G.R. No.

L-12219 March 15, 1918

AMADO PICART, plaintiff-appellant, vs. FRANK SMITH, JR., defendant-

appellee.
Alejo Mabanag for appellant.
G. E. Campbell for appellee.

STREET, J.:

In this action the plaintiff, Amado Picart, seeks to recover of the defendant, Frank
Smith, jr., the sum of P31,000, as damages alleged to have been caused by an
automobile driven by the defendant. From a judgment of the Court of First
Instance of the Province of La Union absolving the defendant from liability the
plaintiff has appealed.

The occurrence which gave rise to the institution of this action took place on
December 12, 1912, on the Carlatan Bridge, at San Fernando, La Union. It appears
that upon the occasion in question the plaintiff was riding on his pony over said
bridge. Before he had gotten half way across, the defendant approached from the
opposite direction in an automobile, going at the rate of about ten or twelve miles
per hour. As the defendant neared the bridge he saw a horseman on it and blew his
horn to give warning of his approach. He continued his course and after he had
taken the bridge he gave two more successive blasts, as it appeared to him that the
man on horseback before him was not observing the rule of the road.

The plaintiff, it appears, saw the automobile coming and heard the warning signals.
However, being perturbed by the novelty of the apparition or the rapidity of the
approach, he pulled the pony closely up against the railing on the right side of the
bridge instead of going to the left. He says that the reason he did this was that he
thought he did not have sufficient time to get over to the other side. The bridge is
shown to have a length of about 75 meters and a width of 4.80 meters. As the
automobile approached, the defendant guided it toward his left, that being the
proper side of the road for the machine. In so doing the defendant assumed that the
horseman would move to the other side. The pony had not as yet exhibited fright,
and the rider had made no sign for the automobile to stop. Seeing that the pony was
apparently quiet, the defendant, instead of veering to the right while yet some
distance away or slowing down, continued to approach directly toward the horse
without diminution of speed. When he had gotten quite near, there being then no
possibility of the horse getting across to the other side, the defendant quickly
turned his car sufficiently to the right to escape hitting the horse alongside of the
railing where it as then standing; but in so doing the automobile passed in such
close proximity to the animal that it became frightened and turned its body across
the bridge with its head toward the railing. In so doing, it as struck on the hock of
the left hind leg by the flange of the car and the limb was broken. The horse fell
and its rider was thrown off with some violence. From the evidence adduced in the
case we believe that when the accident occurred the free space where the pony
stood between the automobile and the railing of the bridge was probably less than
one and one half meters. As a result of its injuries the horse died. The plaintiff
received contusions which caused temporary unconsciousness and required
medical attention for several days.

The question presented for decision is whether or not the defendant in

maneuvering his car in the manner above described was guilty of negligence such
as gives rise to a civil obligation to repair the damage done; and we are of the
opinion that he is so liable. As the defendant started across the bridge, he had the
right to assume that the horse and the rider would pass over to the proper side; but
as he moved toward the center of the bridge it was demonstrated to his eyes that
this would not be done; and he must in a moment have perceived that it was too
late for the horse to cross with safety in front of the moving vehicle. In the nature
of things this change of situation occurred while the automobile was yet some
distance away; and from this moment it was not longer within the power of the
plaintiff to escape being run down by going to a place of greater safety. The
control of the situation had then passed entirely to the defendant; and it was his
duty either to bring his car to an immediate stop or, seeing that there were no other
persons on the bridge, to take the other side and pass sufficiently far away from the
horse to avoid the danger of collision. Instead of doing this, the defendant ran
straight on until he was almost upon the horse. He was, we think, deceived into
doing this by the fact that the horse had not yet exhibited fright. But in view of the
known nature of horses, there was an appreciable risk that, if the animal in
question was unacquainted with automobiles, he might get exited and jump under
the conditions which here confronted him. When the defendant exposed the horse
and rider to this danger he was, in our opinion, negligent in the eye of the law.

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
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 speculations
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 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 conduct or guarding against its consequences.

Applying this test to the conduct of the defendant in the present case we think that
negligence is clearly established. A prudent man, placed in the position of the
defendant, would in our opinion, have recognized that the course which he was
pursuing was fraught with risk, and would therefore have foreseen harm to the
horse and the rider as reasonable consequence of that course. Under these
circumstances the law imposed on the defendant the duty to guard against the
threatened harm.

It goes without saying that the plaintiff himself was not free from fault, for he was
guilty of antecedent negligence in planting himself on the wrong side of the road.
But as we have already stated, the defendant was also negligent; and in such case
the problem always is to discover which agent is immediately and directly
responsible. It will be noted that the negligent acts of the two parties were not
contemporaneous, since the negligence of the defendant succeeded the negligence
of the plaintiff by an appreciable interval. Under these circumstances the law is
that the person who has the last fair chance to avoid the impending harm and fails
to do so is chargeable with the consequences, without reference to the prior
negligence of the other party.
The decision in the case of Rkes vs. Atlantic, Gulf and Pacific Co. (7 Phil. Rep.,
359) should perhaps be mentioned in this connection. This Court there held that
while contributory negligence on the part of the person injured did not constitute a
bar to recovery, it could be received in evidence to reduce the damages which
would otherwise have been assessed wholly against the other party. The defendant
company had there employed the plaintiff, as a laborer, to assist in transporting
iron rails from a barge in Manila harbor to the company's yards located not far
away. The rails were conveyed upon cars which were hauled along a narrow track.
At certain spot near the water's edge the track gave way by reason of the combined
effect of the weight of the car and the insecurity of the road bed. The car was in
consequence upset; the rails slid off; and the plaintiff's leg was caught and broken.
It appeared in evidence that the accident was due to the effects of the typhoon
which had dislodged one of the supports of the track. The court found that the
defendant company was negligent in having failed to repair the bed of the track
and also that the plaintiff was, at the moment of the accident, guilty of contributory
negligence in walking at the side of the car instead of being in front or behind. It
was held that while the defendant was liable to the plaintiff by reason of its
negligence in having failed to keep the track in proper repair nevertheless the
amount of the damages should be reduced on account of the contributory
negligence in the plaintiff. As will be seen the defendant's negligence in that case
consisted in an omission only. The liability of the company arose from its
responsibility for the dangerous condition of its track. In a case like the one now
before us, where the defendant was actually present and operating the automobile
which caused the damage, we do not feel constrained to attempt to weigh the
negligence of the respective parties in order to apportion the damage according to
the degree of their relative fault. It is enough to say that the negligence of the
defendant was in this case the immediate and determining cause of the accident
and that the antecedent negligence of the plaintiff was a more remote factor in the
case.

A point of minor importance in the case is indicated in the special defense pleaded
in the defendant's answer, to the effect that the subject matter of the action had
been previously adjudicated in the court of a justice of the peace. In this connection
it appears that soon after the accident in question occurred, the plaintiff caused
criminal proceedings to be instituted before a justice of the peace charging the
defendant with the infliction of serious injuries (lesiones graves). At the
preliminary investigation the defendant was discharged by the magistrate and the
proceedings were dismissed. Conceding that the acquittal of the defendant at the
trial upon the merits in a criminal prosecution for the offense mentioned would be
res adjudicata upon the question of his civil liability arising from negligence -- a
point upon which it is unnecessary to express an opinion -- the action of the justice
of the peace in dismissing the criminal proceeding upon the preliminary hearing
can have no effect. (See U. S. vs. Banzuela and Banzuela, 31 Phil. Rep., 564.)

From what has been said it results that the judgment of the lower court must be
reversed, and judgment is her rendered that the plaintiff recover of the defendant
the sum of two hundred pesos (P200), with costs of other instances. The sum here
awarded is estimated to include the value of the horse, medical expenses of the
plaintiff, the loss or damage occasioned to articles of his apparel, and lawful
interest on the whole to the date of this recovery. The other damages claimed by
the plaintiff are remote or otherwise of such character as not to be recoverable. So
ordered.

G.R. No. L-4977 March 22, 1910

DAVID TAYLOR, plaintiff-appellee, vs. THE MANILA ELECTRIC

RAILROAD AND LIGHT COMPANY, defendant-appellant.

W. H. Lawrence, for appellant.

W. L. Wright, for appellee.

CARSON, J.:

An action to recover damages for the loss of an eye and other injuries, instituted by
David Taylor, a minor, by his father, his nearest relative.

The defendant is a foreign corporation engaged in the operation of a street railway

and an electric light system in the city of Manila. Its power plant is situated at the
eastern end of a small island in the Pasig River within the city of Manila, known as
the Isla del Provisor. The power plant may be reached by boat or by crossing a
footbridge, impassable for vehicles, at the westerly end of the island.

The plaintiff, David Taylor, was at the time when he received the injuries
complained of, 15 years of age, the son of a mechanical engineer, more mature
than the average boy of his age, and having considerable aptitude and training in
mechanics.

On the 30th of September, 1905, plaintiff, with a boy named Manuel Claparols,
about 12 years of age, crossed the footbridge to the Isla del Provisor, for the
purpose of visiting one Murphy, an employee of the defendant, who and promised
to make them a cylinder for a miniature engine. Finding on inquiry that Mr.
Murphy was not in his quarters, the boys, impelled apparently by youthful
curiosity and perhaps by the unusual interest which both seem to have taken in
machinery, spent some time in wandering about the company's premises. The visit
was made on a Sunday afternoon, and it does not appear that they saw or spoke to
anyone after leaving the power house where they had asked for Mr. Murphy.

After watching the operation of the travelling crane used in handling the
defendant's coal, they walked across the open space in the neighborhood of the
place where the company dumped in the cinders and ashes from its furnaces. Here
they found some twenty or thirty brass fulminating caps scattered on the ground.
These caps are approximately of the size and appearance of small pistol cartridges
and each has attached to it two long thin wires by means of which it may be
discharged by the use of electricity. They are intended for use in the explosion of
blasting charges of dynamite, and have in themselves a considerable explosive
power. After some discussion as to the ownership of the caps, and their right to
take them, the boys picked up all they could find, hung them on stick, of which
each took end, and carried them home. After crossing the footbridge, they met a
little girl named Jessie Adrian, less than 9 years old, and all three went to the home
of the boy Manuel. The boys then made a series of experiments with the caps.
They trust the ends of the wires into an electric light socket and obtained no result.
They next tried to break the cap with a stone and failed. Manuel looked for a
hammer, but could not find one. Then they opened one of the caps with a knife,
and finding that it was filled with a yellowish substance they got matches, and
David held the cap while Manuel applied a lighted match to the contents. An
explosion followed, causing more or less serious injuries to all three. Jessie, who
when the boys proposed putting a match to the contents of the cap, became
frightened and started to run away, received a slight cut in the neck. Manuel had
his hand burned and wounded, and David was struck in the face by several
particles of the metal capsule, one of which injured his right eye to such an extent
as to the necessitate its removal by the surgeons who were called in to care for his
wounds.

The evidence does definitely and conclusively disclose how the caps came to be on
the defendant's premises, nor how long they had been there when the boys found
them. It appears, however, that some months before the accident, during the
construction of the defendant's plant, detonating caps of the same size and kind as
those found by the boys were used in sinking a well at the power plant near the
place where the caps were found; and it also appears that at or about the time when
these caps were found, similarly caps were in use in the construction of an
extension of defendant's street car line to Fort William McKinley. The caps when
found appeared to the boys who picked them up to have been lying for a
considerable time, and from the place where they were found would seem to have
been discarded as detective or worthless and fit only to be thrown upon the rubbish
heap.

No measures seems to have been adopted by the defendant company to prohibit or

prevent visitors from entering and walking about its premises unattended, when
they felt disposed so to do. As admitted in defendant counsel's brief, "it is
undoubtedly true that children in their play sometimes crossed the foot bridge to
the islands;" and, we may add, roamed about at will on the uninclosed premises of
the defendant, in the neighborhood of the place where the caps were found. There
is evidence that any effort ever was made to forbid these children from visiting the
defendant company's premises, although it must be assumed that the company or
its employees were aware of the fact that they not infrequently did so.

Two years before the accident, plaintiff spent four months at sea, as a cabin boy on
one of the interisland transports. Later he took up work in his father's office,
learning mechanical drawing and mechanical engineering. About a month after his
accident he obtained employment as a mechanical draftsman and continued in that
employment for six months at a salary of P2.50 a day; and it appears that he was a
boy of more than average intelligence, taller and more mature both mentally and
physically than most boys of fifteen.

The facts set out in the foregoing statement are to our mind fully and conclusively
established by the evidence of record, and are substantially admitted by counsel.
The only questions of fact which are seriously disputed are plaintiff's allegations
that the caps which were found by plaintiff on defendant company's premises were
the property of the defendant, or that they had come from its possession and
control, and that the company or some of its employees left them exposed on its
premises at the point where they were found.

The evidence in support of these allegations is meager, and the defendant

company, apparently relying on the rule of law which places the burden of proof of
such allegations upon the plaintiff, offered no evidence in rebuttal, and insists that
plaintiff failed in his proof. We think, however, that plaintiff's evidence is
sufficient to sustain a finding in accord with his allegations in this regard.

It was proven that caps, similar to those found by plaintiff, were used, more or less
extensively, on the McKinley extension of the defendant company's track; that
some of these caps were used in blasting a well on the company's premises a few
months before the accident; that not far from the place where the caps were found
the company has a storehouse for the materials, supplies and so forth, used by it in
its operations as a street railway and a purveyor of electric light; and that the place,
in the neighborhood of which the caps were found, was being used by the company
as a sort of dumping ground for ashes and cinders. Fulminating caps or detonators
for the discharge by electricity of blasting charges by dynamite are not articles in
common use by the average citizen, and under all the circumstances, and in the
absence of all evidence to the contrary, we think that the discovery of twenty or
thirty of these caps at the place where they were found by the plaintiff on
defendant's premises fairly justifies the inference that the defendant company was
either the owner of the caps in question or had the caps under its possession and
control. We think also that the evidence tends to disclose that these caps or
detonators were willfully and knowingly thrown by the company or its employees
at the spot where they were found, with the expectation that they would be buried
out of the sight by the ashes which it was engaged in dumping in that
neighborhood, they being old and perhaps defective; and, however this may be, we
are satisfied that the evidence is sufficient to sustain a finding that the company or
some of its employees either willfully or through an oversight left them exposed at
a point on its premises which the general public, including children at play, where
not prohibited from visiting, and over which the company knew or ought to have
known that young boys were likely to roam about in pastime or in play.

Counsel for appellant endeavors to weaken or destroy the probative value of the
facts on which these conclusions are based by intimidating or rather assuming that
the blasting work on the company's well and on its McKinley extension was done
by contractors. It was conclusively proven, however, that while the workman
employed in blasting the well was regularly employed by J. G. White and Co., a
firm of contractors, he did the work on the well directly and immediately under the
supervision and control of one of defendant company's foremen, and there is no
proof whatever in the record that the blasting on the McKinley extension was done
by independent contractors. Only one witness testified upon this point, and while
he stated that he understood that a part of this work was done by contract, he could
not say so of his own knowledge, and knew nothing of the terms and conditions of
the alleged contract, or of the relations of the alleged contractor to the defendant
company. The fact having been proven that detonating caps were more or less
extensively employed on work done by the defendant company's directions and on
its behalf, we think that the company should have introduced the necessary
evidence to support its contention if it wished to avoid the not unreasonable
inference that it was the owner of the material used in these operations and that it
was responsible for tortious or negligent acts of the agents employed therein, on
the ground that this work had been intrusted to independent contractors as to whose
acts the maxim respondent superior should not be applied. If the company did not
in fact own or make use of caps such as those found on its premises, as intimated
by counsel, it was a very simple matter for it to prove that fact, and in the absence
of such proof we think that the other evidence in the record sufficiently establishes
the contrary, and justifies the court in drawing the reasonable inference that the
caps found on its premises were its property, and were left where they were found
by the company or some of its employees.

Plaintiff appears to have rested his case, as did the trial judge his decision in
plaintiff's favor, upon the provisions of article 1089 of the Civil Code read together
with articles 1902, 1903, and 1908 of that code.

ART. 1089 Obligations are created by law, by contracts, by quasi-contracts, and

illicit acts and omissions or by those in which any kind of fault or negligence
occurs.

ART. 1902 A person who by an act or omission causes damage to another when
there is fault or negligence shall be obliged to repair the damage so done.

ART. 1903 The obligation imposed by the preceding article is demandable, not
only for personal acts and omissions, but also for those of the persons for whom
they should be responsible.

The father, and on his death or incapacity the mother, is liable for the damages
caused by the minors who live with them.
xxx xxx xxx

Owners or directors of an establishment or enterprise are equally liable for

damages caused by their employees in the service of the branches in which the
latter may be employed or on account of their duties.

xxx xxx xxx

The liability referred to in this article shall cease when the persons mentioned
therein prove that they employed all the diligence of a good father of a family to
avoid the damage.

ART. 1908 The owners shall also be liable for the damage caused —

1 By the explosion of machines which may not have been cared for with due
diligence, and for kindling of explosive substances which may not have been
placed in a safe and proper place.

Counsel for the defendant and appellant rests his appeal strictly upon his
contention that the facts proven at the trial do not established the liability of the
defendant company under the provisions of these articles, and since we agree with
this view of the case, it is not necessary for us to consider the various questions as
to form and the right of action (analogous to those raised in the case of Rakes vs.
Atlantic, Gulf and Pacific Co., 7 Phil. Rep., 359), which would, perhaps, be
involved in a decision affirming the judgment of the court below.

We agree with counsel for appellant that under the Civil Code, as under the
generally accepted doctrine in the United States, the plaintiff in an action such as
that under consideration, in order to establish his right to a recovery, must establish
by competent evidence:

(1) Damages to the plaintiff.

(2) Negligence by act or omission of which defendant personally, or some person

for whose acts it must respond, was guilty.

(3) The connection of cause and effect between the negligence and the damage.
These proposition are, of course, elementary, and do not admit of discussion, the
real difficulty arising in the application of these principles to the particular facts
developed in the case under consideration.

It is clear that the accident could not have happened and not the fulminating caps
been left exposed at the point where they were found, or if their owner had
exercised due care in keeping them in an appropriate place; but it is equally clear
that plaintiff would not have been injured had he not, for his own pleasure and
convenience, entered upon the defendant's premises, and strolled around thereon
without the express permission of the defendant, and had he not picked up and
carried away the property of the defendant which he found on its premises, and had
he not thereafter deliberately cut open one of the caps and applied a match to its
contents.

But counsel for plaintiff contends that because of plaintiff's youth and
inexperience, his entry upon defendant company's premises, and the intervention of
his action between the negligent act of defendant in leaving the caps exposed on its
premises and the accident which resulted in his injury should not be held to have
contributed in any wise to the accident, which should be deemed to be the direct
result of defendant's negligence in leaving the caps exposed at the place where they
were found by the plaintiff, and this latter the proximate cause of the accident
which occasioned the injuries sustained by him.

In support of his contention, counsel for plaintiff relies on the doctrine laid down in
many of the courts of last resort in the United States in the cases known as the
"Torpedo" and "Turntable" cases, and the cases based thereon.

In a typical cases, the question involved has been whether a railroad company is
liable for an injury received by an infant of tender years, who from mere idle
curiosity, or for the purposes of amusement, enters upon the railroad company's
premises, at a place where the railroad company knew, or had good reason to
suppose, children would be likely to come, and there found explosive signal
torpedoes left unexposed by the railroad company's employees, one of which when
carried away by the visitor, exploded and injured him; or where such infant found
upon the premises a dangerous machine, such as a turntable, left in such condition
as to make it probable that children in playing with it would be exposed to accident
or injury therefrom and where the infant did in fact suffer injury in playing with
such machine.
In these, and in great variety of similar cases, the great weight of authority holds
the owner of the premises liable.

