Boni Ave. on his bicycle, while Anonuevo,
traversing the opposite lane was driving a Lancer car owned by Procter and Gamble Inc.,
the employer of Anonuevo’s brother. Anonuevo was in the course of making a left turn
towards Libertad Street when the collision occurred.Villagracia sustained serious injuries
and had to undergo four operations. Villagracia instituted an action for damages against
P&G Phils., Inc. and Anonuevo before the RTC. He had also filed a criminal complaint
against Anonuevo before the Metropolitan Trial Court of Mandaluyong, but the latter was
subsequently acquitted of the criminal charge.

Anonuevo v. CA, G.R. No. 130003, October 20, 2004

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  Anonuevo claims that Villagracia violated traffic regulations when he failed to register
his bicycle or install safety gadgets. He posits that Article 2185 of the Civil Code applies
by analogy. Article 2185. Unless there is proof to the contrary, it is presumed that a
person driving a motor vehicle has been negligent if at the time of the mishap he was
violating any traffic regulation.

 ISSUES:
 Whether or not Art. 2185 of the New Civil Code should apply to non-motorized vehicles,
making Villagracia presumptively negligent.
 Whether or not Villagracia was negligent for failure to comply with traffic regulations.
 RULING: No to all.

Application of Article 2185

 There is pertinent basis for segregating between motorized and non-motorized vehicles.
A motorized vehicle, unimpeded by the limitations in physical exertion. It is capable of
greater speeds and acceleration than non-motorized vehicles. At the same time, motorized
vehicles are more capable in inflicting greater injury or damage in the event of an
accident or collision. This is due to a combination of factors peculiar to the motor
vehicle, such as the greater speed, its relative greater bulk of masses, and greater
combustibility due to the use of fuel.

Application of Article 2185

 A driver of an automobile, under such circumstances, is required to use a greater degree
of care than drivers of animals, for the reason that the machine is capable of greater
destruction, and furthermore, it is absolutely under the power and control of the driver;
whereas, a horse or other animal can and does to some extent aid in averting an accident.

Negligence on the part of Villagracia

 The existence of negligence in a given case is not determined by the personal judgment
of the actor in a given situation, but rather, it is the law which determines what would be
reckless or negligent. Anonuevo asserts that Villagracia was negligent as the latter had
transgressed traffic regulations. However, Anonuevo was speeding as he made the left
turn, and by his own admission, he had seen Villagracia at a good distance of ten (10)
meters. Had he been decelerating, as he should, as he made the turn, Anonuevo would
have had ample opportunity to avoid hitting Villagracia, such negligent act was the
proximate cause of the accident.

Anonuevo v. CA, G.R. No. 130003, October 20, 2004

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  Even assuming that Anonuevo had failed to see Villagracia because the bicycle was not
equipped with headlights, such lapse on the cyclist’s part would not have acquitted the
driver of his duty to slow down as he proceeded to make the left turn.
 Article 2188. There is prima facie presumption of negligence on the part of the defendant
if the death or injury results from his possession of dangerous weapons or substances,
such as firearms and poison, except when the possession or use thereof is indispensable
in his occupation or business.(n)

Res Ipsa Liquotur

 Doctrine of Res Ipsa Liquotur- it literally means, “the thing or transaction speaks for
itself”
 Requisites:
 1. The accident is of a kind which ordinarily does not occur in the absence of someone
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.

Professional Services Inc. vs Agana

 Requisites
 The occurrence of an injury
 The thing which caused the injury was under the control and management of the
defendant
 The occurrence was such that in the ordinary course of things, would not have happened
if those who had control or management used proper care; and
 The absence of explanation by the defendant.

Ramos vs Court of Appeals GR No. 124354 December 29, 1999

 FACTS: Plaintiff Erlinda Ramos was a 47-year old robust woman. Except for occasional
complaints of discomfort due to pains allegedly caused by presence of a stone in her gall
bladder, she was as normal as any other woman. Because of the discomforts somehow
interfered with her normal ways, she sought professional advice. She was told to undergo
an operation for the removal of a stone in her gall bladder. She underwent series of
examination which revealed that she was fit for the said surgery.

 Through the intercession of a mutual friend, she and her husband met Dr. Osaka for the
first time and she was advised by Dr. Osaka to go under the operation called
cholecystectomy and the same was agreed to be scheduled on June 17, 1985 at 9:00am at
the Delos Santos Medical Center. Rogelio asked Dr. Osaka to look for a good

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 anesthesiologist to which the latter agreed to. A day before the scheduled operation, she
was admitted at the hospital and on the day of the operation.

 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. Dr. Osaka arrived at the
hospital late, Dr. Guttierez, the anesthesiologist, starts to intubate Erlinda when Heminda
heard her say that intubating Erlinda is quite difficult and there were complications. This
prompted Dr. Osaka to order a call to another anesthesiologist, Dr. Caldon who
successfully intubated Erlinda.
 The patient’s nails became bluish and the patient was placed in a trendelenburg position.
After the operation, Erlinda was diagnosed to be suffering from diffuse cerebral
parenchymal damage and that the petitioner alleged that this was due to lack of oxygen
supply to Erlinda’s brain which resulted from the intubation.

 ISSUE: Whether or not the doctors and the hospital are liable for damages against
petitioner for the result of the said operation.

 RULING: 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.
 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. Instead,
it is considered as merely evidentiary or in the nature of a procedural rule. It is regarded
as a mode of prove, or a mere procedural convenience since it furnishes a substitute for,
and relieves a plaintiff of, the burden of producing specific proof of negligence. In other
words, mere invocation and application of the doctrine does not dispense with the
requirement of proof of negligence.
 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.
 Medical malpractice 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. 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.
 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

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 need for expert medical testimony is dispensed with because the injury itself provides the
proof of negligence.
 We find the doctrine of res ipsa loquitur appropriate in the case at bar.
 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.
 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.

Macalinao v. Ong, G.R. No. 146635, Dec. 14, 2005

 FACTS: Macalinao and Ong were employed as utility man and driver, respectively, at
the Genetron International Marketing (Genetron), owned and operated by Sebastian. On
25 April 1992, Sebastian instructed Macalinao, ‘Ong and two truck helpers to deliver a
heavy piece of machinery reactor/motor for mixing chemicals, to Sebastian’s
manufacturing plant in Angat, Bulacan. While, in the process of complying with the
order, the vehicle driven by Ong, Genetrons Isuzu Elf truck hit and bumped the front
portion of a private jeepney along Caypombo, Sta. Maria, Bulacan at around 11:20 in the
morning.

Macalinao v. Ong, G.R. No. 146635, Dec. 14, 2005

 Both vehicles incurred severe damages while the passengers sustained physical injuries
as a consequence of the collision. Macalinao incurred the most serious injuries.
Macalinaos body was paralyzed and immobilized from the neck down as a result of the
accident and per doctor’s advice, his foot was amputated. He also suffered from bed sores
and infection. Before he died, Macalinao was able to file an action for damages against
both Ong and Sebastian before the Regional Trial Court (RTC) of Quezon City, Branch
81.
 RTC: Ong negligent and Sebastian failed to exercise the diligence of a good father of a
family in the selection and supervision of Ong thus ordering them jointly liable to pay
actual, moral, and exemplary damages as well as civil indemnity for Macalinao’s death

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  CA: reversed for lack of evidence.

Macalinao v. Ong, G.R. No. 146635, Dec. 14, 2005

 ISSUE: W/N Ong may be held liable under the doctrine of Res Ipsa Loquitur
 RULING: YES. Contrary to the conclusion of the appellate court, the evidence on record
coupled with the doctrine of res ipsa loquitur sufficiently establishes Ongs negligence.

Macalinao v. Ong, G.R. No. 146635, Dec. 14, 2005

 The photograph clearly shows that the road where the mishap occurred is marked by a
line at the center separating the right from the left lane. While ending up at the opposite
lane is not conclusive proof of fault in automobile conclusion that it was the Isuzu truck
which hit the private jeepney rather than the other way around.
 Based on the angle at which it stopped, the private jeepney obviously swerved to the right
in an unsuccessful effort to avoid the Isuzu truck. Since respondents failed to refute the
contents of the police blotter, the statement therein that the Isuzu truck hit the private
jeepney and not the other way around is deemed established.

Macalinao v. Ong, G.R. No. 146635, Dec. 14, 2005

 While not constituting direct proof of Ong’s negligence, the foregoing pieces of evidence
justify the application of res ipsa loquitur, a Latin phrase which literally means “the thing
or the transaction speaks for itself.

Macalinao v. Ong, G.R. No. 146635, Dec. 14, 2005

 Requisites for the application of res ipsa loquitur

 (1) The accident is of a kind which ordinarily does not occur in the absence of someone’s
negligence; - No two motor vehicles traversing opposite lanes will collide as a matter of
course unless someone is negligent.
 (2) It is caused by an instrumentality within the exclusive control of the defendant or
defendants – Driving the Isuzu truck gave Ong exclusive management and control over
at.
 (3) The possibility of contributing conduct which would make the plaintiff responsible is
eliminated.
 (4) Defendant fails to offer any explanation tending to show that the injury was caused by
his or her want of due care.

We are convinced that all the above requisites are present in the case at bar.

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115
 TITLE XVIII
DAMAGES

CHAPTER 1
General Provisions

Article 2195. The provisions of this Title shall be respectively applicable to all

obligations mentioned in article 1157.

Article 2196. The rules under this Title are without prejudice to special
provisions on damages formulated elsewhere in this Code. Compensation for
workmen and other employees in case of death, injury or illness is regulated
by special laws. Rules governing damages laid down in other laws shall be
observed insofar as they are not in conflict with this Code.

Article 2197. Damages may be:

(1) Actual or compensatory;

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 (2) Moral;

(3) Nominal;

(4) Temperate or moderate;

(5) Liquidated; or

(6) Exemplary or corrective.

Article 2198. The principles of the general law on damages are hereby

adopted insofar as they are not inconsistent with this Code.

CHAPTER 2
Actual or Compensatory Damages

Article 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.

Article 2200. Indemnification for damages shall comprehend not only the

value of the loss suffered, but also that of the profits which the obligee failed
to obtain. (1106)

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

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the non-
performance of the obligation. (1107a)

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Two kinds of compensatory damages
Article 2200 of the Civil Code provides that indemnification for damages shall comprehend not
only the value of the loss suffered, but also that of the profits which the obligee failed to obtain.
Moreover, Article 2201 of the Civil Code instructs that in contracts and quasicontracts, the
damages for which the obligor who acted in good faith is liable shall be those that are the natural
and probable consequences of the breach of the obligation, and which the parties have foreseen
or could have reasonably foreseen at the time the obligation was constituted. In case of fraud,
bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may
be reasonably attributed to the non-performance of the obligation In Central Bank of the Phils. v.
Court of Appeals, the Court explained the principles underlying Articles 2200 and 2201:

Construing these provisions, the following is what this Court held in Cerrano vs. Tan Chuco,
Phil. 392 (1918):

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

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

The Court in San Miguel Foods, Inc., et al. v. Magtuto reiterated that there are two kinds of
actual or compensatory damages: (1) the loss of what a person already possesses, and (2) the
failure to receive as a benefit that which would have pertained to them. In the latter instance, the
familiar rule is that damages cons1stmg of umealized profits, frequently referred to as ganacias
frustradas or lucrum cessans, are not to be granted on the basis of mere speculation, conjecture,
or surmise, but rather by reference to some reasonably definite standard such as market value,
established experience, or direct inference from known circumstances. Thus, to justify a grant of
actual or compensatory damages, it is necessary to prove with a reasonable degree of certainty,
premised upon competent proof and on the best evidence obtainable by the injured party, the
actual amount of loss.

In the case at bench, CONFED failed to present .any persuasive proof that it is entitled to the
compensatory damages awarded by the CA. Its claim for lost profits remained unsubstantiated
and unproven. It is a fundamental principle of the law on damages that, while one injured by a

118
breach of contract shall be awarded fair and just compensation commensurate with the loss
sustained as a consequence of the defendant's acts or omission, a party is entitled only to such
compensation for the pecuniary loss that he or she has duly proven. Actual damages cannot be
presumed and cannot be based on flimsy, remote, speculative and non-substantial proof.
(Voltaire Hans N. Bongcaya, doing business under the name and style of VHB Biopro
Enterprises and Pete Nicomedes Prado v. Confederation of Sugar Producers Cooperatives
(CONFED), Jose J. Jison and Prudential Guarantee and Assurance, Inc., G.R. No. 225438.
January 20, 2021)

(Voltaire Hans N. Bongcaya, doing business under the name and style of VHB
Biopro Enterprises and Pete Nicomedes Prado v. Confederation of Sugar
Producers Cooperatives (CONFED), Jose J. Jison and Prudential Guarantee
and Assurance, Inc., G.R. No. 225438. January 20, 2021)

Article 2202. In crimes and quasi-delicts, the defendant shall be liable for all
damages which are the natural and probable consequences of the act or
omission complained of. It is not necessary that such damages have been
foreseen or could have reasonably been foreseen by the defendant.

