G.R. No.

157658 October 15, 2007

PHILIPPINE NATIONAL RAILWAYS and VIRGILIO J. BORJA, Petitioners,
vs.
COURT OF APPEALS (Second Division), CORAZON C. AMORES, MA. EMILIE A. MOJICA, CECILE C. SISON, DINO C. AMORES,
LARISA C. AMORES, ARMAND JINO C. AMORES and JOHN C. AMORES,Respondents.
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, seeking to annul and set aside
the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 54906 which reversed the Decision2 of the Regional Trial Court (RTC) of Manila,
Branch 28, in Civil Case No. 92-61987.
The factual antecedents are as follows:
In the early afternoon of April 27, 1992, Jose Amores (Amores) was traversing the railroad tracks in Kahilum II Street, Pandacan, Manila. Before
crossing the railroad track, he stopped for a while then proceeded accordingly.3Unfortunately, just as Amores was at the intersection, a Philippine
National Railways (PNR) train with locomotive number T-517 turned up and collided with the car.4
At the time of the mishap, there was neither a signal nor a crossing bar at the intersection to warn motorists of an approaching train. Aside from the
railroad track, the only visible warning sign at that time was the defective standard signboard "STOP, LOOK and LISTEN" wherein the sign "Listen"
was lacking while that of "Look" was bent.5 No whistle blow from the train was likewise heard before it finally bumped the car of Amores.6 After
impact, the car was dragged about ten (10) meters beyond the center of the crossing.7 Amores died as a consequence thereof.
On July 22, 1992, the heirs of Amores, consisting of his surviving wife and six children, herein respondents, filed a Complaint for Damages8 against
petitioners PNR and Virgilio J. Borja (Borja), PNRs locomotive driver at the time of the incident, before the RTC of Manila. The case was raffled to
Branch 28 and was docketed as Civil Case No. 92-61987. In their complaint, respondents averred that the trains speedometer was defective, and that
the petitioners negligence was the proximate cause of the mishap for their failure to take precautions to prevent injury to persons and property
despite the dense population in the vicinity. They then prayed for actual and moral damages, as well as attorneys fees.9
In their Answer,10 the petitioners denied the allegations, stating that the train was railroad-worthy and without any defect. According to them, the
proximate cause of the death of Amores was his own carelessness and negligence, and Amores wantonly disregarded traffic rules and regulations in
crossing the railroad tracks and trying to beat the approaching train. They admitted that there was no crossing bar at the site of the accident because it
was merely a barangay road.11 PNR stressed that it exercised the diligence of a good father of a family in the selection and supervision of the
locomotive driver and train engineer, Borja, and that the latter likewise used extraordinary diligence and caution to avoid the accident. Petitioners
further asserted that respondents had the last clear chance to avoid the accident but recklessly failed to do so.
After trial on the merits, on August 22, 1996, the RTC rendered judgment in favor of the petitioners, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered dismissing the complaint of the plaintiffs and the defendants counterclaim.
The costs shall be halved and paid equally by the parties.
The counsel for the defendants is hereby ordered to inform this court who is the legal representative of the deceased defendant, Virgilio Borja, within
ten (10) days from receipt of a copy of this decision.
SO ORDERED.12
The RTC rationalized that the proximate cause of the collision was Amores fatal misjudgment and the reckless course of action he took in crossing
the railroad track even after seeing or hearing the oncoming train.
On appeal, the CA reversed the RTC decision, as follows:
WHEREFORE, the assailed Decision of the Regional Trial Court of Manila, Branch 28 is hereby REVERSED. The defendants PNR and the estate of
Virgilio J. Borja are jointly and severally liable to pay plaintiffs the following:
1) The amount of P122,300.00 for the cost of damage to the car; and,
2) The amount of P50,000 as moral damages.
For lack of official receipts for funeral expenses and specimen of the last pay slip of the deceased, the claim for reimbursement of funeral expenses
and claim for payment of support is hereby DENIED for lack of basis. Costs against Defendants.
SO ORDERED.13
In reversing the trial courts decision, the appellate court found the petitioners negligent. The court based the petitioners negligence on the failure of
PNR to install a semaphore or at the very least, to post a flagman, considering that the crossing is located in a thickly populated area. Moreover, the
signboard "Stop, Look and Listen" was found insufficient because of its defective condition as described above. Lastly, no negligence could be
attributed to Amores as he exercised reasonable diligence in crossing the railroad track.
Aggrieved by this reversal, the petitioners filed the present petition for review on certiorari, raising the following grounds:
I
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN RENDERING ITS DECISION REVERSING THE
DECISION OF THE REGIONAL TRIAL COURT OF MANILA BRANCH 28, IN NOT TAKING INTO CONSIDERATION THE
PROVISION OF SECTION 42, R.A. 4136 OF THE LAND TRANSPORTATION AND TRAFFIC CODE.
II
THE DECISION OF THE COURT OF APPEALS IS CONTRARY TO THE EVIDENCE ON RECORD ADDUCED IN THE TRIAL ON
THE MERIT IN CIVIL CASE NO. 92-61987.14
The petitioners insist that Amores must have heard the trains whistle and heeded the warning but, noting that the train was still a distance away and
moving slowly, he must have calculated that he could beat it to the other side of the track before the train would arrive at the intersection. The
petitioners likewise add that the train was railroad-worthy and that its defective speedometer did not affect the trains operation. Lastly, they insist
that evidence showed sufficient warning signs strategically installed at the crossing to alert both motorists and pedestrians.
Respondents, on the other hand, argue that the cause of the accident was petitioners carelessness, imprudence and laxity in failing to provide a
crossing bar and keeper at the Kahilum II railway intersection. Considering that Kahilum II Street is in the middle of a thickly populated squatters
area, and many pedestrians cross the railroad track, notwithstanding the fact that it is a public street and a main thoroughfare utilized in going to
Herran Street, the presence of adequate warning signals would have prevented the untimely death of Amores. Another crucial point raised by the
respondents is the manner in which Borja applied the brakes of the train only when the locomotive was already very near Amores car, as admitted by

1
witness Querimit. Finally, respondents claim that Borjas failure to blow the locomotives horn, pursuant to the usual practice of doing the same 100
meters before reaching the Kahilum II crossing point is an earmark of recklessness on the part of the petitioners.
The petition must fail.
The only issue to be resolved in the present case is whether the appellate court was correct in ascribing negligence on the part of the petitioners. It
was ascertained beyond quandary that the proximate cause of the collision is the negligence and imprudence of the petitioner PNR and its locomotive
driver, Borja, in operating the passenger train.
As the action is predicated on negligence, the relevant provision is Article 2176 of the New Civil Code, which states that:
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 was no pre-existing contractual relation between the parties, is called quasi-delict and is governed by the provisions of this
chapter.
We have thoroughly reviewed the records of the case and we find no cogent reason to reverse the appellate courts decision. Negligence has been
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."15 Using the aforementioned philosophy, it may be reliably concluded that
there is no hard and fast rule whereby such degree of care and vigilance is calibrated; it is dependent upon the circumstances in which a person finds
himself. All that the law requires is that it is perpetually compelling upon a person to use that care and diligence expected of sensible men under
comparable circumstances.16
We hold that the petitioners were negligent when the collision took place. The transcript of stenographic notes reveals that the train was running at a
fast speed because notwithstanding the application of the ordinary and emergency brakes, the train still dragged the car some distance away from the
point of impact. Evidence likewise unveils the inadequate precautions taken by petitioner PNR to forewarn the public of the impending danger. Aside
from not having any crossing bar, no flagman or guard to man the intersection at all times was posted on the day of the incident. A reliable signaling
device in good condition, not just a dilapidated "Stop, Look and Listen" signage because of many years of neglect, is needed to give notice to the
public. It is the responsibility of the railroad company to use reasonable care to keep the signal devices in working order. Failure to do so would be an
indication of negligence.
As held in the case of Philippine National Railway v. Brunty,17 it may broadly be stated that railroad companies owe to the public a duty of
exercising a reasonable degree of care to avoid injury to persons and property at railroad crossings, which duties pertain both to the operation of
trains and to the maintenance of the crossings. Moreover, every corporation constructing or operating a railway shall make and construct at all points
where such railway crosses any public road, good, sufficient, and safe crossings, and erect at such points, at sufficient elevation from such road as to
admit a free passage of vehicles of every kind, a sign with large and distinct letters placed thereon, to give notice of the proximity of the railway, and
warn persons of the necessity of looking out for trains.18 The failure of the PNR to put a cross bar, or signal light, flagman or switchman, or
semaphore is evidence of negligence and disregard of the safety of the public, even if there is no law or ordinance requiring it, because public safety
demands that said device or equipment be installed.
The petitioners insist that a train has a right-of-way in a railroad crossing under the existing laws. They derive their theory from Section 42 (d),
Article III of R.A. 4136, otherwise known as the Land Transportation and Traffic Code, which states that:
The driver of a vehicle upon a highway shall bring to a full stop such vehicle before traversing any "through highway" or railroad crossing: Provided,
That when it is apparent that no hazard exists, the vehicle may be slowed down to five miles per hour instead of bringing it to a full stop.
They claim that motorists are enjoined by law to stop, look and listen before crossing railroad tracks and that a heavier responsibility rests upon the
motorists in avoiding accidents at level crossings.
It is true that one driving an automobile must use his faculties of seeing and hearing when nearing a railroad crossing.1wphi1 However, the
obligation to bring to a full stop vehicles moving in public highways before traversing any "through street" only accrues from the time the said
"through street" or crossing is so designated and sign-posted. From the records of the case, it can be inferred that Amores exercised all the necessary
precautions required of him as to avoid injury to himself and to others.1wphi1 The witnesses testimonies showed that Amores slackened his speed,
made a full stop, and then proceeded to cross the tracks when he saw that there was no impending danger to his life. Under these circumstances, we
are convinced that Amores did everything, with absolute care and caution, to avoid the collision.
It is settled that every person or motorist crossing a railroad track should use ordinary prudence and alertness to determine the proximity of a train
before attempting to cross. We are persuaded that the circumstances were beyond the control of Amores for no person would sacrifice his precious
life if he had the slightest opportunity to evade the catastrophe. Besides, the authority in this jurisdiction is that the failure of a railroad company to
install a semaphore or at the very least, to post a flagman or watchman to warn the public of the passing train amounts to negligence.191wphi1
In view of the foregoing, We will now discuss the liability of petitioner PNR. Article 218020 of the New Civil Code discusses the liability of the
employer once negligence or fault on the part of the employee has been established. The employer is actually liable on the assumption of 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 demonstrated.21Even
the existence of hiring procedures and supervisory employees cannot be incidentally invoked to overturn the presumption of negligence on the part of
the employer.22
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated March 31, 2003 in CA-G.R. CV No. 54906 is hereby
AFFIRMED.
SO ORDERED.

2
G.R. Nos. 180880-81 September 25, 2009
KEPPEL CEBU SHIPYARD, INC., Petitioner,
vs.
PIONEER INSURANCE AND SURETY CORPORATION, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. Nos. 180896-97
PIONEER INSURANCE AND SURETY CORPORATION, Petitioner,
vs.
KEPPEL CEBU SHIPYARD, INC., Respondent.
DECISION
NACHURA, J.:
Before us are the consolidated petitions filed by the partiesPioneer Insurance and Surety Corporation1(Pioneer) and Keppel Cebu Shipyard,
Inc.2 (KCSI)to review on certiorari the Decision3 dated December 17, 2004 and the Amended Decision4 dated December 20, 2007 of the Court of
Appeals (CA) in CA-G.R. SP Nos. 74018 and 73934.
On January 26, 2000, KCSI and WG&A Jebsens Shipmanagement, Inc. (WG&A) executed a Shiprepair Agreement5 wherein KCSI would renovate
and reconstruct WG&As M/V "Superferry 3" using its dry docking facilities pursuant to its restrictive safety and security rules and regulations. Prior
to the execution of the Shiprepair Agreement, "Superferry 3" was already insured by WG&A with Pioneer for US$8,472,581.78. The Shiprepair
Agreement reads
SHIPREPAIR AGREEMENT6
Company: WG & A JEBSENS SHIPMANAGEMENT INC.
Address: Harbour Center II, Railroad & Chicago Sts.
Port Area, City of Manila
We, WG & A JEBSENS SHIPMGMT. Owner/Operator of M/V "SUPERFERRY 3" and KEPPEL CEBU SHIPYARD, INC. (KCSI) enter into an
agreement that the Drydocking and Repair of the above-named vessel ordered by the Owners Authorized Representative shall be carried out under
the Keppel Cebu Shipyard Standard Conditions of Contract for Shiprepair, guidelines and regulations on safety and security issued by Keppel Cebu
Shipyard. In addition, the following are mutually agreed upon by the parties:
1. The Owner shall inform its insurer of Clause 207 and 22 (a)8 (refer at the back hereof) and shall include Keppel Cebu
Shipyard as a co-assured in its insurance policy.
2. The Owner shall waive its right to claim for any loss of profit or loss of use or damages consequential on such loss of use
resulting from the delay in the redelivery of the above vessel.
3. Owners sub-contractors or workers are not permitted to work in the yard without the written approval of the Vice President
Operations.
4. In consideration of Keppel Cebu Shipyard allowing Owner to carry out own repairs onboard the vessel, the Owner shall
indemnify and hold Keppel Cebu Shipyard harmless from any or all claims, damages, or liabilities arising from death or bodily
injuries to Owners workers, or damages to the vessel or other property however caused.
5. On arrival, the Owner Representative, Captain, Chief Officer and Chief Engineer will be invited to attend a conference with
our Production, Safety and Security personnel whereby they will be briefed on, and given copies of Shipyard safety regulations.
6. An adequate number of officers and crew must remain on board at all times to ensure the safety of the vessel and compliance
of safety regulations by crew and owner employed workmen.
7. The ships officers/crew or owner appointed security personnel shall maintain watch against pilferage and acts of sabotage.
8. The yard must be informed and instructed to provide the necessary security arrangement coverage should there be inadequate
or no crew on board to provide the expressed safety and security enforcement.
9. The Owner shall be liable to Keppel Cebu Shipyard for any death and/or bodily injuries for the [K]eppel Cebu Shipyards
employees and/or contract workers; theft and/or damages to Keppel Cebu Shipyards properties and other liabilities which are
caused by the workers of the Owner.
10. The invoice shall be based on quotation reference 99-KCSI-211 dated December 20, 1999tariff dated March 15, 1998.
11. Payment term shall be as follows:
12. The Owner and Keppel Cebu Shipyard shall endeavor to settle amicably any dispute that may arise under this Agreement.
Should all efforts for an amicable settlement fail, the disputes shall be submitted for arbitration in Metro Manila in accordance
with provisions of Executive Order No. 1008 under the auspices of the Philippine Arbitration Commission.
(Signed)
(Signed)
BARRY CHIA SOO HOCK
(Printed Name/Signature Above Name)
(Printed Name/Signature Above Name)
Authorized Representative
Vice President Operations
for and in behalf of:
Keppel Cebu Shipyard, Inc.
WG & A Jebsens Shipmgmt.
JAN. 26, 2000.
Date
Date
On February 8, 2000, in the course of its repair, M/V "Superferry 3" was gutted by fire. Claiming that the extent of the damage was pervasive,
WG&A declared the vessels damage as a "total constructive loss" and, hence, filed an insurance claim with Pioneer.
On June 16, 2000, Pioneer paid the insurance claim of WG&A in the amount of US$8,472,581.78. WG&A, in turn, executed a Loss and Subrogation
Receipt9 in favor of Pioneer, to wit:
3
 LOSS AND SUBROGATION RECEIPT
16 June 2000
Our Claim Ref: MH-NIL-H0-99-00018
US$8,472,581.78
------------------------------------------------
RECEIVED from PIONEER INSURANCE & SURETY CORPORATION the sum of U.S. DOLLARS EIGHT MILLION FOUR HUNDRED
SEVENTY-TWO THOUSAND FIVE HUNDRED EIGHTY-ONE & 78/100 (US$ 8,472,581.78) equivalent to PESOS THREE HUNDRED SIXTY
MILLION & 00/100 (Php 360,000,000.00), in full satisfaction, compromise and discharge of all claims for loss and expenses sustained to the vessel
"SUPERFERRY 3" insured under Policy Nos. MH-H0-99-0000168-00-D (H&M) and MH-H0-99-0000169 (I.V.) by reason as follows:
Fire on board at Keppel Cebu Shipyard
on 08 February 2000
and in consideration of which the undersigned hereby assigns and transfers to the said company each and all claims and demands against any person,
persons, corporation or property arising from or connected with such loss or damage and the said company is subrogated in the place of and to the
claims and demands of the undersigned against said person, persons, corporation or property in the premises to the extent of the amount above-
mentioned.
WILLIAM, GOTHONG & ABOITIZ, INC.
&/OR ABOITIZ SHIPPING CORP.
By:
(Signed)
______________________________________
Witnesses:
(Signed)
______________________________________
(Signed)
______________________________________
Armed with the subrogation receipt, Pioneer tried to collect from KCSI, but the latter denied any responsibility for the loss of the subject vessel. As
KCSI continuously refused to pay despite repeated demands, Pioneer, on August 7, 2000, filed a Request for Arbitration before the Construction
Industry Arbitration Commission (CIAC) docketed as CIAC Case No. 21-2000, seeking the following reliefs:
1. To pay to the claimant Pioneer Insurance and Surety Corporation the sum of U.S.$8,472,581.78 or its equivalent amount in Philippine
Currency, plus interest thereon computed from the date of the "Loss and Subrogation Receipt" on 16 June 2000 or from the date of filing of
[the] "Request for Arbitration," as may be found proper;
2. To pay to claimant WG&A, INC. and/or Aboitiz Shipping Corporation and WG&A Jebsens Shipmanagement, Inc. the sum
of P500,000,000.00 plus interest thereon from the date of filing [of the] "Request for Arbitration" or date of the arbitral award, as may be
found proper;
3. To pay to the claimants herein the sum of P3,000,000.00 for and as attorneys fees; plus other damages as may be established during the
proceedings, including arbitration fees and other litigation expenses, and the costs of suit.
It is likewise further prayed that Clauses 1 and 2 on the unsigned page 1 of the "Shiprepair Agreement" (Annex "A") as well as the hardly legible
Clauses 20 and 22 (a) and other similar clauses printed in very fine print on the unsigned dorsal page thereof, be all declared illegal and void ab initio
and without any legal effect whatsoever.10
KCSI and WG&A reached an amicable settlement, leading the latter to file a Notice of Withdrawal of Claim on April 17, 2001 with the CIAC. The
CIAC granted the withdrawal on October 22, 2001, thereby dismissing the claim of WG&A against KCSI. Hence, the arbitration proceeded with
Pioneer as the remaining claimant.
In the course of the proceedings, Pioneer and KCSI stipulated, among others, that: (1) on January 26, 2000, M/V "Superferry 3" arrived at KCSI in
Lapu-Lapu City, Cebu, for dry docking and repairs; (2) on the same date, WG&A signed a ship repair agreement with KCSI; and (3) a fire broke out
on board M/V "Superferry 3" on February 8, 2000, while still dry docked in KCSIs shipyard.11
As regards the disputed facts, below are the respective positions of the parties, viz.:
Pioneers Theory of the Case:
First, Pioneer (as Claimant) is the real party in interest in this case and that Pioneer has been subrogated to the claim of its assured. The Claimant
claims that it has the preponderance of evidence over that of the Respondent. Claimant cited documentary references on the Statutory Source of the
Principle of Subrogation. Claimant then proceeded to explain that the Right of Subrogation:
Is by Operation of Law
exists in Property Insurance
is not Dependent Upon Privity of Contract.
Claimant then argued that Payment Operates as Equitable Assignment of Rights to Insurer and that the Right of Subrogation Entitles Insurer to
Recover from the Liable Party.
Second, Respondent Keppel had custody of and control over the M/V "Superferry 3" while said vessel was in Respondent Keppels premises. In its
Draft Decision, Claimant stated:
A. The evidence presented during the hearings indubitably proves that respondent not only took custody but assumed responsibility and
control over M/V Superferry 3 in carrying out the dry-docking and repair of the vessel.
B. The presence on board the M/V Superferry 3 of its officers and crew does not relieve the respondent of its responsibility for said vessel.
C. Respondent Keppel assumed responsibility over M/V Superferry 3 when it brought the vessel inside its graving dock and applied its own
safety rules to the dry-docking and repairs of the vessel.
D. The practice of allowing a shipowner and its sub-contractors to perform maintenance works while the vessel was within respondents
premises does not detract from the fact that control and custody over M/V Superferry 3 was transferred to the yard.
From the preceding statements, Claimant claims that Keppel is clearly liable for the loss of M/V Superferry 3.
Third, the Vessels Safety Manual cannot be relied upon as proof of the Masters continuing control over the vessel.

4
Fourth, the Respondent Yard is liable under the Doctrine of Res Ipsa Loquitur. According to Claimant, the Yard is liable under the ruling laid down by
the Supreme Court in the "Manila City" case. Claimant asserts that said ruling is applicable hereto as The Law of the Case.
Fifth, the liability of Respondent does not arise merely from the application of the Doctrine of Res Ipsa Loquitur, but from its negligence in this case.
Sixth, the Respondent Yard was the employer responsible for the negligent acts of the welder. According to Claimant;
In contemplation of law, Sevillejo was not a loaned servant/employee. The yard, being his employer, is solely and exclusively liable for his negligent
acts. Claimant proceeded to enumerate its reasons:
A. The "Control Test" The yard exercised control over Sevillejo. The power of control is not diminished by the failure to exercise control.
B. There was no independent work contract between Joniga and Sevillejo Joniga was not the employer of Sevillejo, as Sevillejo remained
an employee of the yard at the time the loss occurred.
C. The mere fact that Dr. Joniga requested Sevillejo to perform some of the Owners hot works under the 26 January 2000 work order did
not make Dr. Joniga the employer of Sevillejo.
Claimant proffers that Dr. Joniga was not a Contractor of the Hot Work Done on Deck A. Claimant argued that:
A. The yard, not Dr. Joniga, gave the welders their marching orders, and
B. Dr. Jonigas authority to request the execution of owners hot works in the passenger areas was expressly recognized by the Yard Project
Superintendent Orcullo.
Seventh, the shipowner had no legal duty to apply for a hotworks permit since it was not required by the yard, and the owners hotworks were
conducted by welders who remained employees of the yard. Claimant contends that the need, if any, for an owners application for a hot work permit
was canceled out by the yards actual knowledge of Sevillejos whereabouts and the fact that he was in deck A doing owners hotworks.
Eight[h], in supplying welders and equipment as per The Work Order Dated 26 January 2000, the Yard did so at its own risk, and acted as a Less
Than Prudent Ship Repairer.1avvphi1
The Claimant then disputed the statements of Manuel Amagsila by claiming that Amagsila was a disgruntled employee. Nevertheless, Claimant
claims that Amagsila affirmed that the five yard welders never became employees of the owner so as to obligate the latter to be responsible for their
conduct and performance.
Claimant enumerated further badges of yard negligence.
According to Claimant:
A. Yards water supply was inadequate.
B. Yard Fire Fighting Efforts and Equipment Were Inadequate.
C. Yard Safety Practices and Procedures Were Unsafe or Inadequate.
D. Yard Safety Assistants and Firewatch-Men were Overworked.
Finally, Claimant disputed the theories propounded by the Respondent (The Yard). Claimant presented its case against:
(i) Non-removal of the life jackets theory.
(ii) Hole-in-the[-]floor theory.
(iii) Need for a plan theory.
(iv) The unauthorized hot works theory.
(v) The Marina report theory.
The Claimant called the attention of the Tribunal (CIAC) on the non-appearance of the welder involved in the cause of the fire, Mr. Severino
Sevillejo. Claimant claims that this is suppression of evidence by Respondent.
KCSIs Theory of the Case
1. The Claimant has no standing to file the Request for Arbitration and the Tribunal has no jurisdiction over the case:
(a) There is no valid arbitration agreement between the Yard and the Vessel Owner. On January 26, 2000, when the ship repair
agreement (which includes the arbitration agreement) was signed by WG&A Jebsens on behalf of the Vessel, the same was still
owned by Aboitiz Shipping. Consequently, when another firm, WG&A, authorized WG&A Jebsens to manage the MV
Superferry 3, it had no authority to do so. There is, as a result, no binding arbitration agreement between the Vessel Owner and
the Yard to which the Claimant can claim to be subrogated and which can support CIAC jurisdiction.
(b) The Claimant is not a real party in interest and has no standing because it has not been subrogated to the Vessel Owner. For
the reason stated above, the insurance policies on which the Claimant bases its right of subrogation were not validly obtained. In
any event, the Claimant has not been subrogated to any rights which the Vessel may have against the Yard because:
i. The Claimant has not proved payment of the proceeds of the policies to any specific party. As a consequence, it has
also not proved payment to the Vessel Owner.
ii. The Claimant had no legally demandable obligation to pay under the policies and did so only voluntarily. Under the
policies, the Claimant and the Vessel agreed that there is no Constructive Total Loss "unless the expense of recovering
and repairing the vessel would exceed the Agreed Value" of P360 million assigned by the parties to the Vessel, a
threshold which the actual repair cost for the Vessel did not reach. Since the Claimant opted to pay contrary to the
provisions of the policies, its payment was voluntary, and there was no resulting subrogation to the Vessel.
iii. There was also no subrogation under Article 1236 of the Civil Code. First, if the Claimant asserts a right of payment
only by virtue of Article 1236, then there is no legal subrogation under Article 2207 and it does not succeed to the
Vessels rights under the Ship [R]epair Agreement and the arbitration agreement. It does not have a right to demand
arbitration and will have only a purely civil law claim for reimbursement to the extent that its payment benefited the
Yard which should be filed in court. Second, since the Yard is not liable for the fire and the resulting damage to the
Vessel, then it derived no benefit from the Claimants payment to the Vessel Owner. Third, in any event, the Claimant
has not proved payment of the proceeds to the Vessel Owner.
2. The Ship [R]epair Agreement was not imposed upon the Vessel. The Vessel knowingly and voluntarily accepted that agreement.
Moreover, there are no signing or other formal defects that can invalidate the agreement.
3. The proximate cause of the fire and damage to the Vessel was not any negligence committed by Angelino Sevillejo in cutting the
bulkhead door or any other shortcoming by the Yard. On the contrary, the proximate cause of the fire was Dr. Jonigas and the Vessels
deliberate decision to have Angelino Sevillejo undertake cutting work in inherently dangerous conditions created by them.

5
 (a) The Claimants material witnesses lied on the record and the Claimant presented no credible proof of any negligence by
Angelino Sevillejo.
(b) Uncontroverted evidence proved that Dr. Joniga neglected or decided not to obtain a hot work permit for the bulkhead cutting
and also neglected or refused to have the ceiling and the flammable lifejackets removed from underneath the area where he
instructed Angelino Sevillejo to cut the bulkhead door. These decisions or oversights guaranteed that the cutting would be done in
extremely hazardous conditions and were the proximate cause of the fire and the resulting damage to the Vessel.
(c) The Yards expert witness, Dr. Eric Mullen gave the only credible account of the cause and the mechanics of ignition of the
fire. He established that: i) the fire started when the cutting of the bulkhead door resulted in sparks or hot molten slag which fell
through pre-existing holes on the deck floor and came into contact with and ignited the flammable lifejackets stored in the ceiling
void directly below; and ii) the bottom level of the bulkhead door was immaterial, because the sparks and slag could have come
from the cutting of any of the sides of the door. Consequently, the cutting itself of the bulkhead door under the hazardous
conditions created by Dr. Joniga, rather than the positioning of the doors bottom edge, was the proximate cause of the fire.
(d) The Manila City case is irrelevant to this dispute and in any case, does not establish governing precedent to the effect that
when a ship is damaged in dry dock, the shipyard is presumed at fault. Apart from the differences in the factual setting of the two
cases, the Manila City pronouncements regarding the res ipsa loquitur doctrine are obiter dicta without value as binding
precedent. Furthermore, even if the principle were applied to create a presumption of negligence by the Yard, however, that
presumption is conclusively rebutted by the evidence on record.
(e) The Vessels deliberate acts and its negligence created the inherently hazardous conditions in which the cutting work that
could otherwise be done safely ended up causing a fire and the damage to the Vessel. The fire was a direct and logical
consequence of the Vessels decisions to: (1) take Angelino Sevillejo away from his welding work at the Promenade Deck
restaurant and instead to require him to do unauthorized cutting work in Deck A; and (2) to have him do that without satisfying
the requirements for and obtaining a hot work permit in violation of the Yards Safety Rules and without removing the flammable
ceiling and life jackets below, contrary to the requirements not only of the Yards Safety Rules but also of the demands of
standard safe practice and the Vessels own explicit safety and hot work policies.
(f) The vessel has not presented any proof to show that the Yard was remiss in its fire fighting preparations or in the actual
conduct of fighting the 8 February 2000 fire. The Yard had the necessary equipment and trained personnel and employed all those
resources immediately and fully to putting out the 8 February 2000 fire.
4. Even assuming that Angelino Sevillejo cut the bulkhead door close to the deck floor, and that this circumstance rather than the extremely
hazardous conditions created by Dr. Joniga and the Vessel for that activity caused the fire, the Yard may still not be held liable for the
resulting damage.
(a) The Yards only contractual obligation to the Vessel in respect of the 26 January 2000 Work Order was to supply welders for
the Promenade Deck restaurant who would then perform welding work "per owner[s] instruction." Consequently, once it had
provided those welders, including Angelino Sevillejo, its obligation to the Vessel was fully discharged and no claim for
contractual breach, or for damages on account thereof, may be raised against the Yard.
(b) The Yard is also not liable to the Vessel/Claimant on the basis of quasi-delict.
i. The Vessel exercised supervision and control over Angelino Sevillejo when he was doing work at the Promenade
Deck restaurant and especially when he was instructed by Dr. Joniga to cut the bulkhead door. Consequently, the Vessel
was the party with actual control over his tasks and is deemed his true and effective employer for purposes of
establishing Article 2180 employer liability.
ii. Even assuming that the Yard was Angelino Sevillejos employer, the Yard may nevertheless not be held liable under
Article 2180 because Angelino Sevillejo was acting beyond the scope of his tasks assigned by the Yard (which was only
to do welding for the Promenade Deck restaurant) when he cut the bulkhead door pursuant to instructions given by the
Vessel.
iii. The Yard is nonetheless not liable under Article 2180 because it exercised due diligence in the selection and
supervision of Angelino Sevillejo.
5. Assuming that the Yard is liable, it cannot be compelled to pay the full amount of P360 million paid by the Claimant.
(a) Under the law, the Yard may not be held liable to the Claimant, as subrogee, for an amount greater than that which the Vessel
could have recovered, even if the Claimant may have paid a higher amount under its policies. In turn, the right of the Vessel to
recover is limited to actual damage to the MV Superferry 3, at the time of the fire.
(b) Under the Ship [R]epair Agreement, the liability of the Yard is limited to P50 million a stipulation which, under the law and
decisions of the Supreme Court, is valid, binding and enforceable.
(c) The Vessel breached its obligation under Clause 22 (a) of the Yards Standard Terms to name the Yard as co-assured under the
policies a breach which makes the Vessel liable for damages. This liability should in turn be set-off against the Claimants claim
for damages.
The Respondent listed what it believes the Claimant wanted to impress upon the Tribunal. Respondent enumerated and disputed these as follows:
1. Claimants counsel contends that the cutting of the bulkhead door was covered by the 26 January 2000 Work Order.
2. Claimants counsel contends that Dr. Joniga told Gerry Orcullo about his intention to have Angelino Sevillejo do cutting work at the
Deck A bulkhead on the morning of 8 February 2000.
3. Claimants counsel contends that under Article 1727 of the Civil Code, "The contractor is responsible for the work done by persons
employed by him."
4. Claimants counsel contends that "[t]he second reason why there was no job spec or job order for this cutting work, [is] the cutting work
was known to the yard and coordinated with Mr. Gerry Orcullo, the yard project superintendent."
5. Claimants counsel also contends, to make the Vessels unauthorized hot works activities seem less likely, that they could easily be
detected because Mr. Avelino Aves, the Yard Safety Superintendent, admitted that "No hot works could really be hidden from the Yard, your
Honors, because the welding cables and the gas hoses emanating from the dock will give these hotworks away apart from the assertion and
the fact that there were also safety assistants supposedly going around the vessel."

6
Respondent disputed the above by presenting its own argument in its Final Memorandum.12
On October 28, 2002, the CIAC rendered its Decision13 declaring both WG&A and KCSI guilty of negligence, with the following findings and
conclusions
The Tribunal agrees that the contractual obligation of the Yard is to provide the welders and equipment to the promenade deck. [The] Tribunal agrees
that the cutting of the bulkhead door was not a contractual obligation of the Yard. However, by requiring, according to its own regulations, that only
Yard welders are to undertake hotworks, it follows that there are certain qualifications of Yard welders that would be requisite of yard welders against
those of the vessel welders. To the Tribunal, this means that yard welders are aware of the Yard safety rules and regulations on hotworks such as
applying for a hotwork permit, discussing the work in a production meeting, and complying with the conditions of the hotwork permit prior to
implementation. By the requirement that all hotworks are to be done by the Yard, the Tribunal finds that Sevillejo remains a yard employee. The act
of Sevillejo is however mitigated in that he was not even a foreman, and that the instructions to him was (sic) by an authorized person. The Tribunal
notes that the hotworks permit require[s] a request by at least a foreman. The fact that no foreman was included in the five welders issued to the
Vessel was never raised in this dispute. As discussed earlier by the Tribunal, with the fact that what was ask (sic) of Sevillejo was outside the work
order, the Vessel is considered equally negligent. This Tribunal finds the concurrent negligence of the Yard through Sevillejo and the Vessel through
Dr. Joniga as both contributory to the cause of the fire that damaged the vessel.14
Holding that the liability for damages was limited to P50,000,000.00, the CIAC ordered KCSI to pay Pioneer the amount of P25,000,000.00, with
interest at 6% per annum from the time of the filing of the case up to the time the decision is promulgated, and 12% interest per annum added to the
award, or any balance thereof, after it becomes final and executory. The CIAC further ordered that the arbitration costs be imposed on both parties on
a pro rata basis.15
Pioneer appealed to the CA and its petition was docketed as CA-G.R. SP No. 74018. KCSI likewise filed its own appeal and the same was docketed
as CA-G.R. SP No. 73934. The cases were consolidated.
On December 17, 2004, the Former Fifteenth Division of the CA rendered its Decision, disposing as follows:
WHEREFORE, premises considered, the Petition of Pioneer (CA-G.R. SP No. 74018) is DISMISSED while the Petition of the Yard (CA-G.R. SP
No. 73934) is GRANTED, dismissing petitioners claims in its entirety. No costs.
The Yard and The WG&A are hereby ordered to pay the arbitration costs pro-rata.
SO ORDERED.16
Aggrieved, Pioneer sought reconsideration of the December 17, 2004 Decision, insisting that it suffered from serious errors in the appreciation of the
evidence and from gross misapplication of the law and jurisprudence on negligence. KCSI, for its part, filed a motion for partial reconsideration of
the same Decision.
On December 20, 2007, an Amended Decision was promulgated by the Special Division of Five Former Fifteenth Division of the CA in light of
the dissent of Associate Justice Lucas P. Bersamin,17 joined by Associate Justice Japar B. Dimaampao. The fallo of the Amended Decision reads
WHEREFORE, premises considered, the Court hereby decrees that:
1. Pioneers Motion for Reconsideration is PARTIALLY GRANTED, ordering The Yard to pay Pioneer P25 Million, without legal interest,
within 15 days from the finality of this Amended Decision, subject to the following modifications:
1.1 Pioneers Petition (CA-G.R. SP No. 74018) is PARTIALLY GRANTED as the Yard is hereby ordered to pay Pioneer P25
Million without legal interest;
2. The Yard is hereby declared as equally negligent, thus, the total GRANTING of its Petition (CA-G.R. SP No. 73934) is now reduced to
PARTIALLY GRANTED, in so far as it is ordered to pay Pioneer P25 Million, without legal interest, within 15 days from the finality of
this Amended Decision; and
3. The rest of the disposition in the original Decision remains the same.
SO ORDERED.18
Hence, these petitions. Pioneer bases its petition on the following grounds:
I
THE COURT OF APPEALS ERRED IN BASING ITS ORIGINAL DECISION ON NON-FACTS LEADING IT TO MAKE FALSE LEGAL
CONCLUSIONS; NON-FACTS REMAIN TO INVALIDATE THE AMENDED DECISION. THIS ALSO VIOLATES SECTION 14, ARTICLE
VIII OF THE CONSTITUTION.
II
THE COURT OF APPEALS ERRED IN LIMITING THE LEGAL LIABILITY OF THE YARD TO THE SUM OF P50,000,000.00, IN THAT:
A. STARE DECISIS RENDERS INAPPLICABLE ANY INVOCATION OF LIMITED LIABILITY BY THE YARD.
B. THE LIMITATION CLAUSE IS CONTRARY TO PUBLIC POLICY.
C. THE VESSEL OWNER DID NOT AGREE THAT THE YARDS LIABILITY FOR LOSS OR DAMAGE TO THE VESSEL
ARISING FROM YARDS NEGLIGENCE IS LIMITED TO THE SUM OF P50,000,000.00 ONLY.
D. IT IS INIQUITOUS TO ALLOW THE YARD TO LIMIT LIABILITY, IN THAT:
(i) THE YARD HAD CUSTODY AND CONTROL OVER THE VESSEL (M/V "SUPERFERRY 3") ON 08
FEBRUARY 2000 WHEN IT WAS GUTTED BY FIRE;
(ii) THE DAMAGING FIRE INCIDENT HAPPENED IN THE COURSE OF THE REPAIRS EXCLUSIVELY
PERFORMED BY YARD WORKERS.
III
THE COURT OF APPEALS ERRED IN ITS RULING THAT WG&A WAS CONCURRENTLY NEGLIGENT, CONSIDERING THAT:
A. DR. JONIGA, THE VESSELS PASSAGE TEAM LEADER, DID NOT SUPERVISE OR CONTROL THE REPAIRS.
B. IT WAS THE YARD THROUGH ITS PROJECT SUPERINTENDENT GERMINIANO ORCULLO THAT SUPERVISED
AND CONTROLLED THE REPAIR WORKS.
C. SINCE ONLY YARD WELDERS COULD PERFORM HOT WORKS IT FOLLOWS THAT THEY ALONE COULD BE
GUILTY OF NEGLIGENCE IN DOING THE SAME.
D. THE YARD AUTHORIZED THE HOT WORK OF YARD WELDER ANGELINO SEVILLEJO.
E. THE NEGLIGENCE OF ANGELINO SEVILLEJO WAS THE PROXIMATE CAUSE OF THE LOSS.
F. WG&A WAS NOT GUILTY OF NEGLIGENCE, BE IT DIRECT OR CONTRIBUTORY TO THE LOSS.

7
 IV
THE COURT OF APPEALS CORRECTLY RULED THAT WG&A SUFFERED A CONSTRUCTIVE TOTAL LOSS OF ITS VESSEL BUT
ERRED BY NOT HOLDING THAT THE YARD WAS LIABLE FOR THE VALUE OF THE FULL CONSTRUCTIVE TOTAL LOSS.
V
THE COURT OF APPEALS ERRED IN NOT HOLDING THE YARD LIABLE FOR INTEREST.
VI
THE COURT OF APPEALS ERRED IN NOT HOLDING THE YARD SOLELY LIABLE FOR ARBITRATION COSTS.19
On the other hand, KCSI cites the following grounds for the allowance of its petition, to wit:
1. ABSENCE OF YARD RESPONSIBILITY
IT WAS GRIEVOUS ERROR FOR THE COURT OF APPEALS TO ADOPT, WITHOUT EXPLANATION, THE CIACS RULING THAT THE
YARD WAS EQUALLY NEGLIGENT BECAUSE OF ITS FAILURE TO REQUIRE A HOT WORKS PERMIT FOR THE CUTTING WORK
DONE BY ANGELINO SEVILLEJO, AFTER THE COURT OF APPEALS ITSELF HAD SHOWN THAT RULING TO BE COMPLETELY
WRONG AND BASELESS.
2. NO CONSTRUCTIVE TOTAL LOSS
IT WAS EQUALLY GRIEVOUS ERROR FOR THE COURT OF APPEALS TO RULE, WITHOUT EXPLANATION, THAT THE VESSEL WAS A
CONSTRUCTIVE TOTAL LOSS AFTER HAVING ITSELF EXPLAINED WHY THE VESSEL COULD NOT BE A CONSTRUCTIVE TOTAL
LOSS.
3. FAILURE OR REFUSAL TO ADDRESS
KEPPELS MOTION FOR RECONSIDERATION
FINALLY, IT WAS ALSO GRIEVOUS ERROR FOR THE COURT OF APPEALS TO HAVE EFFECTIVELY DENIED, WITHOUT
ADDRESSING IT AND ALSO WITHOUT EXPLANATION, KEPPELS PARTIAL MOTION FOR RECONSIDERATION OF THE ORIGINAL
DECISION WHICH SHOWED: 1) WHY PIONEER WAS NOT SUBROGATED TO THE RIGHTS OF THE VESSEL OWNER AND SO HAD NO
STANDING TO SUE THE YARD; 2) WHY KEPPEL MAY NOT BE REQUIRED TO REIMBURSE PIONEERS PAYMENTS TO THE VESSEL
OWNER IN VIEW OF THE CO-INSURANCE CLAUSE IN THE SHIPREPAIR AGREEMENT; AND 3) WHY PIONEER ALONE SHOULD
BEAR THE COSTS OF ARBITRATION.
4. FAILURE TO CREDIT FOR SALVAGE RECOVERY
EVEN IF THE COURT OF APPEALS RULINGS ON ALL OF THE FOREGOING ISSUES WERE CORRECT AND THE YARD MAY
PROPERLY BE HELD EQUALLY LIABLE FOR THE DAMAGE TO THE VESSEL AND REQUIRED TO PAY HALF OF THE DAMAGES
AWARDED (P25 MILLION), THE COURT OF APPEALS STILL ERRED IN NOT DEDUCTING THE SALVAGE VALUE OF THE VESSEL
RECOVERED AND RECEIVED BY THE INSURER, PIONEER, TO REDUCE ANY LIABILITY ON THE PART OF THE YARD TO P9.874
MILLION.20
To our minds, these errors assigned by both Pioneer and KCSI may be summed up in the following core issues:
A. To whom may negligence over the fire that broke out on board M/V "Superferry 3" be imputed?
B. Is subrogation proper? If proper, to what extent can subrogation be made?
C. Should interest be imposed on the award of damages? If so, how much?
D. Who should bear the cost of the arbitration?
To resolve these issues, it is imperative that we digress from the general rule that in petitions for review under Rule 45 of the Rules of Court, only
questions of law shall be entertained. Considering the disparate findings of fact of the CIAC and the CA which led them to different conclusions, we
are constrained to revisit the factual circumstances surrounding this controversy.21
The Courts Ruling
A. The issue of negligence
Undeniably, the immediate cause of the fire was the hot work done by Angelino Sevillejo (Sevillejo) on the accommodation area of the vessel,
specifically on Deck A. As established before the CIAC
The fire broke out shortly after 10:25 and an alarm was raised (Exh. 1-Ms. Aini Ling,22 p. 20). Angelino Sevillejo tried to put out the fire by pouring
the contents of a five-liter drinking water container on it and as he did so, smoke came up from under Deck A. He got another container of water
which he also poured whence the smoke was coming. In the meantime, other workers in the immediate vicinity tried to fight the fire by using fire
extinguishers and buckets of water. But because the fire was inside the ceiling void, it was extremely difficult to contain or extinguish; and it spread
rapidly because it was not possible to direct water jets or the fire extinguishers into the space at the source. Fighting the fire was extremely difficult
because the life jackets and the construction materials of the Deck B ceiling were combustible and permitted the fire to spread within the ceiling void.
From there, the fire dropped into the Deck B accommodation areas at various locations, where there were combustible materials. Respondent points
to cans of paint and thinner, in addition to the plywood partitions and foam mattresses on deck B (Exh. 1-Mullen,23 pp. 7-8, 18; Exh. 2-Mullen, pp.
11-12).24
Pioneer contends that KCSI should be held liable because Sevillejo was its employee who, at the time the fire broke out, was doing his assigned task,
and that KCSI was solely responsible for all the hot works done on board the vessel. KCSI claims otherwise, stating that the hot work done was
beyond the scope of Sevillejos assigned tasks, the same not having been authorized under the Work Order25 dated January 26, 2000 or under the
Shiprepair Agreement. KCSI further posits that WG&A was itself negligent, through its crew, particularly Dr. Raymundo Joniga (Dr. Joniga), for
failing to remove the life jackets from the ceiling void, causing the immediate spread of the fire to the other areas of the ship.
We rule in favor of Pioneer.
First. The Shiprepair Agreement is clear that WG&A, as owner of M/V "Superferry 3," entered into a contract for the dry docking and repair of the
vessel under KCSIs Standard Conditions of Contract for Shiprepair, and its guidelines and regulations on safety and security. Thus, the CA erred
when it said that WG&A would renovate and reconstruct its own vessel merely using the dry docking facilities of KCSI.
Second. Pursuant to KCSIs rules and regulations on safety and security, only employees of KCSI may undertake hot works on the vessel while it was
in the graving dock in Lapu-Lapu City, Cebu. This is supported by Clause 3 of the Shiprepair Agreement requiring the prior written approval of
KCSIs Vice President for Operations before WG&A could effect any work performed by its own workers or sub-contractors. In the exercise of this
authority, KCSIs Vice-President for Operations, in the letter dated January 2, 1997, banned any hot works from being done except by KCSIs
workers, viz.:

8
The Yard will restrict all hot works in the engine room, accommodation cabin, and fuel oil tanks to be carried out only by shipyard workers x x x.26
WG&A recognized and complied with this restrictive directive such that, during the arrival conference on January 26, 2000, Dr. Joniga, the vessels
passage team leader in charge of its hotel department, specifically requested KCSI to finish the hot works started by the vessels contractors on the
passenger accommodation decks.27 This was corroborated by the statements of the vessels hotel manager Marcelo Rabe28 and the vessels quality
control officer Joselito Esteban.29 KCSI knew of the unfinished hot works in the passenger accommodation areas. Its safety supervisor Esteban
Cabalhug confirmed that KCSI was aware "that the owners of this vessel (M/V Superferry 3) had undertaken their own (hot) works prior to arrival
alongside (sic) on 26th January," and that no hot work permits could thereafter be issued to WG&As own workers because "this was not allowed for
the Superferry 3."30 This shows that Dr. Joniga had authority only to request the performance of hot works by KCSIs welders as needed in the repair
of the vessel while on dry dock.
Third. KCSI welders covered by the Work Order performed hot works on various areas of the M/V "Superferry 3," aside from its promenade deck.
This was a recognition of Dr. Jonigas authority to request the conduct of hot works even on the passenger accommodation decks, subject to the
provision of the January 26, 2000 Work Order that KCSI would supply welders for the promenade deck of the ship.
At the CIAC proceedings, it was adequately shown that between February 4 and 6, 2000, the welders of KCSI: (a) did the welding works on the
ceiling hangers in the lobby of Deck A; (b) did the welding and cutting works on the deck beam to access aircon ducts; and (c) did the cutting and
welding works on the protection bars at the tourist dining salon of Deck B,31 at a rate ofP150.00/welder/hour.32 In fact, Orcullo, Project
Superintendent of KCSI, admitted that "as early as February 3, 2000 (five days before the fire) [the Yard] had acknowledged Dr. Jonigas authority to
order such works or additional jobs."33
It is evident, therefore, that although the January 26, 2000 Work Order was a special order for the supply of KCSI welders to the promenade deck, it
was not restricted to the promenade deck only. The Work Order was only a special arrangement between KCSI and WG&A that meant additional cost
to the latter.
Fourth. At the time of the fire, Sevillejo was an employee of KCSI and was subject to the latters direct control and supervision.
Indeed, KCSI was the employer of Sevillejopaying his salaries; retaining the power and the right to discharge or substitute him with another
welder; providing him and the other welders with its equipment; giving him and the other welders marching orders to work on the vessel; and
monitoring and keeping track of his and the other welders activities on board, in view of the delicate nature of their work.34 Thus, as such employee,
aware of KCSIs Safety Regulations on Vessels Afloat/Dry, which specifically provides that "(n)o hotwork (welding/cutting works) shall be done on
board [the] vessel without [a] Safety Permit from KCSI Safety Section,"35 it was incumbent upon Sevillejo to obtain the required hot work safety
permit before starting the work he did, including that done on Deck A where the fire started.
Fifth. There was a lapse in KCSIs supervision of Sevillejos work at the time the fire broke out.
It was established that no hot works could be hidden from or remain undetected by KCSI because the welding cables and the gas hoses emanating
from the dock would give the hot works away. Moreover, KCSI had roving fire watchmen and safety assistants who were moving around the
vessel.36 This was confirmed by Restituto Rebaca (Rebaca), KCSIs Safety Supervisor, who actually spotted Sevillejo on Deck A, two hours before
the fire, doing his cutting work without a hot work permit, a fire watchman, or a fire extinguisher. KCSI contends that it did its duty when it
prohibited Sevillejo from continuing the hot work. However, it is noteworthy that, after purportedly scolding Sevillejo for working without a permit
and telling him to stop until the permit was acquired and the other safety measures were observed, Rebaca left without pulling Sevillejo out of the
work area or making sure that the latter did as he was told. Unfortunately for KCSI, Sevillejo reluctantly proceeded with his cutting of the bulkhead
door at Deck A after Rebaca left, even disregarding the 4-inch marking set, thus cutting the door level with the deck, until the fire broke out.
This conclusion on the failure of supervision by KCSI was absolutely supported by Dr. Eric Mullen of the Dr. J.H. Burgoyne & Partners
(International) Ltd., Singapore, KCSIs own fire expert, who observed that
4.3. The foregoing would be compounded by Angelino Sevillejo being an electric arc welder, not a cutter. The dangers of ignition occurring as a
result of the two processes are similar in that both electric arc welding and hot cutting produce heat at the work area and sparks and incendive
material that can travel some distance from the work area. Hence, the safety precautions that are expected to be applied by the supervisor are the
same for both types of work. However, the quantity and incendivity of the spray from the hot cutting are much greater than those of sparks from
electric arc welding, and it may well be that Angelino Sevillejo would not have a full appreciation of the dangers involved. This made it all the more
important that the supervisor, who should have had such an appreciation, ensured that the appropriate safety precautions were carried out.37
In this light, therefore, Sevillejo, being one of the specially trained welders specifically authorized by KCSI to do the hot works on M/V "Superferry
3" to the exclusion of other workers, failed to comply with the strict safety standards of KCSI, not only because he worked without the required
permit, fire watch, fire buckets, and extinguishers, but also because he failed to undertake other precautionary measures for preventing the fire. For
instance, he could have, at the very least, ensured that whatever combustible material may have been in the vicinity would be protected from the
sparks caused by the welding torch. He could have easily removed the life jackets from the ceiling void, as well as the foam mattresses, and covered
any holes where the sparks may enter.
Conjunctively, since Rebaca was already aware of the hazard, he should have taken all possible precautionary measures, including those above
mentioned, before allowing Sevillejo to continue with his hot work on Deck A. In addition to scolding Sevillejo, Rebaca merely checked that no fire
had started yet. Nothing more. Also, inasmuch as KCSI had the power to substitute Sevillejo with another electric arc welder, Rebaca should have
replaced him.
There is negligence when an act is done without exercising the competence that a reasonable person in the position of the actor would recognize as
necessary to prevent an unreasonable risk of harm to another. Those who undertake any work calling for special skills are required to exercise
reasonable care in what they do.38 Verily, there is an obligation all persons have to take due care which, under ordinary circumstances of the case, a
reasonable and prudent man would take. The omission of that care constitutes negligence. Generally, the degree of care required is graduated
according to the danger a person or property may be subjected to, arising from the activity that the actor pursues or the instrumentality that he uses.
The greater the danger, the greater the degree of care required. Extraordinary risk demands extraordinary care. Similarly, the more imminent the
danger, the higher degree of care warranted.39 In this aspect,
KCSI failed to exercise the necessary degree of caution and foresight called for by the circumstances.
We cannot subscribe to KCSIs position that WG&A, through Dr. Joniga, was negligent.
On the one hand, as discussed above, Dr. Joniga had authority to request the performance of hot works in the other areas of the vessel. These hot
works were deemed included in the January 26, 2000 Work Order and the Shiprepair Agreement. In the exercise of this authority, Dr. Joniga asked

9
Sevillejo to do the cutting of the bulkhead door near the staircase of Deck A. KCSI was aware of what Sevillejo was doing, but failed to supervise
him with the degree of care warranted by the attendant circumstances.
Neither can Dr. Joniga be faulted for not removing the life jackets from the ceiling void for two reasons (1) the life jackets were not even
contributory to the occurrence of the fire; and (2) it was not incumbent upon him to remove the same. It was shown during the hearings before the
CIAC that the removal of the life jackets would not have made much of a difference. The fire would still have occurred due to the presence of other
combustible materials in the area. This was the uniform conclusion of both WG&As40 and KCSIs41 fire experts. It was also proven during the
CIAC proceedings that KCSI did not see the life jackets as being in the way of the hot works, thus, making their removal from storage
unnecessary.42
These circumstances, taken collectively, yield the inevitable conclusion that Sevillejo was negligent in the performance of his assigned task. His
negligence was the proximate cause of the fire on board M/V "Superferry 3." As he was then definitely engaged in the performance of his assigned
tasks as an employee of KCSI, his negligence gave rise to the vicarious liability of his employer43 under Article 2180 of the Civil Code, which
provides
Art. 2180. The obligation imposed by article 2176 is demandable not only for ones own act or omission, but also for those of persons for whom one
is responsible.
xxxx
Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even
though the former are not engaged in any business or industry.
xxxx
The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father
of a family to prevent damage.
KCSI failed to prove that it exercised the necessary diligence incumbent upon it to rebut the legal presumption of its negligence in supervising
Sevillejo.44 Consequently, it is responsible for the damages caused by the negligent act of its employee, and its liability is primary and solidary. All
that is needed is proof that the employee has, by his negligence, caused damage to another in order to make the employer responsible for the tortuous
act of the former.45 From the foregoing disquisition, there is ample proof of the employees negligence.
B. The right of subrogation
Pioneer asseverates that there existed a total constructive loss so that it had to pay WG&A the full amount of the insurance coverage and, by
operation of law, it was entitled to be subrogated to the rights of WG&A to claim the amount of the loss. It further argues that the limitation of
liability clause found in the Shiprepair Agreement is null and void for being iniquitous and against public policy.
KCSI counters that a total constructive loss was not adequately proven by Pioneer, and that there is no proof of payment of the insurance proceeds.
KCSI insists on the validity of the limited-liability clause up to P50,000,000.00, because WG&A acceded to the provision when it executed the
Shiprepair Agreement. KCSI also claims that the salvage value of the vessel should be deducted from whatever amount it will be made to pay to
Pioneer.
We find in favor of Pioneer, subject to the claim of KCSI as to the salvage value of M/V "Superferry 3."
In marine insurance, a constructive total loss occurs under any of the conditions set forth in Section 139 of the Insurance Code, which provides
Sec. 139. A person insured by a contract of marine insurance may abandon the thing insured, or any particular portion hereof separately valued by the
policy, or otherwise separately insured, and recover for a total loss thereof, when the cause of the loss is a peril insured against:
(a) If more than three-fourths thereof in value is actually lost, or would have to be expended to recover it from the peril;
(b) If it is injured to such an extent as to reduce its value more than three-fourths; x x x.
It appears, however, that in the execution of the insurance policies over M/V "Superferry 3," WG&A and Pioneer incorporated by reference the
American Institute Hull Clauses 2/6/77, the Total Loss Provision of which reads
Total Loss
In ascertaining whether the Vessel is a constructive Total Loss the Agreed Value shall be taken as the repaired value and nothing in respect of the
damaged or break-up value of the Vessel or wreck shall be taken into account.
There shall be no recovery for a constructive Total Loss hereunder unless the expense of recovering and repairing the Vessel would exceed the
Agreed Value in policies on Hull and Machinery. In making this determination, only expenses incurred or to be incurred by reason of a single
accident or a sequence of damages arising from the same accident shall be taken into account, but expenses incurred prior to tender of abandonment
shall not be considered if such are to be claimed separately under the Sue and Labor clause. x x x.
In the course of the arbitration proceedings, Pioneer adduced in evidence the estimates made by three (3) disinterested and qualified shipyards for the
cost of the repair of the vessel, specifically: (a)P296,256,717.00, based on the Philippine currency equivalent of the quotation dated April 17, 2000
turned in by Tsuneishi Heavy Industries (Cebu) Inc.; (b) P309,780,384.15, based on the Philippine currency equivalent of the quotation of
Sembawang Shipyard Pte. Ltd., Singapore; and (c)P301,839,974.00, based on the Philippine currency equivalent of the quotation of Singapore
Technologies Marine Ltd. All the estimates showed that the repair expense would exceedP270,000,000.00, the amount equivalent to of the vessels
insured value of P360,000,000.00. Thus, WG&A opted to abandon M/V "Superferry 3" and claimed from Pioneer the full amount of the policies.
Pioneer paid WG&As claim, and now demands from KCSI the full amount ofP360,000,000.00, by virtue of subrogation.1avvphi1
KCSI denies the liability because, aside from its claim that it cannot be held culpable for negligence resulting in the destructive fire, there was no
constructive total loss, as the amount of damage was only US$3,800,000.00 or P170,611,260.00, the amount of repair expense quoted by Simpson,
Spence & Young.
In the face of this apparent conflict, we hold that Section 139 of the Insurance Code should govern, because (1) Philippine law is deemed
incorporated in every locally executed contract; and (2) the marine insurance policies in question expressly provided the following:
I M PO R TAN T
This insurance is subject to English jurisdiction, except in the event that loss or losses are payable in the Philippines, in which case if the said laws
and customs of England shall be in conflict with the laws of the Republic of the Philippines, then the laws of the Republic of the Philippines shall
govern.(Underscoring supplied.)
The CA held that Section 139 of the Insurance Code is merely permissive on account of the word "may" in the provision. This is incorrect. Properly
considered, the word "may" in the provision is intended to grant the insured (WG&A) the option or discretion to choose the abandonment of the thing

10
insured (M/V "Superferry 3"), or any particular portion thereof separately valued by the policy, or otherwise separately insured, and recover for a
total loss when the cause of the loss is a peril insured against. This option or discretion is expressed as a right in Section 131 of the same Code, to wit:
Sec. 131. A constructive total loss is one which gives to a person insured a right to abandon under Section one hundred thirty-nine.
It cannot be denied that M/V "Superferry 3" suffered widespread damage from the fire that occurred on February 8, 2000, a covered peril under the
marine insurance policies obtained by WG&A from Pioneer. The estimates given by the three disinterested and qualified shipyards show that the
damage to the ship would exceed P270,000,000.00, or of the total value of the policies P360,000,000.00. These estimates constituted credible and
acceptable proof of the extent of the damage sustained by the vessel. It is significant that these estimates were confirmed by the Adjustment Report
dated June 5, 2000 submitted by Richards Hogg Lindley (Phils.), Inc., the average adjuster that Pioneer had enlisted to verify and confirm the extent
of the damage. The Adjustment Report verified and confirmed that the damage to the vessel amounted to a constructive total loss and that the claim
for P360,000,000.00 under the policies was compensable.46 It is also noteworthy that KCSI did not cross-examine Henson Lim, Director of Richards
Hogg, whose affidavit-direct testimony submitted to the CIAC confirmed that the vessel was a constructive total loss.
Considering the extent of the damage, WG&A opted to abandon the ship and claimed the value of its policies. Pioneer, finding the claim
compensable, paid the claim, with WG&A issuing a Loss and Subrogation Receipt evidencing receipt of the payment of the insurance proceeds from
Pioneer. On this note, we find as unacceptable the claim of KCSI that there was no ample proof of payment simply because the person who signed
the Receipt appeared to be an employee of Aboitiz Shipping Corporation.47 The Loss and Subrogation Receipt issued by WG&A to Pioneer is the
best evidence of payment of the insurance proceeds to the former, and no controverting evidence was presented by KCSI to rebut the presumed
authority of the signatory to receive such payment.
On the matter of subrogation, Article 2207 of the Civil Code provides
Art. 2207. If the plaintiffs 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.
Subrogation is the substitution of one person by another with reference to a lawful claim or right, so that he who is substituted succeeds to the rights
of the other in relation to a debt or claim, including its remedies or securities. The principle covers a situation wherein an insurer has paid a loss under
an insurance policy is entitled to all the rights and remedies belonging to the insured against a third party with respect to any loss covered by the
policy. It contemplates full substitution such that it places the party subrogated in the shoes of the creditor, and he may use all means that the creditor
could employ to enforce payment.48
We have held that payment by the insurer to the insured operates as an equitable assignment to the insurer of all the remedies that the insured may
have against the third party whose negligence or wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it grow out
of, any privity of contract. It accrues simply upon payment by the insurance company of the insurance claim. The doctrine of subrogation has its roots
in equity. It is designed to promote and to accomplish justice; and is the mode that equity adopts to compel the ultimate payment of a debt by one
who, in justice, equity, and good conscience, ought to pay.49
We cannot accept KCSIs insistence on upholding the validity Clause 20, which provides that the limit of its liability is only up to P50,000,000.00;
nor of Clause 22(a), that KCSI stands as a co-assured in the insurance policies, as found in the Shiprepair Agreement.
Clauses 20 and 22(a) of the Shiprepair Agreement are without factual and legal foundation. They are unfair and inequitable under the premises. It was
established during arbitration that WG&A did not voluntarily and expressly agree to these provisions. Engr. Elvin F. Bello, WG&As fleet manager,
testified that he did not sign the fine-print portion of the Shiprepair Agreement where Clauses 20 and 22(a) were found, because he did not want
WG&A to be bound by them. However, considering that it was only KCSI that had shipyard facilities large enough to accommodate the dry docking
and repair of big vessels owned by WG&A, such as M/V "Superferry 3," in Cebu, he had to sign the front portion of the Shiprepair Agreement;
otherwise, the vessel would not be accepted for dry docking.50
Indeed, the assailed clauses amount to a contract of adhesion imposed on WG&A on a "take-it-or-leave-it" basis. A contract of adhesion is so-called
because its terms are prepared by only one party, while the other party merely affixes his signature signifying his adhesion thereto. Although not
invalid, per se, a contract of adhesion is void when the weaker party is imposed upon in dealing with the dominant bargaining party, and its option is
reduced to the alternative of "taking it or leaving it," completely depriving such party of the opportunity to bargain on equal footing.51
Clause 20 is also a void and ineffectual waiver of the right of WG&A to be compensated for the full insured value of the vessel or, at the very least,
for its actual market value. There was clearly no intention on the part of WG&A to relinquish such right. It is an elementary rule that a waiver must
be positively proved, since a waiver by implication is not normally countenanced. The norm is that a waiver must not only be voluntary, but must
have been made knowingly, intelligently, and with sufficient awareness of the relevant circumstances and likely consequences. There must be
persuasive evidence to show an actual intention to relinquish the right.52 This has not been demonstrated in this case.
Likewise, Clause 20 is a stipulation that may be considered contrary to public policy. To allow KCSI to limit its liability to only P50,000,000.00,
notwithstanding the fact that there was a constructive total loss in the amount of P360,000,000.00, would sanction the exercise of a degree of
diligence short of what is ordinarily required. It would not be difficult for a negligent party to escape liability by the simple expedient of paying an
amount very much lower than the actual damage or loss sustained by the other.53
Along the same vein, Clause 22(a) cannot be upheld. The intention of the parties to make each other a co-assured under an insurance policy is to be
gleaned principally from the insurance contract or policy itself and not from any other contract or agreement, because the insurance policy
denominates the assured and the beneficiaries of the insurance contract. Undeniably, the hull and machinery insurance procured by WG&A from
Pioneer named only the former as the assured. There was no manifest intention on the part of WG&A to constitute KCSI as a co-assured under the
policies. To have deemed KCSI as a co-assured under the policies would have had the effect of nullifying any claim of WG&A from Pioneer for any
loss or damage caused by the negligence of KCSI. No ship owner would agree to make a ship repairer a co-assured under such insurance policy.
Otherwise, any claim for loss or damage under the policy would be rendered nugatory. WG&A could not have intended such a result.54
Nevertheless, we concur with the position of KCSI that the salvage value of the damaged M/V "Superferry 3" should be taken into account in the
grant of any award. It was proven before the CIAC that the machinery and the hull of the vessel were separately sold for P25,290,000.00 (or
US$468,333.33) and US$363,289.50, respectively. WG&As claim for the upkeep of the wreck until the same were sold amounts to P8,521,737.75
(or US$157,809.96), to be deducted from the proceeds of the sale of the machinery and the hull, for a net recovery of US$673,812.87, or equivalent
to P30,252,648.09, at P44.8977/$1, the prevailing exchange rate when the Request for Arbitration was filed. Not considering this salvage value in the
award would amount to unjust enrichment on the part of Pioneer.

11
C. On the imposition of interest
Pursuant to our ruling in Eastern Shipping Lines, Inc. v. Court of Appeals,55 the award in favor of Pioneer in the amount of P350,146,786.89 should
earn interest at 6% per annum from the filing of the case until the award becomes final and executory. Thereafter, the rate of interest shall be 12% per
annum from the date the award becomes final and executory until its full satisfaction.
D. On the payment for the cost of arbitration
It is only fitting that both parties should share in the burden of the cost of arbitration, on a pro rata basis. We find that Pioneer had a valid reason to
institute a suit against KCSI, as it believed that it was entitled to claim reimbursement of the amount it paid to WG&A. However, we disagree with
Pioneer that only KCSI should shoulder the arbitration costs. KCSI cannot be faulted for defending itself for perceived wrongful acts and conditions.
Otherwise, we would be putting a price on the right to litigate on the part of Pioneer.
WHEREFORE, the Petition of Pioneer Insurance and Surety Corporation in G.R. No. 180896-97 and the Petition of Keppel Cebu Shipyard, Inc. in
G.R. No. 180880-81 are PARTIALLY GRANTED and the Amended Decision dated December 20, 2007 of the Court of Appeals is MODIFIED.
Accordingly, KCSI is ordered to pay Pioneer the amount of P360,000,000.00 less P30,252,648.09, equivalent to the salvage value recovered by
Pioneer from M/V "Superferry 3," or the net total amount of P329,747,351.91, with six percent (6%) interest per annum reckoned from the time the
Request for Arbitration was filed until this Decision becomes final and executory, plus twelve percent (12%) interest per annum on the said amount
or any balance thereof from the finality of the Decision until the same will have been fully paid. The arbitration costs shall be borne by both parties
on a pro rata basis. Costs against KCSI.
SO ORDERED.

Digest: http://docslide.net/documents/keppel-eastern-case-digest-insurance-part1.html

G.R. No. 171636 April 7, 2009

NORMAN A. GAID, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
TINGA, J.:
Before the Court is a petition for review on certiorari 1 assailing the 12 July 2005 Decision2 of the Court of Appeals and its subsequent
Resolution3 denying petitioners motion for reconsideration.
Petitioner Norman A. Gaid was charged with the crime of reckless imprudence resulting in homicide in an information which reads as follow:
That on or about 12:00 high noon of October 25, 2001, infront of the Laguindingan National High School, Poblacion, Laguindingan, Misamis
Oriental, Philippines and within the jurisdiction of this Honorable Court, the said accused mentioned above while driving a passengers jeepney color
white bearing plate no. KVG-771 owned by barangay captain Levy Etom has no precautionary measure to preempt the accident, did then and there
willfully, unlawfully and feloniously ran [sic] over Michael Dayata resulting of [sic] his untimely death as pronounced by the attending physician of
Northern Mindanao Medical Center Hospital, Cagayan de Oro City.
CONTRARY TO LAW.4
Petitioner entered a not guilty plea. Thereafter, trial ensued.
The antecedent facts are undisputed.
At around 12:00 noon on 25 October 2001, petitioner was driving his passenger jeepney along a two-lane road where the Laguindingan National
High School is located toward the direction of Moog in Misamis Oriental. His jeepney was filled to seating capacity. 5 At the time several students
were coming out of the school premises.6Meanwhile, a fourteen year-old student, Michael Dayata (Dayata), was seen by eyewitness Artman Bongolto
(Bongolto) sitting near a store on the left side of the road. From where he was at the left side of the road, Dayata raised his left hand to flag down
petitioners jeepney7 which was traveling on the right lane of the road. 8 However, neither did petitioner nor the conductor, Dennis Mellalos
(Mellalos), saw anybody flagging down the jeepney to ride at that point. 9
The next thing Bongalto saw, Dayatas feet was pinned to the rear wheel of the jeepney, after which, he laid flat on the ground behind the
jeepney.10 Another prosecution witness, Usaffe Actub (Actub), who was also situated on the left side of the street but directly in front of the school
gate, heard "a strong impact coming from the jeep sounding as if the driver forced to accelerate in order to hurdle an obstacle." 11 Dayata was then
seen lying on the ground12 and caught in between the rear tires.13 Petitioner felt that the left rear tire of the jeepney had bounced and the vehicle tilted
to the right side.14
Mellalos heard a shout that a boy was run over, prompting him to jump off the jeepney to help the victim. Petitioner stopped and saw Mellalos
carrying the body of the victim.15 Mellalos loaded the victim on a motorcycle and brought him to the hospital. Dayata was first brought to the
Laguindingan Health Center, but it was closed. Mellalos then proceeded to the El Salvador Hospital. Upon advice of its doctors, however, Dayata
was brought to the Northern Mindanao Medical Center where he was pronounced dead on arrival. 16
Dr. Tammy Uy issued an autopsy report stating cranio-cerebral injuries as the cause of death. 17 She testified that the head injuries of Dayata could
have been caused by having run over by the jeepney. 18
The Municipal Circuit Trial Court (MCTC) of Laguindingan19 found petitioner guilty beyond reasonable doubt of the crime charged. The lower court
held petitioner negligent in his driving considering that the victim was dragged to a distance of 5.70 meters from the point of impact. He was also
scored for "not stopping his vehicle after noticing that the jeepneys left rear tire jolted causing the vehicle to tilt towards the right." 20 On appeal, the
Regional Trial Court (RTC)21 affirmed in toto the decision of the MCTC.
The Court of Appeals affirmed the trial courts judgment with modification in that it found petitioner guilty only of simple negligence resulting in
homicide.1avvphi1.zw+
The Court of Appeals exonerated petitioner from the charge of reckless imprudence resulting to homicide on the ground that he was not driving
recklessly at the time of the accident. However, the appellate court still found him to be negligent when he failed "to promptly stop his vehicle to
check what caused the sudden jotting of its rear tire." 22
In its 6 February 2006 Resolution, the Court of Appeals denied petitioners motion for reconsideration. 23
Hence, the instant petition.

12
Petitioner submits that the Court of Appeals erred in finding that "there is (sic) absolutely lack of precaution on the part of the petitioner when he
continued even after he had noticed that the left rear tire and the jeep tilted to its right side." 24 Petitioner stressed that he, in fact, stopped his jeep
when its left rear tire bounced and upon hearing that somebody had been ran over.
Moreover, petitioner asserts that the Court of Appeals committed a grave abuse of discretion in convicting him of the offense of simple negligence
resulting in homicide. Assuming arguendo that he failed to promptly stop his vehicle, petitioner maintains that no prudent man placed in the same
situation could have foreseen the vehicular accident or could have stopped his vehicle in time when its left rear tire bounced due to the following
reasons: (1) the victim was only a trespasser; (2) petitioners attention was focused on the road and the students outside the schools gate; and (3) the
jeepney was fully loaded with passengers and cargoes and it was impossible for the petitioner to promptly stop his vehicle. 25
The Office of the Solicitor-General (OSG) maintained that petitioner was negligent when he continued to run towards the direction of Moog,
Laguindingan, dragging the victim a few meters from the point of impact, despite hearing that a child had been run over. 26
The presence or absence of negligence on the part of petitioner is determined by the operative events leading to the death of Dayata which actually
comprised of two phases or stages. The first stage began when Dayata flagged down the jeepney while positioned on the left side of the road and
ended when he was run over by the jeepney. The second stage covered the span between the moment immediately after the victim was run over and
the point when petitioner put the jeepney to a halt.
During the first stage, petitioner was not shown to be negligent.
Reckless imprudence consists of voluntarily doing or failing to do, without malice, an act from which material damage results by reason of an
inexcusable lack of precaution on the part of the person performing or failing to perform such act. 27
In Manzanares v. People,28 this Court convicted petitioner of the crime of reckless imprudence resulting in multiple homicide and serious physical
injuries when he was found driving the Isuzu truck very fast before it smashed into a jeepney. 29 Likewise, in Pangonorom v. People,30 a public utility
driver, who was driving very fast, failed to slow down and hit a swerving car. He was found negligent by this Court.
In the instant case, petitioner was driving slowly at the time of the accident, as testified to by two eyewitnesses. Prosecution witness Actub affirmed
this fact on cross-examination, thus:
ATTY. MACUA:
(to the witness)
Q Mr. Witness, when the passenger jeepney passed by the gate of the Laguindingan National High School, is it running slowly, am I
correct?
A Yes, he was running slowly.31
The slow pace of the jeepney was seconded by Mellalos:
Q You testified that you heard somebody outside from the vehicle shouting that a boy was ran over, am I correct?
A Yes, Sir.
Q Now, before you heard that shouting, did you observe any motion from the vehicle?
A The jeep was moving slowly and I noticed that there was something that [sic] the jeep a little bit bounced up as if a hump thats the time I
heard a shout from outside.32
Petitioner stated that he was driving at no more than 15 kilometers per hour. 33
It appears from the evidence Dayata came from the left side of the street. Petitioner, who was driving the jeepney on the right lane, did not see the
victim flag him down. He also failed to see him go near the jeepney at the left side. Understandably, petitioner was focused on the road ahead. In
Dayatas haste to board the jeep which was then running, his feet somehow got pinned to the left rear tire, as narrated by Bongolto. Actub only saw
Dayata after he heard a strong impact coming from the jeep.
With the foregoing facts, petitioner can not be held liable during the first stage. Specifically, he cannot be held liable for reckless imprudence
resulting in homicide, as found by the trial court. The proximate cause of the accident and the death of the victim was definitely his own negligence
in trying to catch up with the moving jeepney to get a ride.
In the instant case, petitioner had exercised extreme precaution as he drove slowly upon reaching the vicinity of the school. He cannot be faulted for
not having seen the victim who came from behind on the left side.
However, the Court of Appeals found petitioner guilty of simple negligence resulting in homicide for failing to stop driving at the time when he
noticed the bouncing of his vehicle. Verily, the appellate court was referring to the second stage of the incident.
Negligence has been 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. 34
The elements of simple negligence: are (1) that there is lack of precaution on the part of the offender; and (2) that the damage impending to be caused
is not immediate or the danger is not clearly manifest. 35
The standard test in determining whether a person is negligent in doing an act whereby injury or damage results to the person or property of another
is this: could a prudent man, in the position of the person to whom negligence is attributed, foresee harm to the person injured as a reasonable
consequence of the course actually pursued? If so, the law imposes a duty on the actor to refrain from that course or to take precautions to guard
against its mischievous results, and the failure to do so constitutes negligence. Reasonable foresight of harm, followed by the ignoring of the
admonition born of this provision, is always necessary before negligence can be held to exist. 36
In Philippine National Construction Corporation v. Court of Appeals, 37 the petitioner was the franchisee that operates and maintains the toll facilities
in the North and South Luzon Toll Expressways. It failed to exercise the requisite diligence in maintaining the NLEX safe for motorists. The lighted
cans and lane dividers on the highway were removed even as flattened sugarcanes lay scattered on the ground. The highway was still wet from the
juice and sap of the flattened sugarcanes. The petitioner should have foreseen that the wet condition of the highway would endanger motorists
passing by at night or in the wee hours of the morning.38 Consequently, it was held liable for damages.
In an American case, Hernandez v. Lukas, 39 a motorist traveling within the speed limit and did all was possible to avoid striking a child who was then
six years old only. The place of the incident was a neighborhood where children were playing in the parkways on prior occasions. The court ruled that
it must be still proven that the driver did not exercise due care. The evidence showed that the driver was proceeding in lawful manner within the
speed limit when the child ran into the street and was struck by the drivers vehicle. Clearly, this was an emergency situation thrust upon the driver
too suddenly to avoid.

13
In this case, the courts below zeroed in on the fact that petitioner did not stop the jeepney when he felt the bouncing of his vehicle, a circumstance
which the appellate court equates with negligence. Petitioner contends that he did not immediately stop because he did not see anybody go near his
vehicle at the time of the incident.40
Assuming arguendo that petitioner had been negligent, it must be shown that his negligence was the proximate cause of the accident. Proximate cause
is defined as that which, in the natural and continuous sequence, unbroken by any efficient, intervening cause, produces the injury, and without which
the result would not have
occurred.41 In order to establish a motorist's liability for the negligent operation of a vehicle, it must be shown that there was a direct causal
connection between such negligence and the injuries or damages complained of. Thus, negligence that is not a substantial contributing factor in the
causation of the accident is not the proximate cause of an injury. 42
The head injuries sustained by Dayata at the point of impact proved to be the immediate cause of his death, as indicated in the post-mortem
findings.43 His skull was crushed as a result of the accident. Had petitioner immediately stopped the jeepney, it would still not have saved the life of
the victim as the injuries he suffered were fatal.
The evidence on record do not show that the jeepney dragged the victim after he was hit and run over by the jeepney. Quite the contrary, the evidence
discloses that the victim was not dragged at all. In fact, it is the other way around. Bongolto narrated that after the impact, he saw Dayata left behind
the jeepney.44 Actub saw Dayata in a prone position and bleeding within seconds after impact. 45 Right after the impact, Mellalos immediately jumped
out of the jeepney and saw the victim lying on the ground. 46 The distance of 5.70 meters is the length of space between the spot where the victim fell
to the ground and the spot where the jeepney stopped as observed by the trial judge during the ocular inspection at the scene of the accident. 47
Moreover, mere suspicions and speculations that the victim could have lived had petitioner stopped can never be the basis of a conviction in a
criminal case.48 The Court must be satisfied that the guilt of the accused had been proven beyond reasonable doubt. 49 Conviction must rest on nothing
less than a moral certainty of the guilt of the accused. The overriding consideration is not whether the court doubts the innocence of the accused but
whether it entertains doubt as to his guilt.50
Clearly then, the prosecution was not able to establish that the proximate cause of the victims death was petitioners alleged negligence, if at all,
even during the second stage of the incident.
If at all again, petitioners failure to render assistance to the victim would constitute abandonment of ones victim punishable under Article 275 of the
Revised Penal Code. However, the omission is not covered by the information. Thus, to hold petitioner criminally liable under the provision would be
tantamount to a denial of due process.
Therefore, petitioner must be acquitted at least on reasonable doubt. The award of damages must also be deleted pursuant to Article 2179 of the Civil
Code which states that when the plaintiffs own negligence was the immediate and proximate cause of his injury, he cannot recover damages.
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals dated 12 July 2005 is REVERSED and SET ASIDE. Petitioner
Norman A. Gaid is ACQUITTED of the crime of Simple Negligence Resulting in Homicide as found by the Court of Appeals and of the charge of
Reckless Imprudence Resulting in Homicide in Criminal Case No. 1937 of the MCTC of Laguindingan, Misamis Oriental.
SO ORDERED.

G.R. No. 162987 May 21, 2009

SOFIA M. GUILLANG, represented by SUSAN GUILLANG-CABATBAT, REYNALDO, GERARDO, BIENVENIDO, DAWNA, and
NELLIE, all surnamed GUILLANG, GENARO GUILLANG, JOSE DIGNADICE, and ALVIN LLANILLO, Petitioners,
vs.
RODOLFO BEDANIA and RODOLFO DE SILVA, Respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the 3 June 2003 Decision2 and the 23 March 2004 Resolution3 of the Court of Appeals in CA-G.R. CV No. 69289.
The 3 June 2003 Decision set aside the 5 December 2000 Decision 4 of the Regional Trial Court, Branch 30, Manila (trial court). The 23 March 2004
Resolution denied the motion for reconsideration.
The Facts
On 25 October 1994, at about 5:45 in the afternoon, petitioner Genaro M. Guillang (Genaro) was driving his brand new Toyota Corolla GLI sedan
with conduction sticker no. 54-DFT (car) along Emilio Aguinaldo Highway (highway) in Cavite. Genaro, Antero Guillang (Antero), Felipe Jurilla,
Jose Dignadice (Dignadice), and Alvin Llanillo (Llanillo) had all just left from Golden City, Dasmarias, Cavite, and were on their way to Manila. At
the other side of the highway, respondent Rodolfo A. Bedania (Bedania) was driving a ten-wheeler Isuzu cargo truck with plate no. CAC-923 (truck)
towards Tagaytay City. The truck was owned by respondent Rodolfo de Silva (de Silva).
Along the highway and the road leading to the Orchard Golf Course, Bedania negotiated a U-turn. When the truck entered the opposite lane of the
highway, Genaros car hit the right portion of the truck. The truck dragged Genaros car some five meters to the right of the road.
As a consequence, all the passengers of the car were rushed to the De La Salle University Medical Center in Dasmarias, Cavite for treatment.
Because of severe injuries, Antero was later transferred to the Philippine General Hospital. However, on 3 November 1994, Antero died due to the
injuries he sustained from the collision. The car was a total wreck while the truck sustained minor damage.
On 24 April 1995, petitioners Genaro, Llanillo, Dignadice, and the heirs of Antero 5 instituted a complaint for damages based on quasi-delict against
respondents Bedania and de Silva.
On 5 December 2000, the trial court rendered a decision in favor of petitioners. The trial court found Bedania grossly negligent for recklessly
maneuvering the truck by making a sudden U-turn in the highway without due regard to traffic rules and the safety of other motorists. The trial court
also declared de Silva grossly negligent in the selection and supervision of his driver, Bedania. The dispositive portion of the decision provides:
WHEREFORE, judgment is hereby rendered ordering defendants Rodolfo A. Bedania and Rodolfo de Silva, jointly and severally, to pay plaintiffs, as
follows:
1. The sum of P508,566.03 representing the damage/repair costs of the Toyota to plaintiff Genaro M. Guillang.
2. The sum of P50,000.00 for the death of Antero Guillang plus P185,000.00 for his burial expenses, to the heirs of Antero Guillang.
3. For hospital and medical expenses as reflected in Exhibits E, E-1 to E-30 to plaintiffs Genaro M. Guillang, Jose Dignadice and Alvin
Llanillo.

14
 4. The sum of P50,000.00 as moral damages for the heirs of the deceased Antero Guillang.
5. The sum of P50,000.00 as moral damages each to plaintiffs Jose Dignadice, Alvin Llanillo and Genaro Guillang.
6. The sum of P50,000.00 as exemplary damages.
7. The sum of P100,000.00 as and for attorneys fess.
8. The costs of the suit.
SO ORDERED.6
Respondents appealed to the Court of Appeals.
On 3 June 2003, the Court of Appeals rendered its decision in favor of respondents. The dispositive portion of the decision provides:
IN VIEW OF ALL THE FOREGOING, the appealed decision is REVERSED and SET ASIDE. The complaint of the herein appellees in Civil Case
No. 95-73666 is DISMISSED, for lack of merit. The appellants counterclaims in the instant case are likewise DISMISSED. No pronouncement as to
cost.
SO ORDERED.7
Petitioners filed a motion for reconsideration. On 23 March 2004, the Court of Appeals denied the motion.
Hence, this petition.
The Ruling of the Regional Trial Court
According to the trial court, there is a presumption that a person driving a motor vehicle has been negligent if at the time of the mishap, he was
violating any traffic regulation.8 In this case, the trial court found that the Traffic Accident Investigation Report (report), 9 corroborated by the
testimonies of the witnesses, showed that the truck committed a traffic violation by executing a U-turn without signal lights. The trial court also
declared that Bedania violated Sections 45(b), 10 48,11 and 5412 of Republic Act No. 413613 when he executed the sudden U-turn. The trial court added
that Bedania violated another traffic rule when he abandoned the victims after the collision. 14The trial court concluded that Bedania was grossly
negligent in his driving and held him liable for damages.
Moreover, the trial court found that Bedania did not make the U-turn at an intersection. According to the trial court, vehicles trying to maneuver to
change directions must seek an intersection where it is safer to maneuver and not recklessly make a U-turn in a highway. The trial court said Bedania
should have observed extreme caution in making a U-turn because it was unexpected that a long cargo truck would execute a U-turn along the
highway.
The trial court also said that Bedanias gross negligence raised the legal presumption that de Silva, as Bedanias employer, was negligent in the
selection and supervision of his employees. The trial court said that, under Articles 2176 15 and 218016 of the Civil Code, de Silvas liability was based
on culpa aquiliana which holds the employer primarily liable for tortious acts of his employees, subject to the defense that he exercised all the
diligence of a good father of a family in the selection and supervision of his employees. The trial court ruled that de Silva failed to prove this defense
and, consequently, held him liable for damages.
The Ruling of the Court of Appeals
The Court of Appeals reversed the trial courts decision and said that the trial court overlooked substantial facts and circumstances which, if properly
considered, would justify a different conclusion and alter the results of the case.
The Court of Appeals dismissed the testimonies of the witnesses and declared that they were "contrary to human observation, knowledge and
experience." The Court of Appeals also said that the following were the physical evidences in the case:
1. It was not yet dark when the incident transpired;
2. The four-lane highway the appellees were cruising on was wide, straight, dry, relatively plain and with no obstructions to the drivers
vision;
3. The point of impact of the collision is on the lane where the car was cruising and the car hit the gas tank of the truck located at its right
middle portion, which indicates that the truck had already properly positioned itself and had already executed the U-turn before the impact
occurred;
4. Genaro Guillang was not able to stop the car in time and the cars front portion was totally wrecked. This negates appellees contention
that they were traveling at a moderate speed; and
5. The sheer size of the truck makes it improbable for the said vehicle to negotiate a U-turn at a sudden and fast speed as appellees
vigorously suggest without toppling over on its side.17 (Citations omitted)
The Court of Appeals concluded that the collision was caused by Genaros negligence. The Court of Appeals declared that the truck arrived at the
intersection way ahead of the car and had already executed the U-turn when the car, traveling at a fast speed, hit the trucks side. The Court of
Appeals added that considering the time and the favorable visibility of the road and the road conditions, Genaro, if he was alert, had ample time to
react to the changing conditions of the road. The Court of Appeals found no reason for Genaro not to be prudent because he was approaching an
intersection and there was a great possibility that vehicles would be traversing the intersection either going to or from Orchard Golf Course. The
Court of Appeals said Genaro should have slowed down upon reaching the intersection. The Court of Appeals concluded that Genaros failure to
observe the necessary precautions was the proximate cause of Anteros death and the injuries of the petitioners.
The Court of Appeals also relied on the testimony of Police Traffic Investigator Efren Videna (Videna) that the car was running at a fast speed and
overtook another vehicle just before the collision occurred. 18 The Court of Appeals concluded that Genaro did not see the truck as the other vehicle
temporarily blocked his view of the intersection. The Court of Appeals also gave weight to Videnas testimony that it was normal for a ten-wheeler
truck to make a U-turn on that part of the highway because the entrance to Orchard Golf Course was spacious. 19
The Issues
Petitioners raise the following issues:
1. Did the Court of Appeals decide a question of substance in this case in a way probably not in accord with law or with the applicable
decisions of the Honorable Supreme Court?
2. Did the Court of Appeals depart from the accepted and usual course of judicial proceedings particularly when it revised, and recast the
findings of facts of the trial court pertaining to credibility of witnesses of which the trial court was at the vantage point to evaluate?
3. Did the Court of Appeals act with grave abuse of discretion amounting to lack of jurisdiction when it rendered the palpably questionable
Court of Appeals Decision that tampered with the findings of fact of the trial court for no justifiable reason?
4. Is the Court of Appeals judgment and resolution reversing the decision of the trial court supported by the evidence and the law and
jurisprudence applicable?20

15
The issue in this case is who is liable for the damages suffered by petitioners. The trial court held Bedania and de Silva, as Bedanias employer, liable
because the proximate cause of the collision was the sudden U-turn executed by Bedania without any signal lights. On the other hand, the Court of
Appeals reversed the trial courts decision and held Genaro liable because the proximate cause of the collision was Genaros failure to stop the car
despite seeing that Bedania was making a U-turn.
The Ruling of the Court
The principle is well-established that this Court is not a trier of facts. Therefore, in an appeal by certiorari under Rule 45 of the Rules of Court, only
questions of law may be raised. The resolution of factual issues is the function of the lower courts whose findings on these matters are received with
respect and are, as a rule, binding on this Court.21
However, this rule is subject to certain exceptions. One of these is when the findings of the appellate court are contrary to those of the trial
court.22 Findings of fact of the trial court and the Court of Appeals may also be set aside when such findings are not supported by the evidence or
where the lower courts conclusions are based on a misapprehension of facts. 23 Such is the situation in this case and we shall re-examine the facts and
evidence presented before the lower courts.
Article 2176 of the Civil Code provides that 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 relations between the parties, is called a quasi-delict. To sustain a
claim based on quasi-delict, the following requisites must concur: (a) damage suffered by the plaintiff; (b) fault or negligence of defendant; and (c)
connection of cause and effect between the fault or negligence of defendant and the damage incurred by the plaintiff. 24
There is no dispute that petitioners suffered damages because of the collision. However, the issues on negligence and proximate cause are disputed.
On the Presumption of Negligence and Proximate Cause
Negligence is defined as 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. In Picart v. Smith,25 we held that the test of negligence is whether the
defendant in doing the alleged negligent act used that reasonable care and caution which an ordinary person would have used in the same situation.
The conclusion of the Court of Appeals that Genaro was negligent is not supported by the evidence on record. In ruling that Genaro was negligent,
the Court of Appeals gave weight and credence to Videnas testimony. However, we find that Videnas testimony was inconsistent with the police
records and report that he made on the day of the collision. First, Videna testified that the car was running fast and overtook another vehicle that
already gave way to the truck.26 But this was not indicated in either the report or the police records. Moreover, if the car was speeding, there should
have been skid marks on the road when Genaro stepped on the brakes to avoid the collision. But the sketch of the accident showed no skid marks
made by the car.27 Second, Videna testified that the petitioners came from a drinking spree because he was able to smell liquor. 28 But in the
report,29 Videna indicated that the condition of Genaro was "normal." Videna did not indicate in the report that Genaro "had been drinking liquor" or
that Genaro "was obviously drunk." Third, Videna testified that when he arrived at the scene, Bedania was inside his truck. 30 This contradicts the
police records where Videna stated that after the collision Bedania escaped and abandoned the victims. 31 The police records also showed that Bedania
was arrested by the police at his barracks in Anabu, Imus, Cavite and was turned over to the police only on 26 October 1994. 32
Under Article 2185 of the Civil Code, unless there is proof to the contrary, a person driving a vehicle is presumed negligent if at the time of the
mishap, he was violating any traffic regulation.
In this case, the report33 showed that the truck, while making the U-turn, failed to signal, a violation of traffic rules. The police records also stated
that, after the collision, Bedania escaped and abandoned the petitioners and his truck. 34 This is another violation of a traffic regulation. 35 Therefore,
the presumption arises that Bedania was negligent at the time of the mishap.
The evidence presented in this case also does not support the conclusion of the Court of Appeals that the truck had already executed the U-turn before
the impact occurred. If the truck had fully made the U-turn, it should have been hit on its rear. 36 If the truck had already negotiated even half of the
turn and is almost on the other side of the highway, then the truck should have been hit in the middle portion of the trailer or cargo compartment. But
the evidence clearly shows, and the Court of Appeals even declared, that the car hit the trucks gas tank, located at the trucks right middle portion,
which disproves the conclusion of the Court of Appeals that the truck had already executed the U-turn when it was hit by the car.
Moreover, the Court of Appeals said that the point of impact was on the lane where the car was cruising. Therefore, the car had every right to be on
that road and the car had the right of way over the truck that was making a U-turn. Clearly, the truck encroached upon the cars lane when it suddenly
made the U-turn.
The Court of Appeals also concluded that Bedania made the U-turn at an intersection. Again, this is not supported by the evidence on record. The
police sketch37 does not indicate an intersection and only shows that there was a road leading to the Orchard Golf Course near the place of the
collision. Furthermore, U-turns are generally not advisable particularly on major streets. 38 Contrary to Videnas testimony, it is not normal for a truck
to make a U-turn on a highway. We agree with the trial court that if Bedania wanted to change direction, he should seek an intersection where it is
safer to maneuver the truck. Bedania should have also turned on his signal lights and made sure that the highway was clear of vehicles from the
opposite direction before executing the U-turn.
The finding of the Court of Appeals that it was not yet dark when the collision occurred is also not supported by the evidence on record. The report
stated that the daylight condition at the time of the collision was "darkness." 39
Contrary to the conclusion of the Court of Appeals, the sheer size of the truck does not make it improbable for the truck to execute a sudden U-turn.
The trial courts decision did not state that the truck was traveling at a fast speed when it made the U-turn. The trial court said the truck made a
"sudden" U-turn, meaning the U-turn was made unexpectedly and with no warning, as shown by the fact that the trucks signal lights were not turned
on.
Clearly, Bedanias negligence was the proximate cause of the collision which claimed the life of Antero and injured the petitioners. Proximate cause
is that which, in the natural and continuous sequence, unbroken by any efficient, intervening cause, produces the injury, and without which the result
would not have occurred.40 The cause of the collision is traceable to the negligent act of Bedania for if the U-turn was executed with the proper
precaution, the mishap in all probability would not have happened. The sudden U-turn of the truck without signal lights posed a serious risk to
oncoming motorists. Bedania failed to prevent or minimize that risk. The trucks sudden U-turn triggered a series of events that led to the collision
and, ultimately, to the death of Antero and the injuries of petitioners.
We agree with the trial court that de Silva, as Bedanias employer, is also liable for the damages suffered by petitioners. De Silva failed to prove that
he exercised all the diligence of a good father of a family in the selection and supervision of his employees.
On the Award of Damages and Attorneys Fees

16
According to prevailing jurisprudence, civil indemnity for death caused by a quasi-delict is pegged at P50,000.41Moral damages in the amount
of P50,000 is also awarded to the heirs of the deceased taking into consideration the pain and anguish they suffered. 42 Bienvenido Guillang
(Bienvenido), Anteros son, testified that Sofia, Anteros wife and his mother, became depressed after Anteros death and that Sofia died a year
after.43 Bienvenido also testified on the pain and anguish their family suffered as a consequence of their fathers death. 44 We sustain the trial courts
award of P50,000 as indemnity for death and P50,000 as moral damages to the heirs of Antero.
As to funeral and burial expenses, the court can only award such amount as are supported by proper receipts. 45In this case, petitioners proved funeral
and burial expenses of P55,000 as evidenced by Receipt No. 1082,46P65,000 as evidenced by Receipt No. 114647 and P15,000 as evidenced by
Receipt No. 1064,48 all issued by the Manila South Cemetery Association, Inc., aggregating P135,000. We reduce the trial courts award of funeral
and burial expenses from P185,000 to P135,000.
As to hospitalization expenses, only substantiated and proven expenses, or those that appear to have been genuinely incurred in connection with the
hospitalization of the victims will be recognized in court. 49 In this case, the trial court did not specify the amount of hospitalization expenses to be
awarded to the petitioners. Since petitioners presented receipts for hospitalization expenses during the trial, we will determine the proper amounts to
be awarded to each of them. We award hospitalization expenses of P27,000.98 to the heirs of Antero,50P10,881.60 to Llanillo,51 P5,436.77 to
Dignadice,52 and P300 to Genaro53 because these are the amounts duly substantiated by receipts.
We affirm the trial courts award of P508,566.03 for the repair of the car. The Court notes that there is no dispute that Genaro was driving a brand
new Toyota Corolla GLI sedan and that, after the collision, the car was a total wreck. In this case, the repair order presented by Genaro is sufficient
proof of the damages sustained by the car.541avvphi1.zw+
Moral damages may be recovered in quasi-delicts causing physical injuries. 55 However, in accordance with prevailing jurisprudence, we reduce the
award of moral damages from P50,000 to P30,000 each to Llanillo, Dignadice, and Genaro since they only suffered physical injuries brought about
by the collision.56
In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence. 57 While the amount of 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. 58 In this case, Bedania was grossly negligent in suddenly making a U-turn in the highway
without signal lights. To serve as an example for the public good, we affirm the trial courts award of exemplary damages in the amount of P50,000.
Finally, we affirm the trial courts award of attorneys fees in the amount of P100,000. Under Article 2208 of the Civil Code, attorneys fees may be
recovered when, as in this case, exemplary damages are awarded.
WHEREFORE, we REVERSE the 3 June 2003 Decision and 23 March 2004 Resolution of the Court of Appeals in CA-G.R. CV No. 69289.
We REINSTATE with MODIFICATIONS the 5 December 2000 Decision of the Regional Trial Court, Branch 30, Manila. We ORDER Rodolfo
Bedania and Rodolfo de Silva, jointly and severally, to pay the following amounts:
1. Funeral and Burial Expenses of P135,000 to the heirs of Antero Guillang;
2. Hospitalization Expenses of P27,000.98 to the heirs of Antero Guillang, P10,881.60 to Alvin Llanillo,P5,436.77 to Jose Dignadice,
and P300 to Genaro Guillang; and
3. Moral damages of P30,000 each to Alvin Llanillo, Jose Dignadice, and Genaro Guillang.
SO ORDERED.