As laid down in Railroad Co. vs. Stout (17 Wall. (84 U. S.), 657), wherein the
principal question was whether a railroad company was liable for in injury
received by an infant while upon its premises, from idle curiosity, or for purposes
of amusement, if such injury was, under circumstances, attributable to the
negligence of the company), the principles on which these cases turn are that
"while a railroad company is not bound to the same degree of care in regard to
mere strangers who are unlawfully upon its premises that it owes to passengers
conveyed by it, it is not exempt from responsibility to such strangers for injuries
arising from its negligence or from its tortious acts;" and that "the conduct of an
infant of tender years is not to be judged by the same rule which governs that of
adult. While it is the general rule in regard to an adult that to entitle him to recover
damages for an injury resulting from the fault or negligence of another he must
himself have been free from fault, such is not the rule in regard to an infant of
tender years. The care and caution required of a child is according to his maturity
and capacity only, and this is to be determined in each case by the circumstances of
the case."

The doctrine of the case of Railroad Company vs. Stout was vigorously
controverted and sharply criticized in several state courts, and the supreme court of
Michigan in the case of Ryan vs. Towar (128 Mich., 463) formally repudiated and
disapproved the doctrine of the Turntable cases, especially that laid down in
Railroad Company vs. Stout, in a very able decision wherein it held, in the
language of the syllabus: (1) That the owner of the land is not liable to trespassers
thereon for injuries sustained by them, not due to his wanton or willful acts; (2)
that no exception to this rule exists in favor of children who are injured by
dangerous machinery naturally calculated to attract them to the premises; (3) that
an invitation or license to cross the premises of another can not be predicated on
the mere fact that no steps have been taken to interfere with such practice; (4) that
there is no difference between children and adults as to the circumstances that will
warrant the inference of an invitation or a license to enter upon another's premises.

Similar criticisms of the opinion in the case of Railroad Company vs. Stout were
indulged in by the courts in Connecticut and Massachusetts. (Nolan vs. Railroad
Co., 53 Conn., 461; 154 Mass., 349). And the doctrine has been questioned in
Wisconsin, Pennsylvania, New Hampshire, and perhaps in other States.
On the other hand, many if not most of the courts of last resort in the United States,
citing and approving the doctrine laid down in England in the leading case of
Lynch vs. Nurding (1 Q. B., 29, 35, 36), lay down the rule in these cases in accord
with that announced in the Railroad Company vs. Stout (supra), and the Supreme
Court of the United States, in a unanimous opinion delivered by Justice Harlan in
the case of Union Pacific Railway Co. vs. McDonal and reconsidered the doctrine
laid down in Railroad Co. vs. Stout, and after an exhaustive and critical analysis
and review of many of the adjudged cases, both English and American, formally
declared that it adhered "to the principles announced in the case of Railroad Co. vs.
Stout."

In the case of Union Pacific Railway Co. vs. MacDonald (supra) the facts were as
follows: The plaintiff, a boy 12 years of age, out of curiosity and for his own
pleasure, entered upon and visited the defendant's premises, without defendant's
express permission or invitation, and while there, was by accident injured by
falling into a burning slack pile of whose existence he had no knowledge, but
which had been left by defendant on its premises without any fence around it or
anything to give warning of its dangerous condition, although defendant knew or
had reason the interest or curiosity of passers-by. On these facts the court held that
the plaintiff could not be regarded as a mere trespasser, for whose safety and
protection while on the premises in question, against the unseen danger referred to,
the defendant was under no obligation to make provision.

We quote at length from the discussion by the court of the application of the
principles involved to the facts in that case, because what is said there is strikingly
applicable in the case at bar, and would seem to dispose of defendant's contention
that, the plaintiff in this case being a trespasser, the defendant company owed him
no duty, and in no case could be held liable for injuries which would not have
resulted but for the entry of plaintiff on defendant's premises.

We adhere to the principles announced in Railroad Co. vs. Stout (supra). Applied
to the case now before us, they require us to hold that the defendant was guilty of
negligence in leaving unguarded the slack pile, made by it in the vicinity of its
depot building. It could have forbidden all persons from coming to its coal mine
for purposes merely of curiosity and pleasure. But it did not do so. On the contrary,
it permitted all, without regard to age, to visit its mine, and witness its operation. It
knew that the usual approach to the mine was by a narrow path skirting its slack
pit, close to its depot building, at which the people of the village, old and young,
would often assemble. It knew that children were in the habit of frequenting that
locality and playing around the shaft house in the immediate vicinity of the slack
pit. The slightest regard for the safety of these children would have suggested that
they were in danger from being so near a pit, beneath the surface of which was
concealed (except when snow, wind, or rain prevailed) a mass of burning coals into
which a child might accidentally fall and be burned to death. Under all the
circumstances, the railroad company ought not to be heard to say that the plaintiff,
a mere lad, moved by curiosity to see the mine, in the vicinity of the slack pit, was
a trespasser, to whom it owed no duty, or for whose protection it was under no
obligation to make provisions.

In Townsend vs. Wathen (9 East, 277, 281) it was held that if a man dangerous
traps, baited with flesh, in his own ground, so near to a highway, or to the premises
of another, that dogs passing along the highway, or kept in his neighbors premises,
would probably be attracted by their instinct into the traps, and in consequence of
such act his neighbor's dogs be so attracted and thereby injured, an action on the
case would lie. "What difference," said Lord Ellenborough, C.J., "is there in reason
between drawing the animal into the trap by means of his instinct which he can not
resist, and putting him there by manual force?" What difference, in reason we may
observe in this case, is there between an express license to the children of this
village to visit the defendant's coal mine, in the vicinity of its slack pile, and an
implied license, resulting from the habit of the defendant to permit them, without
objection or warning, to do so at will, for purposes of curiosity or pleasure?
Referring it the case of Townsend vs. Wathen, Judge Thompson, in his work on the
Law of Negligence, volume 1, page 305, note, well says: "It would be a barbarous
rule of law that would make the owner of land liable for setting a trap thereon,
baited with stinking meat, so that his neighbor's dog attracted by his natural
instinct, might run into it and be killed, and which would exempt him from liability
for the consequence of leaving exposed and unguarded on his land a dangerous
machine, so that his neighbor's child attracted to it and tempted to intermeddle with
it by instincts equally strong, might thereby be killed or maimed for life."

Chief Justice Cooley, voicing the opinion of the supreme court of Michigan, in the
case of Powers vs. Harlow (53 Mich., 507), said that (p. 515):

Children, wherever they go, must be expected to act upon childlike instincts and
impulses; and others who are chargeable with a duty of care and caution toward
them must calculate upon this, and take precautions accordingly. If they leave
exposed to the observation of children anything which would be tempting to them,
and which they in their immature judgment might naturally suppose they were at
liberty to handle or play with, they should expect that liberty to be taken.
And the same eminent jurist in his treatise or torts, alluding to the doctrine of
implied invitation to visit the premises of another, says:

In the case of young children, and other persons not fully sui juris, an implied
license might sometimes arise when it would not on behalf of others. Thus leaving
a tempting thing for children to play with exposed, where they would be likely to
gather for that purpose, may be equivalent to an invitation to them to make use of
it; and, perhaps, if one were to throw away upon his premises, near the common
way, things tempting to children, the same implication should arise. (Chap. 10, p.
303.)

The reasoning which led the Supreme Court of the United States to its conclusion
in the cases of Railroad Co. vs. Stout (supra) and Union Pacific Railroad Co. vs.
McDonald (supra) is not less cogent and convincing in this jurisdiction than in that
wherein those cases originated. Children here are actuated by similar childish
instincts and impulses. Drawn by curiosity and impelled by the restless spirit of
youth, boys here as well as there will usually be found whenever the public is
permitted to congregate. The movement of machinery, and indeed anything which
arouses the attention of the young and inquiring mind, will draw them to the
neighborhood as inevitably as does the magnet draw the iron which comes within
the range of its magnetic influence. The owners of premises, therefore, whereon
things attractive to children are exposed, or upon which the public are expressly or
impliedly permitted to enter or upon which the owner knows or ought to know
children are likely to roam about for pastime and in play, " must calculate upon
this, and take precautions accordingly." In such cases the owner of the premises
can not be heard to say that because the child has entered upon his premises
without his express permission he is a trespasser to whom the owner owes no duty
or obligation whatever. The owner's failure to take reasonable precautions to
prevent the child from entering his premises at a place where he knows or ought to
know that children are accustomed to roam about of to which their childish
instincts and impulses are likely to attract them is at least equivalent to an implied
license to enter, and where the child does enter under such conditions the owner's
failure to take reasonable precautions to guard the child against injury from
unknown or unseen dangers, placed upon such premises by the owner, is clearly a
breach of duty, responsible, if the child is actually injured, without other fault on
its part than that it had entered on the premises of a stranger without his express
invitation or permission. To hold otherwise would be expose all the children in the
community to unknown perils and unnecessary danger at the whim of the owners
or occupants of land upon which they might naturally and reasonably be expected
to enter.
This conclusion is founded on reason, justice, and necessity, and neither is
contention that a man has a right to do what will with his own property or that
children should be kept under the care of their parents or guardians, so as to
prevent their entering on the premises of others is of sufficient weight to put in
doubt. In this jurisdiction as well as in the United States all private property is
acquired and held under the tacit condition that it shall not be so used as to injure
the equal rights and interests of the community (see U. S. vs. Toribio,1 No. 5060,
decided January 26, 1910), and except as to infants of very tender years it would be
absurd and unreasonable in a community organized as is that in which we lived to
hold that parents or guardian are guilty of negligence or imprudence in every case
wherein they permit growing boys and girls to leave the parental roof unattended,
even if in the event of accident to the child the negligence of the parent could in
any event be imputed to the child so as to deprive it a right to recover in such cases
— a point which we neither discuss nor decide.

But while we hold that the entry of the plaintiff upon defendant's property without
defendant's express invitation or permission would not have relieved defendant
from responsibility for injuries incurred there by plaintiff, without other fault on
his part, if such injury were attributable to the negligence of the defendant, we are
of opinion that under all the circumstances of this case the negligence of the
defendant in leaving the caps exposed on its premises was not the proximate cause
of the injury received by the plaintiff, which therefore was not, properly speaking,
"attributable to the negligence of the defendant," and, on the other hand, we are
satisfied that plaintiffs action in cutting open the detonating cap and putting match
to its contents was the proximate cause of the explosion and of the resultant
injuries inflicted upon the plaintiff, and that the defendant, therefore is not civilly
responsible for the injuries thus incurred.

Plaintiff contends, upon the authority of the Turntable and Torpedo cases, that
because of plaintiff's youth the intervention of his action between the negligent act
of the defendant in leaving the caps exposed on its premises and the explosion
which resulted in his injury should not be held to have contributed in any wise to
the accident; and it is because we can not agree with this proposition, although we
accept the doctrine of the Turntable and Torpedo cases, that we have thought
proper to discuss and to consider that doctrine at length in this decision. As was
said in case of Railroad Co. vs. Stout (supra), "While it is the general rule in regard
to an adult that to entitle him to recover damages for an injury resulting from the
fault or negligence of another he must himself have been free from fault, such is
not the rule in regard to an infant of tender years. The care and caution required of
a child is according to his maturity and capacity only, and this is to be determined
in each case by the circumstances of the case." As we think we have shown, under
the reasoning on which rests the doctrine of the Turntable and Torpedo cases, no
fault which would relieve defendant of responsibility for injuries resulting from its
negligence can be attributed to the plaintiff, a well-grown boy of 15 years of age,
because of his entry upon defendant's uninclosed premises without express
permission or invitation' but it is wholly different question whether such youth can
be said to have been free from fault when he willfully and deliberately cut open the
detonating cap, and placed a match to the contents, knowing, as he undoubtedly
did, that his action would result in an explosion. On this point, which must be
determined by "the particular circumstances of this case," the doctrine laid down in
the Turntable and Torpedo cases lends us no direct aid, although it is worthy of
observation that in all of the "Torpedo" and analogous cases which our attention
has been directed, the record discloses that the plaintiffs, in whose favor judgments
have been affirmed, were of such tender years that they were held not to have the
capacity to understand the nature or character of the explosive instruments which
fell into their hands.

In the case at bar, plaintiff at the time of the accident was a well-grown youth of
15, more mature both mentally and physically than the average boy of his age; he
had been to sea as a cabin boy; was able to earn P2.50 a day as a mechanical
draftsman thirty days after the injury was incurred; and the record discloses
throughout that he was exceptionally well qualified to take care of himself. The
evidence of record leaves no room for doubt that, despite his denials on the witness
stand, he well knew the explosive character of the cap with which he was amusing
himself. The series of experiments made by him in his attempt to produce an
explosion, as described by the little girl who was present, admit of no other
explanation. His attempt to discharge the cap by the use of electricity, followed by
his efforts to explode it with a stone or a hammer, and the final success of his
endeavors brought about by the application of a match to the contents of the caps,
show clearly that he knew what he was about. Nor can there be any reasonable
doubt that he had reason to anticipate that the explosion might be dangerous, in
view of the fact that the little girl, 9 years of age, who was within him at the time
when he put the match to the contents of the cap, became frightened and ran away.

True, he may not have known and probably did not know the precise nature of the
explosion which might be expected from the ignition of the contents of the cap,
and of course he did not anticipate the resultant injuries which he incurred; but he
well knew that a more or less dangerous explosion might be expected from his act,
and yet he willfully, recklessly, and knowingly produced the explosion. It would be
going far to say that "according to his maturity and capacity" he exercised such and
"care and caution" as might reasonably be required of him, or that defendant or
anyone else should be held civilly responsible for injuries incurred by him under
such circumstances.

The law fixes no arbitrary age at which a minor can be said to have the necessary
capacity to understand and appreciate the nature and consequences of his own acts,
so as to make it negligence on his part to fail to exercise due care and precaution in
the commission of such acts; and indeed it would be impracticable and perhaps
impossible so to do, for in the very nature of things the question of negligence
necessarily depends on the ability of the minor to understand the character of his
own acts and their consequences; and the age at which a minor can be said to have
such ability will necessarily depends of his own acts and their consequences; and at
the age at which a minor can be said to have such ability will necessarily vary in
accordance with the varying nature of the infinite variety of acts which may be
done by him. But some idea of the presumed capacity of infants under the laws in
force in these Islands may be gathered from an examination of the varying ages
fixed by our laws at which minors are conclusively presumed to be capable of
exercising certain rights and incurring certain responsibilities, though it can not be
said that these provisions of law are of much practical assistance in cases such as
that at bar, except so far as they illustrate the rule that the capacity of a minor to
become responsible for his own acts varies with the varying circumstances of each
case. Under the provisions of the Penal Code a minor over fifteen years of age is
presumed to be capable of committing a crime and is to held criminally responsible
therefore, although the fact that he is less than eighteen years of age will be taken
into consideration as an extenuating circumstance (Penal Code, arts. 8 and 9). At
10 years of age a child may, under certain circumstances, choose which parent it
prefers to live with (Code of Civil Procedure, sec. 771). At 14 may petition for the
appointment of a guardian (Id., sec. 551), and may consent or refuse to be adopted
(Id., sec. 765). And males of 14 and females of 12 are capable of contracting a
legal marriage (Civil Code, art. 83; G. O., No. 68, sec. 1).

We are satisfied that the plaintiff in this case had sufficient capacity and
understanding to be sensible of the danger to which he exposed himself when he
put the match to the contents of the cap; that he was sui juris in the sense that his
age and his experience qualified him to understand and appreciate the necessity for
the exercise of that degree of caution which would have avoided the injury which
resulted from his own deliberate act; and that the injury incurred by him must be
held to have been the direct and immediate result of his own willful and reckless
act, so that while it may be true that these injuries would not have been incurred
but for the negligence act of the defendant in leaving the caps exposed on its
premises, nevertheless plaintiff's own act was the proximate and principal cause of
the accident which inflicted the injury.

The rule of the Roman law was: Quod quis ex culpa sua damnum sentit, non
intelligitur sentire. (Digest, book 50, tit. 17 rule 203.)

The Patidas contain the following provisions:

The just thing is that a man should suffer the damage which comes to him through
his own fault, and that he can not demand reparation therefor from another. (Law
25, tit. 5, Partida 3.)

And they even said that when a man received an injury through his own acts the
grievance should be against himself and not against another. (Law 2, tit. 7, Partida
2.)

According to ancient sages, when a man received an injury through his own acts
the grievance should be against himself and not against another. (Law 2, tit. 7
Partida 2.)

And while there does not appear to be anything in the Civil Code which expressly
lays down the law touching contributory negligence in this jurisdiction,
nevertheless, the interpretation placed upon its provisions by the supreme court of
Spain, and by this court in the case of Rakes vs. Atlantic, Gulf and Pacific Co. (7
Phil. Rep., 359), clearly deny to the plaintiff in the case at bar the right to recover
damages from the defendant, in whole or in part, for the injuries sustained by him.

The judgment of the supreme court of Spain of the 7th of March, 1902 (93
Jurisprudencia Civil, 391), is directly in point. In that case the court said:

According to the doctrine expressed in article 1902 of the Civil Code, fault or
negligence is a source of obligation when between such negligence and the injury
there exists the relation of cause and effect; but if the injury produced should not
be the result of acts or omissions of a third party, the latter has no obligation to
repair the same, although such acts or omission were imprudent or unlawful, and
much less when it is shown that the immediate cause of the injury was the
negligence of the injured party himself.
The same court, in its decision of June 12, 1900, said that "the existence of the
alleged fault or negligence is not sufficient without proof that it, and no other
cause, gave rise to the damage."

See also judgment of October 21, 1903.

To similar effect Scaevola, the learned Spanish writer, writing under that title in his
Jurisprudencia del Codigo Civil (1902 Anuario, p. 455), commenting on the
decision of March 7, 1902 of the Civil Code, fault or negligence gives rise to an
obligation when between it and the damage there exists the relation of cause and
effect; but if the damage caused does not arise from the acts or omissions of a third
person, there is no obligation to make good upon the latter, even though such acts
or omissions be imprudent or illegal, and much less so when it is shown that the
immediate cause of the damage has been the recklessness of the injured party
himself.

And again —

In accordance with the fundamental principle of proof, that the burden thereof is
upon the plaintiff, it is apparent that it is duty of him who shall claim damages to
establish their existence. The decisions of April 9, 1896, and March 18, July, and
September 27, 1898, have especially supported the principle, the first setting forth
in detail the necessary points of the proof, which are two: An act or omission on
the part of the person who is to be charged with the liability, and the production of
the damage by said act or omission.

This includes, by inference, the establishment of a relation of cause or effect

between the act or omission and the damage; the latter must be the direct result of
one of the first two. As the decision of March 22, 1881, said, it is necessary that the
damages result immediately and directly from an act performed culpably and
wrongfully; "necessarily presupposing a legal ground for imputability." (Decision
of October 29, 1887.)

Negligence is not presumed, but must be proven by him who alleges it. (Scavoela,
Jurisprudencia del Codigo Civil, vol. 6, pp. 551-552.)

(Cf. decisions of supreme court of Spain of June 12, 1900, and June 23, 1900.)

Finally we think the doctrine in this jurisdiction applicable to the case at bar was
definitely settled in this court in the maturely considered case of Rakes vs.
Atlantic, Gulf and Pacific Co. (supra), wherein we held that while "There are many
cases (personal injury cases) was exonerated," on the ground that "the negligence
of the plaintiff was the immediate cause of the casualty" (decisions of the 15th of
January, the 19th of February, and the 7th of March, 1902, stated in Alcubilla's
Index of that year); none of the cases decided by the supreme court of Spain
"define the effect to be given the negligence of its causes, though not the principal
one, and we are left to seek the theory of the civil law in the practice of other
countries;" and in such cases we declared that law in this jurisdiction to require the
application of "the principle of proportional damages," but expressly and definitely
denied the right of recovery when the acts of the injured party were the immediate
causes of the accident.