Article 2203. The party suffering loss or injury must exercise the diligence of a
good father of a family to minimize the damages resulting from the act or
omission in question.

119
Article 2204. In crimes, the damages to be adjudicated may be respectively
increased or lessened according to the aggravating or mitigating
circumstances.

Article 2205. Damages may be recovered:

(1) For loss or impairment of earning capacity in cases of temporary or

permanent personal injury;

(2) For injury to the plaintiff's business standing or commercial credit.

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.

Article 2207. If the plaintiff's property has been insured, and he has received
indemnity from the insurance company for the injury or loss arising out of the
wrong or breach of contract complained of, the insurance company shall be
subrogated to the rights of the insured against the wrongdoer or the person
who has violated the contract. If the amount paid by the insurance company
does not fully cover the injury or loss, the aggrieved party shall be entitled to
recover the deficiency from the person causing the loss or injury.

120
Article 2208. In the absence of stipulation, attorney's fees and expenses of
litigation, other than judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendant's act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the

plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing
to satisfy the plaintiff's plainly valid, just and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers

and skilled workers;

(8) In actions for indemnity under workmen's compensation and

employer's liability laws;

(9) In a separate civil action to recover civil liability arising from a

crime;

(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that
attorney's fees and expenses of litigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be reasonable.

Article 2209. If the obligation consists in the payment of a sum of money, and
the debtor incurs in delay, the indemnity for damages, there being no
stipulation to the contrary, shall be the payment of the interest agreed upon,
and in the absence of stipulation, the legal interest, which is six per cent per
annum. (1108)

Article 2210. Interest may, in the discretion of the court, be allowed upon

damages awarded for breach of contract.
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Article 2211. In crimes and quasi-delicts, interest as a part of the damages
may, in a proper case, be adjudicated in the discretion of the court.

Article 2212. Interest due shall earn legal interest from the time it is judicially
demanded, although the obligation may be silent upon this point. (1109a)

Article 2213. Interest cannot be recovered upon unliquidated claims or

damages, except when the demand can be established with reasonable
certainty.

Article 2214. In quasi-delicts, the contributory negligence of the plaintiff shall

reduce the damages that he may recover.

Article 2215. In contracts, quasi-contracts, and quasi-delicts, the court may

equitably mitigate the damages under circumstances other than the case
referred to in the preceding article, as in the following instances:

(1) That the plaintiff himself has contravened the terms of the contract;

(2) That the plaintiff has derived some benefit as a result of the
contract;

(3) In cases where exemplary damages are to be awarded, that the

defendant acted upon the advice of counsel;

(4) That the loss would have resulted in any event;

(5) That since the filing of the action, the defendant has done his best to
lessen the plaintiff's loss or injury.

CHAPTER 3
Other Kinds of Damages

Article 2216. No proof of pecuniary loss is necessary in order that moral,

nominal, temperate, liquidated or exemplary damages, may be adjudicated.
The assessment of such damages, except liquidated ones, is left to the
discretion of the court, according to the circumstances of each case.

COMMENTS:
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Actual Damages must Be supported by Receipts;
Temperate Damages may still be awarded- -

The awards for damages can stand some modification, however. Notably, the appellate court
awarded P25,000.00 as actual damages which is the amount stipulated by the parties. However,
it is settled that "only expenses supported by receipts and which appear to have been actually
expended in connection with the death of the [victim] may be allowed." Hence, the award of
P25,000.00 as actual damages is deleted. In lieu thereof, "it is proper to award temperate
damages x x x since the heirs of the victim suffered a loss but could not produce documentary
evidence to support their claims." In line with prevailing jurisprudence, we award P50,000.00 as
temperate damages. As regards the awards for civil indemnity, moral damages and exemplary
damages, it was held in People v. Jugueta that for a felony like murder where the penalty
imposed is death, but reduced to reclusion perpetua because of Republic Act No. 9346, the
amount is fixed at Pl00,000.00 each for civil indemnity, moral damages, and exemplary
damages. WHEREFORE, the appeal is hereby DISMISSED. The Decision of the Court of
Appeals in CA-G.R. CR-HC No. 04241 is AFFIRMED with MODIFICATIONS. Appellant
Marlon Soriano y Narag is ORDERED to pay the heirs of Perfecto Narag the amounts of
Pl00,000.00 as civil indemnity, Pl 00,000.00 as moral damages, P100,000.00 as exemplary
damages, and P150,000.00 as temperate damages. SO ORDERED. (Emphasis supplied, citations
omitted).- PEOPLE OF THE PHILIPPINES v. MARLON SORIANO y NARAG,
G.R. No. 216063, June 05, 2017

When amount of actual damages is below

The amount of temperate damages
which is pegged by jurisprudence at Php50,000.00,
P50,000 shall be awarded in the judgment

The monetary awards of (a) P50,000.00 as civil indemnity; (b) P50,000.00 as moral
damages; ( c ) P25,00000 as attorney’s fees; and, (d) P2,700.00 as cost of suit are correct and in
accord with recent jurisprudence. However, We deem it necessary to delete the actual damages
in the amount of P29,000.00 and award of P50,000.00 as temperate damages in lieu thereof in
conformity with prevailing jurisprudence that when the actual damages is less than the sum
allowed by the court as temperate damages, now pegged at P50,000.00, the award of temperate
damages is justified in lieu of actual damages. We likewise modify the award of exemplary
damages into Php50,000.00 to recognize the reckless and imprudent manner in which petitioners
Prieto and Rondal, Jr. acted during the incident. These monetary awards shall earn interest at the
rate of six per cent (6%) per annum from date of finality of this judgment until fully
paid.”~Edison Prieto and Federico Rondal, Jr. Vs. Erlinda Cajimat, G.R. No. 214898. June 8,
2020

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ACTUAL DAMAGES; Purpose. Actual or compensatory damages simply make
good or replace the loss caused by the wrong.

Manner of Determination

Claimant must produce competent proof or the best evidence obtainable such as receipts to
justify an award therefore. Actual or compensatory damages cannot be presumed but must be
proved with reasonable certainty. (People v. Ereno, Feb. 22, 2000)

TEMPERATE DAMAGES
Purpose
When the court is convinced that there has been such a loss, the judge is
empowered to calculate moderate damages rather than let the complainant suffer
without redress. (GSIS v. Labuang-Deang, 365 SCRA 341)

Manner of Determination
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. No
proof of pecuniary loss is necessary.

SECTION 4, RULE 11

Sec.4. Effect of death on civil actions. –The death of the accused

After arraignment and during the pendency of the criminal action shall
extinguish the civil liability arising from the delict. However, the independent civil
action instituted under section 3 of this Rule or which thereafter is instituted to
enforce liability arising from other sources of obligation may be continued against
the estate or legal representative of the accused after proper substitution or against
said estate, as the case may be. The heirs of the accused may be substituted for the
deceased without requiring the appointment of an executor or administrator and the
court may appoint a guardian ad litem for the minor heirs.
The court shall forthwith order said legal representative or representatives to
appear and be substituted within a period of thirty (30) days from notice.

A final judgment entered in favor of the offended party shall be enforced in the
manner especially provided in these rules for prosecuting claims against the estate
of the deceased.

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If the accused dies before arraignment, the case shall be dismissed without
prejudice to any civil action the offended party may file against the estate of the
deceased.

Actual damages must be supported by receipts;

Temperate damages may still be awarded-

(PEOPLE OF THE PHILIPPINES v. MARLON SORIANO y NARAG, G.R. No.

216063, June 05, 2017)

FACTS:
Appellant Marlon Soriano was indicted for murder before the Regional Trial Court
(RTC) of Tuguegarao City under information which states:

That on February 09, 2004, in the City of Tuguegarao, Province of Cagayan and within
the jurisdiction of this Honorable Court, accused MARLON SORIANO y NARAG, armed with a
bladed weapon, with intent to kill and with evident premeditation and treachery, did then and
there willfully, unlawfully, and feloniously, stab to death victim PERFECTO NARAG, husband
of complainant EDERUNA A. NARAG, inflicting upon him mortal stab wounds which caused his
untimely death.

That the crime was committed with the aggravating circumstance(s) of dwelling, and in
disregard of the respect due to the offended party on account of his age, being an old man.

Ederlina testified that on the afternoon of February 9, 2004, appellant arrived at their
house and asked where her husband Perfecto was. Surprised by his arrival, Edelina asked
appellant why he was looking for Perfecto. Instead of replying to her query, appellant barged
into their house and proceeded to Perfecto’s room. Seeing that appellant was carrying a bladed
weapon, ederlina shouted to Perfecto to close the door to his room.

While Perfecto was attempting to close the door to his room, appellant grabbed his neck
and immediately stabbed him at the right chest while uttering the words “l will kill you.”
Ederlina tried to stop the appellant fro stabbing her husband but he pushed her away and stabbed
her instead at the right wrist and forehead. She pleaded with appellant to stop stabbing his,
Perfecto but appellant did not heed her plea. Perfecto also pleaded with him to stop his stabbing
frenzy, but he paid no attention to his pleas.

Ederlina narrated that at this point, Villamor the tricycle driver in their employ. Came in
and forced appellant out of Perecto’s room. However, appellant was able to return inside the
room and stabbed Perfeto at the back again, Ederlina added that after appellant left their houses,
she saw him and his brother Martin Sorian (Martin) at the street, with appellant himself yelling
“Winner.”

125
 On the other hand, the appellant claimed that there had been a longstanding bad blood
between his (appellants’s) family and his now deceased uncle, Perfecto, who was am elder
brother of his mother; and that this family feud was caused by Perfecto’s desire to deprive
appellant’s mother of her legitimate share in the common residential compound at Linao East,
Tuguegarao City.

He claimed that on that fateful day of February 9, 2004, Perfecto went near a store he was
tending right inside the common residential compound; that at a distance of about five meters,
Perfecto yelled at him to step outside; that when he stepped outside their store, Perfecto swung
his knife at him and injured his knee; that he run inside the kitchen and armed himself with a
chisel; that when Perfecto tried to hurt him again, he was able to stab him first; that several
persons witnessed the incident but nobody tried to interfere; that after the stabbing incident, he
surrendered to Barangay Counciman Benigno Lucas who brought him to the police station in
Annaturan, Tugurgarao City where he was investigated; and that afterward, he was brought to a
hospital for treatment but said hospital did not issue a medical certificate.

The Trial Court convicted the accused. The dispositive portion of the trial court’s
judgment as follows:

WHEREFORE, the accused MARLON SORIANO y NARAG is found GUILTY beyond

reasonable doubt of MURDER as defined in Article 248 of the Revised Penal Code, as amended
by Republic Act. No. 7659 and is hereby sentenced to suffer the penalty of Reclusion Perpetua
without possibility of parole. Said accused is ORDERED to pay the heirs of Perfecto Narag the
amounts of P75,000.00 as stipulated actual damages; P50,000.00 as moral damages; P25,000.00
as exemplary damages; and to pay the costs of suit.

Aggrieved, appellant sought recourse before the Court of Appeals.

The appellate court however threw out the appellant’s appeal. The appellate court nonetheless
modified the sums awarded by the RTC in concept of actual damages and exemplary damages, to
wit:

However, we find it necessary to modify accused-appellant’s civil liability.

The RTC correctly awarded P75,000.00 civil indemnity and P50,000.00 moral damages
but the actual damages should be reduced to P25,000.00 which is the amount of expenses
stipulated by Ederlina in her testimony. The awarded exemplary damages should also be
increased to P30,000.00 in line with recent jurisprudence.

ISSUE:
 Whether or not the appellate court erred n appreciating the facts as established in the trial
court.
 Whether or not the Court of Appeals correctly ruled on the civil liability of the appellant.

RULING:
In an appeal to the Supreme Court, the latter ruled:

126
 The awards for damages can stand some modifications, however. Notably, the appellate
court awarded P25,000.00 as actual damages which is the amount stipulated by the parties.
However, it is settled that “only expenses supported by receipts and which appear to have been
actually expended in connection with the death of the [victim] may be allowed. “Hence, the
award of P25,000.00 as actual damages is deleted. In lieu thereof, “it is proper to award
temperate damages x x x since the heirs of the victim suffered a loss but could not produce
documentary evidence to support their claims.” In line with prevailing jurisprudence, we award
P50,000.00 as temperate damages. As regards the awards for civil indemnity, moral damages and
exemplary damages, it was held in People v. Jugueta that for a felony like murder where the
penalty imposed is death, but reduced to reclusion perpetua because of Republic Act No. 9346,
the amount is fixed at P100,000.00 each for civil indemnity, oral damges, and exemplary
damages.