G.R. No. 157917 August 29, 2012

SPOUSES TEODORO1 and NANETTE PERENA, Petitioners,
vs.
SPOUSES TERESITA PHILIPPINE NICOLAS and L. ZARATE, NATIONAL RAILWAYS, and the COURT OF APPEALS Respondents.
DECISION
BERSAMIN, J.:
The operator of a. school bus service is a common carrier in the eyes of the law. He is bound to observe extraordinary diligence in the conduct of his
business. He is presumed to be negligent when death occurs to a passenger. His liability may include indemnity for loss of earning capacity even if
the deceased passenger may only be an unemployed high school student at the time of the accident.
The Case
By petition for review on certiorari, Spouses Teodoro and Nanette Perefia (Perefias) appeal the adverse decision promulgated on November 13,
2002, by which the Court of Appeals (CA) affirmed with modification the decision rendered on December 3, 1999 by the Regional Trial Court
(RTC), Branch 260, in Paraaque City that had decreed them jointly and severally liable with Philippine National Railways (PNR), their co-
defendant, to Spouses Nicolas and Teresita Zarate (Zarates) for the death of their 15-year old son, Aaron John L. Zarate (Aaron), then a high school
student of Don Bosco Technical Institute (Don Bosco).
Antecedents
The Pereas were engaged in the business of transporting students from their respective residences in Paraaque City to Don Bosco in Pasong Tamo,
Makati City, and back. In their business, the Pereas used a KIA Ceres Van (van) with Plate No. PYA 896, which had the capacity to transport 14
students at a time, two of whom would be seated in the front beside the driver, and the others in the rear, with six students on either side. They
employed Clemente Alfaro (Alfaro) as driver of the van.
In June 1996, the Zarates contracted the Pereas to transport Aaron to and from Don Bosco. On August 22, 1996, as on previous school days, the van
picked Aaron up around 6:00 a.m. from the Zarates residence. Aaron took his place on the left side of the van near the rear door. The van, with its
air-conditioning unit turned on and the stereo playing loudly, ultimately carried all the 14 student riders on their way to Don Bosco. Considering that
the students were due at Don Bosco by 7:15 a.m., and that they were already running late because of the heavy vehicular traffic on the South
Superhighway, Alfaro took the van to an alternate route at about 6:45 a.m. by traversing the narrow path underneath the Magallanes Interchange that
was then commonly used by Makati-bound vehicles as a short cut into Makati. At the time, the narrow path was marked by piles of construction
materials and parked passenger jeepneys, and the railroad crossing in the narrow path had no railroad warning signs, or watchmen, or other
responsible persons manning the crossing. In fact, the bamboo barandilla was up, leaving the railroad crossing open to traversing motorists.
At about the time the van was to traverse the railroad crossing, PNR Commuter No. 302 (train), operated by Jhonny Alano (Alano), was in the
vicinity of the Magallanes Interchange travelling northbound. As the train neared the railroad crossing, Alfaro drove the van eastward across the
railroad tracks, closely tailing a large passenger bus. His view of the oncoming train was blocked because he overtook the passenger bus on its left

17
side. The train blew its horn to warn motorists of its approach. When the train was about 50 meters away from the passenger bus and the van, Alano
applied the ordinary brakes of the train. He applied the emergency brakes only when he saw that a collision was imminent. The passenger bus
successfully crossed the railroad tracks, but the van driven by Alfaro did not. The train hit the rear end of the van, and the impact threw nine of the 12
students in the rear, including Aaron, out of the van. Aaron landed in the path of the train, which dragged his body and severed his head,
instantaneously killing him. Alano fled the scene on board the train, and did not wait for the police investigator to arrive.
Devastated by the early and unexpected death of Aaron, the Zarates commenced this action for damages against Alfaro, the Pereas, PNR and Alano.
The Pereas and PNR filed their respective answers, with cross-claims against each other, but Alfaro could not be served with summons.
At the pre-trial, the parties stipulated on the facts and issues, viz:
A. FACTS:
That spouses Zarate were the legitimate parents of Aaron John L. Zarate;(1)
Spouses Zarate engaged the services of spouses Perea for the adequate and safe transportation carriage of the former spouses' son from
their residence in Paraaque to his school at the Don Bosco Technical Institute in Makati City;(2)
During the effectivity of the contract of carriage and in the implementation thereof, Aaron, the minor son of spouses Zarate died in
connection with a vehicular/train collision which occurred while Aaron was riding the contracted carrier Kia Ceres van of spouses Perea,
then driven and operated by the latter's employee/authorized driver Clemente Alfaro, which van collided with the train of PNR, at around
6:45 A.M. of August 22, 1996, within the vicinity of the Magallanes Interchange in Makati City, Metro Manila, Philippines;(3)
At the time of the vehicular/train collision, the subject site of the vehicular/train collision was a railroad crossing used by motorists for
crossing the railroad tracks;(4)
During the said time of the vehicular/train collision, there were no appropriate and safety warning signs and railings at the site commonly
used for railroad crossing;(5)
At the material time, countless number of Makati bound public utility and private vehicles used on a daily basis the site of the collision as
an alternative route and short-cut to Makati;(6)
The train driver or operator left the scene of the incident on board the commuter train involved without waiting for the police
investigator;(7)
The site commonly used for railroad crossing by motorists was not in fact intended by the railroad operator for railroad crossing at the time
of the vehicular collision;(8)
PNR received the demand letter of the spouses Zarate;(9)
PNR refused to acknowledge any liability for the vehicular/train collision;(10)
The eventual closure of the railroad crossing alleged by PNR was an internal arrangement between the former and its project contractor;
and(11)
The site of the vehicular/train collision was within the vicinity or less than 100 meters from the Magallanes station of PNR.(12)
B. ISSUES
(1) Whether or not defendant-driver of the van is, in the performance of his functions, liable for negligence constituting the proximate cause
of the vehicular collision, which resulted in the death of plaintiff spouses' son;
(2) Whether or not the defendant spouses Perea being the employer of defendant Alfaro are liable for any negligence which may be
attributed to defendant Alfaro;
(3) Whether or not defendant Philippine National Railways being the operator of the railroad system is liable for negligence in failing to
provide adequate safety warning signs and railings in the area commonly used by motorists for railroad crossings, constituting the
proximate cause of the vehicular collision which resulted in the death of the plaintiff spouses' son;
(4) Whether or not defendant spouses Perea are liable for breach of the contract of carriage with plaintiff-spouses in failing to provide
adequate and safe transportation for the latter's son;
(5) Whether or not defendants spouses are liable for actual, moral damages, exemplary damages, and attorney's fees;
(6) Whether or not defendants spouses Teodorico and Nanette Perea observed the diligence of employers and school bus operators;
(7) Whether or not defendant-spouses are civilly liable for the accidental death of Aaron John Zarate;
(8) Whether or not defendant PNR was grossly negligent in operating the commuter train involved in the accident, in allowing or tolerating
the motoring public to cross, and its failure to install safety devices or equipment at the site of the accident for the protection of the public;
(9) Whether or not defendant PNR should be made to reimburse defendant spouses for any and whatever amount the latter may be held
answerable or which they may be ordered to pay in favor of plaintiffs by reason of the action;
(10) Whether or not defendant PNR should pay plaintiffs directly and fully on the amounts claimed by the latter in their Complaint by
reason of its gross negligence;
(11) Whether or not defendant PNR is liable to defendants spouses for actual, moral and exemplary damages and attorney's fees. 2
The Zarates claim against the Pereas was upon breach of the contract of carriage for the safe transport of Aaron; but that against PNR was based on
quasi-delict under Article 2176, Civil Code.
In their defense, the Pereas adduced evidence to show that they had exercised the diligence of a good father of the family in the selection and
supervision of Alfaro, by making sure that Alfaro had been issued a drivers license and had not been involved in any vehicular accident prior to the
collision; that their own son had taken the van daily; and that Teodoro Perea had sometimes accompanied Alfaro in the vans trips transporting the
students to school.
For its part, PNR tended to show that the proximate cause of the collision had been the reckless crossing of the van whose driver had not first
stopped, looked and listened; and that the narrow path traversed by the van had not been intended to be a railroad crossing for motorists.
Ruling of the RTC
On December 3, 1999, the RTC rendered its decision, 3 disposing:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendants ordering them to jointly and
severally pay the plaintiffs as follows:
(1) (for) the death of Aaron- Php50,000.00;
(2) Actual damages in the amount of Php100,000.00;
(3) For the loss of earning capacity- Php2,109,071.00;
18
 (4) Moral damages in the amount of Php4,000,000.00;
(5) Exemplary damages in the amount of Php1,000,000.00;
(6) Attorneys fees in the amount of Php200,000.00; and
(7) Cost of suit.
SO ORDERED.
On June 29, 2000, the RTC denied the Pereas motion for reconsideration, 4 reiterating that the cooperative gross negligence of the Pereas and PNR
had caused the collision that led to the death of Aaron; and that the damages awarded to the Zarates were not excessive, but based on the established
circumstances.
The CAs Ruling
Both the Pereas and PNR appealed (C.A.-G.R. CV No. 68916).
PNR assigned the following errors, to wit:5
The Court a quo erred in:
1. In finding the defendant-appellant Philippine National Railways jointly and severally liable together with defendant-appellants spouses
Teodorico and Nanette Perea and defendant-appellant Clemente Alfaro to pay plaintiffs-appellees for the death of Aaron Zarate and
damages.
2. In giving full faith and merit to the oral testimonies of plaintiffs-appellees witnesses despite overwhelming documentary evidence on
record, supporting the case of defendants-appellants Philippine National Railways.
The Pereas ascribed the following errors to the RTC, namely:
The trial court erred in finding defendants-appellants jointly and severally liable for actual, moral and exemplary damages and attorneys fees with
the other defendants.
The trial court erred in dismissing the cross-claim of the appellants Pereas against the Philippine National Railways and in not holding the latter and
its train driver primarily responsible for the incident.
The trial court erred in awarding excessive damages and attorneys fees.
The trial court erred in awarding damages in the form of deceaseds loss of earning capacity in the absence of sufficient basis for such an award.
On November 13, 2002, the CA promulgated its decision, affirming the findings of the RTC, but limited the moral damages to P 2,500,000.00; and
deleted the attorneys fees because the RTC did not state the factual and legal bases, to wit: 6
WHEREFORE, premises considered, the assailed Decision of the Regional Trial Court, Branch 260 of Paraaque City is AFFIRMED with the
modification that the award of Actual Damages is reduced to P59,502.76; Moral Damages is reduced to P 2,500,000.00; and the award for Attorneys
Fees is Deleted.
SO ORDERED.
The CA upheld the award for the loss of Aarons earning capacity, taking cognizance of the ruling in Cariaga v. Laguna Tayabas Bus Company and
Manila Railroad Company,7 wherein the Court gave the heirs of Cariaga a sum representing the loss of the deceaseds earning capacity despite
Cariaga being only a medical student at the time of the fatal incident. Applying the formula adopted in the American Expectancy Table of Mortality:
2/3 x (80 - age at the time of death) = life expectancy
the CA determined the life expectancy of Aaron to be 39.3 years upon reckoning his life expectancy from age of 21 (the age when he would have
graduated from college and started working for his own livelihood) instead of 15 years (his age when he died). Considering that the nature of his
work and his salary at the time of Aarons death were unknown, it used the prevailing minimum wage of P 280.00/day to compute Aarons gross
annual salary to be P 110,716.65, inclusive of the thirteenth month pay. Multiplying this annual salary by Aarons life expectancy of 39.3 years, his
gross income would aggregate to P 4,351,164.30, from which his estimated expenses in the sum of P 2,189,664.30 was deducted to finally arrive at P
2,161,500.00 as net income. Due to Aarons computed net income turning out to be higher than the amount claimed by the Zarates,
only P 2,109,071.00, the amount expressly prayed for by them, was granted.
On April 4, 2003, the CA denied the Pereas motion for reconsideration. 8
Issues
In this appeal, the Pereas list the following as the errors committed by the CA, to wit:
I. The lower court erred when it upheld the trial courts decision holding the petitioners jointly and severally liable to pay damages with Philippine
National Railways and dismissing their cross-claim against the latter.
II. The lower court erred in affirming the trial courts decision awarding damages for loss of earning capacity of a minor who was only a high school
student at the time of his death in the absence of sufficient basis for such an award.
III. The lower court erred in not reducing further the amount of damages awarded, assuming petitioners are liable at all.
Ruling
The petition has no merit.
1.
Were the Pereas and PNR jointly
and severally liable for damages?
The Zarates brought this action for recovery of damages against both the Pereas and the PNR, basing their claim against the Pereas on breach of
contract of carriage and against the PNR on quasi-delict.
The RTC found the Pereas and the PNR negligent. The CA affirmed the findings.
We concur with the CA.
To start with, the Pereas defense was that they exercised the diligence of a good father of the family in the selection and supervision of Alfaro, the
van driver, by seeing to it that Alfaro had a drivers license and that he had not been involved in any vehicular accident prior to the fatal collision with
the train; that they even had their own son travel to and from school on a daily basis; and that Teodoro Perea himself sometimes accompanied Alfaro
in transporting the passengers to and from school. The RTC gave scant consideration to such defense by regarding such defense as inappropriate in an
action for breach of contract of carriage.
We find no adequate cause to differ from the conclusions of the lower courts that the Pereas operated as a common carrier; and that their standard of
care was extraordinary diligence, not the ordinary diligence of a good father of a family.

19
Although in this jurisdiction the operator of a school bus service has been usually regarded as a private carrier, 9primarily because he only caters to
some specific or privileged individuals, and his operation is neither open to the indefinite public nor for public use, the exact nature of the operation
of a school bus service has not been finally settled. This is the occasion to lay the matter to rest.
A carrier is a person or corporation who undertakes to transport or convey goods or persons from one place to another, gratuitously or for hire. The
carrier is classified either as a private/special carrier or as a common/public carrier. 10 A private carrier is one who, without making the activity a
vocation, or without holding himself or itself out to the public as ready to act for all who may desire his or its services, undertakes, by special
agreement in a particular instance only, to transport goods or persons from one place to another either gratuitously or for hire. 11The provisions on
ordinary contracts of the Civil Code govern the contract of private carriage.The diligence required of a private carrier is only ordinary, that is, the
diligence of a good father of the family. In contrast, a common carrier is a person, corporation, firm or association engaged in the business of carrying
or transporting passengers or goods or both, by land, water, or air, for compensation, offering such services to the public. 12Contracts of common
carriage are governed by the provisions on common carriers of the Civil Code, the Public Service Act, 13 and other special laws relating to
transportation. A common carrier is required to observe extraordinary diligence, and is presumed to be at fault or to have acted negligently in case of
the loss of the effects of passengers, or the death or injuries to passengers. 14
In relation to common carriers, the Court defined public use in the following terms in United States v. Tan Piaco, 15viz:
"Public use" is the same as "use by the public". The essential feature of the public use is not confined to privileged individuals, but is open to the
indefinite public. It is this indefinite or unrestricted quality that gives it its public character. In determining whether a use is public, we must look not
only to the character of the business to be done, but also to the proposed mode of doing it. If the use is merely optional with the owners, or the public
benefit is merely incidental, it is not a public use, authorizing the exercise of the jurisdiction of the public utility commission. There must be, in
general, a right which the law compels the owner to give to the general public. It is not enough that the general prosperity of the public is promoted.
Public use is not synonymous with public interest. The true criterion by which to judge the character of the use is whether the public may enjoy it by
right or only by permission.
In De Guzman v. Court of Appeals,16 the Court noted that Article 1732 of the Civil Code avoided any distinction between a person or an enterprise
offering transportation on a regular or an isolated basis; and has not distinguished a carrier offering his services to the general public, that is, the
general community or population, from one offering his services only to a narrow segment of the general population.
Nonetheless, the concept of a common carrier embodied in Article 1732 of the Civil Code coincides neatly with the notion of public service under the
Public Service Act, which supplements the law on common carriers found in the Civil Code. Public service, according to Section 13, paragraph (b) of
the Public Service Act, includes:
x x x every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited
clientle, whether permanent or occasional, and done for the general business purposes, any common carrier, railroad, street railway, traction railway,
subway motor vehicle, either for freight or passenger, or both, with or without fixed route and whatever may be its classification, freight or carrier
service of any class, express service, steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or
freight or both, shipyard, marine repair shop, ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and
power petroleum, sewerage system, wire or wireless communications systems, wire or wireless broadcasting stations and other similar public
services. x x x.17
Given the breadth of the aforequoted characterization of a common carrier, the Court has considered as common carriers pipeline operators, 18 custom
brokers and warehousemen,19 and barge operators20 even if they had limited clientle.
As all the foregoing indicate, the true test for a common carrier is not the quantity or extent of the business actually transacted, or the number and
character of the conveyances used in the activity, but whether the undertaking is a part of the activity engaged in by the carrier that he has held out to
the general public as his business or occupation. If the undertaking is a single transaction, not a part of the general business or occupation engaged in,
as advertised and held out to the general public, the individual or the entity rendering such service is a private, not a common, carrier. The question
must be determined by the character of the business actually carried on by the carrier, not by any secret intention or mental reservation it may
entertain or assert when charged with the duties and obligations that the law imposes. 21
Applying these considerations to the case before us, there is no question that the Pereas as the operators of a school bus service were: (a) engaged in
transporting passengers generally as a business, not just as a casual occupation; (b) undertaking to carry passengers over established roads by the
method by which the business was conducted; and (c) transporting students for a fee. Despite catering to a limited clientle, the Pereas operated as a
common carrier because they held themselves out as a ready transportation indiscriminately to the students of a particular school living within or near
where they operated the service and for a fee.
The common carriers standard of care and vigilance as to the safety of the passengers is defined by law. Given the nature of the business and for
reasons of public policy, the common carrier is bound "to observe extraordinary diligence in the vigilance over the goods and for the safety of the
passengers transported by them, according to all the circumstances of each case." 22 Article 1755 of the Civil Code specifies that the common carrier
should "carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due
regard for all the circumstances." To successfully fend off liability in an action upon the death or injury to a passenger, the common carrier must
prove his or its observance of that extraordinary diligence; otherwise, the legal presumption that he or it was at fault or acted negligently would
stand.23 No device, whether by stipulation, posting of notices, statements on tickets, or otherwise, may dispense with or lessen the responsibility of
the common carrier as defined under Article 1755 of the Civil Code. 24
And, secondly, the Pereas have not presented any compelling defense or reason by which the Court might now reverse the CAs findings on their
liability. On the contrary, an examination of the records shows that the evidence fully supported the findings of the CA.
As earlier stated, the Pereas, acting as a common carrier, were already presumed to be negligent at the time of the accident because death had
occurred to their passenger.25 The presumption of negligence, being a presumption of law, laid the burden of evidence on their shoulders to establish
that they had not been negligent.26 It was the law no less that required them to prove their observance of extraordinary diligence in seeing to the safe
and secure carriage of the passengers to their destination. Until they did so in a credible manner, they stood to be held legally responsible for the
death of Aaron and thus to be held liable for all the natural consequences of such death.
There is no question that the Pereas did not overturn the presumption of their negligence by credible evidence. Their defense of having observed the
diligence of a good father of a family in the selection and supervision of their driver was not legally sufficient. According to Article 1759 of the Civil
Code, their liability as a common carrier did not cease upon proof that they exercised all the diligence of a good father of a family in the selection and

20
supervision of their employee. This was the reason why the RTC treated this defense of the Pereas as inappropriate in this action for breach of
contract of carriage.
The Pereas were liable for the death of Aaron despite the fact that their driver might have acted beyond the scope of his authority or even in
violation of the orders of the common carrier.27 In this connection, the records showed their drivers actual negligence. There was a showing, to begin
with, that their driver traversed the railroad tracks at a point at which the PNR did not permit motorists going into the Makati area to cross the
railroad tracks. Although that point had been used by motorists as a shortcut into the Makati area, that fact alone did not excuse their driver into
taking that route. On the other hand, with his familiarity with that shortcut, their driver was fully aware of the risks to his passengers but he still
disregarded the risks. Compounding his lack of care was that loud music was playing inside the air-conditioned van at the time of the accident. The
loudness most probably reduced his ability to hear the warning horns of the oncoming train to allow him to correctly appreciate the lurking dangers
on the railroad tracks. Also, he sought to overtake a passenger bus on the left side as both vehicles traversed the railroad tracks. In so doing, he lost
his view of the train that was then coming from the opposite side of the passenger bus, leading him to miscalculate his chances of beating the bus in
their race, and of getting clear of the train. As a result, the bus avoided a collision with the train but the van got slammed at its rear, causing the
fatality. Lastly, he did not slow down or go to a full stop before traversing the railroad tracks despite knowing that his slackening of speed and going
to a full stop were in observance of the right of way at railroad tracks as defined by the traffic laws and regulations. 28 He thereby violated a specific
traffic regulation on right of way, by virtue of which he was immediately presumed to be negligent. 29
The omissions of care on the part of the van driver constituted negligence, 30 which, according to Layugan v. Intermediate Appellate Court, 31 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 doing of something which a prudent and reasonable man would not do, 32 or as Judge Cooley defines it, (t)he 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."33
The test by which to determine the existence of negligence in a particular case has been aptly stated in the leading case of Picart v. Smith, 34 thuswise:
The test by which to determine the existence of 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 ordinarily prudent person would have used in the same situation? If not, then he is guilty
of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the Roman
law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The
law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that.
The question as to what would constitute the conduct of a prudent man in a given situation must of course be always determined in the light of human
experience and in view of the facts involved in the particular case. Abstract speculation cannot here be of much value but this much can be profitably
said: Reasonable men govern their conduct by the circumstances which are before them or known to them. They are not, and are not supposed to be,
omniscient of the future. Hence they can be expected to take care only when there is something before them to suggest or warn of danger. Could a
prudent man, in the case under consideration, foresee harm as a result of the course actually pursued? If so, it was the duty of the actor to take
precautions to guard against that harm. Reasonable foresight of harm, followed by the ignoring of the suggestion born of this prevision, is always
necessary before negligence can be held to exist. Stated in these terms, the proper criterion for determining the existence of negligence in a given
case is this: Conduct is said to be negligent when a prudent man in the position of the tortfeasor would have foreseen that an effect harmful to another
was sufficiently probable to warrant his foregoing the conduct or guarding against its consequences. (Emphasis supplied)
Pursuant to the Picart v. Smith test of negligence, the Pereas driver was entirely negligent when he traversed the railroad tracks at a point not
allowed for a motorists crossing despite being fully aware of the grave harm to be thereby caused to his passengers; and when he disregarded the
foresight of harm to his passengers by overtaking the bus on the left side as to leave himself blind to the approach of the oncoming train that he knew
was on the opposite side of the bus.
Unrelenting, the Pereas cite Phil. National Railways v. Intermediate Appellate Court, 35 where the Court held the PNR solely liable for the damages
caused to a passenger bus and its passengers when its train hit the rear end of the bus that was then traversing the railroad crossing. But the
circumstances of that case and this one share no similarities. In Philippine National Railways v. Intermediate Appellate Court, no evidence of
contributory negligence was adduced against the owner of the bus. Instead, it was the owner of the bus who proved the exercise of extraordinary
diligence by preponderant evidence. Also, the records are replete with the showing of negligence on the part of both the Pereas and the PNR.
Another distinction is that the passenger bus in Philippine National Railways v. Intermediate Appellate Court was traversing the dedicated railroad
crossing when it was hit by the train, but the Pereas school van traversed the railroad tracks at a point not intended for that purpose.
At any rate, the lower courts correctly held both the Pereas and the PNR "jointly and severally" liable for damages arising from the death of Aaron.
They had been impleaded in the same complaint as defendants against whom the Zarates had the right to relief, whether jointly, severally, or in the
alternative, in respect to or arising out of the accident, and questions of fact and of law were common as to the Zarates. 36 Although the basis of the
right to relief of the Zarates (i.e., breach of contract of carriage) against the Pereas was distinct from the basis of the Zarates right to relief against
the PNR (i.e., quasi-delict under Article 2176, Civil Code), they nonetheless could be held jointly and severally liable by virtue of their respective
negligence combining to cause the death of Aaron. As to the PNR, the RTC rightly found the PNR also guilty of negligence despite the school van of
the Pereas traversing the railroad tracks at a point not dedicated by the PNR as a railroad crossing for pedestrians and motorists, because the PNR
did not ensure the safety of others through the placing of crossbars, signal lights, warning signs, and other permanent safety barriers to prevent
vehicles or pedestrians from crossing there. The RTC observed that the fact that a crossing guard had been assigned to man that point from 7 a.m. to 5
p.m. was a good indicium that the PNR was aware of the risks to others as well as the need to control the vehicular and other traffic there. Verily, the
Pereas and the PNR were joint tortfeasors.
2.
Was the indemnity for loss of
Aarons earning capacity proper?
The RTC awarded indemnity for loss of Aarons earning capacity. Although agreeing with the RTC on the liability, the CA modified the amount. Both
lower courts took into consideration that Aaron, while only a high school student, had been enrolled in one of the reputable schools in the Philippines
and that he had been a normal and able-bodied child prior to his death. The basis for the computation of Aarons earning capacity was not what he
would have become or what he would have wanted to be if not for his untimely death, but the minimum wage in effect at the time of his death.
Moreover, the RTCs computation of Aarons life expectancy rate was not reckoned from his age of 15 years at the time of his death, but on 21 years,
his age when he would have graduated from college.

21
We find the considerations taken into account by the lower courts to be reasonable and fully warranted.
Yet, the Pereas submit that the indemnity for loss of earning capacity was speculative and unfounded.1wphi1 They cited People v. Teehankee,
Jr.,37 where the Court deleted the indemnity for victim Jussi Leinos loss of earning capacity as a pilot for being speculative due to his having
graduated from high school at the International School in Manila only two years before the shooting, and was at the time of the shooting only
enrolled in the first semester at the Manila Aero Club to pursue his ambition to become a professional pilot. That meant, according to the Court, that
he was for all intents and purposes only a high school graduate.
We reject the Pereas submission.
First of all, a careful perusal of the Teehankee, Jr. case shows that the situation there of Jussi Leino was not akin to that of Aaron here. The CA and
the RTC were not speculating that Aaron would be some highly-paid professional, like a pilot (or, for that matter, an engineer, a physician, or a
lawyer). Instead, the computation of Aarons earning capacity was premised on him being a lowly minimum wage earner despite his being then
enrolled at a prestigious high school like Don Bosco in Makati, a fact that would have likely ensured his success in his later years in life and at work.
And, secondly, the fact that Aaron was then without a history of earnings should not be taken against his parents and in favor of the defendants whose
negligence not only cost Aaron his life and his right to work and earn money, but also deprived his parents of their right to his presence and his
services as well. Our law itself states that the loss of the earning capacity of the deceased shall be the liability of the guilty party in favor of the heirs
of the deceased, and 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." 38Accordingly, we emphatically hold in favor of the indemnification for
Aarons loss of earning capacity despite him having been unemployed, because compensation of this nature is awarded not for loss of time or
earnings but for loss of the deceaseds power or ability to earn money. 39
This favorable treatment of the Zarates claim is not unprecedented. In Cariaga v. Laguna Tayabas Bus Company and Manila Railroad
Company,40 fourth-year medical student Edgardo Carriagas earning capacity, although he survived the accident but his injuries rendered him
permanently incapacitated, was computed to be that of the physician that he dreamed to become. The Court considered his scholastic record sufficient
to justify the assumption that he could have finished the medical course and would have passed the medical board examinations in due time, and that
he could have possibly earned a modest income as a medical practitioner. Also, in People v. Sanchez, 41 the Court opined that murder and rape victim
Eileen Sarmienta and murder victim Allan Gomez could have easily landed good-paying jobs had they graduated in due time, and that their jobs
would probably pay them high monthly salaries from P 10,000.00 to P 15,000.00 upon their graduation. Their earning capacities were computed at
rates higher than the minimum wage at the time of their deaths due to their being already senior agriculture students of the University of the
Philippines in Los Baos, the countrys leading educational institution in agriculture.
3.
Were the amounts of damages excessive?
The Pereas plead for the reduction of the moral and exemplary damages awarded to the Zarates in the respective amounts of P 2,500,000.00
and P 1,000,000.00 on the ground that such amounts were excessive.
The plea is unwarranted.
The moral damages of P 2,500,000.00 were really just and reasonable under the established circumstances of this case because they were intended by
the law to assuage the Zarates deep mental anguish over their sons unexpected and violent death, and their moral shock over the senseless accident.
That amount would not be too much, considering that it would help the Zarates obtain the means, diversions or amusements that would alleviate their
suffering for the loss of their child. At any rate, reducing the amount as excessive might prove to be an injustice, given the passage of a long time
from when their mental anguish was inflicted on them on August 22, 1996.
Anent the P 1,000,000.00 allowed as exemplary damages, we should not reduce the amount if only to render effective the desired example for the
public good. As a common carrier, the Pereas needed to be vigorously reminded to observe their duty to exercise extraordinary diligence to prevent
a similarly senseless accident from happening again. Only by an award of exemplary damages in that amount would suffice to instill in them and
others similarly situated like them the ever-present need for greater and constant vigilance in the conduct of a business imbued with public interest.
WHEREFORE, we DENY the petition for review on certiorari; AFFIRM the decision promulgated on November 13, 2002; and ORDER the
petitioners to pay the costs of suit.
SO ORDERED.

In June 1996, Nicolas and Teresita Zarate contracted Teodoro and Nanette Perea to transport their (Zarates) son, Aaron Zarate, to and from school. The Pereas were
owners of a van being used for private school transport.
At about 6:45am of August 22, 1996, the driver of the said private van, Clemente Alfaro, while the children were on board including Aaron, decided to take a short cut
in order to avoid traffic. The usual short cut was a railroad crossing of the Philippine National Railway (PNR).
Alfaro saw that the barandilla (the pole used to block vehicles crossing the railway) was up which means it was okay to cross. He then tried to overtake a bus. However,
there was in fact an oncoming train but Alfaro no longer saw the train as his view was already blocked by the bus he was trying to overtake. The bus was able to cross
unscathed but the vans rear end was hit. During the collision, Aaron, was thrown off the van. His body hit the railroad tracks and his head was severed. He was only 15
years old.
It turns out that Alfaro was not able to hear the train honking from 50 meters away before the collision because the vans stereo was playing loudly.
The Zarates sued PNR and the Pereas (Alfaro became at-large). Their cause of action against PNR was based on quasi-delict. Their cause of action against the Pereas
was based on breach of contract of common carriage.
In their defense, the Pereas invoked that as private carriers they were not negligent in selecting Alfaro as their driver as they made sure that he had a drivers license
and that he was not involved in any accident prior to his being hired. In short, they observed the diligence of a good father in selecting their employee.
PNR also disclaimed liability as they insist that the railroad crossing they placed there was not meant for railroad crossing (really, thats their defense!).
The RTC ruled in favor of the Zarates. The Court of Appeals affirmed the RTC. In the decision of the RTC and the CA, they awarded damages in favor of the Zarates
for the loss of earning capacity of their dead son.
The Pereas appealed. They argued that the award was improper as Aaron was merely a high school student, hence, the award of such damages was merely speculative.
They cited the case of People vs Teehankee where the Supreme Court did not award damages for the loss of earning capacity despite the fact that the victim there was
enrolled in a pilot school.
ISSUES: Whether or not the defense of due diligence of a good father by the Pereas is untenable. Whether or not the award of damages for loss of income is proper.
HELD: Yes, in both issues.
Defense of Due Diligence of a Good Father
This defense is not tenable in this case. The Pereas are common carriers. They are not merely private carriers. (Prior to this case, the status of private transport for
school services or school buses is not well settled as to whether or not they are private or common carriers but they were generally regarded as private carriers).

22
Private transport for schools are common carriers. The Pereas, as the operators of a school bus service were: (a) engaged in transporting passengers generally as a
business, not just as a casual occupation; (b) undertaking to carry passengers over established roads by the method by which the business was conducted; and (c)
transporting students for a fee. Despite catering to a limited clientle, the Pereas operated as a common carrier because they held themselves out as a ready
transportation indiscriminately to the students of a particular school living within or near where they operated the service and for a fee.
Being a common carrier, what is required of the Pereas is not mere diligence of a good father. What is specifically required from them by law is extraordinary
diligence a fact which they failed to prove in court. Verily, their obligation as common carriers did not cease upon their exercise of diligently choosing Alfaro as their
employee.
(It is recommended that you read the full text, the Supreme Court made an elaborate and extensive definition of common and private carriers as well as their
distinctions.)
Award of Damages for Aarons loss of earning capacity despite he being a high school student at the time of his death
The award is proper. Aaron was enrolled in a reputable school (Don Bosco). He was of normal health and was an able-bodied person. Further, the basis of the
computation of his earning capacity was not on what he would have become. It was based on the current minimum wage. The minimum wage was validly used because
with his circumstances at the time of his death, it is most certain that had he lived, he would at least be a minimum wage earner by the time he starts working. This is
not being speculative at all.
The Teehankee case was different because in that case, the reason why no damages were awarded for loss of earning capacity was that the defendants there were
already assuming that the victim would indeed become a pilot hence, that made the assumption speculative. But in the case of Aaron, there was no speculation as to
what he might be but whatever hell become, it is certain that he will at the least be earning minimum wage.

G.R. No. 126297 January 31, 2007

PROFESSIONAL SERVICES, INC., Petitioner,
vs.
NATIVIDAD and ENRIQUE AGANA, Respondents.
x-----------------------x
G.R. No. 126467 January 31, 2007
NATIVIDAD (Substituted by her children MARCELINO AGANA III, ENRIQUE AGANA, JR., EMMA AGANA ANDAYA, JESUS
AGANA, and RAYMUND AGANA) and ENRIQUE AGANA, Petitioners,
vs.
JUAN FUENTES, Respondent.
x- - - - - - - - - - - - - - - - - - - -- - - - x
G.R. No. 127590 January 31, 2007
MIGUEL AMPIL, Petitioner,
vs.
NATIVIDAD AGANA and ENRIQUE AGANA, Respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Hospitals, having undertaken one of mankinds most important and delicate endeavors, must assume the grave responsibility of pursuing it with
appropriate care. The care and service dispensed through this high trust, however technical, complex and esoteric its character may be, must meet
standards of responsibility commensurate with the undertaking to preserve and protect the health, and indeed, the very lives of those placed in the
hospitals keeping.1
Assailed in these three consolidated petitions for review on certiorari is the Court of Appeals Decision 2 dated September 6, 1996 in CA-G.R. CV No.
42062 and CA-G.R. SP No. 32198 affirming with modification the Decision 3 dated March 17, 1993 of the Regional Trial Court (RTC), Branch 96,
Quezon City in Civil Case No. Q-43322 and nullifying its Order dated September 21, 1993.
The facts, as culled from the records, are:
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, petitioner in G.R. No. 127590, diagnosed her to be
suffering from "cancer of the sigmoid."
On April 11, 1984, Dr. Ampil, assisted by the medical staff 4 of the Medical City Hospital, performed an anterior resection surgery on Natividad. He
found that the malignancy in her sigmoid area had spread on her left ovary, necessitating the removal of certain portions of it. Thus, Dr. Ampil
obtained the consent of Natividads husband, Enrique Agana, to permit Dr. Juan Fuentes, respondent in G.R. No. 126467, to perform hysterectomy on
her.
After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took over, completed the operation and closed the incision.
However, the operation appeared to be flawed. In the corresponding Record of Operation dated April 11, 1984, the attending nurses entered these
remarks:
"sponge count lacking 2
"announced to surgeon searched (sic) done but to no avail continue for closure."
On April 24, 1984, Natividad was released from the hospital. Her hospital and medical bills, including the doctors fees, amounted to P60,000.00.
After a couple of days, Natividad complained of excruciating pain in her anal region. She consulted both Dr. Ampil and Dr. Fuentes about it. They
told her that the pain was the natural consequence of the surgery. Dr. Ampil then recommended that she consult an oncologist to examine the
cancerous nodes which were not removed during the operation.
On May 9, 1984, Natividad, accompanied by her husband, went to the United States to seek further treatment. After four months of consultations and
laboratory examinations, Natividad was told she was free of cancer. Hence, she was advised to return to the Philippines.
On August 31, 1984, Natividad flew back to the Philippines, still suffering from pains. Two weeks thereafter, her daughter found a piece of gauze
protruding from her vagina. Upon being informed about it, Dr. Ampil proceeded to her house where he managed to extract by hand a piece of gauze
measuring 1.5 inches in width. He then assured her that the pains would soon vanish.
Dr. Ampils assurance did not come true. Instead, the pains intensified, prompting Natividad to seek treatment at the Polymedic General Hospital.
While confined there, Dr. Ramon Gutierrez detected the presence of another foreign object in her vagina -- a foul-smelling gauze measuring 1.5
inches in width which badly infected her vaginal vault. A recto-vaginal fistula had formed in her reproductive organs which forced stool to excrete
through the vagina. Another surgical operation was needed to remedy the damage. Thus, in October 1984, Natividad underwent another surgery.