The doctrine as laid down in that case is as follows:

Difficulty seems to be apprehended in deciding which acts of the injured party

shall be considered immediate causes of the accident. The test is simple.
Distinction must be made between the accident and the injury, between the event
itself, without which there could have been no accident, and those acts of the
victim not entering into it, independent of it, but contributing to his own proper
hurt. For instance, the cause of the accident under review was the displacement of
the crosspiece or the failure to replace it. This produces the event giving occasion
for damages—that is, the sinking of the track and the sliding of the iron rails. To
this event, the act of the plaintiff in walking by the side of the car did not
contribute, although it was an element of the damage which came to himself. Had
the crosspiece been out of place wholly or partly through his act or omission of
duty, that would have been one of the determining causes of the event or accident,
for which he would have been responsible. Where he contributes to the principal
occurrence, as one of its determining factors, he can not recover. Where, in
conjunction with the occurrence, he contributes only to his own injury, he may
recover the amount that the defendant responsible for the event should pay for such
injury, less a sum deemed a suitable equivalent for his own imprudence.

We think it is quite clear that under the doctrine thus stated, the immediate cause of
the explosion, the accident which resulted in plaintiff's injury, was in his own act in
putting a match to the contents of the cap, and that having "contributed to the
principal occurrence, as one of its determining factors, he can not recover."

We have not deemed it necessary to examine the effect of plaintiff's action in

picking up upon defendant's premises the detonating caps, the property of
defendant, and carrying the relation of cause and effect between the negligent act
or omission of the defendant in leaving the caps exposed on its premises and the
injuries inflicted upon the plaintiff by the explosion of one of these caps. Under the
doctrine of the Torpedo cases, such action on the part of an infant of very tender
years would have no effect in relieving defendant of responsibility, but whether in
view of the well-known fact admitted in defendant's brief that "boys are snappers-
up of unconsidered trifles," a youth of the age and maturity of plaintiff should be
deemed without fault in picking up the caps in question under all the circumstances
of this case, we neither discuss nor decide.

Twenty days after the date of this decision let judgment be entered reversing the
judgment of the court below, without costs to either party in this instance, and ten
days thereafter let the record be returned to the court wherein it originated, where
the judgment will be entered in favor of the defendant for the costs in first instance
and the complaint dismissed without day. So ordered.

G.R. No. 129792 December 21, 1999

JARCO MARKETING CORPORATION, LEONARDO KONG, JOSE TIOPE

and ELISA PANELO, petitioners,
vs.
HONORABLE COURT OF APPEALS, CONRADO C. AGUILAR and
CRISELDA R. AGUILAR, respondents.

DAVIDE, JR., J.:

In this petition for review on certiorari under Rule 45 of the Rules of Court,
petitioners seek the reversal of the 17 June 1996 decision 1 of the Court of Appeals
in C.A. G.R. No. CV 37937 and the resolution 2 denying their motion for
reconsideration. The assailed decision set aside the 15 January 1992 judgment of
the Regional Trial Court (RTC), Makati City, Branch 60 in Civil Case No. 7119
and ordered petitioners to pay damages and attorney's fees to private respondents
Conrado and Criselda (CRISELDA) Aguilar.

Petitioner Jarco Marketing Corporation is the owner of Syvel's Department Store,

Makati City. Petitioners Leonardo Kong, Jose Tiope and Elisa Panelo are the
store's branch manager, operations manager, and supervisor, respectively. Private
respondents are spouses and the parents of Zhieneth Aguilar (ZHIENETH).
In the afternoon of 9 May 1983, CRISELDA and ZHIENETH were at the 2nd floor
of Syvel's Department Store, Makati City. CRISELDA was signing her credit card
slip at the payment and verification counter when she felt a sudden gust of wind
and heard a loud thud. She looked behind her. She then beheld her daughter
ZHIENETH on the floor, her young body pinned by the bulk of the store's gift-
wrapping counter/structure. ZHIENETH was crying and screaming for help.
Although shocked, CRISELDA was quick to ask the assistance of the people
around in lifting the counter and retrieving ZHIENETH from the floor. 3

ZHIENETH was quickly rushed to the Makati Medical Center where she was
operated on. The next day ZHIENETH lost her speech and thereafter
communicated with CRISELDA by writing on a magic slate. The injuries she
sustained took their toil on her young body. She died fourteen (14) days after the
accident or on 22 May 1983, on the hospital bed. She was six years old. 4

The cause of her death was attributed to the injuries she sustained. The provisional
medical certificate 5 issued by ZHIENETH's attending doctor described the extent
of her injuries:

Diagnoses:

1. Shock, severe, sec. to intra-abdominal injuries due to blunt injury

2. Hemorrhage, massive, intraperitoneal sec. to laceration, (L) lobe liver

3. Rupture, stomach, anterior & posterior walls

4. Complete transection, 4th position, duodenum

5. Hematoma, extensive, retroperitoneal

6. Contusion, lungs, severe

CRITICAL

After the burial of their daughter, private respondents demanded upon petitioners
the reimbursement of the hospitalization, medical bills and wake and funeral
expenses 6 which they had incurred. Petitioners refused to pay. Consequently,
private respondents filed a complaint for damages, docketed as Civil Case No.
7119 wherein they sought the payment of P157,522.86 for actual damages,
P300,000 for moral damages, P20,000 for attorney's fees and an unspecified
amount for loss of income and exemplary damages.

In their answer with counterclaim, petitioners denied any liability for the injuries
and consequent death of ZHIENETH. They claimed that CRISELDA was
negligent in exercising care and diligence over her daughter by allowing her to
freely roam around in a store filled with glassware and appliances. ZHIENETH
too, was guilty of contributory negligence since she climbed the counter, triggering
its eventual collapse on her. Petitioners also emphasized that the counter was made
of sturdy wood with a strong support; it never fell nor collapsed for the past fifteen
years since its construction.

Additionally, petitioner Jarco Marketing Corporation maintained that it observed

the diligence of a good father of a family in the selection, supervision and control
of its employees. The other petitioners likewise raised due care and diligence in the
performance of their duties and countered that the complaint was malicious for
which they suffered besmirched reputation and mental anguish. They sought the
dismissal of the complaint and an award of moral and exemplary damages and
attorney's fees in their favor.

In its decision 7 the trial court dismissed the complaint and counterclaim after
finding that the preponderance of the evidence favored petitioners. It ruled that the
proximate cause of the fall of the counter on ZHIENETH was her act of clinging to
it. It believed petitioners' witnesses who testified that ZHIENETH clung to the
counter, afterwhich the structure and the girl fell with the structure falling on top of
her, pinning her stomach. In contrast, none of private respondents' witnesses
testified on how the counter fell. The trial court also held that CRISELDA's
negligence contributed to ZHIENETH's accident.

In absolving petitioners from any liability, the trial court reasoned that the counter
was situated at the end or corner of the 2nd floor as a precautionary measure hence,
it could not be considered as an attractive nuisance. 8 The counter was higher than
ZHIENETH. It has been in existence for fifteen years. Its structure was safe and
well-balanced. ZHIENETH, therefore, had no business climbing on and clinging to
it.

Private respondents appealed the decision, attributing as errors of the trial court its
findings that: (1) the proximate cause of the fall of the counter was ZHIENETH's
misbehavior; (2) CRISELDA was negligent in her care of ZHIENETH; (3)
petitioners were not negligent in the maintenance of the counter; and (4) petitioners
were not liable for the death of ZHIENETH.

Further, private respondents asserted that ZHIENETH should be entitled to the

conclusive presumption that a child below nine (9) years is incapable of
contributory negligence. And even if ZHIENETH, at six (6) years old, was already
capable of contributory negligence, still it was physically impossible for her to
have propped herself on the counter. She had a small frame (four feet high and
seventy pounds) and the counter was much higher and heavier than she was. Also,
the testimony of one of the store's former employees, Gerardo Gonzales, who
accompanied ZHIENETH when she was brought to the emergency room of the
Makati Medical Center belied petitioners' theory that ZHIENETH climbed the
counter. Gonzales claimed that when ZHIENETH was asked by the doctor what
she did, ZHIENETH replied, "[N]othing, I did not come near the counter and the
counter just fell on me." 9 Accordingly, Gonzales' testimony on ZHIENETH's
spontaneous declaration should not only be considered as part of res gestae but also
accorded credit.

Moreover, negligence could not be imputed to CRISELDA for it was reasonable

for her to have let go of ZHIENETH at the precise moment that she was signing
the credit card slip.

Finally, private respondents vigorously maintained that the proximate cause of

ZHIENETH's death, was petitioners' negligence in failing to institute measures to
have the counter permanently nailed.

On the other hand, petitioners argued that private respondents raised purely factual
issues which could no longer be disturbed. They explained that ZHIENETH's death
while unfortunate and tragic, was an accident for which neither CRISELDA nor
even ZHIENETH could entirely be held faultless and blameless. Further,
petitioners adverted to the trial court's rejection of Gonzales' testimony as
unworthy of credence.

As to private respondent's claim that the counter should have been nailed to the
ground, petitioners justified that it was not necessary. The counter had been in
existence for several years without any prior accident and was deliberately placed
at a corner to avoid such accidents. Truth to tell, they acted without fault or
negligence for they had exercised due diligence on the matter. In fact, the criminal
case 10 for homicide through simple negligence filed by private respondents
against the individual petitioners was dismissed; a verdict of acquittal was rendered
in their favor.

The Court of Appeals, however, decided in favor of private respondents and

reversed the appealed judgment. It found that petitioners were negligent in
maintaining a structurally dangerous counter. The counter was shaped like an
inverted "L" 11 with a top wider than the base. It was top heavy and the weight of
the upper portion was neither evenly distributed nor supported by its narrow base.
Thus, the counter was defective, unstable and dangerous; a downward pressure on
the overhanging portion or a push from the front could cause the counter to fall.
Two former employees of petitioners had already previously brought to the
attention of the management the danger the counter could cause. But the latter
ignored their concern. The Court of Appeals faulted the petitioners for this
omission, and concluded that the incident that befell ZHIENETH could have been
avoided had petitioners repaired the defective counter. It was inconsequential that
the counter had been in use for some time without a prior incident.

The Court of Appeals declared that ZHIENETH, who was below seven (7) years
old at the time of the incident, was absolutely incapable of negligence or other tort.
It reasoned that since a child under nine (9) years could not be held liable even for
an intentional wrong, then the six-year old ZHIENETH could not be made to
account for a mere mischief or reckless act. It also absolved CRISELDA of any
negligence, finding nothing wrong or out of the ordinary in momentarily allowing
ZHIENETH to walk while she signed the document at the nearby counter.

The Court of Appeals also rejected the testimonies of the witnesses of petitioners.
It found them biased and prejudiced. It instead gave credit to the testimony of
disinterested witness Gonzales. The Court of Appeals then awarded P99,420.86 as
actual damages, the amount representing the hospitalization expenses incurred by
private respondents as evidenced by the hospital's statement of account. 12 It
denied an award for funeral expenses for lack of proof to substantiate the same.
Instead, a compensatory damage of P50,000 was awarded for the death of
ZHIENETH.

We quote the dispositive portion of the assailed decision, 13 thus:

WHEREFORE, premises considered, the judgment of the lower court is SET

ASIDE and another one is entered against [petitioners], ordering them to pay
jointly and severally unto [private respondents] the following:
1. P50,000.00 by way of compensatory damages for the death of Zhieneth
Aguilar, with legal interest (6% p.a.) from 27 April 1984;

2. P99,420.86 as reimbursement for hospitalization expenses incurred; with

legal interest (6% p.a.) from 27 April 1984;

3. P100,000.00 as moral and exemplary damages;

4. P20,000.00 in the concept of attorney's fees; and

5. Costs.

Private respondents sought a reconsideration of the decision but the same was
denied in the Court of Appeals' resolution 14 of 16 July 1997.

Petitioners now seek the reversal of the Court of Appeals' decision and the
reinstatement of the judgment of the trial court. Petitioners primarily argue that the
Court of Appeals erred in disregarding the factual findings and conclusions of the
trial court. They stress that since the action was based on tort, any finding of
negligence on the part of the private respondents would necessarily negate their
claim for damages, where said negligence was the proximate cause of the injury
sustained. The injury in the instant case was the death of ZHIENETH. The
proximate cause was ZHIENETH's act of clinging to the counter. This act in turn
caused the counter to fall on her. This and CRISELDA's contributory negligence,
through her failure to provide the proper care and attention to her child while
inside the store, nullified private respondents' claim for damages. It is also for these
reasons that parents are made accountable for the damage or injury inflicted on
others by their minor children. Under these circumstances, petitioners could not be
held responsible for the accident that befell ZHIENETH.

Petitioners also assail the credibility of Gonzales who was already separated from
Syvel's at the time he testified; hence, his testimony might have been tarnished by
ill-feelings against them.

For their part, private respondents principally reiterated their arguments that
neither ZHIENETH nor CRISELDA was negligent at any time while inside the
store; the findings and conclusions of the Court of Appeals are substantiated by the
evidence on record; the testimony of Gonzales, who heard ZHIENETH comment
on the incident while she was in the hospital's emergency room should receive
credence; and finally, ZHIENETH's part of the res gestae declaration "that she did
nothing to cause the heavy structure to fall on her" should be considered as the
correct version of the gruesome events.

We deny the petition.

The two issues to be resolved are: (1) whether the death of ZHIENETH was
accidental or attributable to negligence; and (2) in case of a finding of negligence,
whether the same was attributable to private respondents for maintaining a
defective counter or to CRISELDA and ZHIENETH for failing to exercise due and
reasonable care while inside the store premises.

An accident pertains to an unforeseen event in which no fault or negligence

attaches to the defendant. 15 It is "a fortuitous circumstance, event or happening;
an event happening without any human agency, or if happening wholly or partly
through human agency, an event which under the circumstances is unusual or
unexpected by the person to whom it happens." 16

On the other hand, negligence is the omission to do something which a reasonable

man, guided by those considerations which ordinarily regulate the conduct of
human affairs, would do, or the doing of something which a prudent and
reasonable man would not do. 17 Negligence is "the failure to observe, for the
protection of the interest of another person, that degree of care, precaution and
vigilance which the circumstances justly demand, whereby such other person
suffers injury." 18

Accident and negligence are intrinsically contradictory; one cannot exist with the
other. Accident occurs when the person concerned is exercising ordinary care,
which is not caused by fault of any person and which could not have been
prevented by any means suggested by common prudence. 19

The test in determining the existence of negligence is enunciated in the landmark

case of Plicart v. Smith, 20 thus: 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. 21

We rule that the tragedy which befell ZHIENETH was no accident and that
ZHIENETH's death could only be attributed to negligence.

We quote the testimony of Gerardo Gonzales who was at the scene of the incident
and accompanied CRISELDA and ZHIENETH to the hospital:
Q While at the Makati Medical Center, did you hear or notice anything while
the child was being treated?

A At the emergency room we were all surrounding the child. And when the
doctor asked the child "what did you do," the child said "nothing, I did not come
near the counter and the counter just fell on me."

Q (COURT TO ATTY. BELTRAN)

You want the words in Tagalog to be translated?

ATTY. BELTRAN

Yes, your Honor.

COURT

Granted. Intercalate "wala po, hindi po ako lumapit doon. Basta bumagsak." 22

This testimony of Gonzales pertaining to ZHIENETH's statement formed (and

should be admitted as) part of the res gestae under Section 42, Rule 130 of the
Rules of Court, thus:

Part of res gestae. Statements made by a person while a startling occurrence is

taking place or immediately prior or subsequent thereto with respect to the
circumstances thereof, may be given in evidence as part of the res gestae. So, also,
statements accompanying an equivocal act material to the issue, and giving it a
legal significance, may be received as part of the res gestae.

It is axiomatic that matters relating to declarations of pain or suffering and

statements made to a physician are generally considered declarations and
admissions. 23 All that is required for their admissibility as part of the res gestae is
that they be made or uttered under the influence of a startling event before the
declarant had the time to think and concoct a falsehood as witnessed by the person
who testified in court. Under the circumstances thus described, it is unthinkable for
ZHIENETH, a child of such tender age and in extreme pain, to have lied to a
doctor whom she trusted with her life. We therefore accord credence to Gonzales'
testimony on the matter, i.e., ZHIENETH performed no act that facilitated her
tragic death. Sadly, petitioners did, through their negligence or omission to secure
or make stable the counter's base.

Gonzales' earlier testimony on petitioners' insistence to keep and maintain the

structurally unstable gift-wrapping counter proved their negligence, thus:

Q When you assumed the position as gift wrapper at the second floor, will you
please describe the gift wrapping counter, were you able to examine?

A Because every morning before I start working I used to clean that counter
and since not nailed and it was only standing on the floor, it was shaky.

xxx xxx xxx

Q Will you please describe the counter at 5:00 o'clock [sic] in the afternoon on
[sic] May 9 1983?

A At that hour on May 9, 1983, that counter was standing beside the
verification counter. And since the top of it was heavy and considering that it was
not nailed, it can collapse at anytime, since the top is heavy.

xxx xxx xxx

Q And what did you do?

A I informed Mr. Maat about that counter which is [sic] shaky and since Mr.
Maat is fond of putting display decorations on tables, he even told me that I would
put some decorations. But since I told him that it not [sic] nailed and it is shaky he
told me "better inform also the company about it." And since the company did not
do anything about the counter, so I also did not do anything about the counter. 24
[Emphasis supplied]

Ramon Guevarra, another former employee, corroborated the testimony of

Gonzales, thus:

Q Will you please described [sic] to the honorable Court the counter where you
were assigned in January 1983?

xxx xxx xxx

A That counter assigned to me was when my supervisor ordered me to carry
that counter to another place. I told him that the counter needs nailing and it has to
be nailed because it might cause injury or accident to another since it was shaky.

Q When that gift wrapping counter was transferred at the second floor on
February 12, 1983, will you please describe that to the honorable Court?

A I told her that the counter wrapper [sic] is really in good [sic] condition; it
was shaky. I told her that we had to nail it.

Q When you said she, to whom are you referring to [sic]?

A I am referring to Ms. Panelo, sir.

Q And what was the answer of Ms. Panelo when you told her that the counter
was shaky?

A She told me "Why do you have to teach me. You are only my subordinate
and you are to teach me?" And she even got angry at me when I told her that.

xxx xxx xxx

Q From February 12, 1983 up to May 9, 1983, what if any, did Ms. Panelo or
any employee of the management do to that (sic)

xxx xxx xxx

Witness:

None, sir. They never nailed the counter. They only nailed the counter after the
accident happened. 25 [Emphasis supplied]

Without doubt, petitioner Panelo and another store supervisor were personally
informed of the danger posed by the unstable counter. Yet, neither initiated any
concrete action to remedy the situation nor ensure the safety of the store's
employees and patrons as a reasonable and ordinary prudent man would have done.
Thus, as confronted by the situation petitioners miserably failed to discharge the
due diligence required of a good father of a family.
On the issue of the credibility of Gonzales and Guevarra, petitioners failed to
establish that the former's testimonies were biased and tainted with partiality.
Therefore, the allegation that Gonzales and Guevarra's testimonies were blemished
by "ill feelings" against petitioners — since they (Gonzales and Guevarra) were
already separated from the company at the time their testimonies were offered in
court — was but mere speculation and deserved scant consideration.

It is settled that when the issue concerns the credibility of witnesses, the appellate
courts will not as a general rule disturb the findings of the trial court, which is in a
better position to determine the same. The trial court has the distinct advantage of
actually hearing the testimony of and observing the deportment of the witnesses.
26 However, the rule admits of exceptions such as when its evaluation was reached
arbitrarily or it overlooked or failed to appreciate some facts or circumstances of
weight and substance which could affect the result of the case. 27 In the instant
case, petitioners failed to bring their claim within the exception.