Effects of Death of Accused on his Civil Liability-

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, -versus-
PORFERIO CULAS y RAGA, G.R. No. 211156 JUNE 05,2017
FACTS:
In a Resolution dated July 18, 2014, the Court adopted the Decision dated July 25, 2013
of the Court of Appeals finding accused-appellant Porferio Culas y Raga (accused-appellant)
guilty beyond reasonable doubt of the crime of Statutory Rape, the pertinent portion of which
reads:

WHEREFORE, the Court ADOPTS the findings of fact and conclusions of law in
AFFIRMS said Decision finding accused-appellant Porferio Culas y Raga GUILTY
beyond reasonable doubt of Statutory Rape under paragraph 1 (d), Article 266-A in
relation to Article 266-B (1) of the Revised Penal Code, sentencing him to suffer the
penalty of reclusion perpetua without eligibility for parole, with MODIFICATIONS as
to the amounts of civil indemnity and damages awarded. Thus, [accused-appellant] is
ordered to pay the following amounts: (a) P100,000.00 as civil indemnity; (b)
P100,000.00 as moral damages; and (c) P100,000.00n as exemplary damages, plus legal
interest at the rate of six percent (6%) per annum on the monetary awards from the dated
of the finality of this judgment until fully paid.

However, before an Entry of Judgment could be issued in the instant case, the Court
received a Letter⁴ dated September 16, 2014 from the Bureau of Corrections informing the Court
of accused-appellant’s death on February 8, 2014 as evidence by the Certificate of Death.

Under prevailing law and jurisprudence, accused-appellant’s death prior to his

final conviction by the Court renders dismissible the criminal case against him. Article 89 (1) of
the Revised Penal Code provides that criminal liability is totally extinguished by the death of
the accused.

In People v. Layag, the Court thoroughly explained the effects of the death of an accused
pending appeal on his liabilities, as follows:

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From this lengthy disquisition, we summarize our ruling herein:

1. Death of the accused pending appeal of his conviction extinguishes his criminal
liability[,] as well as the civil liability[,] based solely thereon. As opined by Justice
Regalado, in this regard, “the death of the accused prior to final judgment terminates his
criminal liability and only the civil liability directly arising from and based solely on the
offense committed, i.e., civil liability ex delicto in senso strictiore.”
2. Corollarily, the claim for civil liability survives notwithstanding the death of accused, if
the same may also be predicated on a source of obligation other than delict. Article 1157
of the Civil Code enumerates these other sources of obligation from which the civil
liability may arise as a result of the same act or omission.
a) Law
b) Contracts
c) Quasi-contracts
d) x x x
e) Quasi-delicts

3. Where the civil liability survives, as explained in Number 2 above, an action for recovery
thereof may be pursued but only by way of filing a separate civil action and subject to
Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This separate
civil action may be enforced either against the executor/administrator or the estate of the
accused, depending on the source obligation upon which the same is based as explained
above.
4. Finally, the private offended party need not fear a forfeiture of his right to file this
separate civil action by prescription, in cases where during the prosecution of the criminal
action and prior to its extinction, the private-offended party instituted together therewith
the civil action. In such case, the statute of limitations on the civil liability is deemed
interrupted during the pendency of the criminal case, conformably with provisions of
Article 1155 of the Civil Code, that should thereby avoid any apprehension on a possible
privation of right by prescription.⁷

Thus, upon accused-appellant’s death pending appeal of his conviction, the criminal
action is extinguished in as much as there is no longer a defendant to stand as the accused;
the civil action instituted therein for the recovery of the civil liability ex delicto is ipso facto
extinguished, grounded as it is on the criminal action. However, it is well to clarify that
accused-appellant’s civil liability in connection with his acts against the victim, AAA, may
be based on sources other than delicts; in which case. AAA may file a separate civil action
against the estate of accused-appellant, as may be warranted by law and procedural rules.

Award of Civil Liability-

PEOPLE OF THE PHILIPPINES, -v- GREGORIO QUITA alias “GREG”, G.R. No. 212818,
January 25, 2017

FACTS:

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 The two accused in this case, Gregorio Quita, alias Greg (Gregorio), and Fleno Quita,
alias Eddie Boy (Fleno) were indicted for Murder before the Regional Trial Court (RTC) of
Parañaque City, in an information which alleged:

That on or about the 17th day of November[,] 2002, in the City Parañaque, Philippines,
and within the jurisdiction of this Honorable Court, the above-named accused, armed
with bladed weapon, conspiring and confederating together and both of them mutually
helping and aiding one another, and with treachery and abuse of superior strength, did
then and there willfully, unlawfully and feloniously attack, assault and stab one
ROBERTO SOLAYAO, thereby inflicting upon the latter mortal wounds which directly
caused his death.

As these accused were not promptly apprehended when the foregoing information was
filed, this case ordered archived by the RTC. But on January 8, 2007, Gregorio was arrested,
hence the case was revived on the said date.

On January 17, 2007, Gregorio, assisted by counsel, was arraigned and entered a negative
plea to the charge against him.⁴ Pre-trial was held,⁵ after which trial on the merits followed.

RULING OF THE REGIONAL TRIAL COURT

The RTC sustained the factuality of the treacherous killing of Roberto, labeling it as murder,
viz.:

The fact of death of the victim was duly established by his death certificate (exhibit “C”).
Accused Gregorio was one of those who killed the victim. The killing was qualified by
treachery. Obviously, the killing was neither parricide nor infanticide.

This Court finds Paquito Solayao’s eyewitness account of the incident worthy of belief. His
positive, straightforward, categorical[,] and unequivocal testimony that accused Gregorio eld
both hands of the victim at the back while being stabbed by his co-accused Fleno who is his
brother, deserves full credence. It is worthy of note that Paquito was not shown to have been
impelled by ill motive to testify falsely against both accused and indict them for a crime as
serious as murder. All that was shown was his ardent desire to give justice to his murdered on.
When there is no showing of any improper motive on the part of the prosecution witnesses to
testify falsely against the accused, the logical conclusion is that no such improper motive exists
and that their positive and categorical testimonies and declarations on the witness stand under the
solemnity of an oath are worthy of full faith and credence.

Upon appeal, the Court of Appeals upheld the decision of the Court a quo, but the CA
modified Gregorio’s civil liability to reflect recent jurisprudential teaching. This CA thereafter
disposed as follows:

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 WHEREFORE, in view of the foregoing, the appeal is hereby DENIED for lack of merit.
The Decision dated December 1, 2010 rendered by the Regional Trial Court of Parañaque City,
Branch 195, in Criminal Case No. 06-0294 is hereby MODIFIED, increasing the amount of civil
indemnity ex delicto to P75,000.00, moral damages to P50,000.00 and exemplary damages to
P30,000.00.

RULING OF THE HIGH COURT

Gregorio’s appeal before this Court is predicated essentially upon the self-same lone
assignment of error set forth in his Brief with the CA. since the factual findings by the CA are
binding upon this Court, especially when the CA’s findings unite with the RTC’s factual
findings, as in this case, this Court is not at liberty to reject or disturb the factual findings of both
lower courts. Indeed, this Court is satisfied that the factual findings of both lower courts are in
accord with the evidence on record. However, with reference to the civil liability, the same must
be modified to conform strictly to the teachings of recent jurisprudence. Thus, the award
P15,000.00 as actual damages is deleted and in lieu thereof, temperate damages in the amount of
P50,000.00 is awarded; the awards of moral damages and exemplary damages are increased to
P75,000.00 each; and the award of P75,000.00 as civil indemnity is maintained. Finally, all
damages shall earn interest at the rate of 6% per annum from the date of finality of this judgment
until fully paid.

KINDS OF DAMAGES
 1. ACTUAL OR COMPENSATORY DAMAGES
 2. MORAL DAMAGES
 3. EXEMPLARY DAMAGES
 4. NOMINAL DAMAGES
 5. TEMPERATE DAMAGES
 6. LIQUIDATED DAMAGES

ACTUAL DAMAGES
 Those awarded to the aggrieved party as adequate compensation only for
such pecuniary loss suffered by him as he has alleged and duly proved.
 For actual damages to be awarded. It is necessary that the claimant produce
competent proof or the best evidence obtainable such as receipts to justify an
award.
 Purpose: Actual or compensatory damages simply make good or replace the
loss caused by the wrong.

130
 KINDS OF ACTUAL DAMAGES
 Art. 2200 of the Civil Code:
 “Indemnification for damages shall comprehend not only the value of the
loss suffered, but also that of the profits which the obliged failed to obtain.”
 1. Daño emergente. It is the loss of what a person already possesses. This
includes actual loss of money or loss or damage to property or even injury to
the plaintiff’s business standing or commercial credit. (See p. 930, Reviewer
on Civil Law by Aquino, 2018 Edition).
 2. Lucro cesante. It is loss of a benefit that the plaintiff failed to receive.
These include lost income or loss of earning capacity. (See p. 930, Reviewer
on Civil Law by Aquino, 2018 Edition citing Titan-Ikeda Construction &
Development Corporation v. Primetown Property Group, Inc. 544 SCRA
466 (2008)).

MORAL DAMAGES

 Moral damages, though incapable of pecuniary estimation, are in the

category of an award designated to compensate the claimant for actual injury
suffered and not to impose a penalty on the wrongdoer. Moral damages are
emphatically not intended to enrich a complainant at the expense of a
defendant; they are awarded only to enable the injured party to obtain
means, diversion or amusement that will serve to alleviate the moral
suffering he has undergone, by reason of the defendant’s culpable action.

 Requisites for Award of Moral Damages

 1. There must be an injury, whether physical, mental, or psychological,
clearly sustained by the claimant;
 2. There must be a culpable act or omission factually established;
 3. The wrongful act or omission of the defendant is the proximate cause of
the injury sustained by the claimant;
 4. The award of damages is predicated on any of the cases stated in Article
2219 of the Civil Code.

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In the recent case of Sofia Tabuada et al., v. Eleanor Tabuada & Bernan Certeza,
G.R. No. 196510, September 12, 2018,

Award of moral damages reversed

because action was not an instance
of disrespect to the dead

The RTC awarded moral damages. to the petitioners based on disrespect to the
dead on the part of Eleanor Tabuada for fraudulently
signing and executing the mortgage by impersonating the late Loreta
Tabuada.

We hold that the RTC thereby fell into a legal error that the Court should correct.
The petitioners cannot recover moral damages from Eleanor Tabuada on the
ground of "disrespect to the dead." The Civil Code provision under Article 309 on
showing "disrespect to the dead" as a ground for the family of the deceased to
recover moral and material damages, being under the title of Funerals, obviously
envisions the commission of the disrespect during the period of mourning over the
demise of the deceased or on the occasion of the funeral of the mortal remains of
the deceased. Neither was true herein. Hence, the act of Eleanor Tabuada of
fraudulently representing the late Loreta Tabuada did not amount to disrespect to
the dead as basis for the recovery of moral damages.

NOMINAL DAMAGES
 Are adjudicated in order that a right of the plaintiff, which has been violated
or invaded by the defendant, may be vindicated or recognized, and not for
the purpose of indemnifying the plaintiff for any loss suffered by him.
 Nominal damages are adjudicated, not for the purpose of indemnifying
respondents for any loss suffered, but for vindicating or recognizing their
right to a property that has been violated or invaded.
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  The assessment of nominal damages is left to the sound discretion of the
court in accordance with the circumstances of each case.
 Nominal damages cannot be awarded together with compensatory damages.
Where the court has already awarded compensatory and exemplary damages
that is already a juridical recognition that plaintiff’s right was violated.

Nominal Damages

However, the award of nominal damages has no basis. It has been settled that
nominal damages cannot co-exist with actual damages. Nominal damages are adjudicated
in order that a right of the plaintiff, which has been violated or invaded by the defendant,
may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for
any loss suffered by him. Since respondent has already been indemnified for the damages
made on the leased premises, there is no more reason to further grant nominal damages.
Philippine-Japan Active Carbon Corporation Vs. Habib Borgaily
G.R. No. 197022. January 15, 2020

TEMPERATE OR MODERATE DAMAGES

 Are more than nominal but less than 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.
 Rationale: From the nature of the case, definite proof of pecuniary loss
cannot be offered. When the court is convinced that there has been such loss,
the judge is empowered to calculate moderate damages, rather than let the
complainant suffer without redress from the defendant’s wrongful act.
 Requisite to justify award: it is essential that “some pecuniary loss” had been
suffered but its exact amount cannot, from the nature of the case, be proved
with certainty.

LIQUIDATED DAMAGES
 Are fixed damages, previously agreed by the parties to the contract and
payable to the innocent party in case of breach by the order.
 However, if the principal obligation is void, there is no contract that could be
breached-the nullity of the principal obligation carries with it the nullity of
the accessory obligation of liquidated damages.

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  If the amount fixed as liquidated damages is iniquitous or unconscionable,
the court may reduce it to a reasonable level.
 Effect of partial performance: if there was a partial performance of the
contract, the total amount of the liquidated damages agreed upon cannot be
enforced. Liquidated damages are presumed to be only for a total breach of
the contract. Hence, there can be a corresponding reduction of the liquidated
damages.