23
On November 12, 1984, Natividad and her husband filed with the RTC, Branch 96, Quezon City a complaint for damages against the Professional
Services, Inc. (PSI), owner of the Medical City Hospital, Dr. Ampil, and Dr. Fuentes, docketed as Civil Case No. Q-43322. They alleged that the
latter are liable for negligence for leaving two pieces of gauze inside Natividads body and malpractice for concealing their acts of negligence.
Meanwhile, Enrique Agana also filed with the Professional Regulation Commission (PRC) an administrative complaint for gross negligence and
malpractice against Dr. Ampil and Dr. Fuentes, docketed as Administrative Case No. 1690. The PRC Board of Medicine heard the case only with
respect to Dr. Fuentes because it failed to acquire jurisdiction over Dr. Ampil who was then in the United States.
On February 16, 1986, pending the outcome of the above cases, Natividad died and was duly substituted by her above-named children (the Aganas).
On March 17, 1993, the RTC rendered its Decision in favor of the Aganas, finding PSI, Dr. Ampil and Dr. Fuentes liable for negligence and
malpractice, the decretal part of which reads:
WHEREFORE, judgment is hereby rendered for the plaintiffs ordering the defendants PROFESSIONAL SERVICES, INC., DR. MIGUEL AMPIL
and DR. JUAN FUENTES to pay to the plaintiffs, jointly and severally, except in respect of the award for exemplary damages and the interest
thereon which are the liabilities of defendants Dr. Ampil and Dr. Fuentes only, as follows:
1. As actual damages, the following amounts:
a. The equivalent in Philippine Currency of the total of US$19,900.00 at the rate of P21.60-US$1.00, as reimbursement of actual
expenses incurred in the United States of America;
b. The sum of P4,800.00 as travel taxes of plaintiffs and their physician daughter;
c. The total sum of P45,802.50, representing the cost of hospitalization at Polymedic Hospital, medical fees, and cost of the saline
solution;
2. As moral damages, the sum of P2,000,000.00;
3. As exemplary damages, the sum of P300,000.00;
4. As attorneys fees, the sum of P250,000.00;
5. Legal interest on items 1 (a), (b), and (c); 2; and 3 hereinabove, from date of filing of the complaint until full payment; and
6. Costs of suit.
SO ORDERED.
Aggrieved, PSI, Dr. Fuentes and Dr. Ampil interposed an appeal to the Court of Appeals, docketed as CA-G.R. CV No. 42062.
Incidentally, on April 3, 1993, the Aganas filed with the RTC a motion for a partial execution of its Decision, which was granted in an Order dated
May 11, 1993. Thereafter, the sheriff levied upon certain properties of Dr. Ampil and sold them for P451,275.00 and delivered the amount to the
Aganas.
Following their receipt of the money, the Aganas entered into an agreement with PSI and Dr. Fuentes to indefinitely suspend any further execution of
the RTC Decision. However, not long thereafter, the Aganas again filed a motion for an alias writ of execution against the properties of PSI and Dr.
Fuentes. On September 21, 1993, the RTC granted the motion and issued the corresponding writ, prompting Dr. Fuentes to file with the Court of
Appeals a petition for certiorari and prohibition, with prayer for preliminary injunction, docketed as CA-G.R. SP No. 32198. During its pendency, the
Court of Appeals issued a Resolution5 dated October 29, 1993 granting Dr. Fuentes prayer for injunctive relief.
On January 24, 1994, CA-G.R. SP No. 32198 was consolidated with CA-G.R. CV No. 42062.
Meanwhile, on January 23, 1995, the PRC Board of Medicine rendered its Decision 6 in Administrative Case No. 1690 dismissing the case against Dr.
Fuentes. The Board held that the prosecution failed to show that Dr. Fuentes was the one who left the two pieces of gauze inside Natividads body;
and that he concealed such fact from Natividad.
On September 6, 1996, the Court of Appeals rendered its Decision jointly disposing of CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198, thus:
WHEREFORE, except for the modification that the case against defendant-appellant Dr. Juan Fuentes is hereby DISMISSED, and with the
pronouncement that defendant-appellant Dr. Miguel Ampil is liable to reimburse defendant-appellant Professional Services, Inc., whatever amount
the latter will pay or had paid to the plaintiffs-appellees, the decision appealed from is hereby AFFIRMED and the instant appeal DISMISSED.
Concomitant with the above, the petition for certiorari and prohibition filed by herein defendant-appellant Dr. Juan Fuentes in CA-G.R. SP No. 32198
is hereby GRANTED and the challenged order of the respondent judge dated September 21, 1993, as well as the alias writ of execution issued
pursuant thereto are hereby NULLIFIED and SET ASIDE. The bond posted by the petitioner in connection with the writ of preliminary injunction
issued by this Court on November 29, 1993 is hereby cancelled.
Costs against defendants-appellants Dr. Miguel Ampil and Professional Services, Inc.
SO ORDERED.
Only Dr. Ampil filed a motion for reconsideration, but it was denied in a Resolution 7 dated December 19, 1996.
Hence, the instant consolidated petitions.
In G.R. No. 126297, PSI alleged in its petition that the Court of Appeals erred in holding that: (1) it is estopped from raising the defense that Dr.
Ampil is not its employee; (2) it is solidarily liable with Dr. Ampil; and (3) it is not entitled to its counterclaim against the Aganas. PSI contends that
Dr. Ampil is not its employee, but a mere consultant or independent contractor. As such, he alone should answer for his negligence.
In G.R. No. 126467, the Aganas maintain that the Court of Appeals erred in finding that Dr. Fuentes is not guilty of negligence or medical
malpractice, invoking the doctrine of res ipsa loquitur. They contend that the pieces of gauze are prima facie proofs that the operating surgeons have
been negligent.
Finally, in G.R. No. 127590, Dr. Ampil asserts that the Court of Appeals erred in finding him liable for negligence and malpractice sans evidence that
he left the two pieces of gauze in Natividads vagina. He pointed to other probable causes, such as: (1) it was Dr. Fuentes who used gauzes in
performing the hysterectomy; (2) the attending nurses failure to properly count the gauzes used during surgery; and (3) the medical intervention of
the American doctors who examined Natividad in the United States of America.
For our resolution are these three vital issues: first, whether the Court of Appeals erred in holding Dr. Ampil liable for negligence and malpractice;
second, whether the Court of Appeals erred in absolving Dr. Fuentes of any liability; and third, whether PSI may be held solidarily liable for the
negligence of Dr. Ampil.
I - G.R. No. 127590
Whether the Court of Appeals Erred in Holding Dr. Ampil
Liable for Negligence and Malpractice.

24
Dr. Ampil, in an attempt to absolve himself, gears the Courts attention to other possible causes of Natividads detriment. He argues that the Court
should not discount either of the following possibilities: first, Dr. Fuentes left the gauzes in Natividads body after performing hysterectomy; second,
the attending nurses erred in counting the gauzes; and third, the American doctors were the ones who placed the gauzes in Natividads body.
Dr. Ampils arguments are purely conjectural and without basis. Records show that he did not present any evidence to prove that the American
doctors were the ones who put or left the gauzes in Natividads body. Neither did he submit evidence to rebut the correctness of the record of
operation, particularly the number of gauzes used. As to the alleged negligence of Dr. Fuentes, we are mindful that Dr. Ampil examined his (Dr.
Fuentes) work and found it in order.
The glaring truth is that all the major circumstances, taken together, as specified by the Court of Appeals, directly point to Dr. Ampil as the negligent
party, thus:
First, it is not disputed that the surgeons used gauzes as sponges to control the bleeding of the patient during the surgical operation.
Second, immediately after the operation, the nurses who assisted in the surgery noted in their report that the sponge count (was) lacking 2;
that such anomaly was announced to surgeon and that a search was done but to no avail prompting Dr. Ampil to continue for closure x
x x.
Third, after the operation, two (2) gauzes were extracted from the same spot of the body of Mrs. Agana where the surgery was performed.
An operation requiring the placing of sponges in the incision is not complete until the sponges are properly removed, and it is settled that the leaving
of sponges or other foreign substances in the wound after the incision has been closed is at least prima facie negligence by the operating surgeon. 8 To
put it simply, such act is considered so inconsistent with due care as to raise an inference of negligence. There are even legions of authorities to the
effect that such act is negligence per se. 9
Of course, the Court is not blind to the reality that there are times when danger to a patients life precludes a surgeon from further searching missing
sponges or foreign objects left in the body. But this does not leave him free from any obligation. Even if it has been shown that a surgeon was
required by the urgent necessities of the case to leave a sponge in his patients abdomen, because of the dangers attendant upon delay, still, it is his
legal duty to so inform his patient within a reasonable time thereafter by advising her of what he had been compelled to do. This is in order that she
might seek relief from the effects of the foreign object left in her body as her condition might permit. The ruling in Smith v. Zeagler 10 is explicit, thus:
The removal of all sponges used is part of a surgical operation, and when a physician or surgeon fails to remove a sponge he has placed in his
patients body that should be removed as part of the operation, he thereby leaves his operation uncompleted and creates a new condition which
imposes upon him the legal duty of calling the new condition to his patients attention, and endeavoring with the means he has at hand to minimize
and avoid untoward results likely to ensue therefrom.
Here, Dr. Ampil did not inform Natividad about the missing two pieces of gauze. Worse, he even misled her that the pain she was experiencing was
the ordinary consequence of her operation. Had he been more candid, Natividad could have taken the immediate and appropriate medical remedy to
remove the gauzes from her body. To our mind, what was initially an act of negligence by Dr. Ampil has ripened into a deliberate wrongful act of
deceiving his patient.
This is a clear case of medical malpractice or more appropriately, medical negligence. To successfully pursue this kind of case, a patient must only
prove that a health care provider either failed to do something which a reasonably prudent health care provider would have done, or that he did
something that a reasonably prudent provider would not have done; and that failure or action caused injury to the patient. 11 Simply put, the elements
are duty, breach, injury and proximate causation. Dr, Ampil, as the lead surgeon, had the duty to remove all foreign objects, such as gauzes, from
Natividads body before closure of the incision. When he failed to do so, it was his duty to inform Natividad about it. Dr. Ampil breached both duties.
Such breach caused injury to Natividad, necessitating her further examination by American doctors and another surgery. That Dr. Ampils negligence
is the proximate cause12 of Natividads injury could be traced from his act of closing the incision despite the information given by the attending
nurses that two pieces of gauze were still missing. That they were later on extracted from Natividads vagina established the causal link between Dr.
Ampils negligence and the injury. And what further aggravated such injury was his deliberate concealment of the missing gauzes from the
knowledge of Natividad and her family.
II - G.R. No. 126467
Whether the Court of Appeals Erred in Absolving
Dr. Fuentes of any Liability
The Aganas assailed the dismissal by the trial court of the case against Dr. Fuentes on the ground that it is contrary to the doctrine of res ipsa loquitur.
According to them, the fact that the two pieces of gauze were left inside Natividads body is a prima facie evidence of Dr. Fuentes negligence.
We are not convinced.
Literally, res ipsa loquitur means "the thing speaks for itself." It is the rule that the fact of the occurrence of an injury, taken with the surrounding
circumstances, may permit an inference or raise a presumption of negligence, or make out a plaintiffs prima facie case, and present a question of fact
for defendant to meet with an explanation.13 Stated differently, where the thing which caused the injury, without the fault of the injured, is under the
exclusive control of the defendant and the injury is such that it should not have occurred if he, having such control used proper care, it affords
reasonable evidence, in the absence of explanation that the injury arose from the defendants want of care, and the burden of proof is shifted to him to
establish that he has observed due care and diligence. 14
From the foregoing statements of the rule, the requisites for the applicability of the doctrine of res ipsa loquitur are: (1) the occurrence of an injury;
(2) the thing which caused the injury was under the control and management of the defendant; (3) 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 (4) the absence of explanation by the defendant.
Of the foregoing requisites, the most instrumental is the "control and management of the thing which caused the injury." 15
We find the element of "control and management of the thing which caused the injury" to be wanting. Hence, the doctrine of res ipsa loquitur will not
lie.
It was duly established that Dr. Ampil was the lead surgeon during the operation of Natividad. He requested the assistance of Dr. Fuentes only to
perform hysterectomy when he (Dr. Ampil) found that the malignancy in her sigmoid area had spread to her left ovary. Dr. Fuentes performed the
surgery and thereafter reported and showed his work to Dr. Ampil. The latter examined it and finding everything to be in order, allowed Dr. Fuentes
to leave the operating room. Dr. Ampil then resumed operating on Natividad. He was about to finish the procedure when the attending nurses
informed him that two pieces of gauze were missing. A "diligent search" was conducted, but the misplaced gauzes were not found. Dr. Ampil then
directed that the incision be closed. During this entire period, Dr. Fuentes was no longer in the operating room and had, in fact, left the hospital.

25
Under the "Captain of the Ship" rule, 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.16 As stated before, Dr. Ampil was the lead surgeon. In other words, he was the "Captain of the Ship." That
he discharged such role is evident from his following conduct: (1) calling Dr. Fuentes to perform a hysterectomy; (2) examining the work of Dr.
Fuentes and finding it in order; (3) granting Dr. Fuentes permission to leave; and (4) ordering the closure of the incision. To our mind, it was this act
of ordering the closure of the incision notwithstanding that two pieces of gauze remained unaccounted for, that caused injury to Natividads body.
Clearly, the control and management of the thing which caused the injury was in the hands of Dr. Ampil, not Dr. Fuentes.
In this jurisdiction, res ipsa loquitur is not a rule of substantive law, hence, does not per se create or constitute an independent or separate ground of
liability, being a mere evidentiary rule. 17 In other words, mere invocation and application of the doctrine does not dispense with the requirement of
proof of negligence. Here, the negligence was proven to have been committed by Dr. Ampil and not by Dr. Fuentes.
III - G.R. No. 126297
Whether PSI Is Liable for the Negligence of Dr. Ampil
The third issue necessitates a glimpse at the historical development of hospitals and the resulting theories concerning their liability for the negligence
of physicians.
Until the mid-nineteenth century, hospitals were generally charitable institutions, providing medical services to the lowest classes of society, without
regard for a patients ability to pay.18 Those who could afford medical treatment were usually treated at home by their doctors. 19 However, the days of
house calls and philanthropic health care are over. The modern health care industry continues to distance itself from its charitable past and has
experienced a significant conversion from a not-for-profit health care to for-profit hospital businesses. Consequently, significant changes in health
law have accompanied the business-related changes in the hospital industry. One important legal change is an increase in hospital liability for medical
malpractice. Many courts now allow claims for hospital vicarious liability under the theories of respondeat superior, apparent authority, ostensible
authority, or agency by estoppel. 20
In this jurisdiction, the statute governing liability for negligent acts is Article 2176 of the Civil Code, which reads:
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.
A derivative of this provision is Article 2180, the rule governing vicarious liability under the doctrine of respondeat superior, thus:
ART. 2180. The obligation imposed by Article 2176 is demandable not only for ones own acts or omissions, but also for those of persons for whom
one is responsible.
x x x x x x
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.
x x x x x x
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.
A prominent civilist commented that professionals engaged by an employer, such as physicians, dentists, and pharmacists, are not "employees" under
this article because the manner in which they perform their work is not within the control of the latter (employer). In other words, professionals are
considered personally liable for the fault or negligence they commit in the discharge of their duties, and their employer cannot be held liable for such
fault or negligence. In the context of the present case, "a hospital cannot be held liable for the fault or negligence of a physician or surgeon in the
treatment or operation of patients."21
The foregoing view is grounded on the traditional notion that the professional status and the very nature of the physicians calling preclude him from
being classed as an agent or employee of a hospital, whenever he acts in a professional capacity. 22 It has been said that medical practice strictly
involves highly developed and specialized knowledge, 23 such that physicians are generally free to exercise their own skill and judgment in rendering
medical services sans interference.24 Hence, when a doctor practices medicine in a hospital setting, the hospital and its employees are deemed to
subserve him in his ministrations to the patient and his actions are of his own responsibility. 25
The case of Schloendorff v. Society of New York Hospital26 was then considered an authority for this view. The "Schloendorff doctrine" regards a
physician, even if employed by a hospital, as an independent contractor because of the skill he exercises and the lack of control exerted over his
work. Under this doctrine, hospitals are exempt from the application of the respondeat superior principle for fault or negligence committed by
physicians in the discharge of their profession.
However, the efficacy of the foregoing doctrine has weakened with the significant developments in medical care. Courts came to realize that modern
hospitals are increasingly taking active role in supplying and regulating medical care to patients. No longer were a hospitals functions limited to
furnishing room, food, facilities for treatment and operation, and attendants for its patients. Thus, in Bing v. Thunig, 27 the New York Court of Appeals
deviated from the Schloendorff doctrine, noting that modern hospitals actually do far more than provide facilities for treatment. Rather, they regularly
employ, on a salaried basis, a large staff of physicians, interns, nurses, administrative and manual workers. They charge patients for medical care and
treatment, even collecting for such services through legal action, if necessary. The court then concluded that there is no reason to exempt hospitals
from the universal rule of respondeat superior.
In our shores, the nature of the relationship between the hospital and the physicians is rendered inconsequential in view of our categorical
pronouncement in Ramos v. Court of Appeals28 that for purposes of apportioning responsibility in medical negligence cases, an employer-employee
relationship in effect exists between hospitals and their attending and visiting physicians. This Court held:
"We now discuss the responsibility of the hospital in this particular incident. The unique practice (among private hospitals) of filling up specialist
staff with attending and visiting "consultants," who are allegedly not hospital employees, presents problems in apportioning responsibility for
negligence in medical malpractice cases. However, the difficulty is more apparent than real.
In the first place, hospitals exercise significant control in the hiring and firing of consultants and in the conduct of their work within the hospital
premises. Doctors who apply for consultant slots, visiting or attending, are required to submit proof of completion of residency, their educational
qualifications, generally, evidence of accreditation by the appropriate board (diplomate), evidence of fellowship in most cases, and references. These

26
requirements are carefully scrutinized by members of the hospital administration or by a review committee set up by the hospital who either accept or
reject the application. x x x.
After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico-pathological conferences, conduct
bedside rounds for clerks, interns and residents, moderate grand rounds and patient audits and perform other tasks and responsibilities, for the
privilege of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients into the hospital. In addition to these, the
physicians performance as a specialist is generally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and
feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short of the minimum
standards acceptable to the hospital or its peer review committee, is normally politely terminated.
In other words, private hospitals, hire, fire and exercise real control over their attending and visiting consultant staff. While consultants are not,
technically employees, x x x, the control exercised, the hiring, and the right to terminate consultants all fulfill the important hallmarks of an
employer-employee relationship, with the exception of the payment of wages. In assessing whether such a relationship in fact exists, the control test
is determining. Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an
employer-employee relationship in effect exists between hospitals and their attending and visiting physicians. "
But the Ramos pronouncement is not our only basis in sustaining PSIs liability. Its liability is also anchored upon the agency principle of apparent
authority or agency by estoppel and the doctrine of corporate negligence which have gained acceptance in the determination of a hospitals liability
for negligent acts of health professionals. The present case serves as a perfect platform to test the applicability of these doctrines, thus, enriching our
jurisprudence.
Apparent authority, or what is sometimes referred to as the "holding
out" theory, or doctrine of ostensible agency or agency by estoppel, 29 has its origin from the law of agency. It imposes liability, not as the result of the
reality of a contractual relationship, but rather because of the actions of a principal or an employer in somehow misleading the public into believing
that the relationship or the authority exists.30 The concept is essentially one of estoppel and has been explained in this manner:
"The principal is bound by the acts of his agent with the apparent authority which he knowingly permits the agent to assume, or which he holds the
agent out to the public as possessing. The question in every case is whether the principal has by his voluntary act placed the agent in such a situation
that a person of ordinary prudence, conversant with business usages and the nature of the particular business, is justified in presuming that such agent
has authority to perform the particular act in question. 31
The applicability of apparent authority in the field of hospital liability was upheld long time ago in Irving v. Doctor Hospital of Lake Worth,
Inc.32 There, it was explicitly stated that "there does not appear to be any rational basis for excluding the concept of apparent authority from the field
of hospital liability." Thus, in cases where it can be shown that a hospital, by its actions, has held out a particular physician as its agent and/or
employee and that a patient has accepted treatment from that physician in the reasonable belief that it is being rendered in behalf of the hospital, then
the hospital will be liable for the physicians negligence.
Our jurisdiction recognizes the concept of an agency by implication or estoppel. Article 1869 of the Civil Code reads:
ART. 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 on his behalf without authority.
In this case, PSI publicly displays in the lobby of the Medical City Hospital the names and specializations of the physicians associated or accredited
by it, including those of Dr. Ampil and Dr. Fuentes. We concur with the Court of Appeals conclusion that it "is now estopped from passing all the
blame to the physicians whose names it proudly paraded in the public directory leading the public to believe that it vouched for their skill and
competence." Indeed, PSIs act is tantamount to holding out to the public that Medical City Hospital, through its accredited physicians, offers quality
health care services. By accrediting Dr. Ampil and Dr. Fuentes and publicly advertising their qualifications, the hospital created the impression that
they were its agents, authorized to perform medical or surgical services for its patients. As expected, these patients, Natividad being one of them,
accepted the services on the reasonable belief that such were being rendered by the hospital or its employees, agents, or servants. The trial court
correctly pointed out:
x x x regardless of the education and status in life of the patient, he ought not be burdened with the defense of absence of employer-employee
relationship between the hospital and the independent physician whose name and competence are certainly certified to the general public by the
hospitals act of listing him and his specialty in its lobby directory, as in the case herein. The high costs of todays medical and health care should at
least exact on the hospital greater, if not broader, legal responsibility for the conduct of treatment and surgery within its facility by its accredited
physician or surgeon, regardless of whether he is independent or employed." 33
The wisdom of the foregoing ratiocination is easy to discern. Corporate entities, like PSI, are capable of acting only through other individuals, such
as physicians. If these accredited physicians do their job well, the hospital succeeds in its mission of offering quality medical services and thus profits
financially. Logically, where negligence mars the quality of its services, the hospital should not be allowed to escape liability for the acts of its
ostensible agents.
We now proceed to the doctrine of corporate negligence or corporate responsibility.
One allegation in the complaint in Civil Case No. Q-43332 for negligence and malpractice is that PSI as owner, operator and manager of Medical
City Hospital, "did not perform the necessary supervision nor exercise diligent efforts in the supervision of Drs. Ampil and Fuentes and its nursing
staff, resident doctors, and medical interns who assisted Drs. Ampil and Fuentes in the performance of their duties as surgeons." 34 Premised on the
doctrine of corporate negligence, the trial court held that PSI is directly liable for such breach of duty.
We agree with the trial court.
Recent years have seen the doctrine of corporate negligence as the judicial answer to the problem of allocating hospitals liability for the negligent
acts of health practitioners, absent facts to support the application of respondeat superior or apparent authority. Its formulation proceeds from the
judiciarys acknowledgment that in these modern times, the duty of providing quality medical service is no longer the sole prerogative and
responsibility of the physician. The modern hospitals have changed structure. Hospitals now tend to organize a highly professional medical staff
whose competence and performance need to be monitored by the hospitals commensurate with their inherent responsibility to provide quality medical
care.35
The doctrine has its genesis in Darling v. Charleston Community Hospital. 36 There, the Supreme Court of Illinois held that "the jury could have found
a hospital negligent, inter alia, in failing to have a sufficient number of trained nurses attending the patient; failing to require a consultation with or
examination by members of the hospital staff; and failing to review the treatment rendered to the patient." On the basis of Darling, other jurisdictions
held that a hospitals corporate negligence extends to permitting a physician known to be incompetent to practice at the hospital. 37 With the passage

27
of time, more duties were expected from hospitals, among them: (1) the use of reasonable care in the maintenance of safe and adequate facilities and
equipment; (2) the selection and retention of competent physicians; (3) the overseeing or supervision of all persons who practice medicine within its
walls; and (4) the formulation, adoption and enforcement of adequate rules and policies that ensure quality care for its patients. 38 Thus, in Tucson
Medical Center, Inc. v. Misevich,39 it was held that a hospital, following the doctrine of corporate responsibility, has the duty to see that it meets the
standards of responsibilities for the care of patients. Such duty includes the proper supervision of the members of its medical staff. And in Bost v.
Riley,40 the court concluded that a patient who enters a hospital does so with the reasonable expectation that it will attempt to cure him. The hospital
accordingly has the duty to make a reasonable effort to monitor and oversee the treatment prescribed and administered by the physicians practicing in
its premises.
In the present case, it was duly established that PSI operates the Medical City Hospital for the purpose and under the concept of providing
comprehensive medical services to the public. Accordingly, it has the duty to exercise reasonable care to protect from harm all patients admitted into
its facility for medical treatment. Unfortunately, PSI failed to perform such duty. The findings of the trial court are convincing, thus:
x x x PSIs liability is traceable to its failure to conduct an investigation of the matter reported in the nota bene of the count nurse. Such failure
established PSIs part in the dark conspiracy of silence and concealment about the gauzes. Ethical considerations, if not also legal, dictated the
holding of an immediate inquiry into the events, if not for the benefit of the patient to whom the duty is primarily owed, then in the interest of
arriving at the truth. The Court cannot accept that the medical and the healing professions, through their members like defendant surgeons, and their
institutions like PSIs hospital facility, can callously turn their backs on and disregard even a mere probability of mistake or negligence by refusing or
failing to investigate a report of such seriousness as the one in Natividads case.
It is worthy to note that Dr. Ampil and Dr. Fuentes operated on Natividad with the assistance of the Medical City Hospitals staff, composed of
resident doctors, nurses, and interns. As such, it is reasonable to conclude that PSI, as the operator of the hospital, has actual or constructive
knowledge of the procedures carried out, particularly the report of the attending nurses that the two pieces of gauze were missing. In Fridena v.
Evans,41 it was held that a corporation is bound by the knowledge acquired by or notice given to its agents or officers within the scope of their
authority and in reference to a matter to which their authority extends. This means that the knowledge of any of the staff of Medical City Hospital
constitutes knowledge of PSI. Now, the failure of PSI, despite the attending nurses report, to investigate and inform Natividad regarding the missing
gauzes amounts to callous negligence. Not only did PSI breach its duties to oversee or supervise all persons who practice medicine within its walls, it
also failed to take an active step in fixing the negligence committed. This renders PSI, not only vicariously liable for the negligence of Dr. Ampil
under Article 2180 of the Civil Code, but also directly liable for its own negligence under Article 2176. In Fridena, the Supreme Court of Arizona
held:
x x x In recent years, however, the duty of care owed to the patient by the hospital has expanded. The emerging trend is to hold the hospital
responsible where the hospital has failed to monitor and review medical services being provided within its walls. See Kahn Hospital Malpractice
Prevention, 27 De Paul . Rev. 23 (1977).
Among the cases indicative of the emerging trend is Purcell v. Zimbelman, 18 Ariz. App. 75,500 P. 2d 335 (1972). In Purcell, the hospital argued
that it could not be held liable for the malpractice of a medical practitioner because he was an independent contractor within the hospital. The Court
of Appeals pointed out that the hospital had created a professional staff whose competence and performance was to be monitored and reviewed by the
governing body of the hospital, and the court held that a hospital would be negligent where it had knowledge or reason to believe that a doctor using
the facilities was employing a method of treatment or care which fell below the recognized standard of care.
Subsequent to the Purcell decision, the Arizona Court of Appeals held that a hospital has certain inherent responsibilities regarding the quality of
medical care furnished to patients within its walls and it must meet the standards of responsibility commensurate with this undertaking. Beeck v.
Tucson General Hospital, 18 Ariz. App. 165, 500 P. 2d 1153 (1972). This court has confirmed the rulings of the Court of Appeals that a hospital has
the duty of supervising the competence of the doctors on its staff. x x x.
x x x x x x
In the amended complaint, the plaintiffs did plead that the operation was performed at the hospital with its knowledge, aid, and assistance, and that
the negligence of the defendants was the proximate cause of the patients injuries. We find that such general allegations of negligence, along with the
evidence produced at the trial of this case, are sufficient to support the hospitals liability based on the theory of negligent supervision."
Anent the corollary issue of whether PSI is solidarily liable with Dr. Ampil for damages, let it be emphasized that PSI, apart from a general denial of
its responsibility, failed to adduce evidence showing that it exercised the diligence of a good father of a family in the accreditation and supervision of
the latter. In neglecting to offer such proof, PSI failed to discharge its burden under the last paragraph of Article 2180 cited earlier, and, therefore,
must be adjudged solidarily liable with Dr. Ampil. Moreover, as we have discussed, PSI is also directly liable to the Aganas.
One final word. Once a physician undertakes the treatment and care of a patient, the law imposes on him certain obligations. In order to escape
liability, he must possess that reasonable degree of learning, skill and experience required by his profession. At the same time, he must apply
reasonable care and diligence in the exercise of his skill and the application of his knowledge, and exert his best judgment.
WHEREFORE, we DENY all the petitions and AFFIRM the challenged Decision of the Court of Appeals in CA-G.R. CV No. 42062 and CA-G.R.
SP No. 32198.
Costs against petitioners PSI and Dr. Miguel Ampil.
SO ORDERED.

FACTS
Natividad Agana was rushed to Medical City because of difficulty of bowel movement and bloody anal discharge. Dr. Ampil diagnosed her to be suffering from cancer
of the sigmoid. Dr. Ampil performed an anterior resection surgery on her, and finding that the malignancy spread on her left ovary, he obtained the consent of her
husband, Enrique, to permit Dr. Fuentes to perform hysterectomy on her. After the hysterectomy, Dr. Fuentes showed his work to Dr. Ampil, who examined it and
found it in order, so he allowed Dr. Fuentes to leave the operating room. Dr. Ampil was about to complete the procedure when the attending nurses made some remarks
on the Record of Operation: sponge count lacking 2; announced to surgeon search done but to no avail continue for closure (two pieces of gauze were missing). A
diligent search was conducted but they could not be found. Dr. Ampil then directed that the incision be closed.
A couple of days after, she complained of pain in her anal region, but the doctors told her that it was just a natural consequence of the surgery. Dr. Ampil
recommended that she consult an oncologist to examine the cancerous nodes which were not removed during the operation. After months of consultations and
examinations in the US, she was told that she was free of cancer. Weeks after coming back, her daughter found a piece of gauze (1.5 in) protruding from her vagina, so
Dr. Ampil manually extracted this, assuring Natividad that the pains will go away. However, the pain worsened, so she sought treatment at a hospital, where another 1.5
in piece of gauze was found in her vagina. She underwent another surgery.

28
 Sps. Agana filed a complaint for damages against PSI (owner of Medical City), Dr. Ampil, and Dr. Fuentes, alleging that the latter are liable for negligence for
leaving 2 pieces of gauze in Natividads body, and malpractice for concealing their acts of negligence. Enrique Agana also filed an administrative complaint for gross
negligence and malpractice against the two doctors with the PRC (although only the case against Dr. Fuentes was heard since Dr. Ampil was abroad). Pending the
outcome of the cases, Natividad died (now substituted by her children). RTC found PSI and the two doctors liable for negligence and malpractice. PRC dismissed
the case against Dr. Fuentes. CA dismissed only the case against Fuentes.

ISSUE AND HOLDING

1. WON CA erred in holding Dr. Ampil liable for negligence and malpractice. NO; DR. AMPIL IS GUILTY
2. WON CA erred in absolving Dr. Fuentes of any liability. NO
3. WON PSI may be held solidarily liable for Dr. Ampils negligence. YES
RATIO
DR. AMPIL IS LIABLE FOR NEGLIGENCE AND MALPRACTICE
His arguments are without basis [did not prove that the American doctors were the ones who put / left the gauzes; did not submit evidence to rebut the correctness of the
operation record (re: number of gauzes used); re: Dr. Fuentes alleged negligence, Dr. Ampil examined his work and found it in order].
Leaving foreign substances in the wound after incision has been closed is at least prima facie negligence by the operating surgeon. Even if it has been
shown that a surgeon was required to leave a sponge in his patients abdomen because of the dangers attendant upon delay, still, it is his legal duty to inform his patient
within a reasonable time by advising her of what he had been compelled to do, so she can seek relief from the effects of the foreign object left in her body as her
condition might permit. Whats worse in this case is that he misled her by saying that the pain was an ordinary consequence of her operation.

Medical negligence; standard of diligence

To successfully pursue this case of medical negligence, a patient must only prove that a health care provider either failed to do something [or did something] which a
reasonably prudent health care provider would have done [or wouldnt have done], and that the failure or action caused injury to the patient.
Duty to remove all foreign objects from the body before closure of the incision; if he fails to do so, it was his duty to inform the patient about it
Breach failed to remove foreign objects; failed to inform patient
Injury suffered pain that necessitated examination and another surgery
Proximate Causation breach caused this injury; could be traced from his act of closing the incision despite information given by the attendant nurses that 2
pieces of gauze were still missing; what established causal link: gauze pieces later extracted from patients vagina
DR. FUENTES NOT LIABLE
The res ipsa loquitur [thing speaks for itself] argument of the Aganas does not convince the court. Mere invocation and application of this doctrine does not dispense
with the requirement of proof of negligence.

Requisites for the applicability of res ipsa loquitur

1. Occurrence of injury
2. Thing which caused injury was under the control and management of the defendant [DR. FUENTES] LACKING SINCE CTRL+MGT WAS WITH DR.
AMPIL
3. Occurrence was such that in the ordinary course of things, would not have happened if those who had control or management used proper care
4. Absence of explanation by defendant
Under the Captain of the Ship rule, the operating surgeon is the person in complete charge of the surgery room and all personnel connected with the operation. That Dr.
Ampil discharged such role is evident from the following:
He called Dr. Fuentes to perform a hysterectomy
He examined Dr. Fuentes work and found it in order
He granted Dr. Fuentes permission to leave
He ordered the closure of the incision
HOSPITAL OWNER PSI SOLIDARILY LIABLE WITH DR. AMPIL [NCC 2180], AND DIRECTLY LIABLE TO SPS. AGANAS [NCC 2176]
Previously, employers cannot be held liable for the fault or negligence of its professionals. However, this doctrine has weakened since courts came to realize that
modern hospitals are taking a more active role in supplying and regulating medical care to its patients, by employing staff of physicians, among others. Hence, there is
no reason to exempt hospitals from the universal rule of respondeat superior. Here are the Courts bases for sustaining PSIs liability:
Ramos v. CA doctrine on E-E relationship

o For purposes of apportioning responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals
and their attending and visiting physicians. [LABOR LESSON: power to hire, fire, power of control]
Agency principle of apparent authority / agency by estoppel

o Imposes liability because of the actions of a principal or employer in somehow misleading the public into believing that the relationship or the
authority exists [see NCC 1869]
o PSI publicly displays in the Medical City lobby the names and specializations of their physicians. Hence, PSI is now estopped from passing all
the blame to the physicians whose names it proudly paraded in the public directory, leading the public to believe that it vouched for their skill and competence.
o

If doctors do well, hospital profits financially, so when negligence mars the quality of its services, the hospital should not be allowed
to escape liability for its agents acts.
Doctrine of corporate negligence / corporate responsibility

29
 o This is the judicial answer to the problem of allocating hospitals liability for the negligent acts of health practitioners, absent facts to support the
application of respondeat superior.
o This provides for the duties expected [from hospitals]. In this case, PSI failed to perform the duty of exercising reasonable care to protect from
harm all patients admitted into its facility for medical treatment. PSI failed to conduct an investigation of the matter reported in the note of the count nurse,
and this established PSIs part in the dark conspiracy of silence and concealment about the gauzes.
o

PSI has actual / constructive knowledge of the matter, through the report of the attending nurses + the fact that the operation was
carried on with the assistance of various hospital staff
o It also breached its duties to oversee or supervise all persons who practice medicine within its walls and take an active step in fixing the
negligence committed
PSI also liable under NCC 2180

o It failed to adduce evidence to show that it exercised the diligence of a good father of the family in the accreditation and supervision of Dr. Ampil

G.R. No. 173870 April 25, 2012

OSCAR DEL CARMEN, JR., Petitioner,
vs.
GERONIMO BACOY, Guardian and representing the children, namely: MARY MARJORIE B. MONSALUD, ERIC B. MONSALUD,
METZIE ANN B. MONSALUD, KAREEN B. MONSALUD, LEONARDO B. MONSALUD, JR., and CRISTINA B.
MONSALUD, Respondents.
DECISION
DEL CASTILLO, J.:
In this Petition for Review on Certiorari,1 the registered owner of a motor vehicle challenges the Decision 2 dated July 11, 2006 of the Court of
Appeals (CA) in CA-G.R. CV No. 67764 which held him liable for damages to the heirs of the victims who were run over by the said vehicle.
Factual Antecedents
At dawn on New Years Day of 1993, Emilia Bacoy Monsalud (Emilia), along with her spouse Leonardo Monsalud, Sr. and their daughter Glenda
Monsalud, were on their way home from a Christmas party they attended in Poblacion, Sominot, Zamboanga Del Sur. Upon reaching Purok Paglaom
in Sominot, they were run over by a Fuso passenger jeep bearing plate number UV-PEK-600 that was being driven by Allan Maglasang (Allan). The
jeep was registered in the name of petitioner Oscar del Carmen, Jr. (Oscar Jr.) and used as a public utility vehicle plying the Molave, Zamboanga del
Sur to Sominot, Zamboanga del Sur and vice versa route.
Because of the unfortunate incident, Criminal Case No. 93-10347 3 for Reckless Imprudence Resulting in Multiple Homicide was filed against Allan
before the Regional Trial Court of Molave, Zamboanga del Sur, Branch 23. In a Decision dated March 13, 1997, said court declared Allan guilty
beyond reasonable doubt of the crime charged.4
During the pendency of said criminal case, Emilias father, Geronimo Bacoy (Geronimo), in behalf of the six minor children 5 of the Monsaluds, filed
Civil Case No. 96-20219,6 an independent civil action for damages based onculpa aquiliana. Aside from Allan, also impleaded therein were his
alleged employers, namely, the spouses Oscar del Carmen, Sr. (Oscar Sr.) and Norma del Carmen (Spouses del Carmen) and the registered owner of
the jeep, their son Oscar Jr. Geronimo prayed for the reimbursement of funeral and burial expenses, as well as the award of attorneys fees, moral and
exemplary damages resulting from the death of the three victims, and loss of net income earnings of Emilia who was employed as a public school
teacher at the time of her death.7
Defendants refused to assume civil liability for the victims deaths. Oscar Sr. averred that the Monsaluds have no cause of action against them
because he and his wife do not own the jeep and that they were never the employers of Allan. 8 For his part, Oscar Jr. claimed to be a victim himself.
He alleged that Allan and his friends9stole his jeep while it was parked beside his drivers rented house to take it for a joyride. Both he and a vehicle
mechanic testified that the subject jeep can easily be started by mere pushing sans the ignition key. The vehicles engine shall then run but without
any headlights on.10 And implying that this was the manner by which the vehicle was illegally taken, Oscar Jr. submitted as part of his documentary
evidence the statements11 of Jemar Alarcon (Jemar) and Benjamin Andujar (Benjamin). The two, who were with Allan in the jeep at the time of the
accident, declared before the investigating officer that during said time, the vehicles headlights were off. Because of this allegation, Oscar Jr. even
filed before the same trial court a carnapping case against Allan and his companions docketed as Criminal Case No. 93-10380. 12 The case was,
however, dismissed for insufficiency of evidence.13
Oscar Jr. clarified that Allan was his jeep conductor and that it was the latters brother, Rodrigo Maglasang (Rodrigo), who was employed as the
driver.14 In any event, Allans employment as conductor was already severed before the mishap occurred on January 1, 1993 since he served as such
conductor only from the first week of December until December 14, 1992. 15 In support of this, Oscar Jr. presented as witnesses Faustino Sismundo
(Faustino) and Cresencio "Junior" Baobao (Cresencio). Faustino, a resident of Molave, testified that when he boarded the jeep heading to Sominot on
December 31, 1992, it was Cresencio who was the conductor. He also believed that Crecencio started to work as such at around December 15 or 16,
1992.16 Cresencio, for his part, testified that he worked as Oscar Jr.s conductor from December 15, 1992 to January 1, 1993 and that Rodrigo was his
driver.17 He stated that upon learning that the jeep figured in an accident, he never bothered to verify the news. Instead, he went to Midsalip to work
there as a conductor for his brothers vehicle, thereby terminating his employment with Oscar Jr. 18
Oscar Jr. likewise testified that it was routinary that after a days trip, the jeep would be parked beside Rodrigos rented house 19 for the next early-
morning operation.
Geronimo, on the other hand, averred that Allan was still Oscar Jr.s employee subsequent to December 14, 1992. To prove this, he presented as
witnesses Saturnino Jumawan (Saturnino) and Jose Navarro (Jose). Saturnino testified that he would pay his fare to Allan every time he would board
the jeep in going to Molave and that the last time he rode the subject vehicle was on December 23, 1992. He also claimed that immediately before
January 1, 1993, Rodrigo and Allan used to park the jeep at the yard of his house. 20 Jose likewise attested that Allan was still the jeep conductor
during the said period as he had ridden the jeep many times in mid-December of 1992. 21

30
Ruling of the Regional Trial Court
In its Decision22 dated April 17, 2000, the RTC exculpated the spouses del Carmen from civil liability for insufficiency of evidence. However, their
son Oscar Jr. was held civilly liable in a subsidiary capacity. The RTC anchored its ruling primarily on the principle of res ipsa loquitur, i.e., that a
presumption of negligence on the part of a defendant may be inferred if the thing that caused an injury is shown to be under his management and that
in the ordinary course of things, the accident would not have happened had there been an exercise of care. Said court ratiocinated that Oscar Jr., as the
registered owner of the jeep, managed and controlled the same through his driver Rodrigo, in whose house the jeep was usually parked. Since both
Oscar Jr. and Rodrigo were well aware that the jeep could easily be started by a mere push even without the ignition key, they should have taken the
necessary precaution to prevent the vehicle from being used by unauthorized persons like Allan. The RTC thus concluded that such lack of proper
precaution, due care and foresight constitute negligence making the registered owner of the vehicle civilly liable for the damage caused by the same.
The RTC disposed of the case as follows:
Wherefore, judgment is hereby entered in favor of the plaintiffs and against the defendants Allan Maglasang and Oscar del Carmen, Jr. ordering
1. Defendant ALLAN MAGLASANG to pay the plaintiffs, and in case of insolvency, for defendant OSCAR DEL CARMEN, JR., to pay
the plaintiffs, the following sums:
a. P73,112.00 for their funeral and burial expenses;
b. P1,000,000.00 moral damages for the death of the late Emilia Monsalud;
c. P250,000.00 moral damages for the death of the late Leonardo Monsalud, Sr.;
d. P250,000.00 moral damages for the death of the late Glenda Monsalud;
e. P40, 000.00, for exemplary damages;
f. P20,000.00 attorneys fees; and
g. The cost of this proceedings.
2. The dismissal of the complaint as against the spouses OSCAR DEL CARMEN SR. and NORMA DEL CARMEN.
SO ORDERED.23
Oscar Jr. moved for reconsideration24 contending that the provision on vicarious liability of the employer under Article 2180 of the Civil
Code25 requires the existence of employer-employee relationship and that the employee was acting within the scope of his employment when the tort
occurred. He stressed that even assuming that Allan was his employee, he was hired not as a driver but as a conductor. Hence, Allan acted beyond the
scope of his employment when he drove the jeep.
Oscar Jr. also stressed that the fact that the jeep was running without its headlights on at the time of the accident indubitably shows that the same was
stolen. He further alleged that the jeep could not have been taken by only one person. As Rodrigo declared in Criminal Case No. 93-10380
(carnapping case), based on his experience, the jeep cannot be pushed by only one person but by at least five people in order for it to start. This was
due to the vehicles mass and the deep canal which separates the parking area from the curved road that was obstructed by a house. 26
Setting aside its earlier decision, the lower court in its Order 27 dated June 21, 2000 granted the Motion for Reconsideration and absolved Oscar Jr.
from civil liability. It cited Article 103 of the Revised Penal Code which provides that for an employer to be subsidiarily liable for the criminal acts of
his employee, the latter should have committed the same in the discharge of his duties. The court agreed with Oscar Jr. that this condition is wanting
in Allans case as he was not acting in the discharge of his duties as a conductor when he drove the jeep.
The court also declared the doctrine of res ipsa loquitur inapplicable since the property owner cannot be made responsible for the damages caused by
his property by reason of the criminal acts of another. It then adjudged that only Allan should bear the consequences of his criminal acts. Thus:
WHEREFORE, premises considered, the MOTION FOR
RECONSIDERATION is granted, and defendant OSCAR DEL CARMEN JR. is hereby absolved from all civil liability arising from the felonious
acts of convicted accused ALLAN MAGLASANG.
IT IS SO ORDERED.28
Geronimo appealed.
Ruling of the Court of Appeals
In its July 11, 2006 Decision,29 the CA granted the appeal.
In resolving the case, the CA first determined the preliminary issue of whether there was an employer-employee relationship between Oscar Jr. and
Allan at the time of the accident. It ruled in the affirmative and gave more credence to the testimonies of Geronimos witnesses than to those of Oscar
Jr.s witnesses, Faustino and Cresencio. The CA ratiocinated that unlike the witness presented by Geronimo, Faustino never resided in Poblacion and
thus has limited knowledge of the place. His testimony was also unreliable considering that he only rode the subject jeep twice 30 during the last two
weeks of December 1992. As regards Cresencios testimony, the appellate court found it puzzling why he appeared to have acted uninterested upon
learning that the jeep was the subject of an accident when it was his bread and butter. Said court likewise considered questionable Oscar Jr.s
asseveration that Cresencio replaced Allan as conductor when Cresencio testified that he replaced a certain Sumagang Jr. 31
With regard to the main issue, the CA adjudged Oscar Jr. liable to the heirs of the victims based on the principle that the registered owner of a vehicle
is directly and primarily responsible for the injuries or death of third parties caused by the operation of such vehicle. It disbelieved Oscar Jr.s defense
that the jeep was stolen not only because the carnapping case filed against Allan and his companions was dismissed but also because, given the
circumstances, Oscar Jr. is deemed to have given Allan the implied permission to use the subject vehicle. To support its conclusion, the CA cited the
following circumstances: siblings Rodrigo and Allan were both employees assigned to the said jeep; after a days work, said vehicle would be parked
just beside Rodrigos house where Allan also lived; the jeep could easily be started even without the use of an ignition key; the said parking area was
not fenced or secured to prevent the unauthorized use of the vehicle which can be started even without the ignition key.
The dispositive portion of the CA Decision reads:
WHEREFORE, premises considered, the instant appeal is GRANTED. The assailed Order dated 21 June 2000 of the Regional Trial Court (Branch
23), Molave, Zamboanga del Sur, in Civil Case No. 96-20,219 is SET ASIDE and a new one is hereby entered. OSCAR DEL CARMEN, Jr. and
ALLAN MAGLASANG are held primarily liable, jointly and severally, to pay plaintiffs-appellants:
1. Civil indemnity for the death of Emilia Bacoy Monsalud, Leonardo Monsalud Sr., and Glenda Monsalud in the amount of Fifty thousand
pesos (P50,000.00) each or for the total amount of One hundred fifty thousand pesos (P150,000.00);
2. Temperate damages in the amount of Twenty-five Thousand Pesos (P25,000.00) each for the death of Emilia Monsalud, Leonardo
Monsalud Sr., and Glenda Monsalud (collectively the Monsaluds) or for the total amount of Seventy-five thousand pesos (P75,000.00);