Anent the negligence imputed to ZHIENETH, we apply the conclusive

presumption that favors children below nine (9) years old in that they are incapable
of contributory negligence. In his book, 28 former Judge Cezar S. Sangco stated:

In our jurisdiction, a person under nine years of age is conclusively presumed to

have acted without discernment, and is, on that account, exempt from criminal
liability. The same presumption and a like exemption from criminal liability
obtains in a case of a person over nine and under fifteen years of age, unless it is
shown that he has acted with discernment. Since negligence may be a felony and a
quasi-delict and required discernment as a condition of liability, either criminal or
civil, a child under nine years of age is, by analogy, conclusively presumed to be
incapable of negligence; and that the presumption of lack of discernment or
incapacity for negligence in the case of a child over nine but under fifteen years of
age is a rebuttable one, under our law. The rule, therefore, is that a child under nine
years of age must be conclusively presumed incapable of contributory negligence
as a matter of law. [Emphasis supplied]

Even if we attribute contributory negligence to ZHIENETH and assume that she

climbed over the counter, no injury should have occurred if we accept petitioners'
theory that the counter was stable and sturdy. For if that was the truth, a frail six-
year old could not have caused the counter to collapse. The physical analysis of the
counter by both the trial court and Court of Appeals and a scrutiny of the evidence
29 on record reveal otherwise, i.e., it was not durable after all. Shaped like an
inverted "L," the counter was heavy, huge, and its top laden with formica. It
protruded towards the customer waiting area and its base was not secured. 30

CRISELDA too, should be absolved from any contributory negligence. Initially,

ZHIENETH held on to CRISELDA's waist, later to the latter's hand. 31
CRISELDA momentarily released the child's hand from her clutch when she
signed her credit card slip. At this precise moment, it was reasonable and usual for
CRISELDA to let go of her child. Further, at the time ZHIENETH was pinned
down by the counter, she was just a foot away from her mother; and the gift-
wrapping counter was just four meters away from CRISELDA. 32 The time and
distance were both significant. ZHIENETH was near her mother and did not loiter
as petitioners would want to impress upon us. She even admitted to the doctor who
treated her at the hospital that she did not do anything; the counter just fell on her.

WHEREFORE, in view of all the foregoing, the instant petition is DENIED and
the challenged decision of the Court of Appeals of 17 June 1996 in C.A. G.R. No.
CV 37937 is hereby AFFIRMED.

Costs against petitioners.

SO ORDERED.

G.R. No. L-35283 November 5, 1932

JULIAN DEL ROSARIO, plaintiff-appellant,

vs.
MANILA ELECTRIC COMPANY, defendant-appellee.

Vicente Sotto for appellant.

Ross, Lawrence & Selph and Antonio T. Carrascoso, Jr. for appellee.

STREET, J.:

This action was instituted by Julian del Rosario for the purpose of recovering
damages from the Manila Electric Company for the death of his son, Alberto del
Rosario, resulting from a shock from a wire used by the defendant for the
transmission of electricity. The accident occurred on Dimas-Alang Street, in the
municipality of Caloocan, Province of Rizal. Damages are claimed in the
complaint in the amount of P30,000. Upon hearing the cause the trial court
absolved the defendant, and the plaintiff appealed.

Shortly after 2 o'clock on the afternoon of August 4, 1930, trouble developed in a

wire used by the defendant on Dimas-Alang Street for the purpose of conducting
electricity used in lighting the City of Manila and its suburbs. Jose Noguera, who
had charge of a tienda nearby, first noticed that the wire was burning and its
connections smoking. In a short while the wire parted and one of the ends of the
wire fell to the ground among some shrubbery close to the way. As soon as
Noguera took cognizance of the trouble, he stepped into a garage which was
located nearby and asked Jose Soco, the timekeeper, to telephone the Malabon
station of the Manila Electric Company that an electrical wire was burning at that
place. Soco transmitted the message at 2.25 p.m. and received answer from the
station to the effect that they would send an inspector. From the testimony of the
two witnesses mentioned we are justified in the conclusion that information to the
effect that the electric wire at the point mentioned had developed trouble was
received by the company's servant at the time stated. At the time that message was
sent the wire had not yet parted, but from the testimony of Demetrio Bingao, one
of the witnesses for the defense, it is clear that the end of the wire was on the
ground shortly after 3 p.m.

At 4 p. m. the neighborhood school was dismissed and the children went home.
Among these was Alberto del Rosario, of the age of 9 years, who was a few paces
ahead of two other boys, all members of the second grade in the public school.
These other two boys were Jose Salvador, of the age of 8, and Saturnino Endrina,
of the age of 10. As the three neared the place where the wire was down, Saturnino
made a motion as if it touch it. His companion, Jose Salvador, happened to be the
son of an electrician and his father had cautioned him never to touch a broken
electrical wire, as it might have a current. Jose therefore stopped Saturnino, telling
him that the wire might be charged. Saturnino yielded to this admonition and
desisted from his design, but Alberto del Rosario, who was somewhat ahead, said,
I have for some time been in the habit of touching wires ("Yo desde hace tiempo
cojo alambres"). Jose Salvador rejoined that he should into touch wires as they
carry a current, but Alberto, no doubt feeling that he was challenged in the matter,
put out his index finger and touch the wire. He immediately fell face downwards,
exclaiming "Ay! madre". The end of the wire remained in contact with his body
which fell near the post. A crowd soon collected, and some one cut the wire and
disengaged the body. Upon being taken to St. Luke's Hospital the child was
pronounced dead.
The wire was an ordinary number 6 triple braid weather proof wire, such as is
commonly used by the defendant company for the purpose of conducting
electricity for lighting. The wire was cased in the usual covering, but this had been
burned off for some distance from the point where the wire parted. The engineer of
the company says that it was customary for the company to make a special
inspection of these wires at least once in six months, and that all of the company's
inspectors were required in their daily rounds to keep a lookout for trouble of this
kind. There is nothing in the record indicating any particular cause for the parting
of the wire.lawphil.net

We are of the opinion that the presumption of negligence on the part of the
company from the breakage of this wire has not been overcome, and the defendant
is in our opinion responsible for the accident. Furthermore, when notice was
received at the Malabon station at 2.25 p. m., somebody should have been
dispatched to the scene of the trouble at once, or other measures taken to guard the
point of danger; but more than an hour and a half passed before anyone
representing the company appeared on the scene, and in the meantime this child
had been claimed as a victim.

It is doubtful whether contributory negligence can properly be imputed to the

deceased, owing to his immature years and the natural curiosity which a child
would feel to do something out of the ordinary, and the mere fact that the deceased
ignored the caution of a companion of the age of 8 years does not, in our opinion,
alter the case. But even supposing that contributory negligence could in some
measure be properly imputed to the deceased, — a proposition upon which the
members of the court do not all agree, — yet such negligence would not be wholly
fatal to the right of action in this case, not having been the determining cause of the
accident. (Rakes vs. Atlantic, Gulf and Pacific Co., 7 Phil., 359.)

With respect to the amount of damages recoverable the majority of the members of
this court are of the opinion that the plaintiff is entitled to recover P250 for
expenses incurred in connection with the death and burial of the boy. For the rest,
in accordance with the precedents cited in Astudillo vs. Manila Electric Company
(55 Phil., 427), the majority of the court are of the opinion that the plaintiff should
recover the sum of P1,000 as general damages for loss of service.

The judgment appealed from is therefore reversed and the plaintiff will recover of
the defendant the sum of P1,250, with costs of both instances. So ordered.
G.R. No. L-33722 July 29, 1988

FEDERICO YLARDE and ADELAIDA DORONIO petitioners,

vs.
EDGARDO AQUINO, MAURO SORIANO and COURT OF APPEALS,
respondents.

Buenaventura C. Evangelista for petitioners.

Modesto V. Cabanela for respondent Edgardo Aquino.

Manuel P. Pastor for respondent Mauro Soriano.

GANCAYCO, J.:

In this petition for review on certiorari seeking the reversal of the decision of the
Court of Appeals in CA-G.R. No. 36390-R entitled "Federico Ylarde, et al. vs.
Edgardo Aquino, et al.," a case which originated from the Court of First Instance of
Pangasinan, We are again caned upon determine the responsibility of the principals
and teachers towards their students or pupils.

In 1963, private respondent Mariano Soriano was the principal of the Gabaldon
Primary School, a public educational institution located in Tayug, Pangasinan-
Private respondent Edgardo Aquino was a teacher therein. At that time, the school
was fittered with several concrete blocks which were remnants of the old school
shop that was destroyed in World War II. Realizing that the huge stones were
serious hazards to the schoolchildren, another teacher by the name of Sergio Banez
started burying them one by one as early as 1962. In fact, he was able to bury ten
of these blocks all by himself.

Deciding to help his colleague, private respondent Edgardo Aquino gathered

eighteen of his male pupils, aged ten to eleven, after class dismissal on October 7,
1963. Being their teacher-in-charge, he ordered them to dig beside a one-ton
concrete block in order to make a hole wherein the stone can be buried. The work
was left unfinished. The following day, also after classes, private respondent
Aquino called four of the original eighteen pupils to continue the digging. These
four pupils — Reynaldo Alonso, Francisco Alcantara, Ismael Abaga and Novelito
Ylarde, dug until the excavation was one meter and forty centimeters deep. At this
point, private respondent Aquino alone continued digging while the pupils
remained inside the pit throwing out the loose soil that was brought about by the
digging.

When the depth was right enough to accommodate the concrete block, private
respondent Aquino and his four pupils got out of the hole. Then, said private
respondent left the children to level the loose soil around the open hole while he
went to see Banez who was about thirty meters away. Private respondent wanted to
borrow from Banez the key to the school workroom where he could get some rope.
Before leaving. , private respondent Aquino allegedly told the children "not to
touch the stone."

A few minutes after private respondent Aquino left, three of the four kids, Alonso,
Alcantara and Ylarde, playfully jumped into the pit. Then, without any warning at
all, the remaining Abaga jumped on top of the concrete block causing it to slide
down towards the opening. Alonso and Alcantara were able to scramble out of the
excavation on time but unfortunately fo Ylarde, the concrete block caught him
before he could get out, pinning him to the wall in a standing position. As a result
thereof, Ylarde sustained the following injuries:

1. Contusion with hematoma, left inguinal region and suprapubic region.

2. Contusion with ecchymosis entire scrotal region.

3. Lacerated wound, left lateral aspect of penile skin with phimosis

4. Abrasion, gluteal region, bilateral.

5. Intraperitoneal and extrapertitoneal extravasation of blood and urine about 2

liters.

6. Fracture, simple, symphesis pubis

7. Ruptured (macerated) urinary bladder with body of bladder almost entirely

separated from its neck.

REMARKS:

1. Above were incurred by crushing injury.

2. Prognosis very poor.

(Sgd.) MELQUIADES A. BRAVO

Physician on Duty. 1

Three days later, Novelito Ylarde died.

Ylarde's parents, petitioners in this case, filed a suit for damages against both
private respondents Aquino and Soriano. The lower court dismissed the complaint
on the following grounds: (1) that the digging done by the pupils is in line with
their course called Work Education; (2) that Aquino exercised the utmost diligence
of a very cautious person; and (3) that the demise of Ylarde was due to his own
reckless imprudence. 2

On appeal, the Court of Appeals affirmed the Decision of the lower court.

Petitioners base their action against private respondent Aquino on Article 2176 of
the Civil Code for his alleged negligence that caused their son's death while the
complaint against respondent Soriano as the head of school is founded on Article
2180 of the same Code.

Article 2176 of 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. 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.

On the other hand, the applicable provision of Article 2180 states:

Art. 2180. x x x

xxx xxx xxx

Lastly, teachers or heads of establishments of arts and trades shall be liable for
damages caused by their pupils and students or apprentices, so long as they remain
in their custody. 3
The issue to be resolved is whether or not under the cited provisions, both private
respondents can be held liable for damages.

As regards the principal, We hold that he cannot be made responsible for the death
of the child Ylarde, he being the head of an academic school and not a school of
arts and trades. This is in line with Our ruling in Amadora vs. Court of Appeals, 4
wherein this Court thoroughly discussed the doctrine that under Article 2180 of the
Civil Code, it is only the teacher and not the head of an academic school who
should be answerable for torts committed by their students. This Court went on to
say that in a school of arts and trades, it is only the head of the school who can be
held liable. In the same case, We explained:

After an exhaustive examination of the problem, the Court has come to the
conclusion that the provision in question should apply to all schools, academic as
well as non-academic. Where the school is academic rather than technical or
vocational in nature, responsibility for the tort committed by the student will attach
to the teacher in charge of such student, following the first part of the provision.
This is the general rule. In the case of establishments of arts and trades, it is the
head thereof, and only he, who shall be held liable as an exception to the general
rule. In other words, teachers in general shall be liable for the acts of their students
except where the school is technical in nature, in which case it is the head thereof
who shall be answerable. Following the canon of reddendo singula sinquilis
'teachers' should apply to the words "pupils and students' and 'heads of
establishments of arts and trades to the word "apprentices."

Hence, applying the said doctrine to this case, We rule that private respondent
Soriano, as principal, cannot be held liable for the reason that the school he heads
is an academic school and not a school of arts and trades. Besides, as clearly
admitted by private respondent Aquino, private respondent Soriano did not give
any instruction regarding the digging.

From the foregoing, it can be easily seen that private respondent Aquino can be
held liable under Article 2180 of the Civil Code as the teacher-in-charge of the
children for being negligent in his supervision over them and his failure to take the
necessary precautions to prevent any injury on their persons. However, as earlier
pointed out, petitioners base the alleged liability of private respondent Aquino on
Article 2176 which is separate and distinct from that provided for in Article 2180.

With this in mind, the question We need to answer is this: Were there acts and
omissions on the part of private respondent Aquino amounting to fault or
negligence which have direct causal relation to the death of his pupil Ylarde? Our
answer is in the affirmative. He is liable for damages.

From a review of the record of this case, it is very clear that private respondent
Aquino acted with fault and gross negligence when he: (1) failed to avail himself
of services of adult manual laborers and instead utilized his pupils aged ten to
eleven to make an excavation near the one-ton concrete stone which he knew to be
a very hazardous task; (2) required the children to remain inside the pit even after
they had finished digging, knowing that the huge block was lying nearby and could
be easily pushed or kicked aside by any pupil who by chance may go to the
perilous area; (3) ordered them to level the soil around the excavation when it was
so apparent that the huge stone was at the brink of falling; (4) went to a place
where he would not be able to check on the children's safety; and (5) left the
children close to the excavation, an obviously attractive nuisance.

The negligent act of private respondent Aquino in leaving his pupils in such a
dangerous site has a direct causal connection to the death of the child Ylarde. Left
by themselves, it was but natural for the children to play around. Tired from the
strenuous digging, they just had to amuse themselves with whatever they found.
Driven by their playful and adventurous instincts and not knowing the risk they
were facing three of them jumped into the hole while the other one jumped on the
stone. Since the stone was so heavy and the soil was loose from the digging, it was
also a natural consequence that the stone would fall into the hole beside it, causing
injury on the unfortunate child caught by its heavy weight. Everything that
occurred was the natural and probable effect of the negligent acts of private
respondent Aquino. Needless to say, the child Ylarde would not have died were it
not for the unsafe situation created by private respondent Aquino which exposed
the lives of all the pupils concerned to real danger.

We cannot agree with the finding of the lower court that the injuries which resulted
in the death of the child Ylarde were caused by his own reckless imprudence, It
should be remembered that he was only ten years old at the time of the incident, As
such, he is expected to be playful and daring. His actuations were natural to a boy
his age. Going back to the facts, it was not only him but the three of them who
jumped into the hole while the remaining boy jumped on the block. From this, it is
clear that he only did what any other ten-year old child would do in the same
situation.

In ruling that the child Ylarde was imprudent, it is evident that the lower court did
not consider his age and maturity. This should not be the case. The degree of care
required to be exercised must vary with the capacity of the person endangered to
care for himself. A minor should not be held to the same degree of care as an adult,
but his conduct should be judged according to the average conduct of persons of
his age and experience. 5 The standard of conduct to which a child must conform
for his own protection is that degree of care ordinarily exercised by children of the
same age, capacity, discretion, knowledge and experience under the same or
similar circumstances. 6 Bearing this in mind, We cannot charge the child Ylarde
with reckless imprudence.

The court is not persuaded that the digging done by the pupils can pass as part of
their Work Education. A single glance at the picture showing the excavation and
the huge concrete block 7 would reveal a dangerous site requiring the attendance of
strong, mature laborers and not ten-year old grade-four pupils. We cannot
comprehend why the lower court saw it otherwise when private respondent Aquino
himself admitted that there were no instructions from the principal requiring what
the pupils were told to do. Nor was there any showing that it was included in the
lesson plan for their Work Education. Even the Court of Appeals made mention of
the fact that respondent Aquino decided all by himself to help his co-teacher Banez
bury the concrete remnants of the old school shop. 8 Furthermore, the excavation
should not be placed in the category of school gardening, planting trees, and the
like as these undertakings do not expose the children to any risk that could result in
death or physical injuries.

The contention that private respondent Aquino exercised the utmost diligence of a
very cautious person is certainly without cogent basis. A reasonably prudent
person would have foreseen that bringing children to an excavation site, and more
so, leaving them there all by themselves, may result in an accident. An ordinarily
careful human being would not assume that a simple warning "not to touch the
stone" is sufficient to cast away all the serious danger that a huge concrete block
adjacent to an excavation would present to the children. Moreover, a teacher who
stands in loco parentis to his pupils would have made sure that the children are
protected from all harm in his company.

We close by categorically stating that a truly careful and cautious person would
have acted in all contrast to the way private respondent Aquino did. Were it not for
his gross negligence, the unfortunate incident would not have occurred and the
child Ylarde would probably be alive today, a grown- man of thirty-five. Due to
his failure to take the necessary precautions to avoid the hazard, Ylarde's parents
suffered great anguish all these years.
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED and the
questioned judgment of the respondent court is REVERSED and SET ASIDE and
another judgment is hereby rendered ordering private respondent Edagardo Aquino
to pay petitioners the following:

(1) Indemnity for the death of Child Ylarde P30,000.00

(2) Exemplary damages 10,000.00

(3) Moral damages 20,000.00

SO ORDERED.
G.R. No. L-32611 November 3, 1930

CULION ICE, FISH AND ELECTRIC CO., INC., plaintiff-appellee,

vs.
PHILIPPINE MOTORS CORPORATION, defendant-appellant.

Gibbs and McDonough for appellant.

Benj. S. Ohnick for appellee.

STREET, J.:

This action was instituted in the Court of First Instance of Manila by the Culion
Ice, Fish & Electric Co., Inc., for the purpose of recovering from the Philippine
Motors Corporation the sum of P11,350, with interest and costs. Upon hearing the
cause the trial court gave judgment in favor of the plaintiff to recover of the
defendant the sum of P9,850, with interest at 6 per centum per annum from March
24,1927, the date of the filing of the complaint, until satisfaction of the judgment,
with costs. From this judgment the defendant appealed.

The plaintiff and defendant are domestic corporations; and at the time of the
incident with which we are here concerned, H.D. Cranston was the representative
of the plaintiff in the City of Manila. At the same time the plaintiff was the
registered owner of the motor schooner Gwendoline, which was used in the fishing
trade in the Philippine Islands. In January, 1925, Cranston decided, if practicable,
to have the engine on the Gwendoline changed from a gasoline consumer to a
crude oil burner, expecting thereby to effect economy in the cost of running the
boat. He therefore made known his desire to McLeod & Co., a firm dealing in
tractors, and was told by Mc Kellar, of said company, that he might make inquiries
of the Philippine Motors Corporations, which had its office on Ongpin Street, in
the City of Manila. Cranston accordingly repaired to the office of the Philippine
Motors Corporation and had a conference with C.E. Quest, its manager, who
agreed to do the job, with the understanding that payment should be made upon
completion of the work.