EXEMPLARY OR CORRECTIVE DAMAGES

 Also known as punitive or vindictive damages, exemplary or corrective
damages are intended to serve as a deterrent to serious wrongdoings and as a
vindication of undue sufferings and wanton invasion of the rights of an
injured or a punishment for those guilty of outrageous conduct.
 Exemplary damages are mere accessories to other forms of damages except
nominal damages.

Cases where exemplary damages may be imposed as accessory damages

 1. Criminal offense-when the crime was committed with one or more

aggravating circumstances;
 2. Quasi-delicts-when the defendant acted with gross negligence;
 3. Contracts and Quasi-contracts-when defendant acted in wanton,
fraudulent, reckless, oppressive or malevolent manner.
 While the exact amount of exemplary damages need not be proved, plaintiff
must prove that he is entitled to moral, temperate or compensatory damages.

DAMAGES IN BREACH OF CONTRACT

 FGU INSURANCE VS. SARMIENTO TRUCKING

FACTS: G.P. Sarmiento Trucking Corporation undertook to deliver 30 units of refrigerators
from the plant side of Conception Industries, Inc., while traveling, the truck of respondent
collided with another truck which caused it to fall into a deep canal, resulting in damages to the
cargo.
 FGU Insurance Corporation, an insurer of Concepcion Industries, paid the value of the
categories. FGU, as subrogee of the rights and interests of Concepcion Industries sought
reimbursement of the amount it had paid to the latter from GPS. The respondent failed to
pay petitioner, hence, FGU filed a complaint for damages and breach of contract of
carriage against GPS and its driver. Respondents answered that GPS is not a common
carrier but an exclusive hauler of Concepcion Industries and that the cause of damage

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 was purely accidental. Subsequently, respondent filed a motion to quash on the ground
that petitioner ailed to prove that it was a common carrier.
 The RTC dismissed the complaint on the ground that respondent is not a common carrier.
Hence, the presumption of fault or negligence on the part of common carrier in case of
loss or damage of the goods during transport does not apply. What applies in this case is
the law on obligation and contract, where negligence or fault is not presumed.
Considering that petitioner failed to adduce evidence to prove that respondent is a
common carrier and its driver was negligent, the complaint should be dismissed.
 The CA also rejected the appeal of petitioner on the ground that petitioner failed to prove
that respondent was a common carrier. Since the presumption of negligence of common
carriers does not arise, petitioner has the burden of proving the negligence of respondent
which the former failed to prove.

ISSUE

 Whether respondent GPS, either as a common carrier or a private carrier, may be

presumed to have been negligent when the goods it undertook to transport safely were
subsequently damaged while in its protective custody and possession.

RULING

 GPS is not a common carrier because it had been an exclusive contractor and hauler of
Concepcion Industries, Inc., rendering or offering its services to no other individual or
entity.
 However, GPS cannot escape from liability.
 In culpa contractual, upon which the action of petitioner rests as being the subrogee of
Concepcion Industries, the mere proof of the existence of the contract and the failure of
its compliance justify, prima facie, a corresponding right of relief.
 The law, recognizing the obligatory force of contracts, will not permit a permit a party to
be set free from liability for any kind of misperformance of the contractual undertaking or
a contravention of the tenor thereof.
 A breach upon the contract confers upon the injured party a valid cause for recovering
that which may have been lost or suffered.

Agreements can accomplish little, unless they are made the basis for action. The effect of every
infraction is to create a new duty-to make recompense to the one who has been injured by the
failure of another to observe his contractual obligation unless he can show extenuating
circumstances, like proof of his exercise of due diligence or the attendance of fortuitous event, to
excuse him from liability.

Respondent recognizes the existence of a contract of carriage between it and petitioners assured
and admits that the cargoes had been lost or damages while in its custody. In such a situation, a
default on, or failure of compliance with the obligation gives rise to a presumption of lack of care
and corresponding liability on the part of the contractual obligor the burden being on him to
establish otherwise. GPS failed to do so. The order is affirmed.

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 DAMAGE TO PROPERTY

 MARIKINA AUTO LINE TRANSPORT CORP. VS PEOPLE OF THE

PHILIPPINES AND ERLINDA VALDELLON
 FACTS: Marikina Autoline Bus is the owner operator of a passenger bus which suddenly
swerved and struck the terrace of a commercial apartment owned by Valdellon. Valdellon
demanded payment of Php. 148,440.00 to cover the cost of the damage of the terrace.
The bus company offered a Php 30,000.00 settlement which Valdellon refused. Valdellon
filed a criminal complaint for reckless imprudence resulting in damage to property and a
separate civil complaint for damages.
 The trial court found Suelto (driver) guilty or reckless imprudence resulting in damage to
property and ordered MATC and Suelto to pay solidarily Php. 150,000.00 by way of
actual and compensatory damages.
 Petitioner and Suelto appealed to the CA which affirmed the decision but the award of
actual damages was reduced to Php. 100,000.00
 ISSUE: WHETHER OR NOT THE PROSECUTION FAILED TO ADDUCE
EVIDENCE TO PROVE THAT RESPONDENT SUFFERED ACTUAL DAMAGES IN
THE AMOUNT OF PHP. 100,000.00

RULING:

 Suelto is guilty of reckless imprudence as the severe damages sustained could not have
resulted had the accused acted as a reasonable and prudent man. What is more probable is
that the accused had to swerve to the right and hit the commercial apartment of the
plaintiff because he could not make a full stop as he was driving too fast in a usually
crowded street.
 Petitioners insist that private respondent was able to prove only the amount of Php.
35,000.00 by way of actual damages, hence, the award of Php 100,000.00 is barren of
factual basis.
We agree with the contention of petitioners that respondents failed to prove that the damages to
the terrace caused by the incident amounted to Php. 100,000.00.

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 Damages
 Refers to the sum of money which the law awards or imposes as a pecuniary
compensation, a recompense or satisfaction for an injury done or a wrong
sustained as a consequence of either of a breach of a contractual obligation or a
tortuous act.

SECTION 1
Moral Damages

Article 2217. Moral damages include physical suffering, mental anguish,

fright, serious anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar injury. Though incapable of pecuniary
computation, moral damages may be recovered if they are the proximate
result of the defendant's wrongful act for omission.

Article 2218. In the adjudication of moral damages, the sentimental value of

property, real or personal, may be considered.

Article 2219. Moral damages may be recovered in the following and analogous

cases:

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

(3) Seduction, abduction, rape, or other lascivious acts;

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

(7) Libel, slander or any other form of defamation;

(8) Malicious prosecution;

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 (9) Acts mentioned in article 309;

(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34,
and 35.

The parents of the female seduced, abducted, raped, or abused, referred to in

No. 3 of this article, may also recover moral damages.

The spouse, descendants, ascendants, and brothers and sisters may bring the
action mentioned in No. 9 of this article, in the order named.

Article 2220. Willful injury to property may be a legal ground for awarding

moral damages if the court should find that, under the circumstances, such
damages are justly due. The same rule applies to breaches of contract where
the defendant acted fraudulently or in bad faith.

COMMENTS:

What are moral damages?

Moral damages are awarded to enable the injured party to obtain means,
diversions or amusements that will serve to alleviate the moral suffering he has
undergone, by reason of the defendant’s culpable action. (Kierulf v. CA, 336 Phil.
4 14, 432 (1997) reiterated in Mendoza v. Sps. Lim (2014)

Why are moral damages awarded?

Moral damages xxx are designed to compensate and alleviate the physical
suffering, mental anguish fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation and similar harm unjustly caused to a
person. xxx

But are all wounded feelings compensable?

xxx the Court held that there must be clear testimony on the anguish and
other forms of mental suffering. Thus to be entitled to moral damages there must
not only be an assertion in the pleadings there must be a clear testimony of the
depth of the ‘wounded feelings” (Francisco v. GSIS)

When moral damages cannot be awarded?

In G.R. No. 200759, penned by Justice Del Castillo the SC had the
occasion to reiterate that xxx moral damages are improperly awarded xxx the only
basis of the trial court in granting moral damages of P500,000.00 was appellee’s
gratuitous claim that she suffered sleepless nights for her frozen shoulder and

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 trigger finger, supposedly evidenced by 5 official receipts issued by her
acupuncturist whom she paid P400.00nper receipt.

What are the grounds of awarding moral damages?

However, the enumeration found in the Civil Code is not exclusive. xxx
There is no hard-and-fast rule in determining what would be a fair and reasonable
amount of moral damages, since each case must be governed by its own peculiar
facts. Trial courts are given discretion in determining amount, with the limitation
that is should not be palpably and scandalously excessive. Indeed, it must be
commensurate to the loss or injury suffered. xxx (Go v. Cordero G.R. No. 164747)

How to prove entitlement to moral damages?

1) Evidence of besmirched reputation or physical, mental or psychological
suffering sustained by the claimant;
2) A culpable act or omission factually established;
3) Proof that the wrongful act or omission of the defendant is the proximate cause
of the damages sustained by the claimant; and
4) The proof that the act is predicated on any of the instances expressed or
envisioned by Article 2219 and Article 2220 of the Civil Code (Mendoza v.
Sps. Lim)

Can the court award moral damages in cases involving sentimental value?
Yes, in G.R. no. 163271 Sps. Patricio v. Heirs of Sambaan, penned by
Justice Del Castillo the Court found that it was proper to award moral damages
based on the last wishes of Julian and taking into consideration the blood
relationship between the parties as well as the turmoil and strain that their
relationship suffered because of the fraudulent transfer of the subject property.

Are corporations entitled to moral damages?

Obviously, an artificial person like herein appellant corporation cannot
experience physical sufferings, mental anguish, fright, serious anxiety, wounded
feelings, moral shock or social humiliation which are basis of moral damages. A
corporation may have good reputation which, if besmirched may also be a ground
for the award of moral damages.

Immaculate Conception Academy et al v. AMA Computer College, Inc., G.R. No. 173575,
Feb. 2, 2011
FACTS:
Immaculate Conception Academy (ICA) owned a three-storey building in Dasmarinas, Cavite.
The property caught the eye of AMA Computer College, Inc. (AMA) and it sought to buy the
same but did not succeed. Subsequently, after inspecting the building, AMA settled on leasing it.

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A ten year lease contract was executed. After the signing of the contract, officials of AMA re-
inspected the building and began renovating it for the upcoming school year. But during an
inspection, AMAs Chief Operating Officer for its Cavite Campus noted several cracks on the
floor and walls of the buildings second storey. This prompted more inspections. Eventually,
AMA applied with the municipal engineer’s office for an occupancy permit. It was subject to an
inspection and was found to be structurally unsafe.

Occupants AMA demanded for a return of the money they deposited and when this was not
given due course they filed an action for breach of contract and damages with prayer for the
issuance of a writ of preliminary attachment against ICA before the RTC. AMA alleged that ICA
fraudulently entered into the lease agreement, fraudulently breached the same, and violated its
implied warranty against hidden defects; that despite knowledge of the instability of the building,
ICA insisted on offering it to AMA; and that ICA had been unable to produce the buildings
certificate of occupancy. AMA prayed for restitution of the amounts it paid to ICA with interest
and award of exemplary damages and attorney’s fees.
The RTC ruled in favor of AMA. The CA ruled in favor of ICA upon appeal.

ISSUES:
1. Whether or not AMA was justified in rescinding the contract of lease either on account of
ICAs fraudulent representation regarding the condition of its building or on account of its
failure to make repairs on the same upon demand; and
2. Whether or not ICA and Dr. Campos are entitled to their claims for damages against
AMA.

RULING:
AMA was not justified in rescinding the contract of lease on account of ICAs alleged fraudulent
representation regarding the true condition of its building. The fact is that AMAs representatives
inspected the building to determine if it was suitable for their school needs. The cracks on the
floor and on the walls were too obvious to suggest to them that something was amiss. It was their
fault that they did not check the significance of such signs. ICA for its part was candid about the
condition of the building and did not in fact deny AMA access to it. Instead of recession they
could have demanded repair which was one of the stipulations in their contract.

Moral damages; Instances when moral damages can be awarded in an action

for breach of contract-

Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and
similar injury. Though incapable of pecuniary computation, moral damages may be

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recovered if they are the proximate result of the defendant's wrongful act or
omission.

Under Article 2219 of the Civil Code, moral damages are recoverable in the
following and analogous cases: (1) a criminal offense resulting in physical injuries;
(2) quasi-delicts causing physical injuries; (3) seduction, abduction, rape or other
lascivious acts; ( 4) adultery or concubinage; ( 5) illegal or arbitrary detention or
arrest; ( 6) illegal search; (7) libel, slander, or any other form of defamation; (8)
malicious prosecution; (9) acts mentioned in Article 309; and (1) acts and actions
referred to in Articles 21,23 ,24 25 26 27 28 29 CIVIL CODE, Article 2217.
.~SPOUSES DIONISIO ESTRADA and JOVITA R. ESTRADA, v.
PHILIPPINE RABBIT BUS LINES, INC. and EDUARDO R. SAYLAN, G.R.
No. 203902, July 19, 2017

Moral damages; honest belief by defendant

That deed of mortgage is fake negates legal
Soundness of award of moral damages

A robotic allegation that one “suffered anxiety and sleepless nights”, or a seemingly
haphazard conversion of these disturbed feelings into some pecuniary equivalent, without more,
will not automatically entitle a party to moral damages. On the other hand, Ganacial’s refusal to
pay her indebtedness was grounded on her firm belief that the subject Deed of Mortgage was
fake. She was unwavering in her claim that she had a sound cause against Cabugao, and the
honesty in her legal pursuit is reflected in the consistency of her allegations throughout the
proceedings. To the Court, Ganacial’s actuations as testified to by Cabugao cannot be seen as
being motivated by a corrupt purpose, some moral obliquity and conscious doing of a wrong, or
a breach of known duty through some other motive or interest or ill-will that partakes of the
nature of fraud to merit an award of moral damages.