31
 3. Moral damages in the amount of Fifty Thousand Pesos (P50,000.00) each for the death of the Monsaluds or for a total amount of One
Hundred Fifty Thousand Pesos (P150,000.00);
4. Exemplary damages of Forty Thousand Pesos (P40,000.00).
No pronouncement as to costs.
SO ORDERED. 32
Issues
As a result of the adverse judgment, Oscar Jr. filed this Petition for Review on Certiorari alleging that the CA erred in:
1. x x x basing its conclusions and findings on speculations, surmises and conjectures; misapprehension of facts which are in conflict with
the findings of the trial court;
2. x x x declaring a question of substance not in accord with law and with the applicable decisions of the Supreme Court;
3. x x x departing from the regular course of the judicial proceedings in the disposition of the appeal and [in going] beyond the issues of the
case.33
Oscar Jr. points out that the CA failed to consider the RTCs ruling in its June 21, 2000 Order which was in accord with Article 2180 of the Civil
Code, i.e., that the tort committed by an employee should have been done within the scope of his assigned tasks for an employer to be held liable
under culpa aquiliana. However, the CA never touched upon this matter even if it was glaring that Allans driving the subject vehicle was not within
the scope of his previous employment as conductor. Moreover, Oscar Jr. insists that his jeep was stolen and stresses that the liability of a registered
owner of a vehicle as to third persons, as well as the doctrine of res ipsa loquitur, should not apply to him. He asserts that although Allan and his
companions were not found to have committed the crime of carnapping beyond reasonable doubt, it was nevertheless established that the jeep was
illicitly taken by them from a well secured area. This is considering that the vehicle was running without its headlights on at the time of the accident,
a proof that it was started without the ignition key.
Our Ruling
Petitioners own evidence casts doubt on his claim that his jeep was stolen by Allan and his alleged cohorts. Negligence is presumed under the
doctrine of res ipsa loquitur.
Oscar Jr.s core defense to release him from responsibility for the death of the Monsaluds is that his jeep was stolen. He highlights that the
unauthorized taking of the jeep from the parking area was indeed carried out by the clandestine and concerted efforts of Allan and his five
companions, notwithstanding the obstacles surrounding the parking area and the weight of the jeep.
Notably, the carnapping case filed against Allan and his group was already dismissed by the RTC for insufficiency of evidence. But even in this civil
case and as correctly concluded by the CA, the evidentiary standard of preponderance of evidence required was likewise not met to support Oscar
Jr.s claim that his jeep was unlawfully taken.
Two of Allans co-accused in the carnapping case, Jemar and Benjamin, declared before the police that when Allan invited them to ride with him, he
was already driving the jeep:
04. Q- On that night, on or about 11:30 oclock on December 31, 1992, where were you?
A- I went to the disco near [the] Public Market[,] Sominot, Zamboanga del Sur.
05. Q- While you were in disco place, do you know if there was an incident [that] happened?
A- No sir but when I was in the disco place, at about 3:30 at dawn more or less[,] January 1, 1993, Allan Maglasang arrived driving the
jeep and he invited me to ride together with Benjamin Andujar, Dioscoro Sol, Arniel Rezada and Joven Orot. 34
xxxx
04. Q- On that night, on or about 9:00 oclock in the evening more or less on December 31, 1992, where were you?
A- I went to the disco at [the] Public Market[,] Sominot, Zamboanga del Sur.
05. Q- While you were in the disco place, do you know if there was an incident [that] happened?
A- No, sir, but when I was in the disco place, at about 3:30 at dawn more or less[,] January 1, 1993, Allan Maglasang arrive[d] driving the
jeep and he invited me to ride together with Jemar Alarcon, Dioscoro Sol, Arniel Rizada and Joven Orot. 35
There were six accused in the carnapping case. If Jemar and Benjamin were fetched by Allan who was driving the jeep, this would mean that only
three men pushed the jeep contrary to Rodrigos testimony in Criminal Case No. 93-10380 that it has to be pushed by at least five people so that it
could start without the ignition key.
On direct examination,36 Oscar Jr. was asked as to what Rodrigo, his driver who had informed him about the accident on January 1, 1993 at around
7:00 a.m., turned over to him after the incident, viz:
Q: When Rodrigo Maglasang, your driver informed you about the accident, what did he carry with him if any and turned over to you?
A: The OR (Official Receipt) and the CR (Certificate of Registration) Sir.
Q: How about the key of the vehicle?
A: It was not turned over, Sir.37
Assuming arguendo that Allan stole the jeep by having the same pushed by a group, the ignition key should then be with Rodrigo as he was entrusted
with the jeeps possession. Thus, at the time Rodrigo faced his employer hours after the incident, it is reasonable to expect that the driver should have
also returned the key to the operator together with the Official Receipt and Certificate of Registration. Notably, Rodrigo did not do so and instead, the
key was allegedly handed over to the police for reasons unexplained and not available from the records. Interestingly, Oscar Jr. never presented
Rodrigo as his witness. Neither was he able to attest on cross-examination that Allan really stole the jeep by pushing or that the key was handed over
to him by Rodrigo:
Q: On December 31, 1992, you did not know that it was Rodrigo Maglasang who gave the key to Allan Maglasang. Is that correct?
A: I was not there. So, I do not know but he had an affidavit to show that he turned it over to the police.
Q: What I was asking you is that, [o]n the night of December 31, 1992, when it was driven by Allan Maglasang, you did not know that the
key was voluntarily given by Rodrigo Maglasang to Allan Maglasang?
A: I was not there.
Q: So, you could not testify on that, is that correct?
A: Yes Sir, I was not there.38
Furthermore, Oscar Jr. acknowledged the dismissal of the carnapping case, thus:

32
 Q: Now, there was a case filed against Allan Maglasang and [his] x x x co-accused x x x [n]amely: Benjamin Andojar, Dioscoro Sol, Joven
Orot, [Jemar Azarcon] and [Arniel] Rizada, for carnapping. Is that correct?
A: Yes Sir.
Q: That case was filed by you because you alleged that on December 31, 1992, your jeep was carnapped by Allan Maglasang and his co-
accused, the said mentioned, is that correct?
A: Yes Sir.
Q: You testified on the case in Aurora, is that correct?
A: Yes, Sir.
Q: And you could well remember that this representation is the counsel of the co-accused of Allan Maglasang, is that correct?
A: Yes Sir.
Q: And that case for carnapping was dismissed, is that correct?
A: Yes Sir.
Q: Even the case of Allan Maglasang, was also dismissed, is that correct
A: Yes Sir.
Q: Because there was no sufficient evidence to establish that the jeep was carnapped, is that correct?
A: Yes Sir.39
While Oscar Jr. highlights that the headlights were not on to support his claim that his jeep was stolen, this circumstance by itself will not prove that
it really was stolen. The reason why the headlights were not on at the time of the accident was not sufficiently established during the trial. Besides,
the fact that the headlights were not on cannot be exclusively attributed to the lack of ignition key in starting the jeep as there may be other
possibilities such as electrical problems, broken headlights, or that they were simply turned off.
Hence, sans the testimony of witnesses and other relevant evidence to support the defense of unauthorized taking, we cannot subscribe to Oscar Jr.s
claim that his jeep was stolen. The evidence on record brings forth more questions than clear-cut answers.
Oscar Jr. alleges that the presumption of negligence under the doctrine of res ipsa loquitur (literally, the thing speaks for itself) should not have been
applied because he was vigilant in securing his vehicle. He claims that the jeep was parked in a well secured area not remote to the watchful senses of
its driver Rodrigo.
Under the doctrine of res ipsa loquitur, "[w]here the thing that caused the injury complained of is shown to be under the management of the
defendant or his servants; and the accident, in the ordinary course of things, would not happen if those who had management or control used proper
care, it affords reasonable evidence in the absence of a sufficient, reasonable and logical explanation by defendant that the accident arose from or
was caused by the defendants want of care."40 Res ipsa loquitur is "merely evidentiary, a mode of proof, or a mere procedural convenience, since it
furnishes a substitute for, and relieves a plaintiff of, the burden of producing a specific proof of negligence." 41 It "recognizes that parties may
establish prima facie negligence without direct proof, thus, it allows the principle to substitute for specific proof of negligence. It permits the plaintiff
to present along with proof of the accident, enough of the attending circumstances to invoke the doctrine, create an inference or presumption of
negligence and thereby place on the defendant the burden of proving that there was no negligence on his part." 42 The doctrine is based partly on "the
theory that the defendant in charge of the instrumentality which causes the injury either knows the cause of the accident or has the best opportunity of
ascertaining it while the plaintiff has no such knowledge, and is therefore compelled to allege negligence in general terms." 43
The requisites of the doctrine of res ipsa loquitur as established by jurisprudence are as follows:
1) the accident is of a kind which does not ordinarily occur unless someone is negligent;
2) the cause of the injury was under the exclusive control of the person in charge and
3) the injury suffered must not have been due to any voluntary action or contribution on the part of the person injured. 44
The above requisites are all present in this case. First, no person just walking along the road would suddenly be sideswiped and run over by an on-
rushing vehicle unless the one in charge of the said vehicle had been negligent. Second, the jeep which caused the injury was under the exclusive
control of Oscar Jr. as its owner. When Oscar Jr. entrusted the ignition key to Rodrigo, he had the power to instruct him with regard to the specific
restrictions of the jeeps use, including who or who may not drive it. As he is aware that the jeep may run without the ignition key, he also has the
responsibility to park it safely and securely and to instruct his driver Rodrigo to observe the same precaution. Lastly, there was no showing that the
death of the victims was due to any voluntary action or contribution on their part.
The aforementioned requisites having been met, there now arises a presumption of negligence against Oscar Jr. which he could have overcome by
evidence that he exercised due care and diligence in preventing strangers from using his jeep. Unfortunately, he failed to do so.
What this Court instead finds worthy of credence is the CAs conclusion that Oscar Jr. gave his implied permission for Allan to use the jeep. This is in
view of Oscar Jr.s failure to provide solid proof that he ensured that the parking area is well secured and that he had expressly imposed restrictions as
to the use of the jeep when he entrusted the same to his driver Rodrigo. As fittingly inferred by the CA, the jeep could have been endorsed to Allan by
his brother Rodrigo since as already mentioned, Oscar Jr. did not give Rodrigo any specific and strict instructions on matters regarding its use.
Rodrigo therefore is deemed to have been given the absolute discretion as to the vehicles operation, including the discretion to allow his brother
Allan to use it.
The operator on record of a vehicle is primarily responsible to third persons for the deaths or injuries consequent to its operation, regardless of
whether the employee drove the registered owners vehicle in connection with his employment.
Without disputing the factual finding of the CA that Allan was still his
employee at the time of the accident, a finding which we see no reason to disturb, Oscar Jr. contends that Allan drove the jeep in his private capacity
and thus, an employers vicarious liability for the employees fault under Article 2180 of the Civil Code cannot apply to him.
The contention is no longer novel. In Aguilar Sr. v. Commercial Savings Bank, 45 the car of therein respondent bank caused the death of Conrado
Aguilar, Jr. while being driven by its assistant vice president. Despite Article 2180, we still held the bank liable for damages for the accident as said
provision should defer to the settled doctrine concerning accidents involving registered motor vehicles, i.e., that the registered owner of any vehicle,
even if not used for public service, would primarily be responsible to the public or to third persons for injuries caused the latter while the vehicle was
being driven on the highways or streets.46 We have already ratiocinated that:
The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or that any damage or injury is caused by the
vehicle on the public highways, responsibility therefor can be fixed on a definite individual, the registered owner. Instances are numerous where
vehicles running on public highways caused accidents or injuries to pedestrians or other vehicles without positive identification of the owner or

33
drivers, or with very scant means of identification. It is to forestall these circumstances, so inconvenient or prejudicial to the public, that the motor
vehicle registration is primarily ordained, in the interest of the determination of persons responsible for damages or injuries caused on public
highways.47
Absent the circumstance of unauthorized use48 or that the subject vehicle was stolen49 which are valid defenses available to a registered owner, Oscar
Jr. cannot escape liability for quasi-delict resulting from his jeeps use.1wphi1
All told and considering that the amounts of damages awarded are in accordance with prevailing jurisprudence, the Court concurs with the findings
of the CA and sustains the awards made. In addition, pursuant to Eastern Shipping Lines, Inc. v. Court of Appeals, 50 an interest of six percent (6%)
per annum on the amounts awarded shall be imposed, computed from the time the judgment of the RTC is rendered on April 17, 2000 and twelve
percent (12%) per annum on such amount upon finality of this Decision until the payment thereof.
WHEREFORE, premises considered, the instant petition is DENIED. The Decision dated July 11, 2006 of the Court of Appeals in CA-G.R. CV No.
67764 is hereby AFFIRMED with further MODIFICATION that an interest of six percent (6%) per annum on the amounts awarded shall be imposed,
computed from the time the judgment of the Regional Trial Court, Branch 23, Molave, Zamboanga del Sur is rendered on April 17, 2000 and twelve
percent (12%) per annum on such amount upon finality of this Decision until the payment thereof.
SO ORDERED.

Facts: Emilia Bacoy Monsalud, along with her spouse Leonardo Monsalud, Sr. and their daughter Glenda Monsalud, were on their way home from a Christmas party
they attended in Poblacion, Sominot, Zamboanga Del Sur. Upon reaching Purok Paglaom in Sominot, they were run over by a Fuso passenger jeep bearing plate
number UV-PEK-600 that was being driven by Allan Maglasang. The jeep was registered in the name of petitioner Oscar del Carmen, Jr. and used as a public utility
vehicle plying the Molave, Zamboanga del Sur to Sominot, Zamboanga del Sur and vice versa route.
Because of the unfortunate incident, Criminal Case No. 93-10347 for Reckless Imprudence Resulting in Multiple Homicide was filed against Allan before the Regional
Trial Court of Molave, Zamboanga del Sur, Branch 23. In a Decision dated March 13, 1997, said court declared Allan guilty beyond reasonable doubt of the crime
charged.
During the pendency of said criminal case, Emilias father, Geronimo Bacoy, in behalf of the six minor children of the Monsaluds, filed Civil Case No. 96-20219, an
independent civil action for damages based on culpa aquiliana. Aside from Allan, also impleaded therein were his alleged employers, namely, the spouses Oscar del
Carmen, Sr. and Norma del Carmen and the registered owner of the jeep, their son Oscar Jr. Geronimo prayed for the reimbursement of funeral and burial expenses, as
well as the award of attorneys fees, moral and exemplary damages resulting from the death of the three victims, and loss of net income earnings of Emilia who was
employed as a public school teacher at the time of her death.
Issue: Whether or not whether there was an employer-employee relationship between Oscar Jr. and Allan at the time of the accident, thus holding Oscar Jr. liable.
Ruling: Under the doctrine of res ipsa loquitur, where the thing that caused the injury complained of is shown to be under the management of the defendant or his
servants; and the accident, in the ordinary course of things, would not happen if those who had management or control used proper care, it affords reasonable evidence
in the absence of a sufficient, reasonable and logical explanation by defendant that the accident arose from or was caused by the defendants want of care. Res ipsa
loquitur is merely evidentiary, a mode of proof, or a mere procedural convenience, since it furnishes a substitute for, and relieves a plaintiff of, the burden of producing
a specific proof of negligence. It recognizes that parties may establish prima facie negligence without direct proof, thus, it allows the principle to substitute for
specific proof of negligence. It permits the plaintiff to present along with proof of the accident, enough of the attending circumstances to invoke the doctrine, create an
inference or presumption of negligence and thereby place on the defendant the burden of proving that there was no negligence on his part. The doctrine is based partly
on the theory that the defendant in charge of the instrumentality which causes the injury either knows the cause of the accident or has the best opportunity of
ascertaining it while the plaintiff has no such knowledge, and is therefore compelled to allege negligence in general terms.
The requisites of the doctrine of res ipsa loquitur as established by jurisprudence are as follows:
1) the accident is of a kind which does not ordinarily occur unless someone is negligent;
2) the cause of the injury was under the exclusive control of the person in charge and
3) the injury suffered must not have been due to any voluntary action or contribution on the part of the person injured.
The aforementioned requisites having been met, there now arises a presumption of negligence which he could have overcome by evidence that he exercised due care
and diligence in preventing strangers from using his jeep. Unfortunately, he failed to do so.
The operator on record of a vehicle is primarily responsible to third persons for the deaths or injuries consequent to its operation, regardless of whether the employee
drove the registered owners vehicle in connection with his employment. Absent the circumstance of unauthorized use or that the subject vehicle was stolen which are
valid defenses available to a registered owner, he cannot escape liability for quasi-delict resulting from his jeeps use.

G.R. No. 194320 February 1, 2012

MALAYAN INSURANCE CO., INC., Petitioner,
vs.
RODELIO ALBERTO and ENRICO ALBERTO REYES, Respondents.
DECISION
VELASCO, JR., J.:
The Case
Before Us is a Petition for Review on Certiorari under Rule 45, seeking to reverse and set aside the July 28, 2010 Decision 1 of the Court of Appeals
(CA) and its October 29, 2010 Resolution2 denying the motion for reconsideration filed by petitioner Malayan Insurance Co., Inc. (Malayan
Insurance). The July 28, 2010 CA Decision reversed and set aside the Decision 3 dated February 2, 2009 of the Regional Trial Court, Branch 51 in
Manila.
The Facts
At around 5 oclock in the morning of December 17, 1995, an accident occurred at the corner of EDSA and Ayala Avenue, Makati City, involving
four (4) vehicles, to wit: (1) a Nissan Bus operated by Aladdin Transit with plate number NYS 381; (2) an Isuzu Tanker with plate number PLR 684;
(3) a Fuzo Cargo Truck with plate number PDL 297; and (4) a Mitsubishi Galant with plate number TLM 732. 4
Based on the Police Report issued by the on-the-spot investigator, Senior Police Officer 1 Alfredo M. Dungga (SPO1 Dungga), the Isuzu Tanker was
in front of the Mitsubishi Galant with the Nissan Bus on their right side shortly before the vehicular incident. All three (3) vehicles were at a halt
along EDSA facing the south direction when the Fuzo Cargo Truck simultaneously bumped the rear portion of the Mitsubishi Galant and the rear left
portion of the Nissan Bus. Due to the strong impact, these two vehicles were shoved forward and the front left portion of the Mitsubishi Galant
rammed into the rear right portion of the Isuzu Tanker. 5
Previously, particularly on December 15, 1994, Malayan Insurance issued Car Insurance Policy No. PV-025-00220 in favor of First Malayan Leasing
and Finance Corporation (the assured), insuring the aforementioned Mitsubishi Galant against third party liability, own damage and theft, among

34
others. Having insured the vehicle against such risks, Malayan Insurance claimed in its Complaint dated October 18, 1999 that it paid the damages
sustained by the assured amounting to PhP 700,000.6
Maintaining that it has been subrogated to the rights and interests of the assured by operation of law upon its payment to the latter, Malayan Insurance
sent several demand letters to respondents Rodelio Alberto (Alberto) and Enrico Alberto Reyes (Reyes), the registered owner and the driver,
respectively, of the Fuzo Cargo Truck, requiring them to pay the amount it had paid to the assured. When respondents refused to settle their liability,
Malayan Insurance was constrained to file a complaint for damages for gross negligence against respondents. 7
In their Answer, respondents asserted that they cannot be held liable for the vehicular accident, since its proximate cause was the reckless driving of
the Nissan Bus driver. They alleged that the speeding bus, coming from the service road of EDSA, maneuvered its way towards the middle lane
without due regard to Reyes right of way. When the Nissan Bus abruptly stopped, Reyes stepped hard on the brakes but the braking action could not
cope with the inertia and failed to gain sufficient traction. As a consequence, the Fuzo Cargo Truck hit the rear end of the Mitsubishi Galant, which,
in turn, hit the rear end of the vehicle in front of it. The Nissan Bus, on the other hand, sideswiped the Fuzo Cargo Truck, causing damage to the latter
in the amount of PhP 20,000. Respondents also controverted the results of the Police Report, asserting that it was based solely on the biased narration
of the Nissan Bus driver.8
After the termination of the pre-trial proceedings, trial ensued. Malayan Insurance presented the testimony of its lone witness, a motor car claim
adjuster, who attested that he processed the insurance claim of the assured and verified the documents submitted to him. Respondents, on the other
hand, failed to present any evidence.
In its Decision dated February 2, 2009, the trial court, in Civil Case No. 99-95885, ruled in favor of Malayan Insurance and declared respondents
liable for damages. The dispositive portion reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff against defendants jointly and severally to pay plaintiff the following:
1. The amount of P700,000.00 with legal interest from the time of the filing of the complaint;
2. Attorneys fees of P10,000.00 and;
3. Cost of suit.
SO ORDERED.9
Dissatisfied, respondents filed an appeal with the CA, docketed as CA-G.R. CV No. 93112. In its Decision dated July 28, 2010, the CA reversed and
set aside the Decision of the trial court and ruled in favor of respondents, disposing:
WHEREFORE, the foregoing considered, the instant appeal is hereby GRANTED and the assailed Decision dated 2 February 2009 REVERSED and
SET ASIDE. The Complaint dated 18 October 1999 is hereby DISMISSED for lack of merit. No costs.
SO ORDERED.10
The CA held that the evidence on record has failed to establish not only negligence on the part of respondents, but also compliance with the other
requisites and the consequent right of Malayan Insurance to subrogation. 11 It noted that the police report, which has been made part of the records of
the trial court, was not properly identified by the police officer who conducted the on-the-spot investigation of the subject collision. It, thus, held that
an appellate court, as a reviewing body, cannot rightly appreciate firsthand the genuineness of an unverified and unidentified document, much less
accord it evidentiary value.12
Subsequently, Malayan Insurance filed its Motion for Reconsideration, arguing that a police report is a prima facie evidence of the facts stated in it.
And inasmuch as they never questioned the presentation of the report in evidence, respondents are deemed to have waived their right to question its
authenticity and due execution.13
In its Resolution dated October 29, 2010, the CA denied the motion for reconsideration. Hence, Malayan Insurance filed the instant petition.
The Issues
In its Memorandum14 dated June 27, 2011, Malayan Insurance raises the following issues for Our consideration:
I
WHETHER THE CA ERRED IN REFUSING ADMISSIBILITY OF THE POLICE REPORT SINCE THE POLICE INVESTIGATOR
WHO PREPARED THE SAME DID NOT ACTUALLY TESTIFY IN COURT THEREON.
II
WHETHER THE SUBROGATION OF MALAYAN INSURANCE IS IMPAIRED AND/OR DEFICIENT.
On the other hand, respondents submit the following issues in its Memorandum 15 dated July 7, 2011:
I
WHETHER THE CA IS CORRECT IN DISMISSING THE COMPLAINT FOR FAILURE OF MALAYAN INSURANCE TO
OVERCOME THE BURDEN OF PROOF REQUIRED TO ESTABLISH THE NEGLIGENCE OF RESPONDENTS.
II
WHETHER THE PIECES OF EVIDENCE PRESENTED BY MALAYAN INSURANCE ARE SUFFICIENT TO CLAIM FOR THE
AMOUNT OF DAMAGES.
III
WHETHER THE SUBROGATION OF MALAYAN INSURANCE HAS PASSED COMPLIANCE AND REQUISITES AS PROVIDED
UNDER PERTINENT LAWS.
Essentially, the issues boil down to the following: (1) the admissibility of the police report; (2) the sufficiency of the evidence to support a claim for
gross negligence; and (3) the validity of subrogation in the instant case.
Our Ruling
The petition has merit.
Admissibility of the Police Report
Malayan Insurance contends that, even without the presentation of the police investigator who prepared the police report, said report is still
admissible in evidence, especially since respondents failed to make a timely objection to its presentation in evidence. 16 Respondents counter that
since the police report was never confirmed by the investigating police officer, it cannot be considered as part of the evidence on record. 17
Indeed, under the rules of evidence, a witness can testify only to those facts which the witness knows of his or her personal knowledge, that is, which
are derived from the witness own perception.18 Concomitantly, a witness may not testify on matters which he or she merely learned from others
either because said witness was told or read or heard those matters. 19 Such testimony is considered hearsay and may not be received as proof of the
truth of what the witness has learned. This is known as the hearsay rule. 20

35
As discussed in D.M. Consunji, Inc. v. CA,21 "Hearsay is not limited to oral testimony or statements; the general rule that excludes hearsay as
evidence applies to written, as well as oral statements."
There are several exceptions to the hearsay rule under the Rules of Court, among which are entries in official records. 22 Section 44, Rule 130
provides:
Entries in official records made in the performance of his duty by a public officer of the Philippines, or by a person in the performance of a duty
specially enjoined by law are prima facie evidence of the facts therein stated.
In Alvarez v. PICOP Resources,23 this Court reiterated the requisites for the admissibility in evidence, as an exception to the hearsay rule of entries in
official records, thus: (a) that the entry was made by a public officer or by another person specially enjoined by law to do so; (b) that it was made by
the public officer in the performance of his or her duties, or by such other person in the performance of a duty specially enjoined by law; and (c) that
the public officer or other person had sufficient knowledge of the facts by him or her stated, which must have been acquired by the public officer or
other person personally or through official information.
Notably, the presentation of the police report itself is admissible as an exception to the hearsay rule even if the police investigator who prepared it
was not presented in court, as long as the above requisites could be adequately proved. 24
Here, there is no dispute that SPO1 Dungga, the on-the-spot investigator, prepared the report, and he did so in the performance of his duty. However,
what is not clear is whether SPO1 Dungga had sufficient personal knowledge of the facts contained in his report. Thus, the third requisite is lacking.
Respondents failed to make a timely objection to the police reports presentation in evidence; thus, they are deemed to have waived their right to do
so.25 As a result, the police report is still admissible in evidence.
Sufficiency of Evidence
Malayan Insurance contends that since Reyes, the driver of the Fuzo Cargo truck, bumped the rear of the Mitsubishi Galant, he is presumed to be
negligent unless proved otherwise. It further contends that respondents failed to present any evidence to overturn the presumption of
negligence.26 Contrarily, respondents claim that since Malayan Insurance did not present any witness who shall affirm any negligent act of Reyes in
driving the Fuzo Cargo truck before and after the incident, there is no evidence which would show negligence on the part of respondents. 27
We agree with Malayan Insurance. Even if We consider the inadmissibility of the police report in evidence, still, respondents cannot evade liability by
virtue of the res ipsa loquitur doctrine. The D.M. Consunji, Inc. case is quite elucidating:
Petitioners contention, however, loses relevance in the face of the application of res ipsa loquitur by the CA. The effect of the doctrine is to warrant a
presumption or inference that the mere fall of the elevator was a result of the person having charge of the instrumentality was negligent. As a rule of
evidence, the doctrine of res ipsa loquitur is peculiar to the law of negligence which recognizes that prima facie negligence may be established
without direct proof and furnishes a substitute for specific proof of negligence.
The concept of res ipsa loquitur has been explained in this wise:
While negligence is not ordinarily inferred or presumed, and while the mere happening of an accident or injury will not generally give rise to an
inference or presumption that it was due to negligence on defendants part, under the doctrine of res ipsa loquitur, which means, literally, the thing or
transaction speaks for itself, or in one jurisdiction, that the thing or instrumentality speaks for itself, the facts or circumstances accompanying an
injury may be such as to raise a presumption, or at least permit an inference of negligence on the part of the defendant, or some other person who is
charged with negligence.
x x x where it is shown that the thing or instrumentality which caused the injury complained of was under the control or management of the
defendant, and that the occurrence resulting in the injury was such as in the ordinary course of things would not happen if those who had its control
or management used proper care, there is sufficient evidence, or, as sometimes stated, reasonable evidence, in the absence of explanation by the
defendant, that the injury arose from or was caused by the defendants want of care.
One of the theoretical bases for the doctrine is its necessity, i.e., that necessary evidence is absent or not available.
The res ipsa loquitur doctrine is based in part upon the theory that the defendant in charge of the instrumentality which causes the injury either knows
the cause of the accident or has the best opportunity of ascertaining it and that the plaintiff has no such knowledge, and therefore is compelled to
allege negligence in general terms and to rely upon the proof of the happening of the accident in order to establish negligence. The inference which
the doctrine permits is grounded upon the fact that the chief evidence of the true cause, whether culpable or innocent, is practically accessible to the
defendant but inaccessible to the injured person.
It has been said that the doctrine of res ipsa loquitur furnishes a bridge by which a plaintiff, without knowledge of the cause, reaches over to
defendant who knows or should know the cause, for any explanation of care exercised by the defendant in respect of the matter of which the plaintiff
complains. The res ipsa loquitur doctrine, another court has said, is a rule of necessity, in that it proceeds on the theory that under the peculiar
circumstances in which the doctrine is applicable, it is within the power of the defendant to show that there was no negligence on his part, and direct
proof of defendants negligence is beyond plaintiffs power. Accordingly, some courts add to the three prerequisites for the application of the res ipsa
loquitur doctrine the further requirement that for the res ipsa loquitur doctrine to apply, it must appear that the injured party had no knowledge or
means of knowledge as to the cause of the accident, or that the party to be charged with negligence has superior knowledge or opportunity for
explanation of the accident.
The CA held that all the requisites of res ipsa loquitur are present in the case at bar:
There is no dispute that appellees husband fell down from the 14th floor of a building to the basement while he was working with appellants
construction project, resulting to his death. The construction site is within the exclusive control and management of appellant. It has a safety engineer,
a project superintendent, a carpenter leadman and others who are in complete control of the situation therein. The circumstances of any accident that
would occur therein are peculiarly within the knowledge of the appellant or its employees. On the other hand, the appellee is not in a position to
know what caused the accident. Res ipsa loquitur is a rule of necessity and it applies where evidence is absent or not readily available, provided the
following requisites are present: (1) the accident was of a kind which does not ordinarily occur unless someone is negligent; (2) the instrumentality or
agency which caused the injury was under the exclusive control of the person charged with negligence; and (3) the injury suffered must not have been
due to any voluntary action or contribution on the part of the person injured. x x x.
No worker is going to fall from the 14th floor of a building to the basement while performing work in a construction site unless someone is
negligent[;] thus, the first requisite for the application of the rule of res ipsa loquitur is present. As explained earlier, the construction site with all its
paraphernalia and human resources that likely caused the injury is under the exclusive control and management of appellant[;] thus[,] the second
requisite is also present. No contributory negligence was attributed to the appellees deceased husband[;] thus[,] the last requisite is also present. All

36
the requisites for the application of the rule of res ipsa loquitur are present, thus a reasonable presumption or inference of appellants negligence
arises. x x x.
Petitioner does not dispute the existence of the requisites for the application of res ipsa loquitur, but argues that the presumption or inference that it
was negligent did not arise since it "proved that it exercised due care to avoid the accident which befell respondents husband."
Petitioner apparently misapprehends the procedural effect of the doctrine. As stated earlier, the defendants negligence is presumed or inferred when
the plaintiff establishes the requisites for the application of res ipsa loquitur. Once the plaintiff makes out a prima facie case of all the elements, the
burden then shifts to defendant to explain. The presumption or inference may be rebutted or overcome by other evidence and, under appropriate
circumstances a disputable presumption, such as that of due care or innocence, may outweigh the inference. It is not for the defendant to explain or
prove its defense to prevent the presumption or inference from arising. Evidence by the defendant of say, due care, comes into play only after the
circumstances for the application of the doctrine has been established. 28
In the case at bar, aside from the statement in the police report, none of the parties disputes the fact that the Fuzo Cargo Truck hit the rear end of the
Mitsubishi Galant, which, in turn, hit the rear end of the vehicle in front of it. Respondents, however, point to the reckless driving of the Nissan Bus
driver as the proximate cause of the collision, which allegation is totally unsupported by any evidence on record. And assuming that this allegation is,
indeed, true, it is astonishing that respondents never even bothered to file a cross-claim against the owner or driver of the Nissan Bus.
What is at once evident from the instant case, however, is the presence of all the requisites for the application of the rule of res ipsa loquitur. To
reiterate, res ipsa loquitur is a rule of necessity which applies where evidence is absent or not readily available. As explained in D.M. Consunji, Inc.,
it is partly based upon the theory that the defendant in charge of the instrumentality which causes the injury either knows the cause of the accident or
has the best opportunity of ascertaining it and that the plaintiff has no such knowledge, and, therefore, is compelled to allege negligence in general
terms and to rely upon the proof of the happening of the accident in order to establish negligence.
As mentioned above, the requisites for the application of the res ipsa loquitur rule are the following: (1) the accident was of a kind which does not
ordinarily occur unless someone is negligent; (2) the instrumentality or agency which caused the injury was under the exclusive control of the person
charged with negligence; and (3) the injury suffered must not have been due to any voluntary action or contribution on the part of the person
injured.29
In the instant case, the Fuzo Cargo Truck would not have had hit the rear end of the Mitsubishi Galant unless someone is negligent. Also, the Fuzo
Cargo Truck was under the exclusive control of its driver, Reyes. Even if respondents avert liability by putting the blame on the Nissan Bus driver,
still, this allegation was self-serving and totally unfounded. Finally, no contributory negligence was attributed to the driver of the Mitsubishi Galant.
Consequently, all the requisites for the application of the doctrine of res ipsa loquitur are present, thereby creating a reasonable presumption of
negligence on the part of respondents.
It is worth mentioning that just like any other disputable presumptions or inferences, the presumption of negligence may be rebutted or overcome by
other evidence to the contrary. It is unfortunate, however, that respondents failed to present any evidence before the trial court. Thus, the presumption
of negligence remains. Consequently, the CA erred in dismissing the complaint for Malayan Insurances adverted failure to prove negligence on the
part of respondents.
Validity of Subrogation
Malayan Insurance contends that there was a valid subrogation in the instant case, as evidenced by the claim check voucher 30 and the Release of
Claim and Subrogation Receipt31 presented by it before the trial court. Respondents, however, claim that the documents presented by Malayan
Insurance do not indicate certain important details that would show proper subrogation.
As noted by Malayan Insurance, respondents had all the opportunity, but failed to object to the presentation of its evidence. Thus, and as We have
mentioned earlier, respondents are deemed to have waived their right to make an objection. As this Court held in Asian Construction and
Development Corporation v. COMFAC Corporation:
The rule is that failure to object to the offered evidence renders it admissible, and the court cannot, on its own, disregard such evidence. We
note that ASIAKONSTRUCTs counsel of record before the trial court, Atty. Bernard Dy, who actively participated in the initial stages of the case
stopped attending the hearings when COMFAC was about to end its presentation. Thus, ASIAKONSTRUCT could not object to COMFACs offer of
evidence nor present evidence in its defense; ASIAKONSTRUCT was deemed by the trial court to have waived its chance to do so.
Note also that when a party desires the court to reject the evidence offered, it must so state in the form of a timely objection and it cannot
raise the objection to the evidence for the first time on appeal. Because of a partys failure to timely object, the evidence becomes part of the
evidence in the case. Thereafter, all the parties are considered bound by any outcome arising from the offer of evidence properly
presented.32 (Emphasis supplied.)
Bearing in mind that the claim check voucher and the Release of Claim and Subrogation Receipt presented by Malayan Insurance are already part of
the evidence on record, and since it is not disputed that the insurance company, indeed, paid PhP 700,000 to the assured, then there is a valid
subrogation in the case at bar. As explained in Keppel Cebu Shipyard, Inc. v. Pioneer Insurance and Surety Corporation:
Subrogation is the substitution of one person by another with reference to a lawful claim or right, so that he who is substituted succeeds to the rights
of the other in relation to a debt or claim, including its remedies or securities. The principle covers a situation wherein an insurer has paid a loss under
an insurance policy is entitled to all the rights and remedies belonging to the insured against a third party with respect to any loss covered by the
policy. It contemplates full substitution such that it places the party subrogated in the shoes of the creditor, and he may use all means that the creditor
could employ to enforce payment.1wphi1
We have held that payment by the insurer to the insured operates as an equitable assignment to the insurer of all the remedies that the insured may
have against the third party whose negligence or wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it grow out
of, any privity of contract. It accrues simply upon payment by the insurance company of the insurance claim. The doctrine of subrogation has its roots
in equity. It is designed to promote and to accomplish justice; and is the mode that equity adopts to compel the ultimate payment of a debt by one
who, in justice, equity, and good conscience, ought to pay. 33
Considering the above ruling, it is only but proper that Malayan Insurance be subrogated to the rights of the assured.
WHEREFORE, the petition is hereby GRANTED. The CAs July 28, 2010 Decision and October 29, 2010 Resolution in CA-G.R. CV No. 93112 are
hereby REVERSED and SET ASIDE. The Decision dated February 2, 2009 issued by the trial court in Civil Case No. 99-95885 is hereby
REINSTATED.
No pronouncement as to cost.
SO ORDERED.

37
G.R. No. 160889 April 27, 2007
DR. MILAGROS L. CANTRE, Petitioner,
vs.
SPS. JOHN DAVID Z. GO and NORA S. GO, Respondents.
DECISION
QUISUMBING, J.:
For review on certiorari are the Decision1 dated October 3, 2002 and Resolution2 dated November 19, 2003 of the Court of Appeals in CA-G.R. CV
No. 58184, which affirmed with modification the Decision3 dated March 3, 1997 of the Regional Trial Court of Quezon City, Branch 98, in Civil
Case No. Q-93-16562.
The facts, culled from the records, are as follows:
Petitioner Dr. Milagros L. Cantre is a specialist in Obstetrics and Gynecology at the Dr. Jesus Delgado Memorial Hospital. She was the attending
physician of respondent Nora S. Go, who was admitted at the said hospital on April 19, 1992.
At 1:30 a.m. of April 20, 1992, Nora gave birth to her fourth child, a baby boy. However, at around 3:30 a.m., Nora suffered profuse bleeding inside
her womb due to some parts of the placenta which were not completely expelled from her womb after delivery. Consequently, Nora suffered
hypovolemic shock, resulting in a drop in her blood pressure to "40" over "0." Petitioner and the assisting resident physician performed various
medical procedures to stop the bleeding and to restore Noras blood pressure. Her blood pressure was frequently monitored with the use of a
sphygmomanometer. While petitioner was massaging Noras uterus for it to contract and stop bleeding, she ordered a droplight to warm Nora and her
baby.4 Nora remained unconscious until she recovered.
While in the recovery room, her husband, respondent John David Z. Go noticed a fresh gaping wound two and a half (2 ) by three and a half (3 )
inches in the inner portion of her left arm, close to the armpit. 5 He asked the nurses what caused the injury. He was informed it was a burn. Forthwith,
on April 22, 1992, John David filed a request for investigation. 6 In response, Dr. Rainerio S. Abad, the medical director of the hospital, called
petitioner and the assisting resident physician to explain what happened. Petitioner said the blood pressure cuff caused the injury.
On May 7, 1992, John David brought Nora to the National Bureau of Investigation for a physical examination, which was conducted by medico-legal
officer Dr. Floresto Arizala, Jr.7 The medico-legal officer later testified that Noras injury appeared to be a burn and that a droplight when placed near
the skin for about 10 minutes could cause such burn.8 He dismissed the likelihood that the wound was caused by a blood pressure cuff as the scar was
not around the arm, but just on one side of the arm.9
On May 22, 1992, Noras injury was referred to a plastic surgeon at the Dr. Jesus Delgado Memorial Hospital for skin grafting. 10 Her wound was
covered with skin sourced from her abdomen, which consequently bore a scar as well. About a year after, on April 30, 1993, scar revision had to be
performed at the same hospital.11 The surgical operation left a healed linear scar in Noras left arm about three inches in length, the thickest portion
rising about one-fourth (1/4) of an inch from the surface of the skin. The costs of the skin grafting and the scar revision were shouldered by the
hospital.12
Unfortunately, Noras arm would never be the same.1a\^/phi1.net Aside from the unsightly mark, the pain in her left arm remains. When sleeping,
she has to cradle her wounded arm. Her movements now are also restricted. Her children cannot play with the left side of her body as they might
accidentally bump the injured arm, which aches at the slightest touch.
Thus, on June 21, 1993, respondent spouses filed a complaint13 for damages against petitioner, Dr. Abad, and the hospital. Finding in favor of
respondent spouses, the trial court decreed:
In view of the foregoing consideration, judgment is hereby rendered in favor of the plaintiffs and against the defendants, directing the latters, (sic)
jointly and severally
(a) to pay the sum of Five Hundred Thousand Pesos (P500,000.00) in moral damages;
(b) to pay the sum of One Hundred Fifty Thousand Pesos (P150,000.00) exemplary damages;
(c) to pay the sum of Eighty Thousand Pesos (P80,000.00) nominal damages;
(d) to pay Fifty Thousand Pesos (P50,000.00) for and as attorneys fees; and
(e) to pay Six Thousand Pesos (P6,000.00) litigation expenses.
SO ORDERED.14
Petitioner, Dr. Abad, and the hospital all appealed to the Court of Appeals, which affirmed with modification the trial court decision, thus:
WHEREFORE, in view of all the foregoing, and finding no reversible error in the appealed Decision dated March 3, 1997 of Branch 98 of the
Regional Trial Court of Quezon City in Civil Case No. Q-93-16562, the same is hereby AFFIRMED, with the following MODIFICATIONS:
1. Ordering defendant-appellant Dra. Milagros [L.] Cantre only to pay plaintiffs-appellees John David Go and Nora S. Go the sum of
P200,000.00 as moral damages;
2. Deleting the award [of] exemplary damages, attorneys fees and expenses of litigation;1awphi1.nt
3. Dismissing the complaint with respect to defendants-appellants Dr. Rainerio S. Abad and Delgado Clinic, Inc.;
4. Dismissing the counterclaims of defendants-appellants for lack of merit; and
5. Ordering defendant-appellant Dra. Milagros [L.] Cantre only to pay the costs.
SO ORDERED.15
Petitioners motion for reconsideration was denied by the Court of Appeals. Hence, the instant petition assigning the following as errors and issues:
I.
WHETHER OR NOT, THE LOWER COURT, AND THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF THEIR DISCRETION
WHEN, NOTWITHSTANDING THAT BOTH PARTIES HAVE RESTED THEIR RESPECTIVE CASES, THE LOWER COURT ADMITTED

38
THE ADDITIONAL EXHIBITS FURTHER OFFERED BY RESPONDENTS NOT TESTIFIED TO BY ANY WITNESS AND THIS DECISION
OF THE LOWER COURT WAS UPHELD BY THE COURT OF APPEALS LIKEWISE COMMITTING GRAVE ABUSE OF DISCRETION;
II.
WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE ABUSE OF ITS DISCRETION WHEN, CONTRARY TO
PREPONDERANCE OF EVIDENCE PRESENTED BY THE PETITIONER, IT RULED THAT THE PETITIONER HAS NOT AMPLY SHOWED
THAT THE DROPLIGHT DID NOT TOUCH THE BODY OF MRS. NORA GO, AND THIS DECISION OF THE LOWER COURT WAS
UPHELD BY THE COURT OF APPEALS LIKEWISE COMMITTING GRAVE ABUSE OF DISCRETION;
III.
WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE ABUSE OF ITS DISCRETION WHEN, CONTRARY TO
PREPONDERANCE OF EVIDENCE PRESENTED BY THE PETITIONER, IT RULED THAT PETITIONER DRA. CANTRE WAS NOT ABLE
TO AMPLY EXPLAIN HOW THE INJURY (BLISTERS) IN THE LEFT INNER ARM OF RESPONDENT MRS. GO CAME ABOUT;
IV.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF ITS DISCRETION WHEN IT MADE A RULING ON THE
RESPONDENTS INJURY QUOTING THE TESTIMONY OF SOMEONE WHO WAS NOT PRESENT AND HAS NOT SEEN THE ORIGINAL,
FRESH INJURY OF RESPONDENT MRS. NORA GO;
V.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ABUSING ITS DISCRETION RULED THAT PETITIONER DRA. CANTRE
SHOULD HAVE INTENDED TO INFLICT THE INJURY TO SAVE THE LIFE OF RESPONDENT MRS. GO;
VI.
WHETHER OR NOT THE LOWER COURT AND THE COURT [OF] APPEALS COMMITTED GRAVE ABUSE OF DISCRETION WHEN,
CONTRARY TO THE DETAILED PROCEDURES DONE BY PETITIONER, BOTH RULED THAT THE RESPONDENT WAS LEFT TO THE
CARE OF THE NURSING STAFF;
VII.
WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE ABUSE OF DISCRETION WHEN, CONTRARY TO THE MEDICAL
PURPOSES OF COSMETIC SURGERY, IT RULED THAT THE COSMETIC SURGERY MADE THE SCARS EVEN MORE UGLY AND
DECLARED THE COSMETIC SURGERY A FAILURE;
VIII.
WHETHER OR NOT THE LOWER COURT GRAVELY ABUSE OF (SIC) DISCRETION WHEN, CONTRARY TO RESPONDENTS
CONTRARY TESTIMONIES AND THE ABSENCE OF ANY TESTIMONY, IT RULED THAT THEY ARE ENTITLED TO DAMAGES AND
WHICH WAS UPHELD, ALTHOUGH MODIFIED, BY THE COURT OF APPEALS LIKEWISE ABUSING ITS DISCRETION. 16
Petitioner contends that additional documentary exhibits not testified to by any witness are inadmissible in evidence because they deprived her of her
constitutional right to confront the witnesses against her. Petitioner insists the droplight could not have touched Noras body. She maintains the injury
was due to the constant taking of Noras blood pressure. Petitioner also insinuates the Court of Appeals was misled by the testimony of the medico-
legal officer who never saw the original injury before plastic surgery was performed. Finally, petitioner stresses that plastic surgery was not intended
to restore respondents injury to its original state but rather to prevent further complication.
Respondents, however, counter that the genuineness and due execution of the additional documentary exhibits were duly admitted by petitioners
counsel. Respondents point out that petitioners blood pressure cuff theory is highly improbable, being unprecedented in medical history and that the
injury was definitely caused by the droplight. At any rate, they argue, even if the injury was brought about by the blood pressure cuff, petitioner was
still negligent in her duties as Noras attending physician.
Simply put, the threshold issues for resolution are: (1) Are the questioned additional exhibits admissible in evidence? (2) Is petitioner liable for the
injury suffered by respondent Nora Go? Thereafter, the inquiry is whether the appellate court committed grave abuse of discretion in its assailed
issuances.
As to the first issue, we agree with the Court of Appeals that said exhibits are admissible in evidence. We note that the questioned exhibits consist
mostly of Noras medical records, which were produced by the hospital during trial pursuant to a subpoena duces tecum. Petitioners counsel
admitted the existence of the same when they were formally offered for admission by the trial court. In any case, given the particular circumstances
of this case, a ruling on the negligence of petitioner may be made based on the res ipsa loquitur doctrine even in the absence of such additional
exhibits.
Petitioners contention that the medico-legal officer who conducted Noras physical examination never saw her original injury before plastic surgery
was performed is without basis and contradicted by the records. Records show that the medico-legal officer conducted the physical examination on
May 7, 1992, while the skin grafting and the scar revision were performed on Nora on May 22, 1992 and April 30, 1993, respectively.
Coming now to the substantive matter, is petitioner liable for the injury suffered by respondent Nora Go?
The Hippocratic Oath mandates physicians to give primordial consideration to the well-being of their patients. If a doctor fails to live up to this
precept, he is accountable for his acts. This notwithstanding, courts face a unique restraint in adjudicating medical negligence cases because
physicians are not guarantors of care and, they never set out to intentionally cause injury to their patients. However, intent is immaterial in negligence
cases because where negligence exists and is proven, it automatically gives the injured a right to reparation for the damage caused. 17
In cases involving medical negligence, the doctrine of res ipsa loquitur allows the mere existence of an injury to justify a presumption of negligence
on the part of the person who controls the instrument causing the injury, provided that the following requisites concur:
1. The accident is of a kind which ordinarily does not occur in the absence of someones 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. 18
As to the first requirement, the gaping wound on Noras arm is certainly not an ordinary occurrence in the act of delivering a baby, far removed as the
arm is from the organs involved in the process of giving birth. Such injury could not have happened unless negligence had set in somewhere.
Second, whether the injury was caused by the droplight or by the blood pressure cuff is of no moment. Both instruments are deemed within the
exclusive control of the physician in charge under the "captain of the ship" doctrine. This doctrine holds the surgeon in charge of an operation liable
for the negligence of his assistants during the time when those assistants are under the surgeons control. 19 In this particular case, it can be logically
inferred that petitioner, the senior consultant in charge during the delivery of Noras baby, exercised control over the assistants assigned to both the

39
use of the droplight and the taking of Noras blood pressure. Hence, the use of the droplight and the blood pressure cuff is also within petitioners
exclusive control.
Third, the gaping wound on Noras left arm, by its very nature and considering her condition, could only be caused by something external to her and
outside her control as she was unconscious while in hypovolemic shock. Hence, Nora could not, by any stretch of the imagination, have contributed
to her own injury.
Petitioners defense that Noras wound was caused not by the droplight but by the constant taking of her blood pressure, even if the latter was
necessary given her condition, does not absolve her from liability. As testified to by the medico-legal officer, Dr. Arizala, Jr., the medical practice is to
deflate the blood pressure cuff immediately after each use. Otherwise, the inflated band can cause injury to the patient similar to what could have
happened in this case. Thus, if Noras wound was caused by the blood pressure cuff, then the taking of Noras blood pressure must have been done so
negligently as to have inflicted a gaping wound on her arm, 20 for which petitioner cannot escape liability under the "captain of the ship" doctrine.
Further, petitioners argument that the failed plastic surgery was not intended as a cosmetic procedure, but rather as a measure to prevent
complication does not help her case. It does not negate negligence on her part.
Based on the foregoing, the presumption that petitioner was negligent in the exercise of her profession stands unrebutted. In this connection, the Civil
Code provides:
ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done.
ART. 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 defendants wrongful act or omission.
Clearly, under the law, petitioner is obliged to pay Nora for moral damages suffered by the latter as a proximate result of petitioners negligence.
We note, however, that petitioner has served well as Noras obstetrician for her past three successful deliveries. This is the first time petitioner is
being held liable for damages due to negligence in the practice of her profession. The fact that petitioner promptly took care of Noras wound before
infection and other complications set in is also indicative of petitioners good intentions. We also take note of the fact that Nora was suffering from a
critical condition when the injury happened, such that saving her life became petitioners elemental concern. Nonetheless, it should be stressed that
all these could not justify negligence on the part of petitioner.
Hence, considering the specific circumstances in the instant case, we find no grave abuse of discretion in the assailed decision and resolution of the
Court of Appeals. Further, we rule that the Court of Appeals award of Two Hundred Thousand Pesos (P200,000) as moral damages in favor of
respondents and against petitioner is just and equitable. 21
WHEREFORE, the petition is DENIED. The Decision dated October 3, 2002 and Resolution dated November 19, 2003 of the Court of Appeals in
CA-G.R. CV No. 58184 are AFFIRMED.
No pronouncement as to costs.
SO ORDERED.