The Philippine Motors Corporation was at this time engaged in business as an

automobile agency, but, under its charter, it had authority to deal in all sorts of
machinery engines and motors, as well as to build, operate, buy and sell the same
and the equipment therof. Quest, as general manager, had full charge of the
corporations in all its branches.

As a result of the aforesaid interview, Quest, in company with Cranston, visited the
Gwendoline while it lay at anchor in the Pasig River, and the work of effecting the
change in the engine was begun and conducted under the supervision of Quest,
chiefly by a mechanic whom Quest took with him to the boat. In this work Quest
had the assistance of the members of the crew of the Gwendoline, who had been
directed by Cranston to place themselves under Quest's directions.

Upon preliminary inspection of the engine, Quest came to the conclusion that the
principal thing necessary to accomplish the end in view was to install a new
carburetor, and a Zenith carburetor was chosen as the one most adapted to the
purpose. After this appliance had been installed, the engine was tried with gasoline
as a fuel, supplied from the tank already in use. The result of this experiment was
satisfactory. The next problem was to introduce into the carburetor the baser fuel,
consisting of a low grade of oil mixed with distillate. For this purpose a temporary
tank to contain the mixture was placed on deck above and at a short distance from
the compartment covering the engine. This tank was connected with the carburetor
by a piece of tubing, which was apparently not well fitted at the point where it was
connected with the tank. Owing to this fact the fuel mixture leaked from the tank
and dripped sown into the engine compartment. The new fuel line and that already
in use between the gasoline tank and carburetor were so fixed that it was possible
to change from the gasoline fuel to the mixed fuel. The purpose of this
arrangement was to enable the operator to start the engine on gasoline and then,
after the engine had been operating for a few moments, to switch to the new fuel
supply. lawphil.net

In the course of the preliminary work upon the carburetor and its connections, it
was observed that the carburetor was flooding, and that the gasoline, or other fuel,
was trickling freely from the lower part to the carburetor to the floor. This fact was
called to Quest's attention, but he appeared to think lightly of the matter and said
that, when the engine had gotten to running well, the flooding would disappear.

After preliminary experiments and adjustments had been made the boat was taken
out into the bay for a trial run at about 5 p.m. or a little later, on the evening of
January 30,1925. The first part of the course was covered without any untoward
development, other than he fact that the engine stopped a few times, owing no
doubt to the use of an improper mixture of fuel. In the course of the trial Quest
remained outside of the engine compartment and occupied himself with making
distillate, with a view to ascertaining what proportion of the two elements would
give best results in the engine.

As the boat was coming in from this run, at about 7:30 p.m. and when passing near
Cavite, the engine stopped, and connection again had to be made with the gasoline
line to get a new start. After this had been done the mechanic, or engineer,
switched to the tube connecting with the new mixture. A moment later a back fire
occurred in the cylinder chamber. This caused a flame to shoot back into the
carburetor, and instantly the carburetor and adjacent parts were covered with a
mass of flames, which the members of the crew were unable to subdue. They were
therefore compelled, as the fire spread, to take to a boat, and their escape was
safely effected, but the Gwendoline was reduced to a mere hulk. The salvage from,
the wreck, when sold, brought only the sum of P150. The value of the boat, before
the accident occured, as the court found, was P10,000.

A study of the testimony lead us to the conclusion that the loss of this boat was
chargeable to the negligence and lack of skill of Quest. The temporary tank in
which the mixture was prepared was apparently at too great an elevation from the
carburetor, with the result that when the fuel line was opened, the hydrostatic
pressure in the carburetor was greater than the delicate parts of the carburetor could
sustain. This was no doubt the cause of the flooding of the carburetor; and the
result was that; when the back fire occurred, the external parts of the carburetor,
already saturated with gasoline, burst into flames, whence the fire was quickly
communicated to the highly inflammable material near-by. Ordinarily a back fire
from an engine would not be followed by any disaster, but in this case the leak
along the pipe line and the flooding of the carburetor had created a dangerous
situation, which a prudent mechanic, versed in repairs of this nature, would have
taken precautions to avoid. The back fire may have been due either to the fact that
the spark was too advanced or the fuel improperly mixed.
In this connection it must be remembered that when a person holds himself out as
being competent to do things requiring professional skill, he will be held liable for
negligence if he fails to exhibit the care and skill of one ordinarily skilled in the
particular work which he attempts to do. The proof shows that Quest had had
ample experience in fixing the engines of automobiles and tractors, but it does not
appear that he was experienced in the doing of similar work on boats. For this
reason, possibly the dripping of the mixture form the tank on deck and the flooding
of the carburetor did not convey to his mind an adequate impression of the danger
of fire. But a person skilled in that particular sort of work would, we think have
been sufficiently warned from those circumstances to cause him to take greater and
adequate precautions against the danger. In other words Quest did not use the skill
that would have been exhibited by one ordinarily expert in repairing gasoline
engines on boats. There was here, in our opinion, on the part of Quest, a
blameworthy antecedent inadvertence to possible harm, and this constitutes
negligence. The burning of the Gwendoline may be said to have resulted from
accident, but this accident was in no sense an unavoidable accident. It would not
have occured but for Quest's carelessness or lack of skill. The test of liability is not
whether the injury was accidental in a sense, but whether Quest was free from
blame.

We therefore see no escape from the conclusion that this accident is chargeable to
lack of skill or negligence in effecting the changes which Quest undertook to
accomplish; and even supposing that our theory as to the exact manner in which
the accident occurred might appear to be in some respects incorrect, yet the origin
of the fire in not so inscrutable as to enable us to say that it was casus fortuitus.

The trial judge seems to have proceeded on the idea that, inasmuch as Quest had
control of the Gwendoline during the experimental run, the defendant corporation
was in the position of a bailee and that, as a consequence, the burden of proof was
on the defendant to exculpate itself from responsibility by proving that the accident
was not due to the fault of Quest. We are unable to accede to this point of view.
Certainly, Quest was not in charge of the navigation of the boat on this trial run.
His employment contemplated the installation of new parts in the engine only, and
it seems rather strained to hold that the defendant corporation had thereby become
bailee of the boat. As a rule workmen who make repairs on a ship in its owner's
yard, or a mechanic who repairs a coach without taking it to his shop, are not
bailees, and their rights and liabilities are determined by the general rules of law,
under their contract. The true bailee acquires possession and what is usually
spoken of as special property in the chattel bailed. As a consequence of such
possession and special property, the bailee is given a lien for his compensation.
These ideas seem to be incompatible with the situation now under consideration.
But though defendant cannot be held liable in the supposition that the burden of
proof had not been sustained by it in disproving the negligence of its manager, we
are nevertheless of the opinion that the proof shows by a clear preponderance that
the accident to the Gwendoline and the damages resulting therefrom are chargeable
to the negligence or lack of skill of Quest.

This action was instituted about two years after the accident in question had
occured, and after Quest had ceased to be manager of the defendant corporation
and had gone back to the United States. Upon these facts, the defendant bases the
contention that the action should be considered stale. It is sufficient reply to say
that the action was brought within the period limited by the statute of limitations
and the situation is not one where the defense of laches can be properly invoked.

It results that the judgment appealed from, awarding damages to the plaintiff in the
amount of P9,850, with interest, must be affirmed; and it is so ordered, with costs
against the appellant.

Avanceña, C.J., Malcolm, Villamor, Ostrand, Romualdez and Villa-Real, JJ.,

concur.

G.R. No. L-12858 January 22, 1918

THE UNITED STATES, plaintiff-appellee,

vs.
SANTIAGO PINEDA, defendant-appellant.
Francisco and Lualhati for appellant.
Acting Attorney-General Paredes for appellee.

MALCOLM, J.:

This appeal requires a construction and an application, for the first time, of the
penal provisions of the Pharmacy Law.

Santiago Pineda, the defendant, is a registered pharmacist of long standing and the
owner of a drug store located at Nos. 442, 444, Calle Santo Cristo, city of Manila.
One Feliciano Santos, having some sick horses, presented a copy of a prescription
obtained from Dr. Richardson, and which on other occasions Santos had given to
his horses with good results, at Pineda's drug store for filling. The prescription read
— "clorato de potasa — 120 gramos — en seis papelitos de 20 gramos, para
caballo." Under the supervision of Pineda, the prescription was prepared and
returned to Santos in the form of six papers marked, "Botica Pineda — Clorato
potasa — 120.00 — en seis papeles — para caballo — Sto. Cristo 442, 444,
Binondo, Manila." Santos, under the belief that he had purchased the potassium
chlorate which he had asked for, put two of the packages in water the doses to two
of his sick horses. Another package was mixed with water for another horse, but
was not used. The two horses, to which had been given the preparation, died
shortly afterwards. Santos, thereupon, took the three remaining packages to the
Bureau of Science for examination. Drs. Peña and Darjuan, of the Bureau of
Science, on analysis found that the packages contained not potassium chlorate but
barium chlorate. At the instance of Santos, the two chemists also went to the drug
store of the defendant and bought potassium chlorate, which when analyzed was
found to be barium chlorate. (Barium chlorate, it should be noted, is a poison;
potassium chlorate is not.) Dr. Buencamino, a veterinarian, performed an autopsy
on the horses, and found that death was the result of poisoning.

Four assignments of error are made. The first is that the lower court erred in
admitting the testimony of the chemist Pena and Darjuan as to their purchase of
potassium chlorate at the drug store of the accused, which substance proved on
analysis to be barium chlorate. What the appellant is here relying on is the maxim
res inter alios acta. As a general rule, the evidence of other offenses committed by
a defendant is inadmissible. But appellant has confused this maxim and this rule
with certain exceptions thereto. The effort is not to convict the accused of a second
offense. Nor is there an attempt to draw the mind away from the point at issue and
thus to prejudice defendant's case. The purpose is to ascertain defendant's
knowledge and intent, and to fix his negligence. If the defendant has on more than
one occasion performed similar acts, accident in good faith is possibly excluded,
negligence is intensified, and fraudulent intent may even be established. It has been
said that there is no better evidence of negligence than the frequency of accidents.
(See 10 R. C. L., pp. 938, 940.) The United States Supreme Court has held that:

On the trial of a criminal case the question relates to the tendency of certain
testimony to throw light upon a particular fact, or to explain the conduct of a
particular person, there is a certain discretion on the part of the trial judge which a
court of errors will not interfere with, unless it manifestly appear that the testimony
has no legitimate bearing upon the question at issue, and is calculated to prejudice
the accused.

Whenever the necessity arises for a resort to circumstantial evidence, either from
the nature of the inquiry or the failure of direct proof, objections to the testimony
on the ground of irrelevancy are not favored.

Evidence is admissible in a criminal action which tends to show motive, although

it tends to prove the commission of another offense by the defendant. (Moore vs.
U. S. [1893], 150 U. S., 57.)

The second assignment of error is that the lower court erred in finding that the
substance sold by the accused to Feliciano Santos on the 22d of June, 1916, was
barium chlorate and not potassium chlorate. The proof demonstrates the contrary.

The third and fourth assignments of error that the lower court erred in finding that
the accused has been proved guilty beyond a reasonable doubt of an infraction of
Act No. 597, section 17, as amended. The third assignment contains the points we
should consider, including, we may remark, a somewhat difficult question
concerning which the briefs have given little assistance.

The Pharmacy Law was first enacted as Act No. 597, was later amended by Act
Nos. 1921, 2236, and 2382, and is now found as Chapter 30 of the Administrative
Code. The law provides for a board of pharmaceutical examiners, and the
examination and registration of pharmacists, and finally contains sundry provisions
relative to the practice of pharmacy. High qualification for applicants for the
pharmaceutical; examination are established. The program of subjects for the
examination is wide. Responsibility for the quality of drugs is fixed by section 17
of the Pharmacy Law, as amended (now Administrative Code [1917], section 751),
in the following term:
Every pharmacist shall be responsible for the quality of all drugs, chemicals,
medicines, and poisons he may sell or keep for sale; and it shall be unlawful for
any person whomsoever to manufacture, prepare, sell, or administer any
prescription, drug, chemical, medicine, or poison under any fraudulent name,
direction, or pretense, or to adulterate any drug, chemical, medicine, or poison so
used, sold or offered for sale. Any drug, chemical, medicine, or poison shall be
held to be adulterated or deteriorated within the meaning of this section if it differs
from the standard of quality or purity given in the United States Pharmacopoeia.

The same section of the Pharmacy Law also contains the following penal
provision: "Any person violating the provisions of this Act shall, upon conviction,
be punished by a fine of not more than five hundred dollar." The Administrative
Code, section 2676, changes the penalty somewhat by providing that:

Any person engaging in the practice of pharmacy in the Philippine Islands contrary
to any provision of the Pharmacy Law or violating any provisions of said law for
which no specific penalty s provided shall, for each offense, be punished by a fine
not to exceed two hundred pesos, or by imprisonment for not more than ninety
days, or both, in the discretion of the court.

These are the provisions of law, pursuant to which prosecution has been initiated
and which it is now incumbent upon us to construe.

Turning to the law, certain points therein as bearing on our present facts must be
admitted. Thus, defendant is a pharmacist. As a pharmacist, he is made responsible
for the quality of all drugs and poisons which he sells. And finally it is provided
that it shall be unlawful for him to sell any drug or poison under any "fraudulent
name." It is the one word "fraudulent" which has given the court trouble. What did
the Legislature intend to convey by this restrictive adjective?

Were we to adhere to the technical definition of fraud, which the appellant

vigorously insists upon, it would be difficult, if not impossible, to convict any
druggist of a violation of the law. The prosecution would have to prove to a
reasonable degree of certainty that the druggist made a material representation; that
it was false; that when he made it he knew that it was false or made it recklessly
without any knowledge of its truth and as positive assertion; that he made it with
the intention that it should be acted upon by the purchaser; that the purchaser acted
in reliance upon it, and that the purchased thereby suffered injury. Such a
construction with a literal following of well-known principles on the subject of
fraud would strip the law of at least much of its force. It would leave the innocent
purchaser of drugs, who must blindly trust in the good faith and vigilance of the
pharmacist, at the mercy of any unscrupulous vendor. We should not, therefore,
without good reason so devitalize the law.

The profession of pharmacy, it has been said again and again, is one demanding
care and skill. The responsibility of the druggist to use care has been variously
qualified as "ordinary care," "care of a special high degree," "the highest degree of
care known to practical men." Even under the first conservative expression,
"ordinary care" with reference to the business of a druggist, the Supreme Court of
Connecticut has said must be held to signify "the highest practicable degree of
prudence, thoughtfulness, and vigilance, and most exact and reliable safeguards
consistent with the reasonable conduct of the business, in order that human life
may not be constantly be exposed to the danger flowing from the substitution of
deadly poisons for harmless medicine." (Tombari vs. Connors [1912], 85 Conn.,
235. See also Willson vs. Faxon, Williams and Faxon [1913], 208 N. Y., 108;
Knoefel vs. Atkins [1907], 81 N. E., 600.) The "skill" required of a druggist is
denominated as "high" or "ample." (Peters vs. Jackson [1902], 50 W. Va., 644; 57
L. R. A., 428.) In other words, the care required must be commensurate with the
danger involved, and the skill employed must correspond with the superior
knowledge of the business which the law demands.

Under one conception, and it should not be forgotten that the case we consider are
civil in nature, the question of negligence or ignorance is irrelevant. The druggist is
responsible as an absolute guarantor of what he sells. In a decision which stands
alone, the Supreme Court of Kentucky said:

As applicable to the owners of drug stores, or persons engaged in vending drugs

and medicines by retail, the legal maxim should be reversed. Instead of caveat
emptor, it should be caveat venditor. That is to say, let him be certain that he does
not sell to a purchaser or send to a patient one drug for another, as arsenic for
calomel, cantharides for or mixed with snakeroot and Peruvian bark, or even one
innocent drug, calculated to produce a certain effect, in place of another sent for
and designed to produce a different effect. If he does these things, he cannot escape
civil responsibility, upon the alleged pretext that it was an accidental or an
innocent mistake; that he had been very careful and particular, and had used
extraordinary care and diligence in preparing or compounding the medicines as
required, etc. Such excuses will not avail him. (Fleet vs. Hollenkemp [1852], 56
Am. Dec., 563.)
Under the other conception, in which the proof of negligence is considered as
material, where a customer calls upon a druggist for a harmless remedy, delivery of
a poisonous drug by mistake by the druggist is prima facie negligence, placing the
burden on him to show that the mistake was under the circumstances consistent
with the exercise of due care. (See Knoefel vs. Atkins, supra,) The druggist cannot,
for example in filling a prescription calling for potassium chlorate give instead to
the customer barium chlorate, a poison, place this poison in a package labeled
"potassium chlorate," and expect to escape responsibility on plea of mistake. His
mistake, under the most favorable aspect for himself, was negligence. So in a case
where a druggist filled an order for calomel tablets with morphine and placed the
morphine in a box labeled calomel, it was said:

It is not suggested, nor can we apprehend that it is in any wise probable, that the
act of furnishing the wrong drug in this case was willful. If it was furnished by the
clerk, it was undoubtedly a mistake and unintentional. However, it was a mistake
of the gravest kind, and of the most disastrous effect. We cannot say that one
holding himself out as competent to handle such drugs, and who does so, having
rightful access to them, and relied upon by those dealing with him to exercise that
high degree of caution and care called for by the peculiarly dangerous nature of
this business, can be heard to say that his mistakes by which he furnishes a
customer the most deadly of drugs for those comparatively harmless is not, in and
of itself, gross negligence, and that of an aggravated form. (Smith's Admrx. vs.
Middleton [1902], 56 L. R. A., 484.)

The rule of caveat emptor cannot apply to the purchase and sale of drugs. The
vendor and the vendee do not stand at arms length as in ordinary transactions. An
imperative duty is on the druggist to take precautions to prevent death or serious
injury to anyone who relies on his absolute honesty and peculiar leaning. The
nature of drugs is such that examination would not avail the purchaser anything. It
would be idle mockery for the customer to make an examination of a compound of
which he can know nothing. Consequently, it must be that the druggist warrants
that he will deliver the drug called for.

In civil cases, the druggist is made liable for any injury approximately resulting
from his negligence. If B negligently sells poison under the guise of a beneficial
drug to A, he is liable for the injury done to A. In a case, which has repeatedly
been termed the leading case on the subject and which has been followed by the
United States Supreme Court, it was said, "Pharmacists or apothecaries who
compound or sell medicines, if they carelessly label a poison as a harmless
medicine, and sent it so labeled into the market, are liable to all persons who,
without fault on their part, are injured by using it as such medicine, in consequence
of the false label; the rule being that the liability in such a case arises not out of any
contract or direct privity between the wrong-doer and the person injured, but out of
the duty which the law imposes on him to avoid acts in their nature dangerous to
the lives of others." (Nat. Savings Bank vs. Ward [1879], 100 U. S., 195, following
Thomas vs. Winchester [1852], 2 Seld. [N. Y.], 387.) In reality, for the druggist,
mistake is negligence and care is no defense. Throughout the criminal law, run the
same rigorous rules. For example, apothecaries or apothecary clerks, who are
guilty of negligence in the sale of medicine when death ensues in consequence,
have been held guilty of manslaughter. (See Tessymond's Case [1828], 1 Lewin, C.
C., 169.)

Bearing these general principles in mind, and remembering particularly the care
and skill which are expected of druggist, that in some jurisdictions they are liable
even for their mistake and in others have the burden placed upon them to establish
that they were not negligent, it cannot be that the Philippine Legislature intended to
use the word "fraudulent" in all its strictness. A plea of accident and mistake
cannot excuse for they cannot take place unless there be wanton and criminal
carelessness and neglect. How the misfortune occurs is unimportant, if under all
the circumstances the fact of occurrence is attributed to the druggist as a legal fault.
Rather considering the responsibility for the quality of drugs which the law
imposes on druggists and the position of the word "fraudulent" in juxtaposition to
"name," what is made unlawful is the giving of a false name to the drug asked for.
This view is borne out by Spanish translation, which we are permitted to consult to
explain the English text. In the Spanish "supuesto" is used, and this word is
certainly not synonymous with "fraudulent." The usual badges of fraud, falsify,
deception, and injury must be present-but not scienter.