As the evidence on record militates against Cabugao’s claim for moral damages a grant
of exemplary damages is necessarily uncalled for. Article 2234 of the Civil Code is already clear
in requiring a prior determination of entitlement to moral, temperate, or compensatory damages
before the Court may consider the question of whether or not exemplary damages should be
awarded. (Pastora Ganancial v. Betty Cabugao, G.R. No. 203348. July 6, 2020)

Further, the deletion of the award of moral damages is proper because it is not recoverable in a
mere breach of contract. Moral damages may be awarded when in a breach of ,contract the
defendant acted in bad faith, or was guilty of gross negligence amounting to bad faith, or in
wanton disregard of his contractual obligation. It is true that VHB Biopro committed a breach in
the performance of its obligation in the Sales and Purchase Agreement. However, absent a clear
showing that VHB Biopro acted in bad faith, or in an oppressive manner, it cannot be held liable
for moral damages. (Voltaire Hans N. Bongcaya, doing business under the name and style of
VHB Biopro Enterprises and Pete Nicomedes Prado v. Confederation of Sugar Producers

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Cooperatives (CONFED), Jose J. Jison and Prudential Guarantee and Assurance, Inc., G.R.
No. 225438. January 20, 2021)

CIVIL CODE, Article 309. Any person who shows disrespect to the dead, or
wrongfully interferes with a funeral shall be liable to the family of the deceased for
damages, material or moral. CIVIL CODE,

Article 21. Any person who willfully causes loss or i11jury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the
latter for the damage.

CIVIL CODE, Article 26. Every person shall respect the dignity, personality,
privacy and peace of mind of his neighbors and other persons. The following and
similar acts, though they may not constitute a criminal offense, shall produce a
cause of action for damages, prevention and other relief:

(1) Prying into the privacy of another's residence;

(2) Meddling with or disturbing the private life or family relations of another;
(3) Intriguing to cause another to be alienated from his friends;
( 4) Vexing or humiliating another on account of his religious beliefs, lowly station
in life, place of birth, physical defect, or other personal condition.
CIVIL CODE, Article 27. Any person suffering material or moral loss because a
public servant or employee refuses or neglects, without just cause, to perform his
official duty may file an action for damages and other relief against the latter,
without prejudice to any disciplinary administrative action that may be taken.

CIVIL CODE, Article 28. Unfair competition in agricultural, commercial or

industrial enterprises or in labor through the use of force, intimidation, deceit,
machination or any other unjust, oppressive or highhanded method shall give rise
to a right of action by the person who thereby suffers damage.

CIVIL CODE, Article 29. When the accused in a criminal prosecution is acquitted
on the ground that his guilt has not been proved beyond reasonable doubt, a civil
action for damages for the same act or omission may be instituted. Such action
requires only a preponderance of evidence. Upon motion of the defendant, the
court may require the plaintiff to file a bond to answer for damages in case the
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complaint should be found to be malicious. If in a criminal case the judgment of
acquittal is based upon reasonable doubt, the court shall so declare.

In the absence of any declaration to that effect, it may be inferred from the text of
the decision whether or not the acquittal is due to that ground.

CIVIL CODE, Article 30. When a separate civil action is brought to demand civil
liability arising from a criminal offense, and no criminal proceedings are instituted
during the pendency of the civil case, a preponderance of evidence shall likewise
be sufficient to prove the act complained of CIVIL CODE, Article 32. Any public
officer or employee, or any private individual, who directly or indirectly obstructs,
defeats, violates or in any manner impedes or impairs any of the following rights
and liberties of another person shall be liable to the latter for damages:

(1) Freedom ofreligion;

(2) Freedom of speech;

(3) Freedom to writ for the press or to maintain a periodical publication;

(4) Freedom from arbitrary or illegal detention;

(5) Freedom of suffiage;

(6) The right against deprivation of property without due process oflaw;

(7) The right to a just compensation when private property is taken for public use;

(8) The right to the equal protection of the laws;

(9) The right to be secured in one's person, house, papers, and effects against
unreasonable searches and seizures;

(I 0) The liberty of abode and of changing the same;

( 11) The privacy of communication and correspondence;

( 12) The right to become a member of associations or societies for purposes not
contrary to Jaw;

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(13) The right to take part in a peaceable assembly to petition the Governrnent for
redress of grievances;

(14) The right to be free from involuntary servitude in any form;

(15) The right of the accused against excessive bail;

(16) The right of the accused to be heard by himself and counsel, to be informed of
the nature and cause of the accusation against him, to have a speedy and public
trial, to meet the witnesses face to face, and to have compulsory process to secure
the attendance of witness in his behalf;

(17) Freedom from being compelled to be a witness against one's self, or from
being forced to confess guilt, or from being induced by a promise of immunity or
reward to make such confession, except when the person confessing becomes a
State witness;

(18) Freedom from excessive fines, or cruel and unusual punishment, unless the
same is imposed or inflicted in accordance with a statute which has not been
judicially declared unconstitutional; and

(19) Freedom of access to the courts.

In any of the cases referred to in this article, whether or not the defendant's act or
omission constitutes a criminal offense, the aggrieved party has a right to
commence an entirely separate and distinct civil action for damages, and for other
relief Such civil action shall proceed independently of any criminal prosecution

(if the latter be instituted) and may be proved by a preponderance of evidence.

The indemnity shall include moral damages. Exemplar'; damages may also be
adjudicated.

The responsibility herein set forth is not demandable from a judge unless his act or
omission constitutes a violation of the Penal Code or other penal statute. CIVIL
CODE, Article 34. When a member of a city or municipal police force refuses or
fails to render aid or protection to any person in case of danger to life or property,
such peace officer shall be primarily liable for damages, and the city or
municipality shall be subsidiarily responsible therefor. The civil action herein

144
recognized shall be independent of any criminal proceedings, and a preponderance
of evidence shall suffice to support such action.

x x x [C]ase law establishes the following requisites for the award of moral
damages: (1) there must be an injury clearly sustained by the claimant, whether
physical, mental or psychological; (2) there must be a culpable act or omission
factually established; (3) the wrongful act or omission of the defendant is the
proximate cause of the injury sustained by the claimant; and (4) the award for
damages is predicated on any of the cases stated in Article 2219 of the Civil Code.

Since breach of contract is not one of the items enumerated under Article 2219,
moral damages, as a general rule, are not recoverable in actions for damages
predicated on breach of contract. x x x As an exception, such damages are
recoverable [in an action for breach of contract:] (1) in cases in which the mishap
results in the death of a passenger, as provided in Article 1764,34 in relation to
Article 2206(3)35 of the Civil Code; and (2) in x x x cases in which the carrier is
guilty of fraud or bad faith, as provided in Article 222036.

Moral damages are not recoverable

in this case.

It is obvious that this case does not come under the first of the abovementioned
exceptions since Dionisio did not die in the mishap but merely suffered an injury.
Nevertheless, petitioners contend that it falls under the second category since they
aver that Philippine Rabbit is guilty of fraud or bad faith

In this case, the fraud or bad faith that must be convincingly proved by petitioners
should be one which was committed by Philippine Rabbit in breaching its contract
of carriage with Dionisio. Unfortunately for petitioners, the Court finds no
persuasive proof of such fraud or bad faith.
Fraud has been defined to include an inducement through insidious
machination. Insidious machination refers to a deceitful scheme or plot with an
evil or devious purpose. Deceit exists where the party, with intent to deceive,
conceals or omits to state material facts and, by reason of such omission or
concealment, the other party was induced to give consent that would not
otherwise have been given.

Bad faith, on the other hand, "does not simply connote bad judgment or
negligence; it imports a dishonest purpose or some moral obliquity and

145
conscious doing of a wrong, a breach of a known duty through some motive or
interest or ill will that partakes of the nature of fraud."

There is no showing here that Philippine Rabbit induced Dionisio to enter into a
contract of carriage with the former through insidious machination. Neither is there
any indication or even an allegation of deceit or concealment or omission of
material facts by reason of which Dionisio boarded the bus owned by Philippine
Rabbit. Likewise, it was not shown that Philippine Rabbit's breach of its known
duty, which was to transport Dionisio from Urdaneta to La Union, was attended by
some motive, interest, or ill will. From these, no fraud or bad faith can be attributed
to Philippine Rabbit.

Still, petitioners insist that since the defenses it pleaded in its Answer were
designed to evade liability, Philippine Rabbit is guilty of fraud or bad faith. Suffice
it to state, however, that the allegations which made up Philippine Rabbit's
defenses are hardly the kind of fraud or bad faith contemplated by law. Again, it
bears to mention that the fraud or bad faith must be one which attended the
contractual breach or one which induced Dionisio to enter into contract in the first
place. Clearly, moral damages are not recoverable in this case. The CA, therefore,
did not err in deleting the award for moral damages. Actual damages for
loss/impairment of earning capacity are also not recoverable. In lieu thereof, the
Court awards temperate damages.

In an attempt to recover the P500,000.00 awarded by the RTC as moral damages

but deleted by the CA, petitioners would instead want this Court to grant them the
same amount as just and proper compensation for the loss of Dionisio's right arm.

It can be recalled that in the Complaint, petitioners justified their claim for moral
damages as follows:
9. [The] amount of PS00,000.00 as moral damages for the amputation of
[Dionisio's] right arm for life including his moral sufferings for such [loss] of right
arm is reasonable.

Said amount is computed and derived using the formula (2/3 x [80- age of the
complainant when the injury is sustained] = life expectancy) adopted in the
American Expectancy Table of Mortality or the actuarial of Combined Experience
Table of Mortality. From such formula, [Dionisio] is expected to live for 18 years,
which is equivalent [to] about 6570 days.

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For each day, [Dionisio] is claiming P80.00 as he is expected to work for 8 hours a
day with his amputated arm or to enjoy the same for at least 8 hours a day (or is
claiming Pl0.00 for each hour) for 18 years (6570 days).

The amount that can be computed thereof would be P525,600.00 (6570 days x
P80.00). [Dionisio] then [rounded] it off to P500,000.00, the moral damages
consisted [of] his moral sufferings due to the [loss] of his right arm for life;

It thus appears that while petitioners denominated their claim for PS00,000.00 as
moral damages, their computation was actually based on the supposed
loss/impairment of Dionisio's earning capacity.

Loss or impairment of earning capacity finds support under Article

2205 ( 1) of the Civil Code, to wit: ~~

Art. 2205. Damages may be recovered:

(1) For loss or impairment of earning capacity in cases of temporary or permanent

personal injury;

xx xx
It is, however, settled that "damages for loss [or impairment] of earning capacity is
in the nature of actual damages x x x. "

Actual or compensatory damages are those awarded in order to compensate a party

for an injury or loss he suffered. They arise out of a sense of natural justice, aimed
at repairing the wrong done. To be recoverable, they must be duly proved with a
reasonable degree of certainty. A court cannot rely on speculation, conjecture, or
guesswork as to the fact and amount of damages, but must depend upon competent
proof that they have suffered, and on evidence of the actual amount thereof.

Thus, as a rule, documentary evidence should be presented to substantiate the

claim for damages for loss of earning capacity. By way of exception, damages for
loss [or impairment] of earning capacity may be awarded despite the absence of
documentary evidence when (1) the deceased [or the injured] was self-employed
and earning less than the minimum wage under current labor laws, in which case,
judicial notice may be taken of the fact that in the deceased's line of work no
documentary evidence is available; or (2) the deceased was employed as a daily
worker earning less than the minimum wage under current labor laws.
147
Here, it is unlikely that petitioners presented evidence to prove a claim for actual
damages based on loss/impairment of earning capacity since what they were
claiming at the outset was an award for moral damages. The Court has nonetheless
gone over the records to find out if they have sufficiently shown during trial that
they are entitled to such compensatory damages that they are now claiming.
Unfortunately, no documentary evidence supporting Dionisio's actual income is
extant on the records. What it bears is the mere testimony of Dionisio on the
matter, viz.:

COURT:
Q:
A:
By the way, why did you submit the original copy of your exhibits
to the GSIS?
I am claiming compensation because I am a government employee

ATTY. SEVILLEJA:
Q: What particular government [agency do] you belong?
A: DECS.
Q: You are a teacher?
A: Yes sir.
Q: You are still continuing your profession as a teacher until now?
A: Yes sir.
Q: By the way Mr. witness, you are claiming x x x moral damages of
P500,000.00? How did you compute that P500,000.00?
A: I based that from [sic] my income which is about P.80.00 a day or
Pl0.00 per hour.
Q: Is that x x x gross or not?
A: Net sir.
Q: What are your other sideline?
A: I know [how] to drive a tricycle.
Q: Because of [the] amputation of your right arm, you mean to say
you [cannot] drive anymore a tricycle?
A: Yes sir.
Q: By the way Mr. witness, how old are you when you met [the]
accident?
A: More than 53 years old sir, less than 54.
Q: If you are claiming for x x x moral damages of P80.00 a day, how
come you are asking for P500,000.00?
148
A: If you compute that it is P2,400.00 monthly. If I still [live by]about 20-30 years
[more], I can still [earn] that amount.