PROFESSIONAL SERVICES, INC., G.R. No. 126297

Petitioner,

- versus -

THE COURT OF APPEALS and NATIVIDAD and

ENRIQUE AGANA,
Respondents,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - x
NATIVIDAD (Substituted by her children MARCELINO G.R. No. 126467
AGANA III, ENRIQUE AGANA, JR., EMMA AGANA
ANDAYA, JESUS AGANA, and RAYMUND AGANA) and
ENRIQUE AGANA,
Petitioners,

- versus -

THE COURT OF APPEALS and JUANFUENTES,

Respondents,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - x
MIGUEL AMPIL,
Petitioner,

G.R. No. 127590

- versus -
Present:

THE COURT OF APPEALS and PUNO, C.J.,

NATIVIDAD AGANA and ENRIQUEAGANA, SANDOVAL-GUTIERREZ,
Respondents. CORONA,
AZCUNA, and
LEONARDO-DE CASTRO, JJ.

Promulgated:

40
 February 11, 2008
x---------------------------------------------------------x

41
 RESOLUTION

SANDOVAL-GUTIERREZ, J.:

As the hospital industry changes, so must the laws and jurisprudence governing hospital liability. The immunity from medical malpractice
traditionally accorded to hospitals has to be eroded if we are to balance the interest of the patients and hospitals under the present setting.
Before this Court is a motion for reconsideration filed by Professional Services, Inc. (PSI), petitioner in G.R. No. 126297, assailing the Courts First
Division Decision datedJanuary 31, 2007, finding PSI and Dr. Miguel Ampil, petitioner in G.R. No. 127590, jointly and severally liable for medical
negligence.
A brief revisit of the antecedent facts is imperative.
On April 4, 1984, Natividad Agana was admitted at the Medical City General Hospital (Medical City) because of difficulty of bowel movement and
bloody anal discharge. Dr. Ampil diagnosed her to be suffering from cancer of the sigmoid. Thus, on April 11, 1984, Dr. Ampil, assisted by the
medical staff[1] of Medical City, performed an anterior resection surgery upon her. During the surgery, he found that the malignancy in her sigmoid
area had spread to her left ovary, necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained the consent of Atty. Enrique Agana,
Natividads husband, to permit Dr. Juan Fuentes, respondent in G.R. No. 126467, to perform hysterectomy upon Natividad.
Dr. Fuentes performed and completed the hysterectomy. Afterwards, Dr. Ampil took over, completed the operation and closed the incision. However,
the operation appeared to be flawed. In the corresponding Record of Operation dated April 11, 1984, the attending nurses entered these remarks:
sponge count lacking 2
announced to surgeon searched done (sic) but to no avail continue for closure.

After a couple of days, Natividad complained of excruciating pain in her anal region. She consulted both Dr. Ampil and Dr. Fuentes about it. They
told her that the pain was the natural consequence of the surgical operation performed upon her. Dr. Ampil recommended that Natividad consult an
oncologist to treat the cancerous nodes which were not removed during the operation.
On May 9, 1984, Natividad, accompanied by her husband, went to the United States to seek further treatment. After four (4) months of consultations
and laboratory examinations, Natividad was told that she was free of cancer. Hence, she was advised to return to the Philippines.
On August 31, 1984, Natividad flew back to the Philippines, still suffering from pains. Two (2) weeks thereafter, her daughter found a piece of gauze
protruding from her vagina. Dr. Ampil was immediately informed. He proceeded to Natividads house where he managed to extract by hand a piece of
gauze measuring 1.5 inches in width. Dr. Ampil then assured Natividad that the pains would soon vanish.
Despite Dr. Ampils assurance, the pains intensified, prompting Natividad to seek treatment at the Polymedic General Hospital. While confined
thereat, Dr. Ramon Gutierrez detected the presence of a foreign object in her vagina -- a foul-smelling gauze measuring 1.5 inches in width. The
gauze had badly infected her vaginal vault. A recto-vaginal fistula had formed in her reproductive organ which forced stool to excrete through the
vagina. Another surgical operation was needed to remedy the situation. Thus, in October 1984, Natividad underwent another surgery.
On November 12, 1984, Natividad and her husband filed with the Regional Trial Court, Branch 96, Quezon City a complaint for damages against PSI
(owner of MedicalCity), Dr. Ampil and Dr. Fuentes.
On February 16, 1986, pending the outcome of the above case, Natividad died. She was duly substituted by her above-named children (the
Aganas).
On March 17, 1993, the trial court rendered judgment in favor of spouses Agana finding PSI, Dr. Ampil and Dr. Fuentes jointly and
severally liable. On appeal, the Court of Appeals, in its Decision dated September 6, 1996, affirmed the assailed judgment with modification in the
sense that the complaint against Dr. Fuentes was dismissed.
PSI, Dr. Ampil and the Aganas filed with this Court separate petitions for review on certiorari. On January 31, 2007, the Court, through its First
Division, rendered a Decision holding that PSI is jointly and severally liable with Dr. Ampil for the following reasons: first, there is an employer-
employee relationship between Medical City and Dr. Ampil. The Court relied on Ramos v. Court of Appeals,[2] holding that for the purpose of
apportioning responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and
visiting physicians; second, PSIs act of publicly displaying in the lobby of the Medical City the names and specializations of its accredited
physicians, including Dr. Ampil, estopped it from denying the existence of an employer-employee relationship between them under the doctrine of
ostensible agency or agency by estoppel; and third, PSIs failure to supervise Dr. Ampil and its resident physicians and nurses and to take an active
step in order to remedy their negligence rendered it directly liable under the doctrine of corporate negligence.
In its motion for reconsideration, PSI contends that the Court erred in finding it liable under Article 2180 of the Civil Code, there being no
employer-employee relationship between it and its consultant, Dr. Ampil. PSI stressed that the Courts Decision in Ramos holding that an employer-
employee relationship in effect exists between hospitals and their attending and visiting physicians for the purpose of apportioning responsibility had
been reversed in a subsequent Resolution. [3] Further, PSI argues that thedoctrine of ostensible agency or agency by estoppel cannot apply because
spouses Agana failed to establish one requisite of the doctrine, i.e., that Natividad relied on the representation of the hospital in engaging the services
of Dr. Ampil. And lastly, PSI maintains that the doctrine of corporate negligence is misplaced because the proximate cause of Natividads injury was
Dr. Ampils negligence.
The motion lacks merit.
As earlier mentioned, the First Division, in its assailed Decision, ruled that an employer-employee relationship in effect exists between
the Medical City and Dr. Ampil.Consequently, both are jointly and severally liable to the Aganas. This ruling proceeds from the following
ratiocination in Ramos:
We now discuss the responsibility of the hospital in this particular incident. The unique practice (among private
hospitals) of filling up specialist staff with attending and visiting consultants, who are allegedly not hospital employees, presents
problems in apportioning responsibility for negligence in medical malpractice cases. However, the difficulty is only more
apparent than real.
42
 In the first place, hospitals exercise significant control in the hiring and firing of consultants and in the conduct
of their work within the hospital premises. Doctors who apply for consultant slots, visiting or attending, are required to
submit proof of completion of residency, their educational qualifications; generally, evidence of accreditation by the appropriate
board (diplomate), evidence of fellowship in most cases, and references. These requirements are carefully scrutinized by
members of the hospital administration or by a review committee set up by the hospital who either accept or reject the
application. This is particularly true with respondent hospital.
After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend
clinico-pathological conferences, conduct bedside rounds for clerks, interns and residents, moderate grand rounds and
patient audits and perform other tasks and responsibilities, for the privilege of being able to maintain a clinic in the
hospital, and/or for the privilege of admitting patients into the hospital. In addition to these, the physicians performance
as a specialist is generally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and
feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly
falls short of the minimum standards acceptable to the hospital or its peer review committee, is normally politely
terminated.
In other words, private hospitals hire, fire and exercise real control over their attending and visiting consultant
staff. While consultants are not, technically employees, a point which respondent hospital asserts in denying all
responsibility for the patients condition, the control exercised, the hiring, and the right to terminate consultants all fulfill
the important hallmarks of an employer-employee relationship, with the exception of the payment of wages. In assessing
whether such a relationship in fact exists, the control test is determining.Accordingly, on the basis of the foregoing, we
rule that for the purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in
effect exists between hospitals and their attending and visiting physicians. This being the case, the question now arises as to
whether or not respondent hospital is solidarily liable with respondent doctors for petitioners condition.
The basis for holding an employer solidarily responsible for the negligence of its employee is found in Article 2180 of
the Civil Code which considers a person accountable not only for his own acts but also for those of others based on the formers
responsibility under a relationship of partia ptetas.

Clearly, in Ramos, the Court considered the peculiar relationship between a hospital and its consultants on the bases of certain factors. One
such factor is the control test wherein the hospital exercises control in the hiring and firing of consultants, like Dr. Ampil, and in the conduct of their
work.
Actually, contrary to PSIs contention, the Court did not reverse its ruling in Ramos. What it clarified was that the De Los Santos Medical
Clinic did not exercise control over its consultant, hence, there is no employer-employee relationship between them. Thus, despite the granting of the
said hospitals motion for reconsideration, the doctrine inRamos stays, i.e., for the purpose of allocating responsibility in medical negligence cases, an
employer-employee relationship exists between hospitals and their consultants.
In the instant cases, PSI merely offered a general denial of responsibility, maintaining that consultants, like Dr. Ampil, are independent
contractors, not employees of the hospital. Even assuming that Dr. Ampil is not an employee of Medical City, but an independent contractor, still the
said hospital is liable to the Aganas.
In Nograles, et al. v. Capitol Medical Center, et al.,[4] through Mr. Justice Antonio T. Carpio, the Court held:
The question now is whether CMC is automatically exempt from liability considering that Dr. Estrada is an
independent contractor-physician.
In general, a hospital is not liable for the negligence of an independent contractor-physician. There is, however, an
exception to this principle. The hospital may be liable if the physician is the ostensible agent of the hospital. (Jones v. Philpott,
702 F. Supp. 1210 [1988]) This exception is also known as the doctrine of apparent authority. (Sometimes referred to as the
apparent or ostensible agency theory. [King v. Mitchell, 31 A.D.3rd 958, 819 N.Y. S.2d 169 (2006)].
xxx
The doctrine of apparent authority essentially involves two factors to determine the liability of an independent
contractor-physician.
The first factor focuses on the hospitals manifestations and is sometimes described as an inquiry whether the hospital
acted in a manner which would lead a reasonable person to conclude that the individual who was alleged to be negligent was an
employee or agent of the hospital. (Diggs v. Novant Health, Inc., 628 S.E.2d 851 (2006) citing Hylton v. Koontz, 138 N.C. App.
629 (2000). In this regard, the hospital need not make express representations to the patient that the treating physician is
an employee of the hospital; rather a representation may be general and implied. (Id.)
The doctrine of apparent authority is a specie of the doctrine of estoppel. Article 1431 of the Civil Code provides that
[t]hrough estoppel, an admission or representation is rendered conclusive upon the person making it, and cannot be denied or
disproved as against the person relying thereon. Estoppel rests on this rule: Whether a party has, by his own declaration, act, or
omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in
any litigation arising out of such declaration, act or omission, be permitted to falsify it. ( De Castro v. Ginete, 137 Phil. 453
[1969], citing Sec. 3, par. A, Rule 131 of the Rules of Court. See also King v. Mitchell, 31 A.D.3rd 958, 819 N.Y.S.2d 169 [2006]).
xxx
The second factor focuses on the patients reliance. It is sometimes characterized as an inquiry on whether the plaintiff
acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence. (Diggs v. Novant
Health, Inc.)

PSI argues that the doctrine of apparent authority cannot apply to these cases because spouses Agana failed to establish proof of their
reliance on the representation ofMedical City that Dr. Ampil is its employee.
The argument lacks merit.

43
 Atty. Agana categorically testified that one of the reasons why he chose Dr. Ampil was that he knew him to be a staff member
of Medical City, a prominent and known hospital.
Q Will you tell us what transpired in your visit to Dr. Ampil?

A Well, I saw Dr. Ampil at the Medical City, I know him to be a staff member there, and I told him about the case of my wife
and he asked me to bring my wife over so she could be examined. Prior to that, I have known Dr. Ampil, first, he was
staying in front of our house, he was a neighbor, second, my daughter was his student in the University of the East
School of Medicine at Ramon Magsaysay; and when my daughter opted to establish a hospital or a clinic, Dr. Ampil
was one of our consultants on how to establish that hospital. And from there, I have known that he was a specialist
when it comes to that illness.

Atty. Agcaoili

On that particular occasion, April 2, 1984, what was your reason for choosing to contact Dr. Ampil in connection with your
wifes 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, than his ordinary patients. [5]

Clearly, PSI is estopped from passing the blame solely to Dr. Ampil. Its act of displaying his name and those of the other physicians in the
public directory at the lobby of the hospital amounts to holding out to the public that it offers quality medical service through the listed
physicians. This justifies Atty. Aganas belief that Dr. Ampil was a member of the hospitals staff. It must be stressed that under the doctrine of
apparent authority, the question in every case is whether the principal has by his voluntary act placed the agent in such a situation that a
person of ordinary prudence, conversant with business usages and the nature of the particular business, is justified in presuming that such
agent has authority to perform the particular act in question.[6] In these cases, the circumstances yield a positive answer to the question.
The challenged Decision also anchors its ruling on the doctrine of corporate responsibility.[7] 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. [8] Such responsibility includes the proper supervision of the members of its medical
staff. Accordingly, the hospital has the duty to make a reasonable effort to monitor and oversee the treatment prescribed and administered
by the physicians practicing in its premises.
Unfortunately, PSI had been remiss in its duty. It did not conduct an immediate investigation on the reported missing gauzes to the great
prejudice and agony of its patient. Dr. Jocson, a member of PSIs medical staff, who testified on whether the hospital conducted an investigation, was
evasive, thus:
Q We go back to the operative technique, this was signed by Dr. Puruganan, was this submitted to the hospital?
A Yes, sir, this was submitted to the hospital with the record of the patient.

Q Was the hospital immediately informed about the missing sponges?

A That is the duty of the surgeon, sir.

Q As a witness to an untoward incident in the operating room, was it not your obligation, Dr., to also report to the
hospital because you are under the control and direction of the hospital?
A The hospital already had the record of the two OS missing, sir.

Q If you place yourself in the position of the hospital, how will you recover.
A You do not answer my question with another question.

Q Did the hospital do anything about the missing gauzes?

A The hospital left it up to the surgeon who was doing the operation, sir.

Q Did the hospital investigate the surgeon who did the operation?
A I am not in the position to answer that, sir.

Q You never did hear the hospital investigating the doctors involved in this case of those missing sponges, or did you hear
something?

xxxxxx

A I think we already made a report by just saying that two sponges were missing, it is up to the hospital to make the
move.

Atty. Agana

44
 Precisely, I am asking you if the hospital did a move, if the hospital did a move.
A I cannot answer that.

Court
By that answer, would you mean to tell the Court that you were aware if there was such a move done by the hospital?
A I cannot answer that, your honor, because I did not have any more follow-up of the case that happened until now.[9]

The above testimony obviously shows Dr. Jocsons lack of concern for the patients. Such conduct is reflective of the hospitals manner
of supervision. Not only did PSI breach its duty to oversee or supervise all persons who practice medicine within its walls, it also failed to
take an active step in fixing the negligence committed. This renders PSI, not only vicariously liable for the negligence of Dr. Ampil under Article
2180 of the Civil Code, but also directly liable for its own negligence under Article 2176.
Moreover, there is merit in the trial courts finding that the failure of PSI to conduct an investigation established PSIs part in the dark
conspiracy of silence and concealment about the gauzes. The following testimony of Atty. Agana supports such findings, thus:
Q You said you relied on the promise of Dr. Ampil and despite the promise you were not able to obtain the said record. Did you
go back to the record custodian?
A I did not because I was talking to Dr. Ampil. He promised me.
Q After your talk to Dr. Ampil, you went to the record custodian?
A I went to the record custodian to get the clinical record of my wife, and I was given a portion of the records consisting
of the findings, among them, the entries of the dates, but not the operating procedure and operative report. [10]

In sum, we find no merit in the motion for reconsideration.

WHEREFORE, we DENY PSIs motion for reconsideration with finality.
SO ORDERED.

G.R. No. 126297 February 2, 2010

PROFESSIONAL SERVICES, INC., Petitioner,
vs.
THE COURT OF APPEALS and NATIVIDAD and ENRIQUE AGANA, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 126467
NATIVIDAD [substituted by her children Marcelino Agana III, Enrique Agana, Jr., Emma Agana-Andaya, Jesus Agana and Raymund
Agana] and ENRIQUE AGANA, Petitioners,
vs.
THE COURT OF APPEALS and JUAN FUENTES, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 127590
MIGUEL AMPIL, Petitioner,
vs.
NATIVIDAD and ENRIQUE AGANA, Respondents.
RESOLUTION
CORONA, J.:
With prior leave of court,1 petitioner Professional Services, Inc. (PSI) filed a second motion for reconsideration 2urging 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),3 Asian Hospital, Inc. (AHI),4 and Private Hospital Association of the Philippines (PHAP)5 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 (hereafter intervenors), 6 and referred en
consulta to the Court en banc the motion for prior leave of court and the second motion for reconsideration of PSI. 7
Due to paramount public interest, the Court en banc accepted the referral8 and heard the parties on oral arguments on one particular issue: whether a
hospital may be held liable for the negligence of physicians-consultants allowed to practice in its premises. 9
To recall the 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 10 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 11 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.
In a decision12 dated March 17, 1993, the RTC held PSI solidarily liable with Dr. Ampil and Dr. Fuentes for damages. 13 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.141avvphi1
On petition for review, this Court, in its January 31, 2007 decision, affirmed the CA decision. 15 PSI filed a motion for reconsideration16 but the Court
denied it in a resolution dated February 11, 2008.17
The Court premised the direct liability of PSI to the Aganas on the following facts and law:

45
First, there existed between PSI and Dr. Ampil an employer-employee relationship as contemplated in the December 29, 1999 decision in Ramos v.
Court of Appeals18 that "for purposes of allocating responsibility in medical negligence cases, an employer-employee relationship exists between
hospitals and their consultants."19Although the Court in Ramos later issued a Resolution dated April 11, 200220 reversing its earlier finding on the
existence of an employment relationship between hospital and doctor, a similar reversal was not warranted in the present case because the defense
raised by PSI consisted of a mere general denial of control or responsibility over the actions of Dr. Ampil. 21
Second, by accrediting Dr. Ampil and advertising his qualifications, PSI created the public impression that he was its agent. 22 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. 23 After his meeting
with Dr. Ampil, Enrique asked Natividad to personally consult Dr. Ampil. 24 In effect, when Enrigue 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.,25 PSI was liable for the negligence of Dr. Ampil.
Finally, 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, 26 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. 27 PSI committed a serious breach of its corporate duty when it failed to
conduct an immediate investigation into the reported missing gauzes. 28
PSI is now asking this Court to reconsider the foregoing rulings for these reasons:
I
The declaration in the 31 January 2007 Decision vis-a-vis the 11 February 2009 Resolution that the ruling in Ramos vs. Court of Appeals (G.R. No.
134354, December 29, 1999) that "an employer-employee relations exists between hospital and their consultants" stays should be set aside for being
inconsistent with or contrary to the import of the resolution granting the hospital's motion for reconsideration in Ramos vs. Court of Appeals (G.R.
No. 134354, April 11, 2002), which is applicable to PSI since the Aganas failed to prove an employer-employee relationship between PSI and Dr.
Ampil and PSI proved that it has no control over Dr. Ampil. In fact, the trial court has found that there is no employer-employee relationship in this
case and that the doctor's are independent contractors.
II
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 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.
III
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. 29
In their respective memoranda, intervenors raise parallel arguments that the Court's ruling on the existence of an employer-employee relationship
between private hospitals and consultants will force a drastic and complex alteration in the long-established and currently prevailing relationships
among patient, physician and hospital, with burdensome operational and financial consequences and adverse effects on all three parties. 30
The Aganas comment that the arguments of PSI need no longer be entertained for they have all been traversed in the assailed decision and
resolution.31
After gathering its thoughts on the issues, this Court holds that PSI is liable to 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.
While in theory a hospital as a juridical entity cannot practice medicine, 32 in reality it utilizes doctors, surgeons and medical practitioners in the
conduct of its business of facilitating medical and surgical treatment. 33 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.
Where an employment relationship exists, the hospital may be held vicariously liable under Article 2176 34 in relation to Article 218035 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 Article 2176 in relation to Article 1431 36 and Article 186937 of the Civil
Code or the principle of apparent authority.38 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. 39
This Court still employs the "control test" to determine the existence of an employer-employee relationship between hospital and doctor. In Calamba
Medical Center, Inc. v. National Labor Relations Commission, et al. 40 it held:
Under the "control test", an employment relationship exists between a physician and a hospital if the hospital controls both the means and the details
of the process by which the physician is to accomplish his task.
xxx xxx xxx
As priorly stated, private respondents maintained specific work-schedules, as determined by petitioner through its medical director, which consisted
of 24-hour shifts totaling forty-eight hours each week and which were strictly to be observed under pain of administrative sanctions.
That petitioner exercised control over respondents gains light from the undisputed fact that in the emergency room, the operating room, or
any department or ward for that matter, respondents' work is monitored through its nursing supervisors, charge nurses and orderlies.
Without the approval or consent of petitioner or its medical director, no operations can be undertaken in those areas. For control test to
apply, it is not essential for the employer to actually supervise the performance of duties of the employee, it being enough that it has the right
to wield the power. (emphasis supplied)
Even in its December 29, 1999 decision41 and April 11, 2002 resolution42 in Ramos, the Court found the control test decisive.
In the present case, it appears to have escaped the Court's attention that both the RTC and the CA found no employment relationship between PSI and
Dr. Ampil, and that the Aganas did not question such finding. In its March 17, 1993 decision, the RTC found "that defendant doctors were not
employees of PSI in its hospital, they being merely consultants without any employer-employee relationship and in the capacity of independent
contractors."43 The Aganas never questioned such finding.

46
PSI, Dr. Ampil and Dr. Fuentes appealed44 from the RTC decision but only on the issues of negligence, agency and corporate liability. In its
September 6, 1996 decision, the CA mistakenly referred to PSI and Dr. Ampil as employer-employee, but it was clear in its discussion on the matter
that it viewed their relationship as one of mere apparent agency. 45
The Aganas appealed from the CA decision, but only to question the exoneration of Dr. Fuentes. 46 PSI also appealed from the CA decision, and it was
then that the issue of employment, though long settled, was unwittingly resurrected.
In fine, as there was no dispute over the RTC finding that PSI and Dr. Ampil had no employer-employee relationship, such finding became final and
conclusive even to this Court.47 There was no reason for PSI to have raised it as an issue in its petition. Thus, whatever discussion on the matter that
may have ensued was purely academic.
Nonetheless, to allay the anxiety of the intervenors, the Court holds that, in this particular instance, the concurrent finding of the RTC and the CA that
PSI was not the employer of Dr. Ampil is correct. Control as a determinative factor in testing the employer-employee relationship between doctor and
hospital under which the hospital could be held vicariously liable to a patient in medical negligence cases is a requisite fact to be established by
preponderance of evidence. Here, there was insufficient evidence that PSI exercised the power of control or wielded such power over the means and
the details of the specific process by which Dr. Ampil applied his skills in the treatment of Natividad. Consequently, PSI cannot be held vicariously
liable for the negligence of Dr. Ampil under the principle of respondeat superior.
There is, however, ample evidence that the hospital (PSI) held out to the patient (Natividad) 48 that the doctor (Dr. Ampil) was its agent. Present are
the two factors that determine apparent authority: first, the hospital's implied manifestation to the patient which led the latter to conclude that the
doctor was the hospital's agent; and second, the patients reliance upon the conduct of the hospital and the doctor, consistent with ordinary care and
prudence.49
Enrique testified that on April 2, 1984, he consulted Dr. Ampil regarding the condition of his wife; that after the meeting and as advised by Dr. Ampil,
he "asked [his] wife to go to Medical City to be examined by [Dr. Ampil]"; and that the next day, April 3, he told his daughter to take her mother to
Dr. Ampil.50 This timeline indicates that it was Enrique who actually made the decision on whom Natividad should consult and where, and that the
latter merely acceded to it. It explains the testimony of Natividad that she consulted Dr. Ampil at the instigation of her daughter. 51
Moreover, when asked what impelled him to choose Dr. Ampil, Enrique testified:
Atty. Agcaoili
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, than his ordinary patients.52 (emphasis supplied)
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.
PSI's acts tended to confirm and reinforce, rather than negate, Enrique's view. It is of record that PSI required a "consent for hospital care" 53 to be
signed preparatory to the surgery of Natividad. The form reads:
Permission is hereby given to the medical, nursing and laboratory staff of the Medical City General Hospital to perform such diagnostic procedures
and to administer such medications and treatments as may be deemed necessary or advisable by the physicians of this hospital for and during the
confinement of xxx. (emphasis supplied)
By such statement, PSI virtually reinforced the public impression 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.1avvphi1
PSI pointed out in its memorandum that Dr. Ampil's hospital affiliation was not the exclusive basis of the Aganas decision to have Natividad treated
in Medical City General Hospital, meaning that, had Dr. Ampil been affiliated with another hospital, he would still have been chosen by the Aganas
as Natividad's surgeon.54
The Court cannot speculate on what could have been behind the Aganas decision but would rather adhere strictly to the fact that, under the
circumstances at that time, Enrique decided to consult Dr. Ampil for he believed him to be a staff member of a prominent and known hospital. After
his meeting with Dr. Ampil, Enrique advised his wife Natividad to go to the Medical City General Hospital to be examined by said doctor, and the
hospital acted in a way that fortified Enrique's belief.
This Court must therefore maintain the ruling that PSI is vicariously liable for the negligence of Dr. Ampil as its ostensible agent.
Moving on to the next issue, the Court notes that PSI made the following admission in its Motion for Reconsideration:
51. Clearly, not being an agent or employee of petitioner PSI, PSI [sic] is not liable for Dr. Ampil's acts during the operation. Considering further that
Dr. Ampil was personally engaged as a doctor by Mrs. Agana, it is incumbent upon Dr. Ampil, as "Captain of the Ship", and as the Agana's doctor to
advise her on what to do with her situation vis-a-vis the two missing gauzes. In addition to noting the missing gauzes, regular check-ups were
made and no signs of complications were exhibited during her stay at the hospital, which could have alerted petitioner PSI's hospital to
render and provide post-operation services to and tread on Dr. Ampil's role as the doctor of Mrs. Agana. The absence of negligence of PSI
from the patient's admission up to her discharge is borne by the finding of facts in this case. Likewise evident therefrom is the absence of any
complaint from Mrs. Agana after her discharge from the hospital which had she brought to the hospital's attention, could have alerted
petitioner PSI to act accordingly and bring the matter to Dr. Ampil's attention. But this was not the case. Ms. Agana complained ONLY to
Drs. Ampil and Fuentes, not the hospital. How then could PSI possibly do something to fix the negligence committed by Dr. Ampil when it
was not informed about it at all.55 (emphasis supplied)
PSI reiterated its admission when it stated that had Natividad Agana "informed the hospital of her discomfort and pain, the hospital would have
been obliged to act on it."56
The significance of the foregoing statements is critical.
First, they constitute judicial admission by PSI that while it had no power to control the means or method by which Dr. Ampil conducted the surgery
on Natividad Agana, it had the power to review or cause the review of what may have irregularly transpired within its walls strictly for the purpose
of determining whether some form of negligence may have attended any procedure done inside its premises, with the ultimate end of protecting its
patients.

47
Second, it is a judicial admission that, by virtue of the nature of its business as well as its prominence 57 in the hospital industry, it assumed a duty to
"tread on" the "captain of the ship" role of any doctor rendering services within its premises for the purpose of ensuring the safety of the patients
availing themselves of its services and facilities.
Third, by such admission, PSI 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; 58 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." 59 An admission made in the pleading cannot be
controverted by the party making such admission and is conclusive as to him, and all proofs submitted by him contrary thereto or inconsistent
therewith should be ignored, whether or not objection is interposed by a party. 60
Given the standard of conduct that PSI defined for itself, the next relevant inquiry is whether the hospital measured up to it.
PSI excuses itself from fulfilling its corporate duty on the ground that Dr. Ampil assumed the personal responsibility of informing Natividad about
the two missing gauzes.61 Dr. Ricardo Jocson, who was part of the group of doctors that attended to Natividad, testified that toward the end of the
surgery, their group talked about the missing gauzes but Dr. Ampil assured them that he would personally notify the patient about it. 62Furthermore,
PSI claimed that there was no reason for it to act on the report on the two missing gauzes because Natividad Agana showed no signs of
complications. She did not even inform the hospital about her discomfort. 63
The excuses proffered by PSI are totally unacceptable.
To begin with, PSI could not simply wave off the problem and nonchalantly delegate to Dr. Ampil the duty to review what transpired during the
operation. The purpose of such review would have been to pinpoint when, how and by whom two surgical gauzes were mislaid so that necessary
remedial measures could be taken to avert any jeopardy to Natividads recovery. Certainly, PSI could not have expected that purpose to be achieved
by merely hoping that the person likely to have mislaid the gauzes might be able to retrace his own steps. By its own standard of corporate conduct,
PSI's duty to initiate the review was non-delegable.
While Dr. Ampil may have had the primary responsibility of notifying Natividad 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.
Corollary to its non-delegable undertaking to review potential incidents of negligence committed within its premises, PSI had the duty to take notice
of medical records prepared by its own staff and submitted to its custody, especially when these bear earmarks of a surgery gone awry. Thus, the
record taken during the operation of Natividad which reported a gauze count discrepancy should have given PSI sufficient reason to initiate a review.
It should not have waited for Natividad to complain.
As it happened, PSI took no heed of the record of operation and consequently did not initiate a review of what transpired during Natividads
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, we make 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. 64
Other circumstances peculiar to this case warrant this ruling, 65 not the least of which being that the agony wrought upon the Aganas has gone on for
26 long years, with Natividad coming to the end of her days racked in pain and agony. Such wretchedness could have been avoided had PSI simply
done what was logical: heed the report of a guaze count discrepancy, initiate a review of what went wrong and take corrective measures to ensure the
safety of Nativad. Rather, for 26 years, PSI hemmed and hawed at every turn, disowning any such responsibility to its patient. Meanwhile, the
options left to the Aganas have all but dwindled, for the status of Dr. Ampil can no longer be ascertained. 66
Therefore, taking all the equities of this case into consideration, this Court believes P15 million would be a fair and reasonable liability of PSI,
subject to 12% p.a. interest from the finality of this resolution to full satisfaction.
WHEREFORE, the second motion for reconsideration is DENIED and the motions for intervention are NOTED.
Professional Services, Inc. is ORDERED pro hac vice to pay Natividad (substituted by her children Marcelino Agana III, Enrique Agana, Jr., Emma
Agana-Andaya, Jesus Agana and Raymund Agana) and Enrique Agana the total amount of P15 million, subject to 12% p.a. interest from the finality
of this resolution to full satisfaction.
No further pleadings by any party shall be entertained in this case.
Let the long-delayed entry of judgment be made in this case upon receipt by all concerned parties of this resolution.
SO ORDERED.

RULE 111
Prosecution of Civil Action
Section 1. Institution of criminal and civil actions. (a) When a criminal action is instituted, the civil action for the recovery of civil liability arising
from the offense charged shall be deemed instituted with the criminal action unless the offended party waives the civil action, reserves the right to
institute it separately or institutes the civil action prior to the criminal action.
The reservation of the right to institute separately the civil action shall be made before the prosecution starts presenting its evidence and under
circumstances affording the offended party a reasonable opportunity to make such reservation.

48
When the offended party seeks to enforce civil liability against the accused by way of moral, nominal, temperate, or exemplary damages without
specifying the amount thereof in the complaint or information, the filing fees thereof shall constitute a first lien on the judgment awarding such
damages.
Where the amount of damages, other than actual, is specified in the complaint or information, the corresponding filing fees shall be paid by the
offended party upon the filing thereof in court.
Except as otherwise provided in these Rules, no filing fees shall be required for actual damages.
No counterclaim, cross-claim or third-party complaint may be filed by the accused in the criminal case, but any cause of action which could have
been the subject thereof may be litigated in a separate civil action. (1a)
(b) The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to include the corresponding civil action. No reservation to file such
civil action separately shall be allowed.
Upon filing of the aforesaid joint criminal and civil actions, the offended party shall pay in full the filing fees based on the amount of the check
involved, which shall be considered as the actual damages claimed. Where the complaint or information also seeks to recover liquidated, moral,
nominal, temperate or exemplary damages, the offended party shall pay additional filing fees based on the amounts alleged therein. If the amounts are
not so alleged but any of these damages are subsequently awarded by the court, the filing fees based on the amount awarded shall constitute a first
lien on the judgment.
Where the civil action has been filed separately and trial thereof has not yet commenced, it may be consolidated with the criminal action upon
application with the court trying the latter case. If the application is granted, the trial of both actions shall proceed in accordance with section 2 of this
Rule governing consolidation of the civil and criminal actions. (cir. 57-97)
Section 2. When separate civil action is suspended. After the criminal action has been commenced, the separate civil action arising therefrom
cannot be instituted until final judgment has been entered in the criminal action.
If the criminal action is filed after the said civil action has already been instituted, the latter shall be suspended in whatever stage it may be found
before judgment on the merits. The suspension shall last until final judgment is rendered in the criminal action. Nevertheless, before judgment on the
merits is rendered in the civil action, the same may, upon motion of the offended party, be consolidated with the criminal action in the court trying the
criminal action. In case of consolidation, the evidence already adduced in the civil action shall be deemed automatically reproduced in the criminal
action without prejudice to the right of the prosecution to cross-examine the witnesses presented by the offended party in the criminal case and of the
parties to present additional evidence. The consolidated criminal and civil actions shall be tried and decided jointly.
During the pendency of the criminal action, the running of the period of prescription of the civil action which cannot be instituted separately or
whose proceeding has been suspended shall be tolled. (n)
The extinction of the penal action does not carry with it extinction of the civil action. However, the civil action based on delict shall be deemed
extinguished if there is a finding in a final judgment in the criminal action that the act or omission from which the civil liability may arise did not
exist. (2a)
Section 3. When civil action may proceeded independently. In the cases provided for in Articles 32, 33, 34 and 2176 of the Civil Code of the
Philippines, the independent civil action may be brought by the offended party. It shall proceed independently of the criminal action and shall require
only a preponderance of evidence. In no case, however, may the offended party recover damages twice for the same act or omission charged in the
criminal action. (3a)
Section 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.
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. (n)

G.R. No. 88582 March 5, 1991

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
HEINRICH S. RITTER, accused-appellant,
The Solicitor General for plaintiff-appellee.
Esteban B. Bautista for accused-appellant.
GUTIERREZ, JR., J.:
The appellant challenges his conviction of the crime involving a young girl of about 12 years old who had been allegedly raped and who later died
because of a foreign object left inside her vaginal canal.
Heinrich Stefan Ritter was charged with the crime of rape with homicide under an information which reads:
That on or about the tenth (10th day of October, 1986 in the City of Olongapo, Philippines, and within the jurisdiction of this Honorable
Court, the above-named accused with lewd design and with intent to kill one Rosario Baluyot, a woman under twelve (12) years of age, did
then and there wilfully, unlawfully and feloniously have carnal knowledge of said Rosario Baluyot and inserted a foreign object into the
vaginal canal of said Rosario Baluyot which caused her death shortly thereafter, to the damage and prejudice of her relatives. (66)
When arraigned, the accused pleaded "Not Guilty". Thereafter, the case was set for trial on the merits.
To prove the guilt of the accused, the prosecutor presented the following witnesses, namely: (1) Jessie Ramirez, (2) Maria Burgos y Turla, (3) P/Cpl.
Mariano Victoria, (4) Policarpio Baluyot, (5) Dr. Reino Rosete, (6) Sumulong Daniel, (7) Jessica Herrera, (8) Sister Eva Palencia, (9) Conrado
Salonga, (10) Dr. Devonne Loop, (11) Dr. Leo Cruz, (12) Paul Maclor, (13) Aida Sarmiento, (14) Patricia Prollamanta (15) Mel Santos, (16) Lorna
Limos, (17) Eduard Lee Bungarner, (18) Ronaldo Marquez, (19) Tom Bonte, (20) 2nd Asst. City Fiscal Nini Alcala, (21) lst Asst. City Fiscal
Dorentino Z. Floresta, (22) Corazon Caber, (23) Rodolfo Mercurio and (24) Fe Israel.