In view of the tremendous an imminent danger to the public from the careless sale
of poisons and medicines, we do not deem it too rigid a rule to hold that the law
penalizes any druggist who shall sell one drug for another whether it be through
negligence or mistake.

The judgment of the lower court, sentencing the defendant to pay a fine of P100,
with subsidiary imprisonment in case of insolvency, and to pay the costs, is
affirmed with the cost of this instance against the appellant, without prejudice to
any civil action which may be instituted. So ordered.

G.R. No. 102383 November 26, 1992

BANK OF THE PHILIPPINE ISLANDS, petitioner,
vs.
THE HON. COURT OF APPEALS (SEVENTH JUDICIAL), HON. JUDGE
REGIONAL TRIAL COURT OF MAKATI, BRANCH 59, CHINA BANKING
CORP., and PHILIPPINE CLEARING HOUSE CORPORATION, respondents.

GUTIERREZ, JR., J.:

The present petition asks us to set aside the decision and resolution of the Court of
Appeals in CA-G.R. SP No. 24306 which affirmed the earlier decision of the
Regional Trial Court of Makati, Branch 59 in Civil Case No. 14911 entitled Bank
of the Philippine Islands v. China Banking Corporation and the Philippine Clearing
House Corporation, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered dismissing

petitioner-appellant's (BPI's) appeal and affirming the appealed order of August 26,
1986 (Annex B of BPI's Petition) with modification as follows:

1. Ordering the petitioner-appellant (BPI) to pay respondent-appellee (CBC):

(a) the amount of One Million Two Hundred Six Thousand, Six Hundred Seven
Pesos and Fifty Eight Centavos (P1,206,607.58) with interest at the legal rate of
twelve percent (12%) per annum starting August 26, 1986, the date when the order
of the PCHC Board of Directors was issued until the full amount is finally paid;
and

(b) the amount of P150,000.00 representing attorney's fees;

2. BPI shall also bear 75% or P5,437.50 and CBC, 25% or P1,812.50 of the
cost of the arbitration proceedings amounting to P7,250.00;

3. The ownership of respondent-appellee (CBC) of the other sum of One

Million Two Hundred Six Thousand Six Hundred Seven Pesos and Fifty Eight
Centavos (P1,206,607.58) previously credited to its clearing account on August 12,
1983 per PCHC Stockholders' Resolution No. 6083 dated April 6, 1983, is hereby
confirmed.
4. The PCHC is hereby directed to immediately debit the clearing account of
BPI the sum of One Million Two Hundred Six Thousand Six Hundred Pesos and
Fifty Eight Centavos (P1,206,607.58) together with its interest as decreed in
paragraph 1 (a) herein above stated and credit the same to the clearing account of
CBC;

5. The PCHC's counterclaim and cross-claim are dismissed for lack of merit;
and

6. With costs against the petitioner-appellant. (Rollo, pp. 161-162)

The controversy in this case arose from the following facts as found by the
Arbitration Committee of respondent Philippine Clearing House Corporation in
Arbicom Case No. 83-029 entitled Bank of the Philippine Island v. China Banking
Corporation:

The story underlying this case began in the afternoon of October 9, 1981 with a
phone call to BPI's Money Market Department by a woman who identified herself
as Eligia G. Fernando who had a money market placement as evidenced by a
promissory note with a maturity date of November 11, 1981 and a maturity value
of P2,462,243.19. The caller wanted to preterminate the placement, but Reginaldo
Eustaquio, Dealer Trainee in BPI's Money Market Department, who received the
call and who happened to be alone in the trading room at the time, told her "trading
time" was over for the day, which was a Friday, and suggested that she call again
the following week. The promissory note the caller wanted to preterminate was a
roll-over of an earlier 50-day money market placement that had matured on
September 24, 1981.

Later that afternoon, Eustaquio conveyed the request for pretermination to the
officer who before had handled Eligia G. Fernando's account, Penelope Bulan, but
Eustaquio was left to attend to the pretermination process.

The next Monday, October 12, 1981, in the morning, the caller of the previous
Friday followed up with Eustaquio, merely by phone again, on the pretermination
of the placement. Although not familiar with the voice of the real Eligia G.
Fernando, Eustaquio "made certain" that the caller was the real Eligia G. Fernando
by "verifying" that the details the caller gave about the placement tallied with the
details in "the ledger/folder" of the account. Eustaquio knew the real Eligia G.
Fernando to be the Treasurer of Philippine American Life Insurance Company
(Philamlife) since he was handling Philamlife's corporate money market account.
But neither Eustaquio nor Bulan who originally handled Fernando's account, nor
anybody else at BPI, bothered to call up Fernando at her Philamlife office to verify
the request for pretermination.

Informed that the placement would yield less than the maturity value because of its
pretermination, the caller insisted on the pretermination just the same and asked
that two checks be issued for the proceeds, one for P1,800,000.00 and the second
for the balance, and that the checks be delivered to her office at Philamlife.

Eustaquio, thus, proceeded to prepare the "purchase order slip" for the requested
pretermination as required by office procedure, and from his desk, the papers,
following the processing route, passed through the position analyst, securities
clerk, verifier clerk and documentation clerk, before the two cashier's checks, nos.
021759 and 021760 for P1,800,000.00 and P613,215.16, respectively, both payable
to Eligia G. Fernando, covering the preterminated placement, were prepared. The
two cashier's checks, together with the papers consisting of the money market
placement was to be preterminated and the promissory note (No. 35623) to be
preterminated, were sent to Gerlanda E. de Castro and Celestino Sampiton, Jr.,
Manager and Administrative Assistant, respectively, in BPI's Treasury Operations
Department, both authorized signatories for BPI, who signed the two checks that
very morning. Having been singed, the checks now went to the dispatcher for
delivery.

Later in the same morning, however, the same caller changed the delivery
instructions; instead of the checks being delivered to her office at Philamlife, she
would herself pick up the checks or send her niece, Rosemarie Fernando, to pick
them up. Eustaquio then told her that if it were her niece who was going to get the
checks, her niece would have to being a written authorization from her to pick up
the checks. This telephone conversation ended with the caller's statement that
"definitely" it would be her niece, Rosemarie Fernando, who would pick up the
checks. Thus, Eustaquio had to hurriedly go to the dispatcher, Bernardo Laderas, to
tell him of the new delivery instructions for the checks; in fact, he changed the
delivery instruction on the purchase order slip, writing thereon "Rosemarie
Fernando release only with authority to pick up.

It was, in fact Rosemarie Fernando who got the two checks from the dispatcher, as
shown by the delivery receipt. Actually, as it turned out, the same impersonated
both Eligia G. Fernando and Rosemarie Fernando. Although the checks
represented the termination proceeds of Eligia G. Fernando's placement, not just a
roll-over of the placement, the dispatcher failed to get or to require the surrender of
the promissory note evidencing the placement. There is also no showing that Eligia
G. Fernando's purported signature on the letter requesting the pretermination and
the latter authorizing Rosemarie Fernando to pick up the two checks, both of which
letters were presumably handed to the dispatcher by Rosemarie Fernando, was
compared or verified with Eligia G. Fernando's signature in BPI's file. Such
purported signature has been established to be forged although it has a "close
similarity" to the real signature of Eligia G. Fernando (TSN of January 15, 1985,
pp. 24 and 26).

The story's scene now shifted when, in the afternoon of October 13, 1981, a
woman who represented herself to be Eligia G. Fernando applied at CBC's Head
Office for the opening of a current account.

She was accompanied and introduced to Emily Sylianco Cuaso, Cash Supervisor,
by Antonio Concepcion whom Cuaso knew to have opened, earlier that year, an
account upon the introduction of Valentin Co, a long-standing "valued client" of
CBC. What Cuaso indicated in the application form, however, was that the new
client was introduced by Valentin Co, and with her initials on the form signifying
her approval, she referred the application to the New Accounts Section for
processing. As finally proceeds, the application form shows the signature of "Eligia
G. Fernando", "her" date of birth, sex, civil status, nationality, occupation
("business woman"), tax account number, and initial deposit of P10,000.00. This
final approval of the new current account is indicated on the application form by
the initials of Regina G. Dy, Cashier, who did not interview the new client but
affixed her initials on the application form after reviewing it. The new current
account was given the number: 26310-3.

The following day, October 14, 1981, the woman holding herself out as Eligia G.
Fernando deposited the two checks in controversy with Current Account No.
126310-3. Her endorsement on the two checks was found to conform with the
depositor's specimen signature. CBC's guaranty of prior endorsements and/or lack
of endorsement was then stamped on the two checks, which CBC forthwith sent to
clearing and which BPI cleared on the same day.

Two days after, withdrawals began on Current Account No. 26310-3: On October
16, 1981, by means of Check No. 240005 dated the same day for P1,000,000.00,
payable to "cash", which the woman holding herself out as Eligia G. Fernando
encashed over the counter, and Check No. 240003 dated October 15, 1981 for
P48,500.00, payable to "cash" which was received through clearing from PNB
Pasay Branch; on October 19, 1981, by means of Check No. 240006 dated the
same day for P1,000,000.00, payable to "cash," which the woman identifying
herself as Eligia G. Fernando encashed over the counter; on October 22, 1981, by
means of Check No. 240007 dated the same day for P370,000.00, payable to
"cash" which the woman herself also encashed over the counter; and on November
4, 1981, by means of Check No. 240001 dated November 3, 1981 for P4,100.00,
payable to "cash," which was received through clearing from Far East Bank.

All these withdrawals were allowed on the basis of the verification of the drawer's
signature with the specimen signature on file and the sufficiency of the funds in the
account. However, the balance shown in the computerized teller terminal when a
withdrawal is serviced at the counter, unlike the ledger or usual statement prepared
at month-end, does not show the account's opening date, the amounts and dates of
deposits and withdrawals. The last withdrawal on November 4, 1981 left Current
Account No. 26310-3 with a balance of only P571.61.

The day of reckoning came on November 11, 1981, the maturity date of Eligia G.
Fernado's money market placement with BPI, when the real Eligia G. Fernando
went to BPI for the roll-over of her placement. She disclaimed having
preterminated her placement on October 12, 1981. She executed an affidavit
stating that while she was the payee of the two checks in controversy, she never
received nor endorsed them and that her purported signature on the back of the
checks was not hers but forged. With her surrender of the original of the
promissory note (No. 35623 with maturity value of P2,462,243.19) evidencing the
placement which matured that day, BPI issued her a new promissory note (No.
40314 with maturity date of December 23, 1981 and maturity value of
P2,500.266.77) to evidence a roll-over of the placement.

On November 12, 1981, supported by Eligia G. Fernando's affidavit, BPI returned

the two checks in controversy to CBC for the reason "Payee's endorsement
forged". A ping-pong started when CBC, in turn, returned the checks for reason
"Beyond Clearing Time", and the stoppage of this ping-pong, as we mentioned at
the outset, prompted the filing of this case.

Investigation of the fraud by the Presidential Security Command led to the filing of
criminal actions for "Estafa Thru Falsification of Commercial Documents" against
four employees of BPI, namely Quirino Victorio, Virgilio Gayon, Bernardo
Laderas and Jorge Atayan, and the woman who impersonated Eligia G. Fernando,
Susan Lopez San Juan. Victorio and Gayon were both bookkeepers in BPI's Money
Market Operations Department, Laderas was a dispatcher in the same department. .
. . (Rollo, pp. 74-79)
The Arbitration Committee ruled in favor of petitioner BPI. The dispositive portion
of the decision reads:

WHEREFORE, we adjudge in favor of the Bank of the Philippine Islands and

hereby order China Banking Corporation to pay the former the amount of
P1,206,607.58 with interest thereon at 12% per annum from August 12, 1983, or
the date when PCHC, pursuant to its procedure for compulsory arbitration of the
ping-pong checks under Stockholders' Resolution No. 6-83 was implemented, up
to the date of actual payment.

Costs of suit in the total amount of P7,250.00 are to be assessed the litigant banks
in the following proportion:

a) Plaintiff BPI —– P1,812.50

b) Defendant China — P5,437.50

Total Assessment — P7,250.00

conformably with PCHC Resolution Nos. 46-83 dated October 25, 1983 and 4-85
dated February 25, 1985.

The PCHC is hereby directed to effect the corresponding entries to the litigant
banks' clearing accounts in accordance with the foregoing decision. (Rollo, pp. 97-
98)

However, upon motion for reconsideration filed by respondent CBC, the Board of
Directors of the PCHC reversed the Arbitration Committee's decision in its Order,
the dispositive portion of which reads:

WHEREFORE, the Board hereby reconsiders the Decision of the Arbitration

Committee dated March 24, 1986 in Arbicom Case No. 183-029 and in lieu
thereof, one is rendered modifying the decision so that the Complaint of BPI is
dismissed, and on the Counterclaim of CBC, BPI is sentenced to pay CBC the sum
of P1,206,607.58. In view of the facts, no interest nor attorney's fees are awarded.
BPI shall also bear 75% or P5,437.50 and CBC, 25% or P1,812.50 of the cost of
the Arbitration proceedings amounting to P7,250.00.
The PCHC is hereby directed to debit the clearing account of the BPI the sum of
P1,206,607.58 and credit the same to that of CBC. The cost of Arbitration
proceedings are to be debited from the accounts of the parties in the proportion
above stated. (Rollo, pp. 112-113)

BPI then filed a petition for review of the abovestated order with the Regional
Trial Court of Makati. The trial court dismissed the petition but modified the order
as can be gleaned from the dispositive portion of its decision quoted earlier.

Not satisfied with the trial court's decision petitioner BPI filed with us a petition
for review on certiorari under Rule 45 of the Rules of Court. The case was
docketed as G.R. No. 96376. However, in a Resolution dated February 6, 1991, we
referred the case to the Court of Appeals for proper determination and disposition.
The appellate court affirmed the trial court's decision.

Hence, this petition.

In a resolution dated May 20, 1992 we gave due course to the petition:

Petitioner BPI now asseverates:

THE DECISION AND RESOLUTION OF THE RESPONDENT COURT

LEAVES THE UNDESIRABLE RESULT OF RENDERING NUGATORY THE
VERY PURPOSE FOR THE UNIFORM BANKING PRACTICE OF
REQUIRING THE CLEARING GUARANTEE OF COLLECTING BANKS.

II

CONTRARY TO THE RULING OF THE RESPONDENT COURT, THE

PROXIMATE CAUSE FOR THE LOSS OF THE PROCEEDS OF THE TWO
CHECKS IN QUESTION WAS THE NEGLIGENCE OF THE EMPLOYEES OF
CBC AND NOT BPI; CONSEQUENTLY, EVEN UNDER SECTION 23 OF THE
NEGOTIABLE INSTRUMENTS LAW, BPI WAS NOT PRECLUDED FROM
RAISING THE DEFENSE OF FORGERY.

III
THE RESPONDENT COURT COMMITTED REVERSIBLE ERROR IN
FAILING TO APPRECIATE THE FACT THAT CBC HAD THE "LAST CLEAR
CHANCE" OF AVOIDING THE LOSS OCCASIONED BY THE
FRAUDULENT ACTS INVOLVED IN THE INSTANT CASE. (Rollo, p. 24)

The main issues raised in the assignment of errors are: When a bank (in this case
CBC) presents checks for clearing and payment, what is the extent of the bank's
warranty of the validity of all prior endorsements stamped at the back of the
checks? In the event that the payee's signature is forged, may the drawer/drawee
bank (in this case BPI) claim reimbursement from the collecting bank [CBC]
which earlier paid the proceeds of the checks after the same checks were cleared by
petitioner BPI through the PCHC?

Anent the first issue, petitioner BPI contends that respondent CBC's clear warranty
that "all prior endorsements and/or lack of endorsements guaranteed" stamped at
the back of the checks was an unrestrictive clearing guaranty that all prior
endorsements in the checks are genuine. Under this premise petitioner BPI asserts
that the presenting or collecting bank, respondent CBC, had an unquestioned
liability when it turned out that the payee's signature on the checks were forged.
With these circumstances, petitioner BPI maintains that considerations of relative
negligence becomes totally irrelevant.

In sum, petitioner BPI theorizes that the Negotiable Instruments Law, specifically
Section 23 thereof is not applicable in the light of the absolute liability of the
representing or collecting bank as regards forged endorsements in consonance with
the clearing guarantee requirement imposed upon the presenting or collecting
banks "as it is worded today."

Petitioner BPI first returned to CBC the two (2) checks on the ground that "Payee's
endorsement (was) forged" on November 12, 1981. At that time the clearing
regulation then in force under PCHC's Clearing House Rules and Regulations as
revised on September 19, 1980 provides:

Items which have been the subject of material alteration or items bearing a forged
endorsement when such endorsement is necessary for negotiation shall be returned
within twenty four (24) hours after discovery of the alteration or the forgery, but in
no event beyond the period prescribed by law for the filing of a legal action by the
returning bank/branch institution or entity against the bank/branch, institution or
entity sending the same. (Section 23)
In the case of Banco de Oro Savings and Mortgage Bank v. Equitable Banking
Corporation (157 SCRA 188 [1988]) the clearing regulation (this is the present
clearing regulation) at the time the parties' dispute occurred was as follows:

Sec. 21. ....

Items which have been the subject of material alteration or items bearing forged
endorsement when such endorsement is necessary for negotiation shall be returned
by direct presentation or demand to the Presenting Bank and not through the
regular clearing house facilities within the period prescribed by law for the filing of
a legal action by the returning bank/branch, institution or entity sending the same.

It is to be noted that the above-cited clearing regulations are substantially the same
in that it allows a return of a check "bearing forged endorsement when such
endorsement is necessary for negotiation" even beyond the next regular clearing
although not beyond the prescriptive period "for the filing of a legal action by the
returning bank."

Bearing in mind this similarity in the clearing regulation in force at the time the
forged checks in the present case and the Banco de Oro case were dishonored and
returned to the presenting or collecting banks, we can be guided by the principles
enunciated in the Banco de Oro case on the relevance of negligence of the drawee
vis-a-vis the forged checks.

The facts in the Banco de Oro case are as follows: Sometime in March, April, May
and August 1983 Equitable Banking Corporation through its Visa Card
Department drew six (6) crossed Manager's check with the total amount of Forty
Five Thousand Nine Hundred and Eighty Two Pesos and Twenty Three Centavos
(P45,982.23) and payable to certain member establishments of Visa Card. Later,
the checks were deposited with Banco de Oro to the credit of its depositor, a
certain Aida Trencio. Following normal procedures, and after stamping at the back
of the checks the endorsements: "All prior and/or lack of endorsements
guaranteed" Banco de Oro sent the checks for clearing through the PCHC.
Accordingly, Equitable Banking Corporation paid the checks; its clearing amount
was debited for the value of the checks and Banco de Oro's clearing account was
credited for the same amount. When Equitable Banking Corporation discovered
that the endorsements at the back of the checks and purporting to be that of the
payees were forged it presented the checks directly to Banco de Oro for
reimbursement. Banco de Oro refused to reimburse Equitable Banking Corporation
for the value of the checks. Equitable Banking Corporation then filed a complaint
with the Arbitration Committees of the PCHC. The Arbiter, Atty. Ceasar Querubin,
ruled in favor of Equitable Banking Corporation. The Board of Directors of the
PCHC affirmed the Arbiter's decision. A petition for review of the decision filed
by Banco de Oro with the Regional Trial Court of Quezon City was dismissed. The
decision of the PCHC was affirmed in toto.

One of the main issues threshed out in this case centered on the effect of Banco de
Oro's (representing or collecting bank) guarantee of "all prior endorsements and/or
lack of endorsements" at the back of the checks. A corollary issue was the effect of
the forged endorsements of the payees which were late discovered by the Equitable
Banking Corporation (drawee bank) resulting in the latter's claim for
reimbursement of the value of checks after it paid the proceeds of the checks.