It must be emphasized, though, that documentary proof of Dionisio's actual income

cannot be dispensed with since based on the above testimony, Dionisio does not
fall under any of the two exceptions aforementioned.
Thus, as it stands, there is no competent proof substantiating his actual income and
because of this, an award for actual damages for loss/ impairment of earning
capacity cannot be made.

Nonetheless, since it was established that Dionisio lost his right arm, temperate
damages in lieu of actual damages for loss/impairment of earning capacity may be
awarded in his favor. Under Article 2224, "[t]emperate or moderate damages,
which are more than nominal but less than 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."

The case of Tan v. OMC Carriers, Inc. enumerates several instances wherein the
Court awarded temperate damages in lieu of actual damages for loss of earning
capacity, viz.:

In the past, we awarded temperate damages in lieu of actual damages for loss of
earning capacity where earning capacity is plainly established but no evidence was
presented to support the allegation of the injured party's actual income.

In Pleno v. Court of Appeals, we sustained the award of temperate damages in the

amount of P200,000.00 instead of actual damages for loss of earning capacity
because the plaintiffs income was not sufficiently proven.

We did the same in People v. Singh, and People v. Almedilla, granting temperate
damages in place of actual damages for the failure of the prosecution to present
sufficient evidence of the deceased's income.

Similarly, in Victory Liner, Inc. v. Gammad, we deleted the award of damages for
loss of earning capacity for lack of evidentiary basis of the actual extent of the loss.
Nevertheless, because the income-earning capacity lost was clearly established, we
awarded the heirs PS00,000.00 as temperate damages.

149
Accordingly, the Court in Tan awarded to the heirs of the therein deceased victim,
who was working as a tailor at the time of his death, temperate damages in the
amount of P300,000.00 in lieu of compensatory damages.

In the subsequent case of Orix Metro Leasing and Finance the Court likewise
awarded temperate damages as follows:

While the net income had not been sufficiently established, the Court recognizes
the fact that the Mangalinao heirs had suffered loss deserving of compensation.
What the CA awarded is in actuality a form of temperate damages. Such form of
damages under Article 2224 of the Civil Code is given in the absence of competent
proof on the actual damages suffered. In the past, we awarded temperate damages
in lieu of actual damages for loss of earning capacity where earning capacity
plainly established but no evidence was presented to support the allegation of the
injured party's actual income. In this case, Roberto Mangalinao, the breadwinner of
the family, was a businessman engaged in buying and selling palay and agricultural
supplies that required high capital in its operations and was only at the time of his
death. Moreover, the Pathfinder which the Mangalinaos own, became a total
wreck. Under the circumstances, we find the award of P.500,000.00 as temperate
damages as reasonable.

And in the more recent case of People v. Salahuddin, the lower courts' award of
P4,398,000.00 as compensation for loss of earning capacity of a murdered lawyer
was disallowed due to insufficiency of evidence. Again in lieu thereof, temperate
damages of Pl,000,000.00 was awarded.

In view of the above rulings and under the circumstances of this case, the Court
finds reasonable to award Dionisio temperate damages of PS00,000.00 in lieu of
actual damages for the loss/impairment of his earning capacity.

Actual damages by way of medical

expenses must be supported by
official receipts.

Anent petitioners' assertion that actual damages should be awarded to them for the
cost of replacement of Dionisio's amputated right arm, suffice it to state that
petitioners failed to show during trial that the said amputated right arm was
actually replaced by an artificial one. All that petitioners submitted was a quotation
of Pl 60,000.00 for a unit of elbow prosthesis and nothing more. It has been held
that actual proof of expenses incurred for medicines and other medical supplies
150
necessary for treatment and rehabilitation must be presented by the claimant, in the
form of official receipts, to show the exact cost of his medication and to prove that
he indeed went through medication and rehabilitation. In the absence of the same,
such claim must be negated.

At any rate, the RTC already granted petitioners actual damages by way of medical
expenses based on the official hospital receipts submitted.

There is, however, a need to correct the amount, that is, there should be legal
interest is imposed on the amounts awarded.

In addition, the amounts of damages awarded are declared subject to legal interest
of 6% per annum from the finality of this Decision until full satisfaction.

WHEREFORE, the Petition for Review on Certiorari is DENIED.

The assailed May 16, 2012 Decision and October 1, 2012 Resolution of the Court
of Appeals in CA-G.R. CV No. 95520 are AFFIRMED with MODIFICATIONS as
follows: (1) petitioners are declared entitled to temperate damages of P500,000.00;
(2) the award of actual damages is set at the amount of P57,658.25; and (3) all
damages awarded are subject to legal interest of 6% per annum from the finality of
this Decision until full satisfaction.
SO ORDERED.~SPOUSES DIONISIO ESTRADA and JOVITA R. ESTRADA,
v. PHILIPPINE RABBIT BUS LINES, INC. and EDUARDO R. SAYLAN, G.R.
No. 203902, July 19, 2017

151
 SECTION 2
Nominal Damages

Article 2221. Nominal damages are adjudicated in order that a right of the

plaintiff, which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying the plaintiff
for any loss suffered by him.

Article 2222. The court may award nominal damages in every obligation

arising from any source enumerated in article 1157, or in every case where
any property right has been invaded.

Article 2223. The adjudication of nominal damages shall preclude further

contest upon the right involved and all accessory questions, as between the
parties to the suit, or their respective heirs and assigns.

SECTION 3
Temperate or Moderate Damages

Article 2224. Temperate or moderate damages, which are more than nominal

but less than compensatory damages, may be recovered when the court finds
that some pecuniary loss has been suffered but its amount can not, from the
nature of the case, be provided with certainty.

In any case, under Article 2224 of the Civil Code, temperate damages may be recovered when
pecuniary loss has been suffered but the amount cannot be proven with certainty. In such cases,
the amount of the award is left to the discretion of the courts, according to the circumstances of
each case, but the same should be reasonable, considering that temperate damages should be
more than nominal but less than compensatory.

Here, the lower courts made factual findings that VHB Biopro failed to perform its obligation to
deliver the agreed urea fertilizers to CONFED despite its receipt of the Domestic Letter of Credit
in January 2008. This factual finding is deemed conclusive and the circumstances appearing on
record convinced the Court that CONFED suffered some pecuniary loss due to its failure to sell
152
the fertilizers to its buyers. Understandably, it is difficult, if not impossible, to adduce solid proof
of the losses suffered by CONFED as a consequence of VHB Biopro 's breach. Certainly,
however, one cannot simply discount the fact that business opportunities were lost. Hence, it is
only just that CONFED be awarded temperate ·or moderate damages. In view of the income
estimated to have been lost which is about P30,000,000.00, but not duly proven, the Court deems
the amount of P4,000,000.00 as temperate damages reasonable under the circumstances.
(Voltaire Hans N. Bongcaya, doing business under the name and style of VHB Biopro
Enterprises and Pete Nicomedes Prado v. Confederation of Sugar Producers Cooperatives
(CONFED), Jose J. Jison and Prudential Guarantee and Assurance, Inc., G.R. No. 225438.
January 20, 2021)

Article 2225. Temperate damages must be reasonable under the

circumstances.

SECTION 4
Liquidated Damages

Article 2226. Liquidated damages are those agreed upon by the parties to a

contract, to be paid in case of breach thereof.

Article 2227. Liquidated damages, whether intended as an indemnity or a

penalty, shall be equitably reduced if they are iniquitous or unconscionable.

Article 2228. When the breach of the contract committed by the defendant is

not the one contemplated by the parties in agreeing upon the liquidated
damages, the law shall determine the measure of damages, and not the
stipulation.

SECTION 5
Exemplary or Corrective Damages

Article 2229. Exemplary or corrective damages are imposed, by way of

example or correction for the public good, in addition to the moral, temperate,
liquidated or compensatory damages.
153
Article 2230. In criminal offenses, exemplary damages as a part of the civil
liability may be imposed when the crime was committed with one or more
aggravating circumstances. Such damages are separate and distinct from fines
and shall be paid to the offended party.

Article 2231. In quasi-delicts, exemplary damages may be granted if the

defendant acted with gross negligence.

Article 2232. In contracts and quasi-contracts, the court may award

exemplary damages if the defendant acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner.

Article 2233. Exemplary damages cannot be recovered as a matter of right;

the court will decide whether or not they should be adjudicated.

Article 2234. While the amount of the exemplary damages need not be proved,
the 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. In case liquidated damages
have been agreed upon, although no proof of loss is necessary in order that
such liquidated damages may be recovered, nevertheless, before the court
may consider the question of granting exemplary in addition to the liquidated
damages, the plaintiff must show that he would be entitled to moral,
temperate or compensatory damages were it not for the stipulation for
liquidated damages.

Article 2235. A stipulation whereby exemplary damages are renounced in

advance shall be null and void.

COMMENTS:

EXEMPLARY DAMAGES AND ATTORNEY’S FEES

TOPIC
o Exemplary damages
 Definition
 Nature
 Rationale

154
  Instances where it may be awarded
o Attorney’s fees
o Cases
1. Pilipinas Makro vs. Coco Charcoal Philippine et al.
2. People vs. Jeffrey Hirang
3. People vs. Tirsosibbu

Article 2229:
Exemplary or corrective damages are imposed, by way of example or
correction for the public good, in addition to moral, temperate, liquidated or
compensatory damages.

Nature:
Exemplary damages are mere accessories to the other forms of damages
(actual, moral, temperate, or liquidated) except nominal damages.

Instances where it may be imposed:

1. Criminal Offenses- when the crime was committed with one or more
aggravating circumstances. (Art. 2230)
2. Quasi-delicts- when the defendant acted with gross negligence. (Art. 2231)
3. Contracts or Quasi-contracts- when the defendant acted in wanton,
fraudulent, reckless, oppressive, or malevolent manner.

ATTORNEY’S FEES

WHEN MAY ATTORNEY’S FEES BE AWARDED?

Attorney’s fees may be awarded only when a separate civil to recover civil
liability has been filed or when exemplary damages are awarded.
The reason for this is that there is no attorney in a criminal case, only a
public prosecutor, who is compensated by the government.

WHEN CAN ATTORNEY’S FEES BE AWARDED IN CRIMINAL CASES?

If there is award of exemplary damages.

155
Exemplary and Attorney’ fees may be awarded only for cause provided for by
law.

Pilipinas Makro Inc. vs. Coco Charcoal Philippines et. al.

(GR. No. 196419, October 4, 2017)

> Petitioner Pilipinas Makro, Inc. (Makro) is a duly registered domestic corporation. In
1999, it was in need of acquiring real properties in Davao City to build on and operate a
store to establish its business.
> On 26 November 1999, Makro and respondents executed a notarized Deed of Absolute
Sale wherein the latter would sell its parcel of land.
> Makro engaged the services a geodetic engineer, to conduct a resurvey. It was discovered
that portions of the lot purchased from respondents had been encroached upon by the
Department of Public Works and Highways (DPWH) for its road widening project and
construction of a drainage canal to develop and expand the Davao-Cotabato National
Highway.
> Makro filed separate complaints against Coco Charcoal and Lim to collect the refund
sought, which was granted by the RTC.

RULING:
1. RTC awarded makro attorney’s fees. Is this correct?

NOT CORRECT. The fact that a party was compelled to litigate his cause does
not necessarily warrant the award of attorney’s fees. Other than the bare fact that Makro
was compelled to hire the services of counsel to prosecute its case, the RTC did not
provide compelling reasons to jusify the award of attorney’s fees.

> In finding for Makro, the RTC also awarded attorney’s fees and exemplary damages in its
favor. The trial court ruled that Makro was entitled to attorney’s fees because it was
forced to bring the matter before the court assisted by counsel. It found the grant of
exemplary damages in order because respondents were in bad faith for concealing from
Makro the fact that the DPWH had already dispossessed a portion of the lots purchased.

In ABS-CBN Broadcasting Corporation v. Court of Appeals, the Court cautioned that a

party was compelled to litigate his cause does not necessarily warrant the award
of attorney’s fees, to wit:
As regards attorney’s fees, the law is clear that in the absence of stipulation, attorney’s fees
may be recovered as actual or compensatory damages under any of the circumstances
provided for in Article 2208 of the Civil Code.