49
On the other hand, the defense offered in evidence Exhibits "1" to "24" and the testimonies of (1) Heinrich S. Ritter, (2) Father Roque Villanueva, (3)
Angelita Amulong (4) Gaspar Alcantara, (5) Dr. Val Barcinal and (6) Dr. Pedro C. Solis.
The facts of the case upon which the lower court based its finding of guilt beyond reasonable doubt are summarized in its decision, as follows:
The people's evidence show that on October 10, 1986 about midnight, accused Heinrich Stefan Ritter brought a boy and girl namely: Jessie
Ramirez and Rosario Baluyot inside his hotel room at MGM Hotel along Magsaysay Drive, Olongapo City. These two (2) children were
chosen from among a bunch of street children. Once inside the hotel room accused told them to take a bath. Jessie Ramirez, alias "Egan",
was the first to take a bath and when he came out Rosario Baluyot went to the bathroom to do the same. While Rosario Baluyot was inside
the bathroom, accused Ritter took out some pictures depicting dressed up young boys, and put them on top of the table. Other things which
were taken out and placed on top of a table were three (3) other objects which he described as like that of a vicks inhaler. One of these
objects the accused played with his hands and placed it on his palms. The color of which is grayish blue which turned out later to be the
foreign object which was inserted inside the vagina of Rosario Baluyot. The other objects were later established to be anti-nasal inhalers
against pollution purchased by the accused in Bangkok when he went there as a tourist. While Rosario was in the bathroom, accused told
Ramirez to lay down on bed, and so did the accused. He then started masturbating the young boy and also guided the boy's hand for him to
be masturbated, so that they masturbated each other, while they were both naked, and he gave Jessie Ramirez an erection. When Rosario
Baluyot came out of the bathroom, she was told to remove her clothes by accused and to join him in bed. The accused then placed himself
between the two (2) children and accused started fingering Rosario.
At this time, Ramirez was already sleepy, but Rosario touched him to call his attention. He looked, and he saw accused placing his penis
against the vagina of Rosario and that he was trying to penetrate the vagina but it would not fit. After what he saw, Ramirez did not
anymore bother to look because he was sleepy and fell asleep.
The following morning, the accused, whom the juveniles described as an "American, paid Ramirez alias"Egan" P200.00 and Rosario
P300.00. He then left them in the hotel. After the American left, they went downstairs, and Rosario told Egan that the American inserted
something in her vagina. But they could not do anything anymore, because the American had already left, and neither did they report the
matter to the police. Sometime the following day, Jessie saw Rosario and he asked her whether the object was already removed from her
body and Rosario said "Yes". However, Jessie Ramirez claimed that on the evening of that same date, he saw Rosario and she was
complaining of pain in her vagina and when Egan asked her, she said that the foreign object was not yet removed. Then there was another
occasion wherein Jessie was summoned and when he came he saw Rosario writhing in pain and when he tried to talk to Rosario she
scolded him with defamatory remarks. Thereafter, he did not see Rosario anymore because he already went home to his aunt's house who
resided at Barrio Barretto and resumed his studies in the primary grades.
On May 14, 1987, Gaspar Alcantara, a defense witness, while garbage scavenging at Lot 21, near the gate of the U.S. Naval Base saw
Rosario at Magsaysay Drive near the Happy Bake Shop near Lot 21, being ogled by people because Rosario's skirt was bloodied and she
was unconscious and foul smelling. Since nobody helped Rosario, he took pity on her condition and brought her to the Olongapo City
General Hospital in an unconscious condition, via jeepney. He went to the Information desk and he was the one who gave the personal
circumstances of Rosario as to her name, age, her residence as Nagbakulaw, Lower Kalaklan, and Gaspar Alcantara signed as "guardian" of
Rosario, while Rosario was already in the emergency room. Although Gaspar Alcantara denied that he did not know the name of Rosario
Baluyot when he brought her to the hospital, this is belied by the testimony of the Information clerk Lorna Limos, who was then on duty.
Limos testified that it was Alcantara who supplied the personal circumstances of Rosario. The Court gives more credence to the testimony
of Miss Limos as against Gaspar Alcantara who became a defense witness, for the reason that through his own testimony, Gaspar Alcantara
claimed that even prior to May 14, 1987, he had already known Rosario Baluyot for more than one (1) year, because he has seen the said
girl go to the house of his twin brother, Melchor Alcantara, who is his immediate neighbor. Rosario used to visit a girl by the name of
"Nora" who was then in the custody of his brother. His brother Melchor was also living with their mother, brother and sister-in-law and
their two (2) children in his house. Rosario as per Gaspar's testimony even stays for one week or a few days at his brother's house when she
visits Nora. So the Court can safely assume that of all the more than one (1) year that he had regularly seen Rosario at his brother's house,
he must have already did come to know the name of Rosario Baluyot including her age. In his testimony in Court he stated that he even
asked Rosario for movie and softdrinks money which can safely be concluded that he knows her very well. It is against normal behavior
especially to a Filipino who have a characteristic of curiosity not to have found out the real name of the girl he claims to know only as
"Tomboy".
While Rosario Baluyot was confined at the Olongapo City General Hospital, nobody was attending to her since she is a street child, having
stowed away from the custody of her grandmother. Three (3) good samaritans who belong to religious and civic organizations, in the
persons of Jessica Herrera, Fe Israel and Sr. Eva Palencia, in one of their missions in the hospital chanced upon Rosario Baluyot who was
all alone with no relatives attending to her and after finding out that she was only 12 years old decided to help her. After a short interview
with Rosario, regarding her name and age only because she clamped up about her residence and her relatives, they decided to help her by
providing her the medicine she needed during her confinement in readiness for an operation. It was Fe Israel who was able to get the name
and age of Rosario Baluyot from Rosario Baluyot herself when she saw her for the first time. For Fe Israel, the age of Rosario Baluyot was
an important factor because their program assisted only indigent patients from infants up to 13 years old.
Rosario's first ailment at the Olongapo City General Hospital was loose bowel movement and vomiting, which was first suspected as
gastro-enteritis, but which came out later as symptoms of peritonitis due to a massive infection in the abdominal cavity. Subsequently, on
May 17, 1987, after she was examined by the physicians at the hospital, it was found out that there was a foreign object lodged in her
vaginal canal and she had vaginal discharge tinged with blood and foul smelling odor emanating from her body. One of the doctors who
attended to her was Dr. Barcinal, an OB-GYNE. Dr. Barcinal tried to extract the foreign object by means of a forceps, but several attempts
proved futile because said object was deeply embedded in the vaginal canal and was covered by tissues. Her abdomen was enlarged, tender
and distended, symptoms of peritonitis. The patient was feverish and incoherent when she was scheduled for operation on May 19, 1987,
after the first attempt for an operation on May 17 was aborted allegedly because the consent of Dr. Reino Rosete, the hospital director was
not obtained. The surgeon who operated on her was Dr. Rosete himself. He testified that Rosario had to be operated even in that condition
in order to save her life. Her condition was guarded. This was corroborated by Dr. Leo Cruz, the anesthesiologist during Rosario's
operation. It was in the evening of May 19 at about 7:00 p.m. when Dr. Rosete opened her abdomen by making a 5 inch incision on her
stomach. He found out that the fallopian tubes were congested with pus and so with the peritonieum, and the pelvic cavity, and patches of

50
pus in the liver, although the gallbladder and kidney appeared to have septicemia, poisoning of the blood. The peritonitis and septicemia
were traced to have been caused through infection by the foreign object which has been lodged in the intra-vaginal canal of Rosario. The
foreign object which was already agreed upon by both parties that it is a portion of a sexual vibrator was extracted from the vagina of
Rosario while under anesthesia. Said object was coated with tissues, pus and blood. Dr. Rosete gave it to the assisting surgical nurse for
safekeeping and gave instructions to release it to the authorized person. This object was shown by the nurse to Dr. Leo Cruz. Dr. Rosete
considered the operation successful and the patient was alive when he left her under Dr. Cruz. Dr. Cruz stayed with said patient in the ward
for about 30 minutes and thereafter he left. The following day, Rosario got serious and it was Dr. Leo Cruz who pronounced her death at
2:00 to 2:15 in the afternoon of May 20, 1987.
Thereafter, a death certificate was prepared under the direction of Dr. Cruz which was indicated therein that the cause of death was cardio-
respiratory arrest, secondary to septicemia caused by the foreign object lodged in the intra uteral vaginal canal of Rosario Baluyot.
The foreign object was washed by nurse Obedina, then placed it in a transparent small jar and labelled "Rosario Baluyot". Jessica Herrera
asked the nurse for the foreign object, and it was given to her under proper receipt. Herrera then showed the same to the persons who
helped financially Rosario's case, and afterwards she gave it to Sister Eva Palencia. Sis. Palencia was in custody of the said object until Mr.
Salonga came and asked her for the object.
After Rosario Baluyot died, Sis. Palencia and a companion went to Gaspar Alcantara to ask him in locating the relatives of Rosario. They
were able to trace Rosario's grandmother, Mrs. Maria Burgos Turla, and informed her that her granddaughter was already dead and lying in
state at St. Martin Funeral Parlor. Mrs. Turla went there with her son, who shouldered all the burial expenses for Rosario.
Subsequently, Sis. Palencia, Fr. Cullens and Mr. Salonga came to her residence at Sta. Rita and asked her if she was interested in filing a
case against the person who caused the death of her granddaughter. Of course she agreed. Hence, she was brought to the Fiscal's (City)
Office to file the same.
After the case was filed against the herein accused, Atty. Edmundo Legaspi with his messenger came to her house and told her that the
accused was willing to settle the case, but that accused Ritter had only P15,000.00. The old woman did not accept it because she knows that
the accused is liable to pay damages anyway. After that, she received a letter from Atty. Legaspi telling her to get a lawyer for her case. By
this time, Mrs. Turla, who wanted to have the case settled once and for all giving the reason that she can no longer bear the situation, sent
her nephew, Conrado Marcelo to Atty. Legaspi. Her nephew obliged and told her that she will be paid at the office of Atty. Legaspi. On a
date not clear in the records, she went with her nephew Conrado Marcelo, and Roberto Sundiam, an assistant barangay tanod of Sta. Rita,
and while they were there, she saw Ritter arrive at the law office. Ritter and Atty. Legaspi talked at the office near the bathroom, and
thereafter Ritter left. After he left, Atty. Legaspi told Rosario's grandmother that they are willing to settle for P20,000.00, but that Ritter left
only P15,000.00, so she received the money with the understanding that there was a balance of P5,000.00 yet. She was made to sign a
statement, and she was asked to change the age of her granddaughter Rosario. With the document prepared, she and the lawyer's messenger
went to the Fiscal's office to have it subscribed, and was subscribed before an assistant city fiscal. But the balance of P5,000.00 was not
paid, because later on Atty. Legaspi became the OIC of Olongapo City and he could no longer attend to it. Atty. Legaspi, during one of the
hearings before the Court even apologized to her.
As to the case, P/Cpl. Marino Victoria, as criminal investigator of Station "A", was directed by Col. Daos, Station Commander of the
Olongapo Police Department to make a follow up of the case of Rosario Baluyot. On the other hand, since the suspect who inserted the
foreign object inside Rosario's vagina was said to be an American, the NISRA Subic Naval Base also conducted its investigation headed by
criminal investigator Agent Conrado Salonga. Coordinating with the local police and with Sister Eva Palencia, since Rosario was a street
child at Magsaysay Drive, they rounded up about 43 street children and from some of them they learned that Rosario Baluyot was with
Jessie Ramirez with an American at the MGM Hotel when the foreign object was inserted in her vagina. After finding Jessie Ramirez, they
asked him about Rosario Baluyot. They found out that indeed he was with Rosario Baluyot sometime before Christmas of 1986 with an
American, who brought them to the said hotel. Jessie Ramirez was taken inside the U.S. Naval Base, Olongapo City and took his statement.
Then he was brought to Mr. Edward Lee Bungarner, a cartographer, and out of the description supplied by Ramirez, a composite drawing
was photocopied and copies thereof were distributed to the local police and to the sentries at the gate of the U.S. Naval Base. Some
American servicemen who had resemblance to the composite drawing were photographed and these were shown to Jessie Ramirez, but the
result was negative. Aside from the physical description by Ramirez about the appearance of the suspect, he also described him as having
the mannerisms of a homo-sexual.
After obtaining information that foreign homo-sexuals frequented Ermita, Manila, and thinking that the so-called American may be
European or Australian national, the team composed of Agent Salonga, Mr. Heinsell, P/Cpl. Marino Victoria and P/Cpl. Andres Montaon,
Jessie Ramirez and Michael Johnson, another juvenile, proceeded to Manila. They first went to the Manila NISRA Office, and thereafter
checked in a hotel. That was on September 23, 1987. On the first night, they went to Luneta Park where foreign homo-sexuals were said to
be frequenting, but the result was negative. Then on September 25, at about 11:00 p.m., while they were standing at the corner of A. Mabini
and M.H. del Pilar Street, a male caucasian who looked like a homo-sexual stopped by admiringly infront of the two (2) juveniles, Ramirez
and Johnson. Jessie Ramirez then reported to Mr. Salonga that this foreigner had a similarity with the American suspect, so the two minors
were instructed to follow the foreigner and to strike a conversation. They did, and when they returned, Jessie Ramirez told them that indeed
the said foreigner was the one who brought him and Rosario Baluyot to the MGM Hotel. Bobby Salonga told Ramirez that this foreigner
had no beard while the one previously described by Ramirez had a beard. Jessie Ramirez told them that maybe he have just shaved it off.
The said caucasian then entered a bar, and after several minutes he came out, and Jessie Ramirez upon his signal with his thumbs up, as a
signal to confirm that the said foreigner is the suspect, arrested Ritter and brought him to the Manila Western Police District. It could be
mentioned at this stage that in this operation they were accompanied by two (2) policemen from the Western Police District. The foreigner
was hand cuffed and was told that he was a suspect for Rape with Homicide. After the arrest, they first went to the pension house of the
suspect in Ermita, Manila to get his shoulder bag which contained his personal belongings, and from there they brought him to the Western
Police Department. At the said police headquarters, they were allowed a permissive search by the foreigner of his clutch bag and his small
shoulder bag and confiscated his passport, I.D., 3 inhalers, money in the form of dollars and travellers checks amounting about $1,500.00
and about P100.00, all duly receipted for. From the passport they learned that the suspect's name was Heinrich Stefan Ritter, an Austrian
national. During the questioning of Hitter, Salonga and his team already left the headquarters and went to their hotel, because at this time
Jessie Ramirez was already shaking with fear after he identified the accused.

51
 The following day, they brought the accused to Olongapo and was detained at the Olongapo City Jail. The case for Rape with Homicide
was filed against him at the City Fiscal of Olongapo. At the preliminary investigation, accused was assisted by his own counsel. The private
complainant was Maria Burgos Turla because it was she who had custody of Rosario Baluyot after her mother Anita Burgos died on
January 12, 1982, and their father Policarpio Baluyot had left them under her custody. When this case was filed, the father's whereabouts
was unknown, and he only appeared when the trial of this case before the Court was already in progress. And upon his (Policarpio Baluyot)
own admission, he only learned about the death of his daughter Rosario Baluyot from the newspaper, long after Rosario was already gone.
The defense tried to dislodge the case by claiming that there could be no crime of Rape with Homicide because the suspect was described
as an American while Ritter is an Austrian. Also advanced by the defense is that, it is a case of mistaken identity. That Rosario Baluyot was
at the time of the commission of the offense, already more than 13 years old, she having been born on December 26, 1973 as per baptismal
certificate, wherein it appears that Rosario Baluyot was baptized on December 25, 1974 and was born on December 26, 1973 as testified to
by Fr. Roque Villanueva of St. James Parish Church who issued the Baptismal Certificate, having custody and possession of the book of
baptism for the year 1975, but admitted that he had no personal knowledge about the matters or entries entered therein. Likewise, the
defense's stand is that the accused cannot be liable for Homicide because a vibrator is not a weapon of death but it is a thing for the purpose
of giving sexual pleasure, and that the death of Rosario Baluyot was due to the incompetence of Dr. Rosete, the surgeon and Director of the
Olongapo City General Hospital, who operated on her. (Rollo, pp. 109-116)
On March 29, 1989, the trial court rendered its decision. The dispositive portion of the decision reads as follows:
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Court holds, that the prosecution has established the GUILT of the accused
beyond reasonable doubt for the crime of Rape with Homicide as defined and penalized in Art. 335 No. 3 of the Revised Penal Code, and
hereby sentences HEINRICH STEFAN RITTER to a penalty of RECLUSION PERPETUA, to indemnify the heirs of the deceased in the
sum of SIXTY THOUSAND PESOS (P60,000.00) Philippine Currency, and TEN THOUSAND PESOS (Pl0,000.00) by way of attorney's
fees to the private prosecutors and to pay the costs. (Rollo, p. 126)
The accused now comes to this Court on the following assigned errors allegedly committed by the court:
I
THE TRIAL COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN FINDING THAT THE ALLEGED OFFENSE WAS
COMMITTED ON OCTOBER 10, 1986 AND THAT IT WAS ACCUSED-APPELLANT WHO COMMITTED IT.
II
THE TRIAL COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN FINDING THAT ROSARIO BALUYOT WAS LESS
THAN TWELVE (12) YEARS OLD WHEN THE ALLEGED OFFENSE WAS COMMITTED AND IN HOLDING THAT THERE WAS
RAPE WITH HOMICIDE.
III
THE TRIAL COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN GIVING CREDENCE TO AND NOT REJECTING
THE PROSECUTION'S EVIDENCE AND IN NOT UPHOLDING THAT OF THE DEFENSE AND ACQUITTING THE ACCUSED.
Inasmuch as it is the bounden duty of this Court to affirm a judgment of conviction only if the guilt of the accused has been proved beyond
reasonable doubt, it behooves us to exert the most painstaking effort to examine the records in the light of the arguments of both parties if only to
satisfy judicial conscience that the appellant indeed committed the criminal act (See People v. Villapaa, 161 SCRA 73 [1988]).
The appellant was convicted by the trial court of the crime of rape with homicide of a young girl who died after the rape because of a foreign object,
believed to be a sexual vibrator, left inside her vagina.
As stated by the trial court one crucial issue in this case is the age of the victimwhether or not Rosario Baluyot was less than twelve (12) years old
at the time the alleged incident happened on October 10, 1986. The age is important in determining whether or not there was statutory rape, Article
335 of the Revised Penal Code defines the third type of rape as having carnal knowledge of a woman under 12 years of age, in which case force,
intimidation, deprivation of reason or unconscious state do not have to be present.
The trial court found that Rosario was below 12 years old when she was sexually abused by the accused and, therefore, rape was committed inspite of
the absence of force or intimidation.
In resolving the issue, the trial court put great weight on the testimonies of the victim's grandmother and father who testified that she was born on
December 22, 1975. These oral declarations were admitted pursuant to then Rule 130, Section 33 of the Rules of Court where, in the absence of a
birth certificate, the act or declaration about pedigree may be received in evidence on any notable fact in the life of a member of the family. Since
birth is a matter of pedigree within the rule which permits the admission of hearsay evidence, oral declarations are therefore admissible as proof of
birth (Decision, p. 54).
The grandmother, Maria Burgos Turla, testified that she remembered Rosario's birth date because her brother died in Pampanga and her daughter,
Anita (Rosario's mother) was the only one who failed to attend the funeral because the latter has just given birth allegedly to Rosario (T.S.N. p. 8,
Jan. 13, 1988).
The father likewise testified that as far as he could remember, Rosario was born on December 22, 1975 (T.S.N., p. 4, Jan. 27, 1988) and he was
certain that Rosario was more than one (1) year old when she was baptized (T.S.N., p. 45, Jan. 27, 1988).
The trial court further added that their testimony is supported by the clinical record and the death certificate indicating that she was 12 years old when
she was admitted at the Olongapo City General Hospital for treatment. The age was supplied by Rosario's alleged guardian, Gaspar Alcantara to the
hospital's clinical record clerk, Lorna Limos. Fe Israel, a social worker who interviewed Rosario Baluyot also testified that she was told by Rosario
that she was 12 years old. The trial court accepted this as adequate evidence of the truth. Moreover, Jessie Ramirez, the principal witness in this case
declared that he was born on September 5, 1973 and that he was older than Rosario Baluyot. Therefore, since he was 13 years old in 1986, Rosario
must have been less than 12 yeas old in 1986. (Decision, p. 55)
The trial court concluded that the oral declarations of the grandmother and father supported by other independent evidence such as the clinical record,
death certificate and the testimonies of Fe Israel and Jessie Ramirez, rendered the baptismal certificate presented by the defense without any
probative or evidentiary value. (Decision, p. 55)
The findings of the trial court with respect to Rosario Baluyot's age cannot stand the application of evidentiary rules.
The trial court relied on Section 33, Rule 130 (now Section 40 of Rule 130 of the 1989 Revised Rules of Court).
For oral evidence to be admissible under this Rule, the requisites are:
(1) That the declarant must be dead or outside of the Philippines or unable to testify;

52
 (2) That pedigree is in issue;
(3) That the person whose pedigree is in question must be related to the declarant by birth or marriage;
(4) That the declaration must be made before the controversy occurred or ante litem motam; and
(5) That the relationship between the declarant and the person whose pedigree is in question must as a general rule be shown by evidence
other than such act or declaration.
These requirements were not satisfied by the evidence for the prosecution nor do the declarations fall within the purview of the rule.
The victim's grandmother and father whose declarations regarding Rosario's age were admitted by the trial court are both alive, in the Philippines and
able to testify as they both did testify in court. Their declarations were made at the trial which is certainly not before the controversy arose. The other
witnesses who testified on Rosario's age are not members of the victim's family. The testimonies of Rosario's relatives must be weighed according to
their own personal knowledge of what happened and not as hearsay evidence on matters of family history.
At this point, we find the evidence regarding Rosario's age of doubtful value.
The trial court justified the admissibility of the grandmother's testimony pursuant to the ruling laid down in U.S. v. Bergantino, (3 Phil., 118 [1903])
where the Court accepted the testimony of the mother that her daughter was 14 years old and 4 months old. The mother stated that she knew the age
because the child was born about the time of the cholera epidemic of 1889. This was not hearsay, but came from one who had direct knowledge of the
child's birth.
It is however, equally true that human memory on dates or days is frail and unless the day is an extraordinary or unusual one for the witness, there is
no reasonable assurance of its correctness. (People v. Dasig 93 Phil. 618, 632 [1953])
With respect to the grandmother's testimony, the date of the brother's death or funeral was never established, which indicates that the day was rather
insignificant to be remembered. The father's declaration is likewise not entirely reliable. His testimony in court does not at all show that he had direct
knowledge of his daughter's birth. He was certain though that she was more than one (1) year old at the time she was baptized.
The other witnesses are not at all competent to testify on the victim's age, nor was there any basis shown to establish their competence for the
purpose. The clinical records were based on Gaspar Alcantara's incompetent information given when he brought the victim to the hospital. Alcantara
came to know her only about a year before her death. He had absolutely no knowledge about the circumstances of Rosario's birth. The death
certificate relied upon by the trial court was merely based on the clinical records. It is even less reliable as a record of birth.
All the evidence presented by the prosecution showing that Rosario Baluyot was less than 12 years old at the time of the alleged incident are not
adequate to establish the exact date of birth, much less offset a documentary record showing a different date.
The defense presented Rosario Baluyot's baptismal certificate which the trial court rejected as being hearsay and of no value. As against the oral
declarations made by interested witnesses establishing Rosario's age to be less than 12 years old, the evidence on record is more convincing and
worthy of belief. (See Filinvest Land, Inc. v. Court of Appeals, 183 SCRA 664, 673 [1990]).
By virtue of a subpoena duces tecum and ad testificandum, issued by the lower court to the St. James Parish Church, Subic, Zambales, Fr. Roque
Villanueva a Roman Catholic priest testified and stated that he is the head of said parish. He brought with him Baptismal Register No. 9 entitled
"Liber Baptisnorum", a latin term for baptismal book or record. On page 151, No. 3 of the said Registry Book, there appears the name of Rosario
Baluyot who was baptized on December 25, 1974, and born on December 26, 1973. Parents are Policarpio Baluyot and Anita Burgos, residents of
Subic, Zambales. Edita R. Milan appears as the only sponsor with Olongapo City as her address.
In the case of Macadangdang v. Court of appeals (100 SCRA 73 [1980]), we held that:
xxx xxx xxx
In our jurisprudence, this Court has been more definite in its pronouncements on the value of baptismal certificates. It thus ruled that while
baptismal and marriage certificates may be considered public documents, they are evidence only to prove the administration of the
sacraments on the dates therein specifiedbut not the veracity of the status or declarations made therein with respect to his kinsfolk and/or
citizenship (Paa v. Chan, L-25945, Oct. 31, 1967). Again, in the case of Fortus v. Novero (L-22378, 23 SCRA 1331 [1968]), this Court held
that a baptismal certificate is conclusive proof only of the baptism administered, in conformity with the rites of the Catholic Church by the
priest who baptized the child, but it does not prove the veracity of the declarations and statements contained in the certificate that concern
the relationship of the person baptized. Such declarations and statements, in order that their truth may be admitted, must indispensably be
shown by proof recognized by law. (At pp. 84-85)
In the same light, the entries made in the Registry Book may be considered as entries made in the course of business under Section 43 of Rule 130,
which is an exception to the hearsay rule. The baptisms administered by the church are one of its transactions in the exercise of ecclesiastical duties
and recorded in a book of the church during the course of its business. (U.S. v. de Vera, 28 Phil. 105 [1914] Hence, the certificate (Exhibit "22")
presented by the defense that Rosario Baluyot was baptized on December 25, 1974 may be admitted in evidence as proof of baptism. Policarpio
Baluyot, the victim's father testified that he had in his possession a baptismal certificate different from the one presented in court. However, no other
baptismal record was ever presented to prove a date different from that brought by the official custodian. Since the baptismal certificate states that
Rosario was baptized on December 25, 1974, it is therefore highly improbable that Rosario could have been born on December 22, 1975. She could
not have been baptized before she was born. Exhibit "22" may be proof only of baptism but it puts a lie to the declaration that Rosario was born in
1975. With the father's assertion that Rosario was more than one (1) year old when she was baptized, we are then more inclined to agree that Rosario
was born in 1973 as stated in the Baptismal Registry.
In the case of People v. Rebancos (172 SCRA 425 [1989]), the Court stated:
xxx xxx xxx
. . . Although no birth certificate was presented because her birth had allegedly not been registered, her baptismal certificate, coupled by her
mother's testimony, was sufficient to establish that Mary Rose was below twelve years old when she was violated by Rebancos. (At. p. 426)
Unfortunately, in the instant case, nobody could corroborate the date on a more reliable document as to Rosario's birth which could serve as sufficient
proof that she was born on December 26, 1973. Therefore, she was more than 12 years old at the time of the alleged incident on October 10, 1986.
Moreover, it is not incumbent upon the defense to prove Rosario's age. The burden of proof lies on the prosecution to prove that Rosario was less
than 12 years old at the time of the alleged incident in a charge of statutory rape. The prosecution failed in this respect.
Since Rosario was not established to have been under 12 years of age at the time of the alleged sexual violation, it was necessary to prove that the
usual elements of rape were present; i.e. that there was force of intimidation or that she was deprived of reason or otherwise unconscious in
accordance with Article 335 of the Revised Penal Code.

53
We agree with the defense that there was no proof of such facts. On the contrary, the evidence shows that Rosario submitted herself to the sexual
advances of the appellant. In fact, she appears to have consented to the act as she was paid P300.00 the next morning while her companion, Jessie
Ramirez was paid P200.00 (T.S.N. p. 50, January 6, 1988). The environmental circumstances coupled with the testimonies and evidence presented in
court clearly give the impression that Rosario Baluyot, a poor street child, was a prostitute inspite of her tender age. Circumstances in life may have
forced her to submit to sex at such a young age but the circumstances do not come under the purview of force or intimidation needed to convict for
rape.
In view of these clear facts which the prosecution failed to refute, no rape was committed. But was Ritter guilty of homicide?
The trial court justified its ruling by saying that the death of the victim was a consequence of the insertion of the foreign object into the victim's
vagina by the appellant.
We now ask "Was the appellant responsible for the sexual vibrator left inside Rosario's vagina which led to her death?
The trial court convicted the accused based on circumstantial evidence. Unfortunately, the circumstances are capable of varying interpretations and
are not enough to justify conviction.
Jessie Ramirez, the principal witness did not actually see the object inserted in Rosario's vagina. Neither could he identify the object (Exhibit "C-2")
taken from Rosario as the same object which the appellant was holding at that time of the alleged incident.
In his sworn statement given to the police investigator on September 4, 1987, he answered that:
xxx xxx xxx
T Habang kayo ay nasa loob ng kuwarto ng otel, mayroon ka bang napansin na inilabas ng kano sa kanyang daladalahan kung mayroon
man?
S Ang Amerikano ay may dala-dalang shoulder bag na kulay itim, at napansin ko na may inilabas siya sa kanyang bag na parang vicks
inhaler, na kanyang inamoy-amoy habang nasa otel kami at pagkatapos niya ay inilapag niya sa lamiseta.
T Ilarawan mo nga sa akin ang bagay na nakita mong inilabas ng Amerikano?
S Ito ay may habang tatlong pulgada at ang takip nito ay may habang dalawang pulgada. Iyong takip ay bilog na patulis at may tabang mga
kalahating pulgada. Hindi ko napansin ang hugis ng dulo ng bagay na may takip dahil natatakpan ng kamay at ilong ng Amerikano.
T Ipinakikita ko sa iyo ang isang larawan. Tignan mong mabuti ang larawang ito at sabihin mo nga sa akin kung makikilala mo ang mga
bagay na nasa larawang ito, na may kinalaman sa nakita mong kinuha ng Amerikano sa kanyang bag?
S Napansin ko na ang kulay asul na bagay sa larawan ay katulad na katulad noong takip ng bagay na inilabas ng Amerikano sa kanyang
bag. Kaya lang ay bakit naging kulay asul gayong ng makita ko ito ay kulay puti? (Exhibit "A", p. 2; Emphasis Supplied)
Presumably, what Jessie Ramirez saw was merely the Vicks inhaler which the appellant does not deny having possessed at that time. He was certain
that the object was white. (T.S.N. p. 91, January 6, 1988)
Later, Ramirez retracted and corrected himself. He said that it was grayish in color with color blue (Medyo kulay abo na may kulay na parang blue).
(T.S.N. p. 92, January 6, 1988) The inconsistency of the witness' testimony casts doubt as to the veracity of the statements made especially when he
answered on additional cross-examination that the reason why he concluded that Exhibit "C-2" was the same object being held by Ritter was because
it was the only one shown to him by the prosecution (T.S.N. pp. 109-110, January 6, 1988). Jessie Ramirez was not all certain about the sexual
vibrator because he did not actually see it in the possession of the appellant.
What he merely remembers is the revelation made by Rosario the next morning that the foreigner inserted something inside her vagina. The trial
court admitted such statement as part of the res gestae. In a strained effort to accept such statement as part of res gestae, the trial court focused the
test of admissibility on the lapse of time between the event and the utterance. For the average 13 years old, the insertion of a mechanical device or
anything for that matter into the vagina of a young girl is undoubtedly startling. For Rosario and Jessie, however, there must be more evidence to
show that the statement, given after a night's sleep had intervened, was given instinctively because the event was so startling Res gestae does not
apply. (Section 42, Rule 130, Rules of Court)
Even if it were established that the appellant did insert something inside Rosario's vagina, the evidence is still not adequate to impute the death of
Rosario to the appellant's alleged act.
Jessie Ramirez testified that Rosario was able to remove the object inserted in her vagina. We quote:
Q Now, you also stated on direct examination that later on Rosario even categorically admitted to you that she was already able to remove
the object allegedly inserted inside her vagina, is that correct?
A Yes, sir.
xxx xxx xxx
ATTY. CARAAN:
Q Will you kindly tell to this Honorable Court the exact words used by Rosario Baluyot later on when you met her when you asked her and
when she told you that she was already able to remove that object from her vagina?
A "Oy, Jessie, natanggal na, "she told me that. I asked her, "Was it already removed?" And she answered, "Yes, it was removed." But the
same night, she again complained of pain of her stomach. She sent one of her friends to call for me. And as a matter of fact, Tomboy was
uttering defamatory words against me as she was groaning in pain. (TSN, Jan. 6,1988, pp. 72-73)
This encounter happened on the night of the day following the day after both children were invited by the foreigner to the hotel. (T.S.N. p. 73,
January 6, 1988). Rosario was said to be groaning in pain so we can just imagine the distress she was undergoing at this point in time. If the device
inserted by the appellant caused the pain, it is highly inconceivable how she was able to endure the pain and discomfort until May, 1987, seven (7)
months after the alleged incident. Evidence must not only proceed from the mouth of a credible witness but it must be credible in itself such as the
common experience and observation of mankind can approve as probable under the circumstances. (People vs. Patog, 144 SCRA 429 [1986]).
At this juncture, we find Dr. Pedro Solis' testimony rather significant. Dr. Pedro Solis, a witness for the defense is considered an expert witness. (A
Doctor of Medicine and a graduate of the State University in 1940, a degree of Bachelor of Laws and member of the Bar 1949, and a graduate of the
Institute of Criminology University. He was awarded Post Graduate Diploma in Criminology in 1963, and also a graduate of United Nations Asia and
Far East Asia Institute on the Prevention of Crimes in Tokyo Japan 1965. He was appointed Medico Legal Officer of the National Bureau of
Investigation in 1940 until 1944. He became Chief Medico Legal Officer in 1970 and became the Deputy Director of the NBI up to 1984. He is at
present a Professorial Lecturer on Legal Medicine at the UP, FEU, UE, and Fatima College of Medicine; a Medico Legal Consultant of the PGH
Medical Center, Makati Medical Center, UERM Medical Center, MCU Medical Center. He has been with the NBI for 43 years. He has attended no

54
less than 13 conferences abroad. He is the author of the textbooks entitled "Legal Medicine" and "Medical Jurisprudence".) With his impressive legal
and medical background, his testimony is too authoritative to ignore. We quote the pertinent portions of his testimony:
Q Now Dr. Solis, would you kindly go over this object marked as Exh. "C-2" which object was described as a part of a sexual vibrator
battery operated. Now, given this kind of object, would you kindly tell us what would be the probable effect upon a 12 years old girl when
it is inserted into her vagina?
A Well, this vibrator must be considered a foreign body placed into a human being and as such be considered a foreign object. As a foreign
object, the tendency of the body may be: No. 1expel the foreign bodyNo. 2.The tendency of the body is to react to that foreign body.
One of the reactions that maybe manifested by the person wherein such foreign body is concerned is to cover the foreign body with human
tissue, in a way to avoid its further injury to the body.
Now, the second reaction is irritation thereby producing certain manifest symptoms and changes in the area where the foreign body is
located.
In severe cases, the symptoms manifestation might not only be localized but may be felt all over the body, we call it systemic reaction.
Now, considering the fact that this foreign body as shown to me is already not complete, this shows exposure of its different parts for the
body to react. If there is mechanism to cause the foreign body to vibrate, there must be some sort of power from within and that power must
be a dry cell battery. [The] composition of the battery are, manganese dioxide ammonium, salts, water and any substance that will cause
current flow. All of these substances are irritants including areas of the container and as such, the primary reaction of the body is to cause
irritation on the tissues, thereby inflammatory changes develop and in all likelihood, aside from those inflammatory changes would be a
supervening infection in a way that the whole generative organ of the woman will suffer from diseased process causing her the systemic
reaction like fever, swelling of the area, and other systemic symptoms. . . . . (TSN., pp. 13-15, October 19,1988)
xxx xxx xxx
Q Now, given this object, how long would it take, Doctor before any reaction such as an infection would set in, how many days after the
insertion of this object in the vagina of a 12 year old girl?
A In the example given to me, considering that one of the ends is exposed, in a way that vaginal secretion has more chance to get in, well,
liberation of this irritant chemicals would be enhanced and therefore in ashorter period of time, there being this vaginal reaction.
Q How many days or weeks would you say would that follow after the insertion?
A As I said, with my experience at the NBI, insertion of any foreign body in the vaginal canal usually developed within, a period of two (2)
weeks . . .
xxx xxx xxx
Q . . . [T]he subject in this case was allegedly raped, and a sexual vibrator was inserted in her vagina on October 10, 1986 and she was
operated on, on May 19, 1987 the following year, so it took more than 7 months before this was extracted, would you say that it will take
that long before any adverse infection could set in inside the vagina?
A Infection and inflamatory changes will develop in a shorter time. (TSN., Oct. 19,1988, p. 18)
xxx xxx xxx
Q When you said shorter, how long would that be, Doctor?
A As I said, in my personal experience, hair pins, cottonballs and even this lipstick of women usually, there are only about two (2) weeks
time that the patient suffer some abnormal symptoms.
Q Now, considering that this is a bigger object to the object that you mentioned, this object has a shorter time?
A Yes, Sir shorter time. (TSN., Oct. 19. 1988, p. 20)
The trial court, however, ruled that "there is no hard and fast rule as to the time frame wherein infection sets in upon insertion of a foreign body in the
vagina canal. For Dr. Solis, the time frame is not more than 10 months, and this case is still within the said time frame."
A more generous time interval may be allowed in non-criminal cases. But where an accused is facing a penalty ofreclusion perpetua, the evidence
against him cannot be based on probabilities which are less likely than those probabilities which favor him.
It should be clarified that the time frame depends upon the kind of foreign body lodged inside the body. An examination of the object gave the
following results:
(1) Color: Blue
Size: (a) Circumference3.031
inches (b) Lengthapproximately
2.179 inches.
Composition: Showed the general
characteristics of a styrene-butadiene plastic.
(2) The specimen can be electrically operated by means of a battery as per certification dated 01 June 1988, signed by Mr. Rodolfo D.
Mercuric, Shipboard Electrical Systems Mechanics, Foreman II, SRF Shop 51, Subic (see attached certification).
(3) No comparative examination was made on specimen #1 and vibrator depicted in the catalog because no actual physical dimensions
and/or mechanical characteristics were shown in the catalog. (Exhibit "LL")
The vibrator end was further subjected to a macro-photographic examination on the open end portion which revealed the following:
Result of Examination
Macro-photographic examination on the open end portion of specimen #1 shows the following inscription:
MABUCHI MOTOR JAPAN RE 14 PAT (Exhibit "MM")
From the above results, the subject object is certainly not considered as inert and based on Dr. Solis' testimony, it is more likely that infection should
set in much earlier. Considering also that the object was inserted inside the vagina which is part of the generative organ of a woman, an organ which
is lined with a very thin layer of membrane with plenty of blood supply, this part of the body is more susceptible to infection. (T.S.N. p. 34, October
19, 1988)
The truth of Dr. Solis' testimony is more probable under the circumstances of the case. We see no reason why his opinions qualified by training and
experience should not be controlling and binding upon the Court in the determination of guilt beyond reasonable doubt. (People v. Tolentino, 166
SCRA 469 [1988]).

55
Dr. Barcinal, another witness for the defense also testified that he examined Rosario Baluyot on May 17, 1986 as a referral patient from the
Department of Surgery to give an OB-GYN clearance to the patient prior to operation. (T.S.N. p. 6, September 28, 1988)
Q And how many times did you examine this patient Rosario Baluyot on that day?
A I examined her twice on that day.
Q The first time that you examined her, what is the result of your findings, if any?
A My first examination, I examined the patient inside the delivery room. The patient was brought to the delivery room wheel-chaired then
from the wheel chair, the patient was ambigatory (sic). She was able to walk from the door to the examining table. On examination, the
patient is conscious, she was fairly nourished, fairly developed, she had fever, she was uncooperative at that time and examination deals
more on the abdomen which shows slightly distended abdomen with muscle guarding with tenderness all over, with maximum tenderness
over the hypogastric area. (T.S.N. p. 5, September 28, 1988)
xxx xxx xxx
Q What about your second examination to the patient, what was your findings, if any?
A In my second examination, I repeated the internal examination wherein I placed my index finger and middle finger inside the vagina of
the patient and was able to palpate a hard object. After which, I made a speculum examination wherein I was able to visualize the inner
portion of the vaginal canal, there I saw purulent foul smelling, blood tints, discharge in the vaginal canal and a foreign body invaded on
the posterior part of the vaginal canal.
xxx xxx xxx
A I referred back to Dr. Fernandez about my findings and he asked me to try to remove the said foreign object by the use of forceps which I
tried to do so also but I failed to extract the same.
Q All this time that you were examining the patient Rosario Baluyot both in the first and second instance, Rosario Baluyot was conscious
and were you able to talk to her when you were examining her?
A Yes, sir.
Q And did you ask her why there is a foreign object lodge inside her vagina?
A Yes, Sir I asked her.
Q And what did she tell you, if any?
A She said in her own words that "GINAMIT AKO NG NEGRO AT SIYA ANG NAGLAGAY NITO."
Q Did she also tell you when, this Negro who used her and who inserted and placed the foreign object on her vagina?
A Yes, Sir I asked her and she said he used me three (3) months ago from the time I examined her.
Q Now, you said that you referred the patient to the ward, what happened next with your patient?
A To my knowledge, the patient is already scheduled on operation on that date.
Q Meaning, May 17, 1987?
A Yes, Sir I was presuming that the patient would undergo surgery after that?
(TSN, Sept. 28,1988, pp. 8-9; Emphasis supplied)
The trial court debunked Dr. Barcinals testimony considering Rosario's condition at that time. It ruled that it is inconceivable that she would be
striking a normal conversation with the doctors and would be sitting on the examination table since Gaspar Alcantara stated that when he brought
Rosario Baluyot to the hospital, she was unconscious and writhing in pain.
It was not improbable for Rosario Baluyot to still be conscious and ambulant at that time because there were several instances testified to by different
witnesses that she was still able to talk prior to her operation:
(1) Fe Israel, a witness for the prosecution and a member of the Olongapo Catholic Charismatic Renewal Movement testified that as a member of this
group she visits indigent children in the hospital every Saturday and after office hours on working days.
On the Saturday prior to Rosario's death which was May 17, she was still able to talk to Rosario Baluyot. In fact, one of her groupmates helped
Rosario go to the comfort room to urinate. (T.S.N., pp. 16-19, May 25, 1988)
(2) Angelita Amulong, a witness for the defense is another para social worker who worked at Pope John 23rd Community Center under Sister Eva
Palencia. In one of her hospital visits, she encountered Rosario Baluyot in the month of May, 1987. She actually saw a child who happened to be
Rosario Baluyot seated on the cement floor and when she asked why she was seated there, she was told that it was too hot in the bed. She saw
Rosario Baluyot for about 2 or 3 days successively. (T.S.N. pp. 10-13, September 7, 1988)
(3) Gaspar Alcantara, the person who brought Rosario to the hospital actually testified that she was conscious (T.S.N. p. 36, September 14, 1988) but
writhing in pain. He took pity on her so he brought her to the hospital (T.S.N. p. 12, September 14, 1988)
From the above testimonies, it is clear that Rosario was still conscious and could still answer questions asked of her although she was complaining of
stomach pains. Unfortunately, the medical attention given to her failed to halt the aggravation of her condition. The operation on May 19 was too late.
Rosario died because of septicemia, which in layman's language is blood poisoning, and peritonitis, which is massive infection, in the abdominal
cavity caused by the foreign object or the cut sexual vibrator lodged in the vagina of the victim. This led to the infection from the uterus to the
fallopian tubes and into the peritoneum and the abdominal cavity.
The trial court convicted the accused citing the rationale of Article 4 of the RPC
He who is the cause of the cause is the cause of the evil caused.
But before the conviction is affirmed, we must first follow the rule as stated in the case of Urbano vs. Intermediate Appellate Court (157 SCRA 1
[1988]) to wit:
The rule is that the death of the victim must be the direct, natural and logical consequence of the wounds inflicted upon him by the accused.
And since we are dealing with a criminal conviction, the proof that the accused caused the victim's death must convince a rational mind
beyond reasonable doubt. (Emphasis supplied)
In People v. Tempongko, Jr., (144 SCRA 583, 592 [1986]), we explained that:
xxx xxx xxx
The basic principle in every criminal prosecution is that accusation is not synonymous with guilt. The accused is presumed innocent until
the contrary is proved by the prosecution. If the prosecution fails, it fails utterly, even if the defense is weak or, indeed, even if there is no
defense at all. The defendant faces the full panoply of state authority with all "The People of the Philippines" arrayed against him. In a
manner of speaking, he goes to bat with all the bases loaded. The odds are heavily against him. It is important, therefore, to equalize the

56
 positions of the prosecution and the defense by presuming the innocence of the accused until the state is able to refute the presumption by
proof of guilt beyond reasonable doubt. (At. p. 592)
The evidence for the accused maybe numerically less as against the number of witnesses and preponderance of evidence presented by the prosecution
but there is no direct and convincing proof that the accused was responsible for the vibrator left inside the victim's vagina which caused her death
seven (7) months after its insertion. What the prosecution managed to establish were mere circumstances which were not sufficient to overcome the
constitutional presumption of innocence. While circumstantial evidence may suffice to support a conviction it is imperative, though, that the
following requisites should concur:
(a) There is more than one circumstance;
(b) The facts from which the inferences are derived are proven; and
(c) The combination of all the circumstances is such as to produce a conviction beyond reasonable doubt. (Rule 133, Sec. 4 Revised Rules
of Court)
For the well-entrenched rule in evidence is that "before conviction can be had upon circumstantial evidence, the circumstances proved should
constitute an unbroken chain which leads to one fair and reasonable conclusion pointing to the defendant, to the exclusion of all others, as the author
of the crime (People v. Subano, 73 Phil. 692 [1942]; Emphasis supplied). It must fairly exclude every reasonable hypothesis of innocence (Dorado v.
Court of Appeals, 153 SCRA 420, 433 [1987]). In this case the circumstantial evidence presented by the prosecution does not conclusively point to
the liability of the appellant for the crime charged. (People v. Tolentino, supra)
We are aware of the wide publicity given to the plight of Rosario Baluyot and how her death exemplified starkly the daily terrors that most street
children encounter as they sell their bodies in order to survive. At an age when innocence and youthful joys should preponderate in their lives, they
experience life in its most heartless and inhuman form. Instead of nothing more than gentle disappointments occupying their young minds, they daily
cope with tragedies that even adults should never be made to carry.
It is with distressing reluctance that we have to seemingly set back the efforts of Government to dramatize the death of Rosario Baluyot as a means of
galvanizing the nation to care for its street children. It would have meant a lot to social workers and prosecutors alike if one pedophile-killer could be
brought to justice so that his example would arouse public concern, sufficient for the formulation and implementation of meaningful remedies.
However, we cannot convict on anything less than proof beyond reasonable doubt. The protections of the Bill of Rights and our criminal justice
system are as much, if not more so, for the perverts and outcasts of society as they are for normal, decent, and law-abiding people.
The requirement of proof which produces in an unprejudiced mind moral certainty or conviction that the accused did commit the offense has not been
satisfied.
By way of emphasis, we reiterate some of the factors arousing reasonable doubt:
1. The evidence on Rosario Baluyot's baptism creates reasonable doubt about her being less than 12 years old when the carnal knowledge
took place. If the evidence for the prosecution is to be believed, she was not yet born on the date she was baptized.
2. Since the proof of Rosario's being under 12 years of age is not satisfactory, the prosecution has to prove force, intimidation, or
deprivation of reason in order to convict for rape. There is no such proof. In fact, the evidence shows a willingness to submit to the sexual
act for monetary considerations.
3. The only witness to the fact of Ritter's placing a vibrator inside the vagina of Rosario was Jessie Ramirez. This witness did not see Ritter
insert the vibrator. The morning after the insertion, he was only told by Rosario about it. Two days later, he allegedly met Rosario who
informed him that she was able to remove the object. And yet, Ramirez testified that on the night of that second encounter, he saw Rosario
groaning because of pain in her stomach. She was even hurling invectives. Ramirez' testimony is not only hearsay, it is also contradictory.
4. It was improbable, according to expert medical testimony, for a foreign object with active properties to cause pain, discomfort, and
serious infection only after seven months inside a young girl's vaginal canal. Infection would have set in much earlier. Jessie Ramirez
recalled that the incident happened in December of 1986. (TSN., January 6, 1988, pp. 15-17) The evidence, however shows that the
appellant was not here in the Philippines that December. As per the Commission on Immigration Arrival and Departure Report, Heinrich
Ritter arrived in the Philippines on October 7, 1986 and left on October 12, 1986. He never returned until September 23, 1987 (Exhibits
"DD" and "EE") The incident could have happened only in October, but then it would have been highly improbable for the sexual vibrator
to stay inside the vagina for seven (7) months with the kind of serious complications it creates.
5. The gynecologist who attended to Rosario during her hospital confinement testified that she told him "Ginamit ako ng Negro at siya ang
naglagay nito." The accused is not a black.
Noteworthy is the fact that nothing was mentioned about Rosario's activities after the hotel incident. Considering Dr. Barcinal's testimony indicating
that she was "used" by a "Negro" three (3) months prior to admission in the hospital and Rosario's unfortunate profession, there is always the
possibility that she could have allowed herself to be violated by this perverse kind of sexual behavior where a vibrator or vibrators were inserted into
her vagina between October, 1986 and May, 1987.
Moreover, the long delay of seven (7) months after the incident in reporting the alleged crime renders the evidence for the prosecution insufficient to
establish appellant's guilty connection with the requisite moral certainty. (See People v. Mula Cruz, 129 SCRA 156 [1984]).
The established facts do not entirely rule out the possibility that the appellant could have inserted a foreign object inside Rosario's vagina. This object
may have caused her death. It is possible that the appellant could be the guilty person. However, the Court cannot base an affirmance of conviction
upon mere possibilities. Suspicions and possibilities are not evidence and therefore should not be taken against the accused. (People v.
Tolentino,supra)
Well-established is the rule that every circumstance favorable to the accused should be duly taken into account. This rule applies even to hardened
criminals or those whose bizarre behaviour violates the mores of civilized society. The evidence against the accused must survive the test of reason.
The strongest suspicion must not be allowed to sway judgment. (See Sacay v. Sandiganbayan, 142 SCRA 593 [1986]). As stated in the case of People
v. Ng (142 SCRA 615 [1986]):
. . . [F]rom the earliest years of this Court, it has emphasized the rule that reasonable doubt in criminal cases must be resolved in favor of
the accused. The requirement of proof beyond reasonable doubt calls for moral certainty of guilt. It has been defined as meaning such proof
"to the satisfaction of the court, keeping in mind the presumption of innocence, as precludes every reasonable hypothesis except that which
it is given to support. It is not sufficient for the proof to establish a probability, even though strong, that the fact charged is more likely to be
true than the contrary. It must establish the truth of the fact to a reasonable and moral certaintya certainty that convinces and satisfies the