We agreed with the following disquisition of the Regional Trial Court, to wit:

Anent petitioner's liability on said instruments, this court is in full accord with the
ruling of the PCHC Board of Directors that:

In presenting the checks for clearing and for payment, the defendant made an
express guarantee on the validity of "all prior endorsements." Thus, stamped at the
back of the checks are the defendant's clear warranty: ALL PRIOR
ENDORSEMENTS AND/OR LACK OF ENDORSEMENTS GUARANTEED.
Without such warranty, plaintiff would not have paid on the checks.

No amount of legal jargon can reverse the clear meaning of defendant's warranty.
As the warranty has proven to be false and inaccurate, the defendant is liable for
any damage arising out of the falsity of its representation.

The principle of estoppel, effectively prevents the defendant from denying liability
for any damage sustained by the plaintiff which, relying upon an action or
declaration of the defendant, paid on the checks. The same principle of estoppel
effectively prevents the defendant from denying the existence of the checks. (pp.
10-11, Decision, pp. 43-44, Rollo) (at pp. 194-195)

We also ruled:

Apropos the matter of forgery in endorsements, this Court has presently succintly
emphasized that the collecting bank or last endorser generally suffers the loss
because it has the duty to ascertain the genuineness of all prior endorsements
considering that the act of presenting the check for payment to the drawee is an
assertion that the party making the presentment has done its duty to ascertain the
genuineness of the endorsements. This is laid down in the case of PNB v. National
City Bank. (63 Phil. 1711) In another case, this court held that if the drawee-bank
discovers that the signature of the payee was forged after it has paid the amount of
the check to the holder thereof, it can recover the amount paid from the collecting
bank.

xxx xxx xxx

The point that comes uppermost is whether the drawee bank was negligent in
failing to discover the alteration or the forgery. (Emphasis supplied)

xxx xxx xxx

The court reproduces with approval the following disquisition of the PCHC in its
decision.

xxx xxx xxx

III. Having Violated Its Warranty On Validity Of All Endorsements, Collecting

Bank Cannot Deny Liability To Those Who Relied On Its Warranty.

xxx xxx xxx

The damage that will result if judgment is not rendered for the plaintiff is
irreparable. The collecting bank has privity with the depositor who is the principal
culprit in this case. The defendant knows the depositor; her address and her history.
Depositor is defendant's client. It has taken a risk on its depositor when it allowed
her to collect on the crossed-checks.

Having accepted the crossed checks from persons other than the payees, the
defendant is guilty of negligence; the risk of wrongful payment has to be assumed
by the defendant. (Emphasis supplied, at pp. 198-202)

As can be gleaned from the decision, one of the main considerations in affirming
the PCHC's decision was the finding that as between the drawee bank (Equitable
Bank) and the representing or collecting bank (Banco de Oro) the latter was
negligent and thus responsible for undue payment.
Parenthetically, petitioner BPI's theory that the present clearing guarantee
requirement imposed on the representing or collecting bank under the PCHC rules
and regulations is independent of the Negotiable Instruments Law is not in order.

Another reason why the petitioner's theory is uncalled for is the fact that the
Negotiable Instruments Law (Act No. 2031) applied to negotiable instruments as
defined under section one thereof. Undeniably, the present case involves checks as
defined by and under the coverage of the Negotiable Instruments Law. To affirm
the theory of the petitioner would, therefore, violate the rule that rules and
regulations implementing the law should conform to the law, otherwise the rules
and regulations are null and void. Thus, we held Shell Philippines, Inc. v. Central
Bank of the Philippines (162 SCRA 628 [1988]):

. . . while it is true that under the same law the Central Bank was given the
authority to promulgate rules and regulations to implement the statutory provision
in question, we reiterate the principle that this authority is limited only to carrying
into effect what the law being implemented provides.

In People v. Maceren (79 SCRA 450, 458 and 460), this Court ruled that:

Administrative regulations adopted under legislative authority by a particular

department must be in harmony with the provisions of the law, and should be for
the sole purpose of carrying into effect its general provisions. By such regulations,
of course, the law itself cannot be extended. (U.S. v. Tupasi Molina, supra). An
administrative agency cannot amend an act of Congress (Santos v. Estenzo, 109
Phil. 419, 422; Teoxon v. Members of the Board of Administrators, L-25619, June
30, 1970, 33 SCRA 585; Manuel v. General Auditing Office, L-28952, December
29, 1971, 42 SCRA 660; Deluao v. Casteel, L-21906, August 29, 1969, 29 SCRA
350).

The rule-making power must be confined to details for regulating the mode or
proceeding to carry into effect the law as it has been enacted. The power cannot be
extended to amending or expanding the statutory requirements or to embrace
matters not covered by the statute. Rules that subvert the statute cannot be
sanctioned. (University of Santo Tomas v. Board of Tax Appeals, 93 Phil. 376,
382, citing 12 C.J. 845-46. as to invalid regulations, see Collector of Internal
Revenue v. Villaflor, 69 Phil. 319; Wise & Co. v. Meer, 78 Phil. 655, 676; Del
Mar v. Phil. Veterans Administration, L-27299, June 27, 1973, 51 SCRA 340,
349).
xxx xxx xxx

. . . The rule or regulation should be within the scope of the statutory authority
granted by the legislature to the administrative agency. (Davis, Administrative
Law, p. 194, 197, cited in Victorias Milling Co., Inc. v. Social Security
Commission, 114 Phil. 555, 558).

In case of discrepancy between the basic law and a rule or regulation issued to
implement said law the basic law prevails because said rule or regulation cannot go
beyond the terms and provisions of the basic law (People v. Lim 108 Phil. 1091).
(at pp. 633-634)

Section 23 of the Negotiable Instruments Law states:

When signature is forged or made without the authority of the person whose
signature it purports to be, it is wholly inoperative and no right to retain the
instrument, or to give discharge therefore, or to enforce payment thereof, against
any party thereto, can be acquired through or under such forged signature, unless
the party against whom it is sought to enforce such right is precluded from setting
up the forgery or want of authority.

There are two (2) parts of the provision. The first part states the general rule while
the second part states the exception to the general rule. The general rule is to the
effect that a forged signature is "wholly inoperative", and payment made "through
or under such signature" is ineffectual or does not discharge the instrument. The
exception to this rule is when the party relying in the forgery is "precluded from
setting up the forgery or want of authority. In this jurisdiction we recognize
negligence of the party invoking forgery as an exception to the general rule. (See
Banco de Oro Savings and Mortgage Bank v. Equitable Banking Corporation
supra; Philippine National Bank v. Quimpo, 158 SCRA 582 [1988]; Philippine
National Bank v. Court of Appeals, 25 SCRA 693 [1968]; Republic v. Equitable
Banking Corporation, 10 SCRA 8 [1964]; National Bank v. National City Bank of
New York, 63 Phil. 711 [1936]; San Carlos Milling Co. v. Bank of P.I., 59 Phil. 59
[1933]). In these cases we determined the rights and liabilities of the parties under
a forged endorsement by looking at the legal effects of the relative negligence of
the parties thereto.

In the present petition the payee's names in the two (2) subject checks were forged.
Following the general rule, the checks are "wholly inoperative" and of no effect.
However, the underlying circumstances of the case show that the general rule on
forgery is not applicable. The issue as to who between the parties should bear the
loss in the payment of the forged checks necessities the determination of the rights
and liabilities of the parties involved in the controversy in relation to the forged
checks.

The records show that petitioner BPI as drawee bank and respondent CBC as
representing or collecting bank were both negligent resulting in the encashment of
the forged checks.

The Arbitration Committee in its decision analyzed the negligence of the

employees of petitioner BPI involved in the processing of the pre-termination of
Eligia G. Fernando's money market placement and in the issuance and delivery of
the subject checks in this wise:

a) The impostor could have been readily unmasked by a mere telephone call,
which nobody in BPI bothered to make to Eligia G. Fernando, a vice-president of
Philamlife (Annex C, p. 13).

b) It is rather curious, too, that the officer who used to handle Eligia G.
Fernando's account did not do anything about the account's pre-termination (Ibid,
p. 13).

c) Again no verification appears to have been made by (sic) Eligia G.

Fernando's purported signature on the letter requesting the pre-termination and the
letter authorizing her niece to pick-up the checks, yet, her signature was in BPI's
file (Ibid., p. 13).

d) Another step that could have foiled the fraud, but which BPI neglected to
take, was requiring before the two checks in controversy were delivered, the
surrender of the promissory note evidencing the money market placement that was
supposedly pre-terminated. (Rollo, p. 13).

The Arbitration Committee, however, belittled petitioner BPI's negligence

compared to that of respondent CBC which it declared as graver and the proximate
cause of the loss of the subject checks to the impostor who impersonated Eligia G.
Fernando. Petitioner BPI now insists on the adoption of the Arbitration
Committee's evaluation of the negligence of both parties, to wit:

a) But what about the lapses of BPI's employees who processed the
pretermination of Eligia G. Fernando's placement and issued the checks? We do
not think it was a serious lapse not to confirm the telephone request for
pretermination purportedly made by Eligia G. Fernando, considering that it is
common knowledge that business in the money market is done mostly by
telephone. Then, too, the initial request of the caller was for the two checks
representing the pretermination proceeds to be delivered to "her" office, meaning
Eligia G. Fernando's office at Philamlife, this clever ruse must have put off guard
the employee preparing the "purchase order slip", enough at least for him to do
away with having to call Eligia G. Fernando at her office. (Annex C at p. 17).

b) We also do not think it unusual that Penelope Bulan, who used to handle
Eligia G. Fernando's account, should do nothing about the request for
pretermination and leave it to Eustaquio to process the pretermination. In a bank
the of BPI, it would be quite normal for an officer to take over from another the
handling of an account. (Ibid. p. 17)

c) The failure to verify or compare Eligia G. Fernando's purported signature on

the letter requesting the pretermination and the letter authorizing the pick-up of the
checks in controversy with her signature in BPI's file showed lack of care and
prudence required by the circumstances, although it is doubtful that such
comparison would have disclosed the deception considering the "close similarity"
between her purported signature and her signature in BPI's file. (Ibid., p. 17).

d) A significant lapse was, however, committed when the two checks in

controversy were delivered without requiring the surrender of the promissory note
evidencing the placement that was supposedly preterminated. Although, as we
already said, it is hard to determine whether the failure to require the surrender of
the promissory note was a deliberate act of Laderas, the dispatcher, or simply
because the "purchase order slip" note, (sic) the fact remains that such failure
contributed to the consummation of the fraud. (Ibid., p. 17-18)

The Arbitration Committee Decision's conclusion was expressed thus —

Except for Laderas, not one of the BPI personnel tasked with the pretermination of
Eligia G. Fernando's placement and the issuance of the pretermination checks
colluded in the fraud, although there may have been lapses of negligence on their
part which we shall discuss later. The secreting out of BPI of Fernando's specimen
signature, which, as admitted by the impostor herself (Exhibit E-2, page 5), helped
her in forging Fernando's signature was no doubt an "inside job" but done by any
of the four employees colluding in the fraud, not by the personnel directly charged
with the custody of Fernando's records. (Annex C, p. 15)
With respect to the negligence of the CBC employees in the payment of the two (2)
BPI cashier's checks involved in this case, the Arbitration Committee's Decision
made incontrovertible findings undisputed in the statement of facts found in the
Court of Appeals' decision of 8 August 1991, the Regional Trial Court decision of
28 November 1990 and the PCHC Board of Directors' Order of 26 August 1986
(Annexes A, E, D, respectively). These findings point to negligence of the CBC
employees which led to: (a) the opening of the impostor's current account in the
name of Eligia G. Fernando; (b) the deposit of said account of the two (2) checks
in controversy and (c) the withdrawal of their proceeds from said account.

The Arbitration Committee found that —

1. Since the impostor presented only her tax account number as a means of
identification, we feel that Emily Sylianco Cuaso, Cash Supervisor, approved the
opening of her current account in the name of Eligia G. Fernando on the strength
of the introduction of Antonio Concepcion who had himself opened an account
earlier that year. That Mrs. Cuaso was not comfortable with the introduction of the
new depositor by Concepcion is betrayed by the fact that she made it appear in the
application form that the new depositor was introduced by Valentin Co a long-
standing valued client of CBC who had introduced Concepcion when he opened
his account. We find this misrepresentation significant because when she reviewed
the application form she assumed that the new client was introduced by Valentin
Co as indicated in the application form (tsn of March 19, 1985, page 13). Thus we
find that the impostor was able to open with CBC's current account in the name of
Eligia G. Fernando due to the negligence, if not misrepresentation, of its Cash
Supervisor, (Annex C, p. 18).

2. Even with negligence attending the impostor's opening of a current account,

her encashment of the two checks in controversy could still have been prevented if
only the care and diligence demanded by the circumstances were exercised. On
October 14, 1981, just a day after she opened her account, the impostor deposited
the two checks which had an aggregate value of P2,413,215.16, which was grossly
disproportionate to her initial deposit of P10,000. The very date of both checks,
October 12, 1981, should have tipped off the real purpose of the opening of the
account on October 13, 1981. But what surely can be characterized only as
abandonment of caution was allowing the withdrawal of the checks' proceeds
which started on October 16, 1981 only two days after the two checks were
deposited; by October 22, 1981, the account had been emptied of the checks'
proceeds. (Annex C, p. 19).
3. We cannot accept CBC's contention that "big withdrawals" are "usual
business" with it. Huge withdrawals might be a matter of course with an
established account but not for a newly opened account, especially since the
supposed check proceeds being withdrawn were grossly disproportionate to the
initial cash deposit. (Annex C, p. 19).

As intimated earlier, the foregoing findings of fact were not materially disputed
either by the respondent PCHC Board of Directors or by the respondent courts
(compare statement of facts of respondent court as reproduced in pp. 9-11 of this
petition).

Having seen the negligence of the employees of both Banks, the relevant question
is: which negligence was graver. The Arbitration Committee's Decision found and
concluded thus —

Since there were lapses by both BPI and CBC, the question is: whose negligence
was the graver and which was the proximate cause of the loss? Even viewing BPI's
lapses in the worst light, it can be said that while its negligence may have
introduced the two checks in controversy into the commercial stream. CBC's lack
of care in approving the opening with it of the impostor's current account, and its
allowing the withdrawal's of the checks' proceeds, the aggregate value of which
was grossly disproportionate to the initial cash deposit, so soon after such checks
were deposited, caused the "payment" of the checks. Being closest to the vent of
loss, therefore, CBC's negligence must be held to be proximate cause of the loss.
(Annex C, pp. 19-20) (Rollo, pp. 38-41)

While it is true that the PCHC Board of Directors, and the lower courts did not
dispute the findings of facts of the Arbitration Committee, the PCHC Board of
Directors evaluated the negligence of the parties, to wit:

The Board finds the ruling that the negligence of the employees of CBC is graver
than that of the BPI not warranted by the facts because:

1. The acts and omissions of which BPI employees are guilty are not only
negligent but criminal as found by the decision.

2. The act of BPI's dealer-trainee Eustaquio of disclosing information about the

money market placement of its client over the telephone is a violation, if not of
Republic Act 1405, of Sec. 87 (a) of the General Banking Act which penalizes any
officer-employee or agent of any banking institution who discloses to any
unauthorized person any information relative to the funds or properties in the
custody of the bank belonging to private individual, corporations, or any other
entity; and the bland excuse given by the decision that "business in the money
market is done mostly by the telephone" cannot be accepted nor tolerated for it is
an elementary rule of law that no custom or usage of business can override what a
law specifically provides. (Ang Tek v. CA, 87 Phil. 383).

3. The failure of BPI employees to verify or compare Eligia G. Fernando's

purported signature on the letter requesting for pre-termination and the letter
authorizing the pick-up of the checks in controversy with the signatures on file is
not even justified but admitted in the decision as showing lack of care and
prudence required by the circumstances. The conjectural excuse made in the
decision that "it is doubtful that such comparison would have disclosed the
deception" does not give an excuse for the omission by BPI employees of the act of
verifying the signature, a duty which is the basic requirement of all acts in the
bank. From the very first time an employee enters the services of a bank up to the
time he becomes the highest officer thereof, the cautionary rule is drilled on him to
always be sure that when he acts on the basis of any signature presented before
him, the signature is to be verified as genuine and that if the bank acts on the basis
of a forgery of such signature, the bank will be held liable. There can be no excuse
therefore for such an omission on the part of BPI employees.

4. The decision admits that:

A significant lapse was, however, committed when the two checks in controversy
were delivered without requiring the surrender of the promissory note evidencing
the placement that was supposedly preterminated.

This omission of the BPI to require the surrender of the promissory notes
evidencing the placement is justified by the decision by saying that Sec. 74 of the
Negotiable Instrument Law is not violated by this omission of the BPI employees
because said provision is intended for the benefit of the person paying (in this case
the BPI) so that since the omission to surrender having been waived by BPI, so the
non-surrender does not invalidate the payment. The fallacy of this argument is that
the in this case is: whether or not such non-surrender is a necessary ingredient in
the cause of the success of the fraud and not whether or not the payment was valid.
This excuse may perhaps be acceptable if the omission did not cause damage to
any other person. In this case, however, it did cause tremendous damage.
Moreover, this statement obviously overlooks the provision in Art. 1240 of the
Civil Code requiring the payor (which in this case is the BPI) to be sure he pays to
the right person and as Art. 1242 states, he can claim good faith in paying to the
right person only if he pays to the person possession of the credit (which in this
case is the promissory note evidencing the money market placement). Clearly
therefore, the excuse given in the decision for the non-surrender of this promissory
note evidencing the money market placement cannot be accepted.

xxx xxx xxx

The decision, however, discusses in detail the negligent acts of the CBC in its
lapses or certain requirements in the opening of the account and in allowing
withdrawals against the deposited checks soon after the deposit thereof. As stated
by the decision however, in computerized banks the history of the account is not
shown in the computer terminal whenever a withdrawal is made.

The Board therefore believes that these withdrawals, without any further showing
that the CBC employees "had actual knowledge of the infirmity or defect, or
knowledge of such facts" (Sec. 56, Negotiable Instruments Law) that their action in
accepting their checks for deposit and allowing the withdrawals against the same
"amounted to bad faith" cannot be considered as basis for holding CBC liable.
(Rollo, pp. 107-111)

Banks handle daily transactions involving millions of pesos. By the very nature of
their work the degree of responsibility, care and trustworthiness expected of their
employees and officials is far greater than those of ordinary clerks and employees.
For obvious reasons, the banks are expected to exercise the highest degree of
diligence in the selection and supervision of their employees.

In the present case, there is no question that the banks were negligent in the
selection and supervision of their employees. The Arbitration Committee, the
PCHC Board of Directors and the lower court, however disagree in the evaluation
of the degree of negligence of the banks. While the Arbitration Committee
declared the negligence of respondent CBC graver, the PCHC Board of Directors
and the lower courts declared that petitioner BPI's negligence was graver. To the
extent that the degree of negligence is equated to the proximate cause of the loss,
we rule that the issue as to whose negligence is graver is relevant. No matter how
many justifications both banks present to avoid responsibility, they cannot erase
the fact that they were both guilty in not exercising extraordinary diligence in the
selection and supervision of their employees. The next issue hinges on whose
negligence was the proximate cause of the payment of the forged checks by an
impostor.

Petitioner BPI accuses the Court of Appeals of inconsistency when it affirmed the
PCHC's Board of Directors' Order but in the same breath declared that the
negligent acts of the CBC employees occurred immediately before the actual loss.

In this regard petitioner BPI insists that the doctrine of last clear chance enunciated
in the case of Picart v. Smith (37 Phil. 809 [1918]) should have been applied
considering the circumstances of the case.