The general rule is that attorney’s fees cannot b recovered as part of damages because of the
policy that no premium should be placed on the right to litigate. They are not to be awarded
every time a party wins a suit. The power of the court to award attorney’s fees under Article

156
2208 demands factual, legal, and equitable justification. Even when a claimant is compelled to
litigate with third persons or to incur expenses to protect his rights, still attorney’s fees may not
be awarded where no sufficient showing s of bad faith could be reflected in a party’s persistence
in a case other than an erroneous conviction of the righteousness of his case. (emphasis supplied)

2. Was Makro entitled to exemplary damages?

No. there is insufficient evidence to definitely ascertain that respondents’ omission to
mention the ongoing DPWH projects was impelled by a conscious desire to defraud Makro.

People of the Philippines vs. Jeffrey Hirang y Rodrigue

(GR. No. 223528, January 11, 2017)

 Hirang, also known as Jojit and Jojie, was charged before the Regional Trial Court (RTC)
of Pasig City with the crime of qualified trafficking in persons, as defined and penalized
under Section 4(a), in relation to Section 6(a) and (c), and Section 3(a), (b) and (c) of
R.A. No. 9208.
 The RTC found him GUILTY beyond reasonable doubt of the crime of Violation of
Section 6 of [R.A.] No. 9208 and is hereby sentenced to suffer the penalty of life
imprisonment and a fine of Two Million Pesos (Php2,000,000.00).

RULING:
Damages in favor of the victims should, however, also be awarded. In line with
prevailing jurisprudence, each victim is entitled to P500,000.00 as moral damages, and
P100,000.00 as exemplary damages. This is supported by Article 2219 of the New Civil Code,
which reads:
Moral damages may be recovered in the following and analogous cases:
(1) A criminal offense resulting physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in Article 309;
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35.
xx xx

The criminal case of Trafficking in Persons as a Prostitute is an analogous case to the

crimes of seduction, abduction, rape, or other lascivious acts. In fact, it is worse, thereby
justifying the award of moral damages. When the crime is aggravated, the award of
exemplary damages is also justified.
People vs. Tirso Sibbu (GR. No. 210757, March 29, 2017)

157
 > Appellant, together with Benny Barid (Benny) and John Does was charged with multiple
charges of murder and attempted murder allegedly committed, with presence of
aggravating circumstances.
> On May 15 2009, the RTC rendered judgment finding appellant guilty beyond reasonable
doubt of murder in Criminal Case Nos. 11721, 11723, and 11724, and of attempted
murder in Criminal Case No. 11722. The RTC gave credence to Bryan’s positive
identification of appellant as the person who shot at him and killed his daughter, mother
and father. On the other hand, the RTC found appellant’s defense of denial and alibi
weak.
> Moral and exemplary damages were awarded.

RULING:

In summary: For those crimes like Murder, Parricide, Serious Intentional Mutilation, Infanticide,
and other crimes involving death of a victim where the penalty consists of indivisible penalties:
1.1 Where the penalty imposed is death but reduced to reclusion perpetua because of RA 9364:
a. Civil indemnity- P100,000.00
b. Moral damages- P1000,00.00
c. Exemplary damages- P100,000.00
1.2 Where the crime committed was not consummated:
a. Frustrated:
 Civil indemnity- P75,000.00
 Moral damages- P75,000.00
 Exemplary damages- P75,000.00
b. Attempted
 Civil indemnity- P50,000.00
 Moral damages- P50,000.00
 Exemplary damages- P50,000.00

Hence in criminal cases appellant was convicted of murder the crime being
attended by the qualifying circumstances of treachery and by the aggravating
circumstances of dwelling and disguise., we further modify the awards of civil indemnity,
moral damages, and exemplary damages to P100,000.00 each for each case. Moreover,
since the award of actual damages in the amount of P55,602.00 pertained to all three
cases, the same should be modified to P50,000.00 for each case.

Exemplary damages and attorney's fees may be awarded only for cause provided for by law.
-PILIPINAS MAKRO, INC. v. COCO CHARCOAL PHILIPPINES, INC. and LIM KIM
SAN, G.R. No. 196419, October 4, 2017)

158
In finding for Makro, the RTC also awarded attorney's fees and exemplary damages in its favor.
The trial court ruled that Makro was entitled to attorney's fees because it was forced to bring the
matter before the court assisted by counsel. It found the grant of exemplary damages in order
because respondents were in bad faith for concealing from Makro the fact that the DPWH had
already dispossessed a portion of the lots purchased. In ABS-CBN Broadcasting Corporation v.
Court of Appeals, the Court cautioned that the fact that a party was compelled to litigate his
cause does not necessarily warrant the award of attorney's fees, to wit: As regards attorney's fees,
the law is clear that in the absence of stipulation, attorney's fees may be recovered as actual or
compensatory damages under any of the circumstances provided for in Article 2208 of the Civil
Code. The general rule is that attorney's fees cannot be recovered as part of damages because of
the policy that no premium should be placed on the right to litigate. They are not to be awarded
every time a party wins a suit. The power of the court to award attorney's fees under Article 2208
demands factual, legal, and equitable justification. Even when a claimant is compelled to litigate
with third persons or to incur expenses to protect his rights, still attorney's fees may not be
awarded where no sufficient showing of bad faith could be reflected in a party's persistence in a
case other than an erroneous conviction of the righteousness of his cause. (emphasis supplied)
Other than the bare fact that Makro was compelled to hire the services of counsel to prosecute its
case, the RTC did not provide compelling reasons to justify the award of attorney's fees. Thus, it
is but right to delete the award especially since there is no showing that respondents had acted in
bad faith in refusing Makro's demand for refund. It is in consonance with the policy that there is
no premium on the right to litigate. On the other hand, exemplary damages may be awarded if
the defendant had acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. The
RTC found the award of exemplary damages warranted because respondents allegedly concealed
the fact the DPWH had already taken possession of a portion of the land they had sold to Makro.
Bad faith, however, involves a state of mind dominated by ill will or motive implying a
conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity.
Here, there is insufficient evidence to definitively ascertain that respondents' omission to
mention the ongoing DPWH projects was impelled by a conscious desire to defraud Makro. This
is especially true since the road widening project was already in progress even before the time of
the sale, and which would have been noticeable when Makro conducted its ocular inspection.
WHEREFORE, the petition is GRANTED. (PILIPINAS MAKRO, INC., v. COCO
CHARCOAL PHILIPPINES, INC. and LIM KIM SAN, G.R. No. 196419, October 4, 2017).

In the earlier case of Central Taxicab Corp. v. Ex-Mera/co Employees Transportation Co., the
Court held that there was no hard-and-fast rule on the quantum of evidence needed to prove due
observance of all the diligence of a good father of a family as would constitute a valid defense to
the legal presumption of negligence on the part of an employer or master whose employee has,
by his negligence, caused damage to another. Jurisprudence nevertheless shows that testimonial
evidence, without more, is insufficient to meet the required quantum of proof. In Metro Manila
Transit Corporation v. Court of Appeals, the CoUJi found that "[p]etitioner's attempt to prove its
diligentissimi patris familias in the selection and supervision of employees through oral evidence
must fail as it was unable to buttress the same with any other evidence, object or documentary,
which might obviate the apparent biased nature of the testimony." There, the supposed
clearances, results of seminars and tests which Leonardo allegedly submitted and complied with
were never presented in comi despite the fact that, if true, then they were obviously in the

159
possession and control of Metro Manila Transit Corporation (MMTC). Subsequently, in a
different case also involving MMTC, the Court held that "in a trial involving the issue of
vicarious liability, employers must submit concrete proof, including documentary evidence." 40
A Here, both the R TC and the CA found that Grandeur was able to sufficiently prove, through
testimonial and documentary evidence, that it had exercised the diligence of a good father of a
family in the selection and hiring of its security guards. As testified to by its HRD head Ungui,
and corroborated by documentary evidence including clearances from various government
agencies, certificates, and favorable test results in medical and psychiatric examinations,
Grandeur's selection and hiring procedure was outlined as follows: 1. Initial screening; 2.
Submission of personal bio-data; 3. Submission of the following documents and clearances: (1)
NBI Clearance; (2) PDICE Clearance; (3) Barangay Clearance; (4) PNP Clearance; (5) Birth
Certificate; (6) High School Diploma/Transcript/College Diploma; (7) Reserved Officers
Training Corps or Citizens Army Training ce1iificate; (8) Court Clearances; and (9) resignation
or clearance from previous employment; 4. Pre-licensing training (15 days or 150 hours) for
those without experience or pre-training course (56 hours) for applicants with working
experience as security guard; 5. Undergo neuro-psychiatric examination, drug testing and
physical examination; 6. Submit and secure a security license before being given an application
form;. Series of Interviews by Grandeur's Recruiting Officer, Personnel Clerk, Head of Human
Resources Department, Operation Department or Security Officer, Senior Security Officer, Chief
Security Officer, Assistant Vice President for Operations, Assistant Vice President for
Accounting, and recommending approval by the Vice President and the President. 8. The
applicant undergoes on-the-job training (OJT) for seven days assigned in the field or within
Grandeur's office; and 9. The applicant then undergoes a probationary period of six months after
which the employee automatically becomes regular upon meeting the company standards.
Unlike in the aforecited MMTC cases, the evidence presented by Grandeur consists not only in
the testimony of its HRD head but also by documentary evidence showing respondents
Doctolero's and Avila's comp I iance with the above hiring and selection process consisting of
their respective: (1) private security licenses; (2) NBI Clearances; (3) Medical Certificates; (4)
Police Clearances; (5) Certificate of Live Birth/Certification issued by the Local Civil Registrar
appertaining to date of birth; (6) Certificates issued by the Safety Vocational and Training
Center for satisfactory completion of the Pre-Licensing Training Course; (7) High School
Diplomas; (8) SSS Personal Data Records; (9) Barangay Clearances; (I 0) Court Clearance;
( 11) Neuro-psychiatric result issued by Goodwill Medical Center, Inc. for Doctolero's pre-
employment screening as Security Guard /Evaluation Report by Office Chief Surgeon Army,
Headquarters, Phil. Army, Fort Bonifactio Metro-Manila for Avila showing an above-average
result and no psychotic ideations; ( 12) Certification from Varsitarian Security and Investigation
Agency, Inc. that Doctolero has been employed with said agency; ( 13) Ce1iificate issued by
Cordova High School showing that Doctolero had completed the requirements of the courts of
Institution in Citizen Army Training-I ; (I 4) Certification by Grandeur that Doctolero has
submitted the requirements for his application for the post of Security Guard. Thus, we agree
with the RTC and CA's evaluation that Grandeur was able to satisfactorily prove that it had
exercised due diligence in the selection of respondents Doctolcro and Avila. 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.

160
B 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. 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. Grandeur also submitted as evidence certificates of
attendance to various seminars and the memorandum commending respondents for their good
works and reprimanding them for violations of various company policies. 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 A vi la.
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. (JOHN E.R.
REYES and MERWIN JOSEPH REYES v. ORICO DOCTOLERO, ROMEO AVILA,
GRANDEUR SECURITY AND SERVICES CORPORATION, and MAKATI CINEMA
SQUARE, G.R. No. 185597, August 2, 2017)

Attorney’s fees
Finally, the attorney's fees were also correctly deleted by the CA. The general rule is that
attorney's fees cannot be recovered as part of damages because of the policy that no premium
should be placed on the right to litigate. They are not to be awarded every time a party wins a
suit The power of the court to award attorney's fees under Article 2208 demands factual, legal,
and equitable justification. Attorney's fees are awarded only in those instances enumerated in
Article 2208 of the Civil Code which must always be reasonable. Here, there is no factual
evidence to award attorney's fees; thus, the CA did not err in denying CONFED's claim for
attorney's fees. (Voltaire Hans N. Bongcaya, doing business under the name and style of VHB
Biopro Enterprises and Pete Nicomedes Prado v. Confederation of Sugar Producers
Cooperatives (CONFED), Jose J. Jison and Prudential Guarantee and Assurance, Inc., G.R.
No. 225438. January 20, 2021)

TITLE XII
CONCURRENCE AND PREFERENCE OF CREDITS

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 CHAPTER 1
General Provisions

Article 2236. The debtor is liable with all his property, present and future, for
the fulfillment of his obligations, subject to the exemptions provided by law.
(1911a)

Article 2237. Insolvency shall be governed by special laws insofar as they are

not inconsistent with this Code. (n)

Article 2238. So long as the conjugal partnership or absolute community

subsists, its property shall not be among the assets to be taken possession of by
the assignee for the payment of the insolvent debtor's obligations, except
insofar as the latter have redounded to the benefit of the family. If it is the
husband who is insolvent, the administration of the conjugal partnership or
absolute community may, by order of the court, be transferred to the wife or
to a third person other than the assignee. (n)