57
 reason and the conscience of those who are to act upon it. (Moreno, Philippine Law Dictionary, 1972 Edition, p. 379, citing U.S. v. Reyes,
3 Phil. 3). . . .
In the instant case, since there are circumstances which prevent our being morally certain of the guilt of the appellant, he is, therefore, entitled to an
acquittal.
This notwithstanding, the Court can not ignore the acts of the appellant on the children, Jessie Ramirez and Rosario Baluyot in October, 1986 at the
MGM Hotel. Inspite of his flat denials, we are convinced that he comes to this country not to look at historical sights, enrich his intellect or indulge in
legitimate pleasures but in order to satisfy the urgings of a sick mind.
With the positive Identification and testimony by Jessie Ramirez that it was the appellant who picked him and Rosario from among the children and
invited them to the hotel; and that in the hotel he was shown pictures of young boys like him and the two masturbated each other, such actuations
clearly show that the appellant is a pedophile. When apprehended in Ermita, he was sizing up young children. Dr. Solis defined pedophilia in his
book entitled Legal Medicine, 1987 edition, as follows:
PedophiliaA form of sexual perversion wherein a person has the compulsive desire to have sexual intercourse with a child of either sex.
Children of various ages participate in sexual activities, like fellatio, cunnilingus, fondling with sex organs, or anal sexual intercourse.
Usually committed by a homosexual between a man and a boy the latter being a passive partner.
Ritter was prosecuted for rape with homicide and not pedophilia, assuming this is a crime by itself. Pedophilia is clearly a behavior offensive to
public morals and violative of the declared policy of the state to promote and protect the physical, moral, spiritual and social well-being of our youth.
(Article II, Section 13, 1987 Constitution) (Harvey v. Defensor Santiago, 162 SCRA 840, 848 [1989]). Pedophiles, especially thrill seeking aliens
have no place in our country.
In this case, there is reasonable ground to believe that the appellant committed acts injurious not only to Rosario Baluyot but also to the public good
and domestic tranquility of the people. The state has expressly committed itself to defend the right of children to assistance and special protection
from all forms of neglect, abuse, cruelty, exploitation and other conditions prejudicial to their development. (Art. XV, Section 3 [2] . . . (Harvey v.
Santiago,supra). The appellant has abused Filipino children, enticing them with money. The appellant should be expelled from the country.
Furthermore, it does not necessarily follow that the appellant is also free from civil liability which is impliedly instituted with the criminal action.
(Rule III, Section 1) The well-settled doctrine is that a person while not criminally liable, may still be civilly liable. We reiterate what has been stated
in Urbano v. IAC, supra.
. . . While the guilt of the accused in a criminal prosecution must be established beyond reasonable doubt, only a preponderance of evidence
is required in a civil action for damages. (Article 29, Civil Code). The judgment of acquittal extinguishes the civil liability of the accused
only when it includes a declaration that the facts from which the civil liability might arise did not exist. (Padilla v. Court of Appeals, 129
SCRA 559).
The reason for the provisions of Article 29 of the Civil Code, which provides that the acquittal of the accused on the ground that his guilt
has not been proved beyond reasonable doubt does not necessarily exempt him from civil liability for the same act or omission, has been
explained by the Code Commission as follows:
The old rule that the acquittal of the accused in a criminal case also releases him from civil liability is one of the most serious
flaws in the Philippine legal system. It has given rise to numberless instances of miscarriage of justice, where the acquittal was
due to a reasonable doubt in the mind of the court as to the guilt of the accused. The reasoning followed is that inasmuch as the
civil responsibility is derived from the criminal offense, when the latter is not proved, civil liability cannot be demanded.
This is one of those causes where confused thinking leads to unfortunate and deplorable consequences. Such reasoning fails to
draw a clear line of demarcation between criminal liability and civil responsibility, and to determine the logical result of the
distinction. The two liabilities are separate and distinct from each other. One affects the social order and the other, private rights.
One is for the punishment or correction of the offender while the other is for the reparation of damages suffered by the aggrieved
party. The two responsibilities are so different from each other that article 1813 of the present (Spanish) Civil Code reads thus:
"There may be a compromise upon the civil action arising from a crime; but the public action for the imposition of the legal
penalty shall not thereby be extinguished." It is just and proper that, for the purposes of the imprisonment of or fine upon the
accused, the offense should be proved beyond reasonable doubt. But for the purpose of indemnifying the complaining party, why
should the offense also be proved beyond reasonable doubt? Is not the invasion or violation of every private right to be proved
only by a preponderance of evidence? Is the right of the aggrieved person any less private because the wrongful act is also
punishable by the criminal law?
For these reasons, the Commission recommends the adoption of the reform under discussion. It will correct a serious defect in
our law. It will close up an inexhaustible source of injusticea cause for disillusionment on the part of the innumerable persons
injured or wronged.
Rosario Baluyot is a street child who ran away from her grandmother's house.1wphi1 Circumstances forced her to succumb and enter this
unfortunate profession. Nonetheless, she has left behind heirs who have certainly suffered mental anguish, anxiety and moral shock by her sudden
and incredulous death as reflected in the records of the case. Though we are acquitting the appellant for the crime of rape with homicide, we
emphasize that we are not ruling that he is innocent or blameless. It is only the constitutional presumption of innocence and the failure of the
prosecution to build an airtight case for conviction which saved him, not that the facts of unlawful conduct do not exist. As earlier stated, there is the
likelihood that he did insert the vibrator whose end was left inside Rosario's vaginal canal and that the vibrator may have caused her death. True, we
cannot convict on probabilities or possibilities but civil liability does not require proof beyond reasonable doubt. The Court can order the payment of
indemnity on the facts found in the records of this case.
The appellant certainly committed acts contrary to morals, good customs, public order or public policy (see Article 21 Civil Code). As earlier
mentioned, the appellant has abused Filipino children, enticing them with money. We can not overstress the responsibility for proper behavior of all
adults in the Philippines, including the appellant towards young children. The sexual exploitation committed by the appellant should not and can not
be condoned. Thus, considering the circumstances of the case, we are awarding damages to the heirs of Rosario Baluyot in the amount of P30,000.00.
And finally, the Court deplores the lack of criminal laws which will adequately protect street children from exploitation by pedophiles, pimps, and,
perhaps, their own parents or guardians who profit from the sale of young bodies. The provisions on statutory rape and other related offenses were
never intended for the relatively recent influx of pedophiles taking advantage of rampant poverty among the forgotten segments of our society.
Newspaper and magazine articles, media exposes, college dissertations, and other studies deal at length with this serious social problem but

58
pedophiles like the appellant will continue to enter the Philippines and foreign publications catering to them will continue to advertise the availability
of Filipino street children unless the Government acts and acts soon. We have to acquit the appellant because the Bill of Rights commands us to do
so. We, however, express the Court's concern about the problem of street children and the evils committed against them. Something must be done
about it.
WHEREFORE, the appealed judgment is REVERSED and SET ASIDE. Appellant HEINRICH STEFAN RITTER is ACQUITTED on grounds of
reasonable doubt. The appellant is ordered to pay the amount of P30,000.00 by way of moral and exemplary damages to the heirs of Rosario Baluyot.
The Commissioner of Immigration and Deportation is hereby directed to institute proper deportation proceedings against the appellant and to
immediately expel him thereafter with prejudice to re-entry into the country.
SO ORDERED.

ACTS
On or about October 10, 1986, accused Ritter brought Jessie Ramirez and RosarioBaluyot inside his hotel room in Olongapo City. Inside the hotel
room, the accused told themto take a bath. When Rosario came out of the bathroom, she was told to remove her clothesby the accused and to join him
in bed. At that time, Jessie was already asleep but Rosariotouched him to call his attention. When he looked, he saw the accused placing his
penisagainst the vagina of Rosario and that he was trying to penetrate but it would not fit. Thefollowing morning the accused left after paying the
children. Rosario then told Jessie thatthe accused inserted something in her vagina. Sometime the following day, Jessie sawRosario and he asked her
whether the object was already removed from her body andRosario said "Yes". However, Jessie claimed that on the evening of that same date, he
sawRosario and she was complaining of pain in her vagina and when he asked her, she saidthat the foreign object was not yet removed.Seven months
later, Rosario was brought to the hospital with bloodied skirt,unconscious and foul smelling. After 6 days, Rosario got serious and was pronounced
deadsubsequent to her operation with a portion of a sexual vibrator extracted from her vagina. A case for Rape with Homicide was filed
against Ritter. The Regional Trial Court ofOlongapo rendered a decision declaring him guilty beyond reasonable doubt citing the
rationale of Art 4 of the Revised Penal
He who is the cause of the cause is the cause of theevil caused
. The Supreme Court however, reversed the judgment of the lower court andacquitted Ritter.
ISSUE
Whether or not the acquittal of the accused in a criminal case also releases him from civilliability
RULING
It does not necessarily follow that the appellant is also free from civil liability which isimpliedly instituted with the criminal action. (Rule III, Section
1) The well-settled doctrine isthat a person while not criminally liable may still be civilly liable. While the guilt of theaccused in a criminal
prosecution must be established beyond reasonable doubt, only apreponderance of evidence is required in a civil action for damages. (Article 29,
Civil Code).The judgment of acquittal extinguishes the civil liability of the accused only when it includesa declaration that the facts from which the
civil liability might arise did not exist. (Padilla v.Court of Appeals, 129 SCRA 559) Rosario Baluyot is a street child who ran away from her
grandmother's house.Circumstances forced her to succumb and enter this unfortunate profession. Nonetheless,she has left behind heirs who have
certainly suffered mental anguish, anxiety and moralshock by her sudden and incredulous death as reflected in the records of the case. Thoughthe SC
is acquitting the appellant for the crime of rape with homicide, it emphasizes that it isnot ruling that he is innocent or blameless.It is only the
constitutional presumption of innocence and the failure of theprosecution to build an airtight case for conviction which saved him, not that the facts
ofunlawful conduct do not exist. As earlier stated, there is the likelihood that he did insert thevibrator whose end was left inside Rosario's vaginal
canal and that the vibrator may havecaused her death. The Court cannot convict on probabilities or possibilities but civil liabilitydoes not require
proof beyond reasonable doubt. The Court can order the payment ofindemnity on the facts found in the records of this case.The appellant certainly
committed acts contrary to morals, good customs, publicorder or public policy (Article 21 Civil Code). As earlier mentioned, the appellant has
abusedFilipino children, enticing them with money. The Court cannot overstress the responsibilityfor proper behavior of all adults in the Philippines,
including the appellant towards youngchildren. The sexual exploitation committed by the appellant should not and cannot becondoned. Thus,
considering the circumstances of the case, the Court awarded damages tothe heirs of Rosario Baluyot in the amount of P30,000.00.The appealed
judgment is REVERSED and SET ASIDE. Appellant HEINRICHSTEFAN RITTER is ACQUITTED

on grounds of reasonable doubt

. The appellant is orderedto pay the amount of P30,000.00 by way of moral and exemplary damages to the heirs ofRosario Baluyot.

FACTS: On or about October 10, 1986, Ritter brought Jessie Ramirez and Rosario Baluyot in a hotel room in Olongapo. Ritter masturbated Jessie
and fingered Rosario. Afterwards, he inserted a foreign object to the vagina of Rosario. The next morning, Ritter gave Jessie 200, and Rosario 300.
Rosario told Jessie that Ritter inserted an object inside her vagina. Sometime the following day, Rosario said that the object has already been removed
from her vagina. On May 14, 1987, Alcantara saw Rosario with bloody skirt, foul smelling. Rosario was brought and confined to Olongapo City
general Hospital. An OB-Gyne tried to remove the object inside her vagina using forceps but failed because it was deeply embedded and covered by
tissues. She was having peritonitis. She told the attending physician that a Negro inserted the object to her vagina 3 months ago. Ritter was made
liable for rape with homicide.

ISSUE: W/N Ritter was liable for rape and homicide

HELD: No. The prosecution failed to prove that Rosario was only 12 years old when the incident with Ritter happened. And that Rosario prostituted
herself even at the tender age. As evidence, she received 300 from Ritter the following morning. A doctor/specialist also testified that the inserted
object in the vagina of Rosario Baluyot by Ritter was different from that which caused her death. As evidence, Rosario herself said to Jessie the
following day that the object has been removed already. She also told the doctor that a Negro inserted it to her vagina 3 months ago. Ritter was a
Caucasian. Ritter was also acquitted for the criminal case of rape with homicide. However, it does not exempt him for the moral and exemplary
damages he must award to the victims heirs. It does not necessarily follow that the appellant is also free from civil liability which is impliedly
instituted with the criminal action. Ritter was deported.
59
G.R. No. 157547 February 23, 2011
HEIRS OF EDUARDO SIMON, Petitioners,
vs.
ELVIN* CHAN AND THE COURT OF APPEALS, Respondent.
DECISION
BERSAMIN, J.:
There is no independent civil action to recover the civil liability arising from the issuance of an unfunded check prohibited and punished under Batas
Pambansa Bilang 22 (BP 22).
Antecedents
On July 11, 1997, the Office of the City Prosecutor of Manila filed in the Metropolitan Trial Court of Manila (MeTC) an information charging the
late Eduardo Simon (Simon) with a violation of BP 22, docketed as Criminal Case No. 275381 entitled People v. Eduardo Simon. The accusatory
portion reads:
That sometime in December 1996 in the City of Manila, Philippines, the said accused, did then and there willfully, unlawfully and feloniously make
or draw and issue to Elvin Chan to apply on account or for value Landbank Check No. 0007280 dated December 26, 1996 payable to cash in the
amount of P336,000.00 said accused well knowing that at the time of issue she/he/they did not have sufficient funds in or credit with the drawee bank
for payment of such check in full upon its presentment, which check when presented for payment within ninety (90) days from the date thereof was
subsequently dishonored by the drawee bank for Account Closed and despite receipt of notice of such dishonor, said accused failed to pay said Elvin
Chan the amount of the check or to make arrangement for full payment of the same within five (5) banking days after receiving said notice.
CONTRARY TO LAW. 1
More than three years later, or on August 3, 2000, respondent Elvin Chan commenced in the MeTC in Pasay City a civil action for the collection of
the principal amount of P336,000.00, coupled with an application for a writ of preliminary attachment (docketed as Civil Case No. 915-00). 2 He
alleged in his complaint the following:
xxx
2. Sometime in December 1996 defendant employing fraud, deceit, and misrepresentation encashed a check dated December 26, 1996 in
the amount of P336,000.00 to the plaintiff assuring the latter that the check is duly funded and that he had an existing account with the
Land Bank of the Philippines, xerox copy of the said check is hereto attached as Annex "A";
3. However, when said check was presented for payment the same was dishonored on the ground that the account of the defendant with the
Land Bank of the Philippines has been closed contrary to his representation that he has an existing account with the said bank and that the
said check was duly funded and will be honored when presented for payment;
4. Demands had been made to the defendant for him to make good the payment of the value of the check, xerox copy of the letter of
demand is hereto attached as Annex "B", but despite such demand defendant refused and continues to refuse to comply with plaintiffs
valid demand;
5. Due to the unlawful failure of the defendant to comply with the plaintiffs valid demands, plaintiff has been compelled to retain the
services of counsel for which he agreed to pay as reasonable attorneys fees the amount of P50,000.00 plus additional amount of P2,000.00
per appearance.
ALLEGATION IN SUPPORT OF PRAYER
FOR PRELIMINARY ATTACHMENT
6. The defendant as previously alleged has been guilty of fraud in contracting the obligation upon which this action is brought and that
there is no sufficient security for the claims sought in this action which fraud consist in the misrepresentation by the defendant that he has
an existing account and sufficient funds to cover the check when in fact his account was already closed at the time he issued a check;
7. That the plaintiff has a sufficient cause of action and this action is one which falls under Section 1, sub-paragraph (d), Rule 57 of the
Revised Rules of Court of the Philippines and the amount due the plaintiff is as much as the sum for which the plaintiff seeks the writ of
preliminary attachment;
8. That the plaintiff is willing and able to post a bond conditioned upon the payment of damages should it be finally found out that the
plaintiff is not entitled to the issuance of a writ of preliminary attachment. 3
On August 9, 2000, the MeTC in Pasay City issued a writ of preliminary attachment, which was implemented on August 17, 2000 through the sheriff
attaching a Nissan vehicle of Simon.4
On August 17, 2000, Simon filed an urgent motion to dismiss with application to charge plaintiffs attachment bond for damages, 5 pertinently
averring:
xxx
On the ground of litis pendentia, that is, as a consequence of the pendency of another action between the instant parties for the same cause before the
Metropolitan Trial Court of Manila, Branch X (10) entitled "People of the Philippines vs. Eduardo Simon", docketed thereat as Criminal Case No.
275381-CR, the instant action is dismissable under Section 1, (e), Rule 16, 1997 Rules of Civil Procedure, xxx
xxx
While the instant case is civil in nature and character as contradistinguished from the said Criminal Case No. 915-00 in the Metropolitan Trial Court
of Manila, Branch X (10), the basis of the instant civil action is the herein plaintiffs criminal complaint against defendant arising from a charge of
violation of Batas Pambansa Blg. 22 as a consequence of the alleged dishonor in plaintiffs hands upon presentment for payment with drawee bank a
Land Bank Check No. 0007280 dated December 26, 1996 in the amount of P336,000- drawn allegedly issued to plaintiff by defendant who is the
accused in said case, a photocopy of the Criminal information filed by the Assistant City Prosecutor of Manila on June 11, 1997 hereto attached and
made integral part hereof as Annex "1".
It is our understanding of the law and the rules, that, "when a criminal action is instituted, the civil action for recovery of civil liability arising from
the offense charged is impliedly instituted with the criminal action, unless the offended party expressly waives the civil action or reserves his right to
institute it separately xxx.
On August 29, 2000, Chan opposed Simons urgent motion to dismiss with application to charge plaintiffs attachment bond for damages, stating:

60
 1. The sole ground upon which defendant seeks to dismiss plaintiffs complaint is the alleged pendency of another action between the same
parties for the same cause, contending among others that the pendency of Criminal Case No. 275381-CR entitled "People of the Philippines
vs. Eduardo Simon" renders this case dismissable;
2. The defendant further contends that under Section 1, Rule 111 of the Revised Rules of Court, the filing of the criminal action, the civil
action for recovery of civil liability arising from the offense charged is impliedly instituted with the criminal action which the plaintiff does
not contest; however, it is the submission of the plaintiff that an implied reservation of the right to file a civil action has already been made,
first, by the fact that the information for violation of B.P. 22 in Criminal Case No. 2753841 does not at all make any allegation of damages
suffered by the plaintiff nor is there any claim for recovery of damages; on top of this the plaintiff as private complainant in the criminal
case, during the presentation of the prosecution evidence was not represented at all by a private prosecutor such that no evidence has been
adduced by the prosecution on the criminal case to prove damages; all of these we respectfully submit demonstrate an effective implied
reservation of the right of the plaintiff to file a separate civil action for damages;
3. The defendant relies on Section 3 sub-paragraph (a) Rule 111 of the Revised Rules of Court which mandates that after a criminal action
has been commenced the civil action cannot be instituted until final judgment has been rendered in the criminal action; however, the
defendant overlooks and conveniently failed to consider that under Section 2, Rule 111 which provides as follows:
In the cases provided for in Articles 31, 32, 33, 34 and 2177 of the Civil Code of the Philippines, an independent civil action entirely
separate and distinct from the criminal action, may be brought by the injured party during the pendency of criminal case provided the right
is reserved as required in the preceding section. Such civil action shall proceed independently of the criminal prosecution, and shall require
only a preponderance of evidence.
In as much as the case is one that falls under Art. 33 of the Civil Code of the Philippines as it is based on fraud, this action therefore may be
prosecuted independently of the criminal action;
4. In fact we would even venture to state that even without any reservation at all of the right to file a separate civil action still the plaintiff is
authorized to file this instant case because the plaintiff seeks to enforce an obligation which the defendant owes to the plaintiff by virtue of
the negotiable instruments law. The plaintiff in this case sued the defendant to enforce his liability as drawer in favor of the plaintiff as
payee of the check. Assuming the allegation of the defendant of the alleged circumstances relative to the issuance of the check, still when
he delivered the check payable to bearer to that certain Pedro Domingo, as it was payable to cash, the same may be negotiated by delivery
by who ever was the bearer of the check and such negotiation was valid and effective against the drawer;
5. Indeed, assuming as true the allegations of the defendant regarding the circumstances relative to the issuance of the check it would be
entirely impossible for the plaintiff to have been aware that such check was intended only for a definite person and was not negotiable
considering that the said check was payable to bearer and was not even crossed;
6. We contend that what cannot be prosecuted separate and apart from the criminal case without a reservation is a civil action arising from
the criminal offense charged. However, in this instant case since the liability of the defendant are imposed and the rights of the plaintiff are
created by the negotiable instruments law, even without any reservation at all this instant action may still be prosecuted;
7. Having this shown, the merits of plaintiffs complaint the application for damages against the bond is totally without any legal support
and perforce should be dismissed outright.6
On October 23, 2000, the MeTC in Pasay City granted Simons urgent motion to dismiss with application to charge plaintiffs attachment bond for
damages,7 dismissing the complaint of Chan because:
xxx
After study of the arguments of the parties, the court resolves to GRANT the Motion to Dismiss and the application to charge plaintiffs bond for
damages.
For "litis pendentia" to be a ground for the dismissal of an action, the following requisites must concur: (a) identity of parties or at least such as to
represent the same interest in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same acts; and (c) the
identity in the two (2) cases should be such that the judgment, which may be rendered in one would, regardless of which party is successful, amount
to res judicata in the other. xxx
A close perusal of the herein complaint denominated as "Sum of Money" and the criminal case for violation of BP Blg. 22 would readily show that
the parties are not only identical but also the cause of action being asserted, which is the recovery of the value of Landbank Check No. 0007280 in
the amount of P336,000.00. In both civil and criminal cases, the rights asserted and relief prayed for, the reliefs being founded on the same facts, are
identical.
Plaintiffs claim that there is an effective implied waiver of his right to pursue this civil case owing to the fact that there was no allegation of damages
in BP Blg. 22 case and that there was no private prosecutor during the presentation of prosecution evidence is unmeritorious. It is basic that when a
complaint or criminal Information is filed, even without any allegation of damages and the intention to prove and claim them, the offended party has
the right to prove and claim for them, unless a waiver or reservation is made or unless in the meantime, the offended party has instituted a separate
civil action. xxx The over-all import of the said provision conveys that the waiver which includes indemnity under the Revised Penal Code, and
damages arising under Articles 32, 33, and 34 of the Civil Code must be both clear and express. And this must be logically so as the primordial
objective of the Rule is to prevent the offended party from recovering damages twice for the same act or omission of the accused.
Indeed, the evidence discloses that the plaintiff did not waive or made a reservation as to his right to pursue the civil branch of the criminal case for
violation of BP Blg. 22 against the defendant herein. To the considered view of this court, the filing of the instant complaint for sum of money is
indeed legally barred. The right to institute a separate civil action shall be made before the prosecution starts to present its evidence and under
circumstances affording the offended party a reasonable opportunity to make such reservation. xxx
Even assuming the correctness of the plaintiffs submission that the herein case for sum of money is one based on fraud and hence falling under
Article 33 of the Civil Code, still prior reservation is required by the Rules, to wit:
"In the cases provided for in Articles 31, 32, 33, 34 and 2177 of the Civil Code of the Philippines, an independent civil action entirely separate and
distinct from the criminal action, may be brought by the injured party during the pendency of criminal case provided the right is reserved as required
in the preceding section. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of
evidence."
xxx
WHEREFORE, premises considered, the court resolves to:

61
 1. Dismiss the instant complaint on the ground of "litis pendentia";
2. Dissolve/Lift the Writ of Attachment issued by this court on August 14, 2000;
3. Charge the plaintiffs bond the amount of P336,000.00 in favor of the defendant for the damages sustained by the latter by virtue of the
implementation of the writ of attachment;
4. Direct the Branch Sheriff of this Court to RESTORE with utmost dispatch to the defendants physical possession the vehicle seized from
him on August 16, 2000; and
5. Direct the plaintiff to pay the defendant the sum of P5,000.00 by way of attorneys fees.
SO ORDERED.
Chans motion for reconsideration was denied on December 20, 2000, 8 viz:
Considering that the plaintiffs arguments appear to be a mere repetition of his previous submissions, and which submissions this court have already
passed upon; and taking into account the inapplicability of the ratio decidendi in the Tactaquin vs. Palileo case which the plaintiff cited as clearly in
that case, the plaintiff therein expressly made a reservation to file a separate civil action, the Motion for Reconsideration is DENIED for lack of
merit.
SO ORDERED.
On July 31, 2001, the Regional Trial Court (RTC) in Pasay City upheld the dismissal of Chans complaint, disposing: 9
WHEREFORE, finding no error in the appealed decision, the same is hereby AFFIRMED in toto.
SO ORDERED.
On September 26, 2001, Chan appealed to the Court of Appeals (CA) by petition for review, 10 challenging the propriety of the dismissal of his
complaint on the ground of litis pendentia.
In his comment, 11 Simon countered that Chan was guilty of bad faith and malice in prosecuting his alleged civil claim twice in a manner that caused
him (Simon) utter embarrassment and emotional sufferings; and that the dismissal of the civil case because of the valid ground of litis pendentia
based on Section 1 (e), Rule 16 of the 1997 Rules of Civil Procedure was warranted.
On June 25, 2002, the CA promulgated its assailed decision, 12 overturning the RTC, viz:
xxx
As a general rule, an offense causes two (2) classes of injuries. The first is the social injury produced by the criminal act which is sought to be
repaired through the imposition of the corresponding penalty, and the second is the personal injury caused to the victim of the crime which injury is
sought to be compensated through indemnity which is also civil in nature. Thus, "every person criminally liable for a felony is also civilly liable."
The offended party may prove the civil liability of an accused arising from the commission of the offense in the criminal case since the civil action is
either deemed instituted with the criminal action or is separately instituted.
Rule 111, Section 1 of the Revised Rules of Criminal Procedure, which became effective on December 1, 2000, provides that:
(a) When a criminal action is instituted, the civil action for the recovery of civil liability arising from the offense charged shall be deemed instituted
with the criminal action unless the offended party waives the civil action, reserves the right to institute it separately or institute the civil action prior
to the criminal action.
Rule 111, Section 2 further states:
After the criminal action has been commenced, the separate civil action arising therefrom cannot be instituted until final judgment has been entered in
the criminal action.
However, with respect to civil actions for recovery of civil liability under Articles 32, 33, 34 and 2176 of the Civil Code arising from the same act or
omission, the rule has been changed.
In DMPI Employees Credit Association vs. Velez, the Supreme Court pronounced that only the civil liability arising from the offense charged is
deemed instituted with the criminal action unless the offended party waives the civil action, reserves his right to institute it separately, or institutes the
civil action prior to the criminal action. Speaking through Justice Pardo, the Supreme Court held:
"There is no more need for a reservation of the right to file the independent civil action under Articles 32, 33, 34 and 2176 of the Civil Code of the
Philippines. The reservation and waiver referred to refers only to the civil action for the recovery of the civil liability arising from the offense
charged. This does not include recovery of civil liability under Articles 32, 33, 34, and 2176 of the Civil Code of the Philippines arising from the
same act or omission which may be prosecuted separately without a reservation".
Rule 111, Section 3 reads:
Sec. 3. When civil action may proceed independently. In the cases provided in Articles 32, 33, 34, and 2176 of the Civil Code of the Philippines, the
independent civil action may be brought by the offended party. It shall proceed independently of the criminal action and shall require only a
preponderance of evidence. In no case, however, may the offended party recover damages twice for the same act or omission charged in the criminal
action.
The changes in the Revised Rules on Criminal Procedure pertaining to independent civil actions which became effective on December 1, 2000 are
applicable to this case.
Procedural laws may be given retroactive effect to actions pending and undetermined at the time of their passage. There are no vested rights in the
rules of procedure. xxx
Thus, Civil Case No. CV-94-124, an independent civil action for damages on account of the fraud committed against respondent Villegas under
Article 33 of the Civil Code, may proceed independently even if there was no reservation as to its filing."
It must be pointed that the abovecited case is similar with the instant suit. The complaint was also brought on allegation of fraud under Article 33 of
the Civil Code and committed by the respondent in the issuance of the check which later bounced. It was filed before the trial court, despite the
pendency of the criminal case for violation of BP 22 against the respondent. While it may be true that the changes in the Revised Rules on Criminal
Procedure pertaining to independent civil action became effective on December 1, 2000, the same may be given retroactive application and may be
made to apply to the case at bench, since procedural rules may be given retroactive application. There are no vested rights in the rules of procedure.
In view of the ruling on the first assigned error, it is therefore an error to adjudge damages in favor of the petitioner.
WHEREFORE, the petition is hereby GRANTED. The Decision dated July 13, 2001 rendered by the Regional Trial Court of Pasay City, Branch 108
affirming the dismissal of the complaint filed by petitioner is hereby REVERSED and SET ASIDE. The case is hereby REMANDED to the trial
court for further proceedings.
SO ORDERED.

62
On March 14, 2003, the CA denied Simons motion for reconsideration. 13
Hence, this appeal, in which the petitioners submit that the CA erroneously premised its decision on the assessment that the civil case was an
independent civil action under Articles 32, 33, 34, and 2176 of the Civil Code; that the CAs reliance on the ruling in DMPI Employees Credit
Cooperative Inc. v. Velez14 stretched the meaning and intent of the ruling, and was contrary to Sections 1 and 2 of Rule 111 of the Rules of Criminal
Procedure; that this case was a simple collection suit for a sum of money, precluding the application of Section 3 of Rule 111 of the Rules of Criminal
Procedure.15
In his comment,16 Chan counters that the petition for review should be denied because the petitioners used the wrong mode of appeal; that his cause
of action, being based on fraud, was an independent civil action; and that the appearance of a private prosecutor in the criminal case did not preclude
the filing of his separate civil action.
Issue
The lone issue is whether or not Chans civil action to recover the amount of the unfunded check (Civil Case No. 915-00) was an independent civil
action.
Ruling
The petition is meritorious.
A
Applicable Law and Jurisprudence on the
Propriety of filing a separate civil action based on BP 22
The Supreme Court has settled the issue of whether or not a violation of BP 22 can give rise to civil liability in Banal v. Judge Tadeo, Jr., 17 holding:
xxx
Article 20 of the New Civil Code provides:
Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.
Regardless, therefore, of whether or not a special law so provides, indemnification of the offended party may be had on account of the damage, loss
or injury directly suffered as a consequence of the wrongful act of another. The indemnity which a person is sentenced to pay forms an integral part
of the penalty imposed by law for the commission of a crime (Quemel v. Court of Appeals, 22 SCRA 44, citing Bagtas v. Director of Prisons, 84 Phil
692). Every crime gives rise to a penal or criminal action for the punishment of the guilty party, and also to civil action for the restitution of the thing,
repair of the damage, and indemnification for the losses (United States v. Bernardo, 19 Phil 265).
xxx
Civil liability to the offended party cannot thus be denied. The payee of the check is entitled to receive the payment of money for which the worthless
check was issued. Having been caused the damage, she is entitled to recompense.
Surely, it could not have been the intendment of the framers of Batas Pambansa Blg. 22 to leave the offended private party defrauded and empty-
handed by excluding the civil liability of the offender, giving her only the remedy, which in many cases results in a Pyrrhic victory, of having to file a
separate civil suit. To do so may leave the offended party unable to recover even the face value of the check due her, thereby unjustly enriching the
errant drawer at the expense of the payee. The protection which the law seeks to provide would, therefore, be brought to naught.
xxx
However, there is no independent civil action to recover the value of a bouncing check issued in contravention of BP 22. This is clear from Rule 111
of the Rules of Court, effective December 1, 2000, which relevantly provides:
Section 1. Institution of criminal and civil actions. - (a) When a criminal action is instituted, the civil action for the recovery of civil liability arising
from the offense charged shall be deemed instituted with the criminal action unless the offended party waives the civil action, reserves the right to
institute it separately or institutes the civil action prior to the criminal action.
The reservation of the right to institute separately the civil action shall be made before the prosecution starts presenting its evidence and under
circumstances affording the offended party a reasonable opportunity to make such reservation.
When the offended party seeks to enforce civil liability against the accused by way of moral, nominal, temperate, or exemplary damages without
specifying the amount thereof in the complaint or information, the filing fees therefor shall constitute a first lien on the judgment awarding such
damages.
Where the amount of damages, other than actual, is specified in the complaint or information, the corresponding filing fees shall be paid by the
offended party upon the filing thereof in court.
Except as otherwise provided in these Rules, no filing fees shall be required for actual damages.
No counterclaim, cross-claim or third-party complaint may be filed by the accused in the criminal case, but any cause of action which could have
been the subject thereof may be litigated in a separate civil action. (1a)
(b) The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to include the corresponding civil action. No reservation to file such
civil action separately shall be allowed. 18
Upon filing of the aforesaid joint criminal and civil actions, the offended party shall pay in full the filing fees based on the amount of the check
involved, which shall be considered as the actual damages claimed. Where the complaint or information also seeks to recover liquidated, moral,
nominal, temperate or exemplary damages, the offended party shall pay the filing fees based on the amounts alleged therein. If the amounts are not so
alleged but any of these damages are subsequently awarded by the court, the filing fees based on the amount awarded shall constitute a first lien on
the judgment.
Where the civil action has been filed separately and trial thereof has not yet commenced, it may be consolidated with the criminal action upon
application with the court trying the latter case. If the application is granted, the trial of both actions shall proceed in accordance with section 2 of the
Rule governing consolidation of the civil and criminal actions.
Section 3. When civil action may proceed independently. In the cases provided in Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines,
the independent civil action may be brought by the offended party. It shall proceed independently of the criminal action and shall require only a
preponderance of evidence. In no case, however, may the offended party recover damages twice for the same act or omission charged in the criminal
action.
The aforequoted provisions of the Rules of Court, even if not yet in effect when Chan commenced Civil Case No. 915-00 on August 3, 2000, are
nonetheless applicable. It is axiomatic that the retroactive application of procedural laws does not violate any right of a person who may feel
adversely affected, nor is it constitutionally objectionable. The reason is simply that, as a general rule, no vested right may attach to, or arise from,

63
procedural laws.19 Any new rules may validly be made to apply to cases pending at the time of their promulgation, considering that no party to an
action has a vested right in the rules of procedure, 20 except that in criminal cases, the changes do not retroactively apply if they permit or require a
lesser quantum of evidence to convict than what is required at the time of the commission of the offenses, because such retroactivity would be
unconstitutional for being ex post facto under the Constitution.21
Moreover, the application of the rule would not be precluded by the violation of any assumed vested right, because the new rule was adopted from
Supreme Court Circular 57-97 that took effect on November 1, 1997.
Supreme Court Circular 57-97 states:
Any provision of law or Rules of Court to the contrary notwithstanding, the following rules and guidelines shall henceforth be observed in the filing
and prosecution of all criminal cases under Batas Pambansa Blg. 22 which penalizes the making or drawing and issuance of a check without funds or
credit:
1. The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to necessarily include the corresponding civil action, and
no reservation to file such civil action separately shall be allowed or recognized. 22
2. Upon the filing of the aforesaid joint criminal and civil actions, the offended party shall pay in full the filing fees based upon the amount
of the check involved which shall be considered as the actual damages claimed, in accordance with the schedule of fees in Section 7 (a) and
Section 8 (a), Rule 141 of the Rules of Court as last amended by Administrative Circular No. 11-94 effective August 1, 1994. Where the
offended party further seeks to enforce against the accused civil liability by way of liquidated, moral, nominal, temperate or exemplary
damages, he shall pay the corresponding filing fees therefor based on the amounts thereof as alleged either in the complaint or information.
If not so alleged but any of these damages are subsequently awarded by the court, the amount of such fees shall constitute a first lien on the
judgment.
3. Where the civil action has heretofore been filed separately and trial thereof has not yet commenced, it may be consolidated with the
criminal action upon application with the court trying the latter case. If the application is granted, the trial of both actions shall proceed in
accordance with the pertinent procedure outlined in Section 2 (a) of Rule 111 governing the proceedings in the actions as thus consolidated.
4. This Circular shall be published in two (2) newspapers of general circulation and shall take effect on November 1, 1997.
The reasons for issuing Circular 57-97 were amply explained in Hyatt Industrial Manufacturing Corporation v. Asia Dynamic Electrix
Corporation,23 thus:
xxx
We agree with the ruling of the Court of Appeals that upon filing of the criminal cases for violation of B.P. 22, the civil action for the recovery of the
amount of the checks was also impliedly instituted under Section 1(b) of Rule 111 of the 2000 Rules on Criminal Procedure. Under the present
revised Rules, the criminal action for violation of B.P. 22 shall be deemed to include the corresponding civil action. The reservation to file a separate
civil action is no longer needed. The Rules provide:
Section 1. Institution of criminal and civil actions.
(a) x x x
(b) The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to include the corresponding civil action. No reservation
to file such civil action separately shall be allowed.
Upon filing of the aforesaid joint criminal and civil actions, the offended party shall pay in full the filing fees based on the amount of the check
involved, which shall be considered as the actual damages claimed. Where the complaint or information also seeks to recover liquidated, moral,
nominal, temperate or exemplary damages, the offended party shall pay additional filing fees based on the amounts alleged therein. If the amounts are
not so alleged but any of these damages are subsequently awarded by the court, the filing fees based on the amount awarded shall constitute a first
lien on the judgment.
Where the civil action has been filed separately and trial thereof has not yet commenced, it may be consolidated with the criminal action upon
application with the court trying the latter case. If the application is granted, the trial of both actions shall proceed in accordance with section 2 of this
Rule governing consolidation of the civil and criminal actions.1avvphi1
The foregoing rule was adopted from Circular No. 57-97 of this Court. It specifically states that the criminal action for violation of B.P. 22 shall be
deemed to include the corresponding civil action. It also requires the complainant to pay in full the filing fees based on the amount of the check
involved. Generally, no filing fees are required for criminal cases, but because of the inclusion of the civil action in complaints for violation of B.P.
22, the Rules require the payment of docket fees upon the filing of the complaint. This rule was enacted to help declog court dockets which are filled
with B.P. 22 cases as creditors actually use the courts as collectors. Because ordinarily no filing fee is charged in criminal cases for actual damages,
the payee uses the intimidating effect of a criminal charge to collect his credit gratis and sometimes, upon being paid, the trial court is not even
informed thereof. The inclusion of the civil action in the criminal case is expected to significantly lower the number of cases filed before the courts
for collection based on dishonored checks. It is also expected to expedite the disposition of these cases. Instead of instituting two separate cases, one
for criminal and another for civil, only a single suit shall be filed and tried. It should be stressed that the policy laid down by the Rules is to
discourage the separate filing of the civil action. The Rules even prohibit the reservation of a separate civil action, which means that one can no
longer file a separate civil case after the criminal complaint is filed in court. The only instance when separate proceedings are allowed is when the
civil action is filed ahead of the criminal case. Even then, the Rules encourage the consolidation of the civil and criminal cases. We have previously
observed that a separate civil action for the purpose of recovering the amount of the dishonored checks would only prove to be costly, burdensome
and time-consuming for both parties and would further delay the final disposition of the case. This multiplicity of suits must be avoided. Where
petitioners rights may be fully adjudicated in the proceedings before the trial court, resort to a separate action to recover civil liability is clearly
unwarranted. In view of this special rule governing actions for violation of B.P. 22, Article 31 of the Civil Code cited by the trial court will not apply
to the case at bar.24
The CAs reliance on DMPI Employees Credit Association v. Velez 25 to give due course to the civil action of Chan independently and separately of
Criminal Case No. 275381 was unwarranted. DMPI Employees, which involved a prosecution for estafa, is not on all fours with this case, which is a
prosecution for a violation of BP 22. Although the Court has ruled that the issuance of a bouncing check may result in two separate and distinct
crimes of estafa and violation of BP 22,26 the procedures for the recovery of the civil liabilities arising from these two distinct crimes are different and
non-interchangeable. In prosecutions of estafa, the offended party may opt to reserve his right to file a separate civil action, or may institute an
independent action based on fraud pursuant to Article 33 of the Civil Code, 27 as DMPI Employees has allowed. In prosecutions of violations of BP

64
22, however, the Court has adopted a policy to prohibit the reservation or institution of a separate civil action to claim the civil liability arising from
the issuance of the bouncing check upon the reasons delineated in Hyatt Industrial Manufacturing Corporation, supra.
To repeat, Chans separate civil action to recover the amount of the check involved in the prosecution for the violation of BP 22 could not be
independently maintained under both Supreme Court Circular 57-97 and the aforequoted provisions of Rule 111 of the Rules of Court,
notwithstanding the allegations of fraud and deceit.
B
Aptness of the dismissal of the civil action
on the ground of litis pendentia
Did the pendency of the civil action in the MeTC in Manila (as the civil aspect in Criminal Case No. 275381) bar the filing of Civil Case No. 915-00
in the MeTC in Pasay City on the ground of litis pendentia?
For litis pendentia to be successfully invoked as a bar to an action, the concurrence of the following requisites is necessary, namely: (a) there must be
identity of parties or at least such as represent the same interest in both actions; (b) there must be identity of rights asserted and reliefs prayed for, the
reliefs being founded on the same facts; and, (c) the identity in the two cases should be such that the judgment that may be rendered in one would,
regardless of which party is successful, amount to res judicata in respect of the other. Absent the first two requisites, the possibility of the existence of
the third becomes nil.28
A perusal of Civil Case No. 01-0033 and Criminal Case No. 275381 ineluctably shows that all the elements of litis pendentia are attendant. First of
all, the parties in the civil action involved in Criminal Case No. 275381 and in Civil Case No. 915-00, that is, Chan and Simon, are the same.
Secondly, the information in Criminal Case No. 275381 and the complaint in Civil Case No. 915-00 both alleged that Simon had issued Landbank
Check No. 0007280 worth P336,000.00 payable to "cash," thereby indicating that the rights asserted and the reliefs prayed for, as well as the facts
upon which the reliefs sought were founded, were identical in all respects. And, thirdly, any judgment rendered in one case would necessarily bar the
other by res judicata; otherwise, Chan would be recovering twice upon the same claim.
It is clear, therefore, that the MeTC in Pasay City properly dismissed Civil Case No. 915-00 on the ground of litis pendentia through its decision
dated October 23, 2000; and that the RTC in Pasay City did not err in affirming the MeTC.
Wherefore, we grant the petition for review on certiorari, and, accordingly, we reverse and set aside the decision promulgated by the Court of Appeals
on June 25, 2002. We reinstate the decision rendered on October 23, 2000 by the Metropolitan Trial Court, Branch 45, in Pasay City.
Costs of suit to be paid by the respondent.
SO ORDERED.

Facts:In 11 July 1997 the City Prosecutor of Manila filed a criminal case in the Metropolitan Trial Court of Manila charging Eduardo Simon of
violating BP22.Sometime in December 1996, Simon issued to Elvin Chan a Landbank check with a declared amount of P336,000. The accuse did not
have sufficient fund in his account to fund the check he issued, contrary to the information he had given to the respondent. Despite notice
insufficiency of his account

s funds, the petitioner failed to pay the respondent the value of the check within 5 days after receiving the notice.Three years later on 3 August 2000,
Elvin Chan commenced in the MTC in Pasay City a Civil Action for the collection of the principal amount of P 336,000.00.On 17 August 2000,
Simon filed an urgent Motion to Dismiss with application to change plaintiff

s attachmnent bond for damages on the ground of litis pendentia asa consequence of the pendency of another action between parties for the same
cause.The plaintiff countered the argument of Simon by pointing out he did not make any allegation as to the exact amount of his claim in the
criminal case, consitituting an implied right to initiate civil action. The Plaintiff also cited Rule 111 Section 2, exception to file separate civil action
during the pendency of a criminal case under Art. 31, 32, 33, 34, and 2177 of the CCP. The case falls underArt. 33 of the CCP.On 23 October 2000,
the MCTC in Pasay City granted Simon

s urgent Motion to Dismiss with application to charge plaintiff

s attachment bond for damages. On 31 July 2001, the RTC of Pasay City upheld MCTC

s dismissal of Chan

s initiated Civil Case.Chan appealed to the CA by petition for review with the following issue; Whetheror not the RTC erred in the dismissal of his
case on the ground of litis pendetia.The CA overturened the decision of the RTC with following legal basis; Though the CA recognized that civil case
cannot anymore initiated following the filling of a criminal case, the following case falls under the exception under Rule 111 sec. 2. The case
remanded to the trial court for further proceedings.Simon appealed to the Supreme Court for petition for review.Issue/Issues:1. Whether or not Chan

s Civil action to recover the amount of the bounced check as an independent civil action.2. Whether or not new Supreme Court circular pertaining to
BP22 can be applied retroactively.Ruling:The SC set aside the decision promulgated by the Court of Appeals on June 25, 2002. Furthermore, the SC
reinstate the decision rendered on October 23, 2000 by the Metropolitan Trial Court, Branch 45, in Pasay City.

FACTS:

Eduardo Simon was charged by Elvin Chan of violating BP 22. Chan then commenced a civil action in the MTC for the collection of the principal amount.
Chan argued that BP 22 falls under Art. 33 of the Civil Code in fraud, for such offense to be civilly tried independently.

The RTC first denied it but the CA later affirmed the action.

ISSUE: Whether the independent civil action is valid.

65
RULING:

The SC granted the petition and reversed the CA's decision.

Rule 111, Sec. 1 of the Rules of Court states clearly that the criminal action of BP 22 also includes the corresponding civil action. This provision was also
in the Supreme Court circular. For Chan to file an independent civil action, the case should have an estafa charged with it.

66