Article 2239. If there is property, other than that mentioned in the preceding
article, owned by two or more persons, one of whom is the insolvent debtor,
his undivided share or interest therein shall be among the assets to be taken
possession of by the assignee for the payment of the insolvent debtor's
obligations. (n)

Article 2240. Property held by the insolvent debtor as a trustee of an express

or implied trust, shall be excluded from the insolvency proceedings. (n)

CHAPTER 2
Classification of Credits

Article 2241. With reference to specific movable property of the debtor, the

following claims or liens shall be preferred:

(1) Duties, taxes and fees due thereon to the State or any subdivision
thereof;

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 (2) Claims arising from misappropriation, breach of trust, or
malfeasance by public officials committed in the performance of their
duties, on the movables, money or securities obtained by them;

(3) Claims for the unpaid price of movables sold, on said movables, so
long as they are in the possession of the debtor, up to the value of the
same; and if the movable has been resold by the debtor and the price is
still unpaid, the lien may be enforced on the price; this right is not lost
by the immobilization of the thing by destination, provided it has not
lost its form, substance and identity; neither is the right lost by the sale
of the thing together with other property for a lump sum, when the
price thereof can be determined proportionally;

(4) Credits guaranteed with a pledge so long as the things pledged are in
the hands of the creditor, or those guaranteed by a chattel mortgage,
upon the things pledged or mortgaged, up to the value thereof;

(5) Credits for the making, repair, safekeeping or preservation of

personal property, on the movable thus made, repaired, kept or
possessed;

(6) Claims for laborers' wages, on the goods manufactured or the work
done;

(7) For expenses of salvage, upon the goods salvaged;

(8) Credits between the landlord and the tenant, arising from the
contract of tenancy on shares, on the share of each in the fruits or
harvest;

(9) Credits for transportation, upon the goods carried, for the price of
the contract and incidental expenses, until their delivery and for thirty
days thereafter;

(10) Credits for lodging and supplies usually furnished to travellers by

hotel keepers, on the movables belonging to the guest as long as such
movables are in the hotel, but not for money loaned to the guests;

(11) Credits for seeds and expenses for cultivation and harvest advanced
to the debtor, upon the fruits harvested;

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 (12) Credits for rent for one year, upon the personal property of the
lessee existing on the immovable leased and on the fruits of the same,
but not on money or instruments of credit;

(13) Claims in favor of the depositor if the depositary has wrongfully

sold the thing deposited, upon the price of the sale.

In the foregoing cases, if the movables to which the lien or preference attaches
have been wrongfully taken, the creditor may demand them from any
possessor, within thirty days from the unlawful seizure. (1922a)

Article 2242. With reference to specific immovable property and real rights of

the debtor, the following claims, mortgages and liens shall be preferred, and
shall constitute an encumbrance on the immovable or real right:

(1) Taxes due upon the land or building;

(2) For the unpaid price of real property sold, upon the immovable sold;

(3) Claims of laborers, masons, mechanics and other workmen, as well

as of architects, engineers and contractors, engaged in the construction,
reconstruction or repair of buildings, canals or other works, upon said
buildings, canals or other works;

(4) Claims of furnishers of materials used in the construction,

reconstruction, or repair of buildings, canals or other works, upon said
buildings, canals or other works;

(5) Mortgage credits recorded in the Registry of Property, upon the real
estate mortgaged;

(6) Expenses for the preservation or improvement of real property when

the law authorizes reimbursement, upon the immovable preserved or
improved;

(7) Credits annotated in the Registry of Property, in virtue of a judicial

order, by attachments or executions, upon the property affected, and
only as to later credits;

(8) Claims of co-heirs for warranty in the partition of an immovable

among them, upon the real property thus divided;

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 (9) Claims of donors or real property for pecuniary charges or other
conditions imposed upon the donee, upon the immovable donated;

(10) Credits of insurers, upon the property insured, for the insurance
premium for two years. (1923a)

Article 2243. The claims or credits enumerated in the two preceding articles

shall be considered as mortgages or pledges of real or personal property, or
liens within the purview of legal provisions governing insolvency. Taxes
mentioned in No. 1, article 2241, and No. 1, article 2242, shall first be satisfied.
(n)

Article 2244. With reference to other property, real and personal, of the

debtor, the following claims or credits shall be preferred in the order named:

(1) Proper funeral expenses for the debtor, or children under his or her
parental authority who have no property of their own, when approved
by the court;

(2) Credits for services rendered the insolvent by employees, laborers,

or household helpers for one year preceding the commencement of the
proceedings in insolvency;

(3) Expenses during the last illness of the debtor or of his or her spouse
and children under his or her parental authority, if they have no
property of their own;

(4) Compensation due the laborers or their dependents under laws

providing for indemnity for damages in cases of labor accident, or
illness resulting from the nature of the employment;

(5) Credits and advancements made to the debtor for support of himself
or herself, and family, during the last year preceding the insolvency;

(6) Support during the insolvency proceedings, and for three months
thereafter;

(7) Fines and civil indemnification arising from a criminal offense;

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 (8) Legal expenses, and expenses incurred in the administration of the
insolvent's estate for the common interest of the creditors, when
properly authorized and approved by the court;

(9) Taxes and assessments due the national government, other than
those mentioned in articles 2241, No. 1, and 2242, No. 1;

(10) Taxes and assessments due any province, other than those referred
to in articles 2241, No. 1, and 2242, No. 1;

(11) Taxes and assessments due any city or municipality, other than
those indicated in articles 2241, No. 1, and 2242, No. 1;

(12) Damages for death or personal injuries caused by a quasi-delict;

(13) Gifts due to public and private institutions of charity or

beneficence;

(14) Credits which, without special privilege, appear in (a) a public

instrument; or (b) in a final judgment, if they have been the subject of
litigation. These credits shall have preference among themselves in the
order of priority of the dates of the instruments and of the judgments,
respectively. (1924a)

Article 2245. Credits of any other kind or class, or by any other right or title
not comprised in the four preceding articles, shall enjoy no preference. (1925)

CHAPTER 3
Order of Preference of Credits

Article 2246. Those credits which enjoy preference with respect to specific

movables, exclude all others to the extent of the value of the personal property
to which the preference refers.

Article 2247. If there are two or more credits with respect to the same specific
movable property, they shall be satisfied pro rata, after the payment of duties,
taxes and fees due the State or any subdivision thereof. (1926a)

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Article 2248. Those credits which enjoy preference in relation to specific real
property or real rights, exclude all others to the extent of the value of the
immovable or real right to which the preference refers.

Article 2249. If there are two or more credits with respect to the same specific
real property or real rights, they shall be satisfied pro rata, after the payment
of the taxes and assessments upon the immovable property or real right.
(1927a)

Article 2250. The excess, if any, after the payment of the credits which enjoy
preference with respect to specific property, real or personal, shall be added
to the free property which the debtor may have, for the payment of the other
credits. (1928a)

Article 2251. Those credits which do not enjoy any preference with respect to
specific property, and those which enjoy preference, as to the amount not
paid, shall be satisfied according to the following rules:

(1) In the order established in article 2244;

(2) Common credits referred to in article 2245 shall be paid pro rata
regardless of dates. (1929a)

TRANSITIONAL PROVISIONS

Article 2252. Changes made and new provisions and rules laid down by this
Code which may prejudice or impair vested or acquired rights in accordance
with the old legislation shall have no retroactive effect.

For the determination of the applicable law in cases which are not specified
elsewhere in this Code, the following articles shall be observed: (Pars. 1 and 2,
Transitional Provisions).

Article 2253. The Civil Code of 1889 and other previous laws shall govern
rights originating, under said laws, from acts done or events which took place
under their regime, even though this Code may regulate them in a different
manner, or may not recognize them. But if a right should be declared for the
first time in this Code, it shall be effective at once, even though the act or

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event which gives rise thereto may have been done or may have occurred
under prior legislation, provided said new right does not prejudice or impair
any vested or acquired right, of the same origin. (Rule 1)

Article 2254. No vested or acquired right can arise from acts or omissions
which are against the law or which infringe upon the rights of others. (n)

Article 2255. The former laws shall regulate acts and contracts with a
condition or period, which were executed or entered into before the effectivity
of this Code, even though the condition or period may still be pending at the
time this body of laws goes into effect. (n)

Article 2256. Acts and contracts under the regime of the old laws, if they are
valid in accordance therewith, shall continue to be fully operative as provided
in the same, with the limitations established in these rules. But the revocation
or modification of these acts and contracts after the beginning of the
effectivity of this Code, shall be subject to the provisions of this new body of
laws. (Rule 2a)

Article 2257. Provisions of this Code which attach a civil sanction or penalty

or a deprivation of rights to acts or omissions which were not penalized by the
former laws, are not applicable to those who, when said laws were in force,
may have executed the act or incurred in the omission forbidden or
condemned by this Code.

If the fault is also punished by the previous legislation, the less severe sanction
shall be applied.

If a continuous or repeated act or omission was commenced before the

beginning of the effectivity of this Code, and the same subsists or is
maintained or repeated after this body of laws has become operative, the
sanction or penalty prescribed in this Code shall be applied, even though the
previous laws may not have provided any sanction or penalty therefor. (Rule
3a)

Article 2258. Actions and rights which came into being but were not exercised
before the effectivity of this Code, shall remain in full force in conformity with
the old legislation; but their exercise, duration and the procedure to enforce
them shall be regulated by this Code and by the Rules of Court. If the exercise
of the right or of the action was commenced under the old laws, but is pending
on the date this Code takes effect, and the procedure was different from that
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established in this new body of laws, the parties concerned may choose which
method or course to pursue. (Rule 4)

Article 2259. The capacity of a married woman to execute acts and contracts

is governed by this Code, even if her marriage was celebrated under the
former laws. (n)

Article 2260. The voluntary recognition of a natural child shall take place

according to this Code, even if the child was born before the effectivity of this
body of laws. (n)

Article 2261. The exemption prescribed in article 302 shall also be applicable

to any support, pension or gratuity already existing or granted before this
Code becomes effective. (n)

Article 2262. Guardians of the property of minors, appointed by the courts

before this Code goes into effect, shall continue to act as such, notwithstanding
the provisions of article 320. (n)

Article 2263. Rights to the inheritance of a person who died, with or without a

will, before the effectivity of this Code, shall be governed by the Civil Code of
1889, by other previous laws, and by the Rules of Court. The inheritance of
those who, with or without a will, die after the beginning of the effectivity of
this Code, shall be adjudicated and distributed in accordance with this new
body of laws and by the Rules of Court; but the testamentary provisions shall
be carried out insofar as they may be permitted by this Code. Therefore,
legitimes, betterments, legacies and bequests shall be respected; however,
their amount shall be reduced if in no other manner can every compulsory
heir be given his full share according to this Code. (Rule 12a)

Article 2264. The status and rights of natural children by legal fiction referred
to in article 89 and illegitimate children mentioned in article 287, shall also be
acquired by children born before the effectivity of this Code. (n)

Article 2265. The right of retention of real or personal property arising after

this Code becomes effective, includes those things which came into the
creditor's possession before said date. (n)

Article 2266. The following shall have not only prospective but also
retroactive effect:

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 (1) Article 315, whereby a descendant cannot be compelled, in a
criminal case, to testify against his parents and ascendants;

(2) Articles 101 and 88, providing against collusion in cases of legal
separation and annulment of marriage;

(3) Articles 283, 284, and 289, concerning the proof of illegitimate
filiation;

(4) Article 838, authorizing the probate of a will on petition of the

testator himself;

(5) Articles 1359 to 1369, relative to the reformation of instruments;

(6) Articles 476 to 481, regulating actions to quiet title;

(7) Articles 2029 to 2031, which are designed to promote compromises.

(n)

Article 2267. The following provisions shall apply not only to future cases but
also to those pending on the date this Code becomes effective:

(1) Article 29, Relative to criminal prosecutions wherein the accused is

acquitted on the ground that his guilt has not been proved beyond reasonable
doubt;

(2) Article 33, concerning cases of defamation, fraud, and physical injuries. (n)

Article 2268. Suits between members of the same family which are pending at
the time this Code goes into effect shall be suspended, under such terms as the
court may determine, in order that compromise may be earnestly sought, or,
in case of legal separation proceedings, for the purpose of effecting, if possible,
a reconciliation. (n)

Article 2269. The principles upon which the preceding transitional provisions

are based shall, by analogy, be applied to cases not specifically regulated by
them. (Rule 13a)

REPEALING CLAUSE

Article 2270. The following laws and regulations are hereby repealed:

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 (1) Those parts and provisions of the Civil Code of 1889 which are in
force on the date when this new Civil Code becomes effective:

(2) The provisions of the Code of Commerce governing sales,

partnership, agency, loan, deposit and guaranty;

(3) The provisions of the Code of Civil Procedure on prescription as far

as inconsistent with this Code; and

(4) All laws, Acts, parts of Acts, rules of court, executive orders, and
administrative regulations which are inconsistent with this Code. (n)

Approved: June 18, 1949.

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