In the Picart case, Amado Picart was then riding on his pony over the Carlatan
Bridge at San Fernando, La Union when Frank Smith approached from the
opposite direction in a car. As Smith neared the bridge he saw Picart and blew his
horn to give warning of his approach. When he was already on the bridge Picart
gave two more successive blasts as it appeared to him that Picart was not observing
the rule of the road. Picart saw the car coming and heard the warning signals. An
accident then ensued resulting in the death of the horse and physical injuries
suffered by Picart which caused him temporary unconsciousness and required
medical attention for several days. Thereafter, Picart sued Smith for damages.

We ruled:

The question presented for decision is whether or not the defendant in

maneuvering his car in the manner above described was guilty of negligence such
as gives rise to a civil obligation to repair the damage done; and we are of the
opinion that he is so liable. As the defendant started across the bridge, he had the
right to assume that the horse and rider would pass over to the proper side; but as
he moved toward the center of the bridge it was demonstrated to his eyes that this
would not be done; and he must in a moment have perceived that it was too late for
the horse to cross with safety in front of the moving vehicle. In the nature of things
this change of situation occurred while the automobile was yet some distance
away; and from this moment it was no longer within the power of the plaintiff to
escape being run down by going to a place of greater safety. The control of the
situation had then passed entirely to the defendant; and it was his duty to either to
bring his car to an immediate stop or, seeing that there were no other persons on
the bridge, to take the other side and pass sufficiently far away from the horse to
avoid the danger of collision. Instead of doing this, the defendant ran starlight on
until he was almost upon the horse. He was, we think, deceived into doing this by
the fact that the horse had not yet exhibited fright. But in view of the known nature
of horses, there was an appreciable risk that, if the animal in question was
unacquainted with automobiles, he might get excited and jump under the
conditions which here confronted him. When the defendant exposed the horse and
rider to this danger he was, in our opinion, negligent in the eyes of the law.

The test by which 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.

xxx xxx xxx

It goes without saying that the plaintiff himself was not free from fault, for he was
guilty of antecedent negligence in planting himself on the wrong side of the road.
But as we have already stated, the defendant was also negligent; and in such case
the problem always is to discover which agent is immediately and directly
responsible. It will be noted that the negligent acts of the two parties were not
contemporaneous, since the negligence of the defendant succeeded the negligence
of the plaintiff by an appreciable interval. Under these circumstances the law is
that the person who has the last fair chance to avoid the impending harm and fails
to do so is chargeable with the consequences, without reference to the prior
negligence of the other party."

Applying these principles, petitioner BPI's reliance on the doctrine of last clear
chance to clear it from liability is not well-taken. CBC had no prior notice of the
fraud perpetrated by BPI's employees on the pretermination of Eligia G. Fernando's
money market placement. Moreover, Fernando is not a depositor of CBC. Hence, a
comparison of the signature of Eligia G. Fernando with that of the impostor Eligia
G. Fernando, which respondent CBC did, could not have resulted in the discovery
of the fraud. Hence, unlike in the Picart case herein the defendant, had he used
reasonable care and caution, would have recognized the risk he was taking and
would have foreseen harm to the horse and the plaintiff but did not, respondent
CBC had no way to discover the fraud at all. In fact the records fail to show that
respondent CBC had knowledge, actual or implied, of the fraud perpetrated by the
impostor and the employees of BPI.

However, petitioner BPI insists that even if the doctrine of proximate cause is
applied, still, respondent CBC should be held responsible for the payment to the
impostor of the two (2) checks. It argues that the acts and omissions of respondent
CBC are the cause "that set into motion the actual and continuous sequence of
events that produced the injury and without which the result would not have
occurred." On the other hand, it assets that its acts and omissions did not end in a
loss. Petitioner BPI anchors its argument on its stance that there was "a gap, a
hiatus, an interval between the issuance and delivery of said checks by petitioner
BPI to the impostor and their actual payment of CBC to the impostor. Petitioner
BPI points out that the gap of one (1) day that elapsed from its issuance and
delivery of the checks to the impostor is material on the issue of proximate cause.
At this stage, according to petitioner BPI, there was yet no loss and the impostor
could have decided to desist from completing the same plan and could have held to
the checks without negotiating them.

We are not persuaded.

In the case of Vda. de Bataclan, et al, v. Medina (102 Phil. 181 [1957]), we had
occasion to discuss the doctrine of proximate cause.

Briefly, the facts of this case are as follows:

At about 2:00 o'clock in the morning of September 13, 1952 a bus carrying about
eighteen (18) passengers on its way to Amandeo, Cavite figured in an accident.
While the bus was running, one of the front tires burst and the bus began to zigzag
until it fell into a canal on the right side of the road and turned turtle. Some
passengers managed to get out from the overturned bus except for four (4)
passengers, among them, Bataclan. The passengers who got out heard shouts for
help from Bataclan and another passenger Lara who said they could not get out
from the bus. After half an hour, about ten men came, one of them carrying a
lighted torch made of bamboo with a wick on one end fueled with petroleum.
These men approached the overturned bus, and almost immediately, a fierce fire
started burning and all but consuming the bus including the four (4) passengers
trapped inside. It turned out that as the bus overturned, gasoline began to leak and
escape from the gasoline tank on the side of the chassis spreading over and
permeating the body of the bus and the ground under and around it. The lighted
torch brought by one of the men who answered the call for help set it on fire. On
the same day, the charred bodies of the trapped passengers were removed and
identified. By reason of his death, Juan Bataclan's wife and her children filed a suit
for damages against Maximo Medina, the operator and owner of the bus in the then
Court of First Instance of Cavite. The trial court ruled in favor of the defendant.
However, we reversed and set aside the trial court's decision and said:
There is no question that under the circumstances, the defendant carrier is liable.
The only question is to what degree. The trial court was of the opinion that the
proximate cause of the death of Bataclan was not the overturning of the bus, but
rather the fire that burned the bus, including himself and his co-passengers who
were unable to leave it; that at the time the fire started, Bataclan, though the must
have suffered, physical injuries, perhaps serious, was still alive and so damages
were awarded, not for his death, but for the physical satisfactory definition of
promote cause is found in Volume 38, pages 695-696 of American Jurisprudence,
cited by plaintiffs-appellants in their brief. It is as follows:

. . . that cause, which, in natural and continuous sequence, unbroken by any

efficient intervening cause, produces the injury, and without which the result
would not have occurred. And more comprehensively, the proximate legal cause in
that acting first and producing the injury, either immediately or by setting other
events in motion, all constituting a natural and continuous chain of events, each
having a close causal connection with its immediate predecessor, the final event in
the chain immediately effecting the injury as natural and probable result of the
cause which first acted, under such circumstances that the person responsible for
the first event should, as an ordinarily prudent and intelligent person, have
reasonable ground to expect at the moment of his act or default that an injury to
some person might probably result therefrom.

It may be that ordinarily, when a passenger bus overturns, and pins down a
passenger, merely causing him physical injuries, if through some event,
unexpected and extraordinary, the overturned bus is set on fire, say, by lightning,
or if some highwaymen after looting the vehicle sets it on fire, and the passenger is
burned to death, on might still contend that the proximate cause of his death was
the fire and not the overturning of the vehicle. But in the present case and under the
circumstances obtaining in the same, we do not hesitate to hold that the proximate
cause of the death of Bataclan was the overturning of the bus, this for the reason
that when the vehicle turned not only on its side but completely on its back, the
leaking of the gasoline from the tank was not unnatural or unexpected; that the
coming of the men with a lighted torch was in response to the call for help, made
not only by the passengers, but most probably, by the driver and the conductor
themselves, and that because it was very dark (about 2:30 in the morning), the
rescuers had to carry a light with them; and coming as they did from a rural area
where lanterns and flashlights were not available, they had to use a torch, the most
handy and available; and what was more natural than that said rescuers should
innocently approach the overturned vehicle to extend the aid and effect the rescue
requested from them. In other words, the coming of the men with the torch was to
be expected and was natural sequence of the overturning of the bus, the trapping of
some of its passengers and the call for outside help. (Emphasis Supplied, at pp.
185-187)

Again, applying the doctrine of proximate cause, petitioner BPI's contention that
CBC alone should bear the loss must fail. The gap of one (1) day between the
issuance and delivery of the checks bearing the impostor's name as payee and the
impostor's negotiating the said forged checks by opening an account and depositing
the same with respondent CBC is not controlling. It is not unnatural or unexpected
that after taking the risk of impersonating Eligia G. Fernando with the connivance
of BPI's employees, the impostor would complete her deception by encashing the
forged checks. There is therefore, greater reason to rule that the proximate cause of
the payment of the forged checks by an impostor was due to the negligence of
petitioner BPI. This finding, notwithstanding, we are not inclined to rule that
petitioner BPI must solely bear the loss of P2,413,215.16, the total amount of the
two (2) forged checks. Due care on the part of CBC could have prevented any loss.

The Court cannot ignore the fact that the CBC employees closed their eyes to the
suspicious circumstances of huge over-the-counter withdrawals made immediately
after the account was opened. The opening of the account itself was accompanied
by inexplicable acts clearly showing negligence. And while we do not apply the
last clear chance doctrine as controlling in this case, still the CBC employees had
ample opportunity to avoid the harm which befell both CBC and BPI. They let the
opportunity slip by when the ordinary prudence expected of bank employees would
have sufficed to seize it.

Both banks were negligent in the selection and supervision of their employees
resulting in the encashment of the forged checks by an impostor. Both banks were
not able to overcome the presumption of negligence in the selection and
supervision of their employees. It was the gross negligence of the employees of
both banks which resulted in the fraud and the subsequent loss. While it is true that
petitioner BPI's negligence may have been the proximate cause of the loss,
respondent CBC's negligence contributed equally to the success of the impostor in
encashing the proceeds of the forged checks. Under these circumstances, we apply
Article 2179 of the Civil Code to the effect that while respondent CBC may
recover its losses, such losses are subject to mitigation by the courts. (See Phoenix
Construction Inc. v. Intermediate Appellate Courts, 148 SCRA 353 [1987]).

Considering the comparative negligence of the two (2) banks, we rule that the
demands of substantial justice are satisfied by allocating the loss of P2,413,215.16
and the costs of the arbitration proceeding in the amount of P7,250.00 and the cost
of litigation on a 60-40 ratio. Conformably with this ruling, no interests and
attorney's fees can be awarded to either of the parties.

WHEREFORE, the questioned DECISION and RESOLUTION of the Court of

Appeals are MODIFIED as outlined above. Petitioner Bank of the Philippine
Islands shall be responsible for sixty percent (60%) while respondent China
Banking Corporation shall share forty percent (40%) of the loss of TWO
MILLION FOUR HUNDRED THIRTEEN THOUSAND, TWO HUNDRED
FIFTEEN PESOS and SIXTEEN CENTAVOS (2,413,215.16) and the arbitration
costs of SEVEN THOUSAND, TWO HUNDRED FIFTY PESOS (7,250.00). The
Philippine Clearing House Corporation is hereby directed to effect the
corresponding entries to the banks' clearing accounts in accordance with this
decision. Costs in the same proportion against the Bank of the Philippine Islands
and the China Banking Corporation.

SO ORDERED

G.R. No. L-40452 October 12, 1989

GREGORIO GENOBIAGON, petitioner,

vs.
COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.

Mario D. Ortiz for petitioner.

GRIÑO-AQUINO, J.:

This is a petition for review of the Court of Appeals' decision in CA-G.R. No.
09949-CR, dated October 10, 1974, affirming the conviction of the petitioner of
the crime of homicide thru reckless imprudence.

As found by the Court of Appeals, the facts of this case are:

On December 31,1959, at about 7:30 o'clock in the evening, a rig driven by

appellant bumped an old woman who was crossing T. Padilla St., Cebu City, at the
right side of T. Padilla Market. The appellant's rig was following another at a
distance of two meters. The old woman started to cross when the first rig was
approaching her, but as appellant's vehicle was going so fast not only because of
the steep down-grade of the road, but also because he was trying to overtake the rig
ahead of him, the appellant's rig bumped the old woman, who as a consequence,
fell at the middle of the road. The appellant continued to drive on, but a by-stander,
one Vicente Mangyao, who just closed his store in market in order to celebrate the
coming of the New Year, and who saw the incident right before him, shouted at the
appellant to stop. He ran after appellant when the latter refused to stop. Overtaking
the appellant, Mangyao asked him why he bumped the old woman and his answer
was, 'it was the old woman that bumped him.' The appellant went back to the place
where the old woman was struck by his rig. The old woman was unconscious, and
the food and viands she was carrying were scattered on her body. The victim was
then loaded in a jeep and brought to the hospital where she died three hours later
(Exh. C). The findings after an autopsy are as follows:

Contusion with Hematoma Left, Frontal and Occipito-Parietal Regionas Fracture

Occipito-Parietal Bone Cerebral Hemorrhage.

The deceased was an eighty-one-year old woman named Rita B. Cabrera. (pp. 31-
32, Rollo.)

Petitioner was charged with homicide thru reckless imprudence in the Court of
First Instance of Cebu (Crim. Case No. V7855). The trial court found petitioner
guilty of the felony charged and sentenced him to "suffer an indeterminate penalty
of three (3) months of arresto mayor as minimum to one (1) year, one (1) month
and eleven (11) days of prision correccional as maximum, to indemnify the heirs of
Rita Banzon Cabrera the sum of P6,000 with subsidiary imprisonment in case of
insolvency, not to exceed 1/3 of the principal penalty and to pay the costs" (p. 3,
Appellant's Brief, p. 56, Rollo).

The petitioner appealed to the Court of Appeals (CA-G.R. 09949-CR)which,on

October 10,1974,conviction of the accused but increased his civil liability to
P12,000. The dispositive portion of its decision reads:

WHEREFORE, finding no error in the judgment appealed from except in the

amount of indemnity to be paid to the heirs of the deceased, Rita B. Cabrera, which
is the sum of P6,000.00 with subsidiary imprisonment in case of insolvency which
should be raised to P12,000.00 (People vs. Pantoja, G.R. No. L-18793, October 11,
1968, 25 SCRA 468) but without subsidiary imprisonment in case of insolvency,
the same should be, as it is hereby affirmed in all other respects with costs. (P. 37,
Rollo.)
After his motion for reconsideration of the Court of Appeals' decision was denied,
he filed a petition for review in this Court, alleging that the Court of Appeals erred:

1. in not finding that the reckless negligence of the victim was the proximate
cause of the accident which led to her death;

2. in not acquitting the petitioner on the ground of reasonable doubt; and

3. in unjustly increasing the civil liability of the petitioner from P6,000.00 to

P12,000.00, although the circumstances of the victim and the accused (petitioner)
do not warrant such increase.

It is quite evident that all the issues raised in the petition for review are factual.
Well-entrenched in our jurisprudence is the rule that findings of fact of the trial
court and the Court of Appeals are binding upon us (Bernardo vs. Bernardo, 101
SCRA 351; Vda. De Roxas vs. IAC, 143 SCRA 77; Republic vs. IAC, 144 SCRA
705).

The alleged contributory negligence of the victim, if any, does not exonerate the
accused. "The defense of contributory negligence does not apply in criminal cases
committed through reckless imprudence, since one cannot allege the negligence of
another to evade the effects of his own negligence (People vs. Orbeta, CA-G.R.
No. 321, March 29,1947)." (People vs. Quinones, 44 O.G. 1520).

The petitioner's contention that the Court of Appeals unjustly increased his civil
liability to P12,000, is devoid of merit. The prevailing jurisprudence in fact
provides that indemnity for death in homicide or murder is P30,000 (People vs. De
la Fuente, [1983]126 SCRA 518; People vs. Centeno, 130 SCRA 198).
Accordingly, the civil liability of the petitioner is increased to P30,000.

WHEREFORE, the appealed decision is affirmed with modification as to the civil

liability of the petitioner which is hereby increased to P30,000. Costs against
petitioner.

SO ORDERED.

G.R. No. 1719 January 23, 1907

M. H., RAKES, plaintiff-appellee,
vs.
THE ATLANTIC, GULF AND PACIFIC COMPANY, defendant-appellant.

A. D. Gibbs for appellant.

F. G. Waite, & Thimas Kepner for appellee.

TRACEY, J.:

This is an action for damages. The plaintiff, one of a gang of eight negro laborers
in the employment of the defendant, was at work transporting iron rails from a
barge in the harbor to the company's yard near the malecon in Manila. Plaintiff
claims that but one hand car was used in this work. The defendant has proved that
there were two immediately following one another, upon which were piled
lengthwise seven rails, each weighing 560 pounds, so that the ends of the rails lay
upon two crosspieces or sills secured to the cars, but without side pieces or guards
to prevent them from slipping off. According to the testimony of the plaintiff, the
men were either in the rear of the car or at its sides. According to that defendant,
some of them were also in front, hauling by a rope. At a certain spot at or near the
water's edge the track sagged, the tie broke, the car either canted or upset, the rails
slid off and caught the plaintiff, breaking his leg, which was afterwards amputated
at about the knee.

This first point for the plaintiff to establish was that the accident happened through
the negligence of the defendant. The detailed description by the defendant's
witnesses of the construction and quality of the track proves that if was up to the
general stranded of tramways of that character, the foundation consisting on land
of blocks or crosspieces of wood, by 8 inches thick and from 8 to 10 feet long laid,
on the surface of the ground, upon which at a right angle rested stringers of the
same thickness, but from 24 to 30 feet in length. On the across the stringers the
parallel with the blocks were the ties to which the tracks were fastened. After the
road reached the water's edge, the blocks or crosspieces were replaced with pilling,
capped by timbers extending from one side to the other. The tracks were each
about 2 feet wide and the two inside rails of the parallel tracks about 18 inches
apart. It was admitted that there were no side pieces or guards on the car; that
where no ends of the rails of the track met each other and also where the stringers
joined, there were no fish plates. the defendant has not effectually overcome the
plaintiff's proof that the joints between the rails were immediately above the joints
between the underlying stringers.
The cause of the sagging of the tracks and the breaking of the tie, which was the
immediate occasion of the accident, is not clear in the evidence, but is found by the
trial court and is admitted in the briefs and in the argument to have been the
dislodging of the crosspiece or piling under the stringer by the water of the bay
raised by a recent typhoon. The superintendent of the company attributed it to the
giving way of the block laid in the sand. No effort was made to repair the injury at
the time of the occurrence. According to plaintiffs witnesses, a depression of the
track, varying from one half inch to one inch and a half, was therafter apparent to
the eye, and a fellow workman of the plaintiff swears that the day before the
accident he called the attention of McKenna, the foreman, to it and asked by
simply straightening out the crosspiece, resetting the block under the stringer and
renewing the tie, but otherwise leaving the very same timbers as before. It has not
proven that the company inspected the track after the typhoon or had any proper
system of inspection.

In order to charge the defendant with negligence, it was necessary to show a breach
of duty on its part in failing either to properly secure the load on iron to vehicles
transporting it, or to skillfully build the tramway or to maintain it in proper
condition, or to vigilantly inspect and repair the roadway as soon as the depression
in it became visible. It is upon the failure of the defendant to repair the weakened
track, after notice of its condition, that the judge below based his judgment.

This case presents many important matters for our decision, and first among them
is the standard of duty which we shall establish in our jurisprudence on the part of
employees toward employees.

The lack or the harshness of legal rules on this subject has led many countries to
enact designed to put these relations on a fair basis in the form of compensation or
liability laws or the institution of insurance. In the absence of special legislation we
find no difficulty in so applying the general principles of our law as to work out a
just result.

Article 1092 of the Civil Code provides:

Civil obligations, arising from crimes or misdemeanors, shall be governed by the

provisions of the Penal Code.

And article 568 of the latter code provides:

He who shall execute through reckless negligence an act that if done with malice
would constitute a grave crime, shall be punished.

And article 590 provides that the following shall be punished:

4. Those who by simple imprudence or negligence, without committing any

infraction of regulations, shall cause an injury which, had malice intervened, would
have constituted a crime or misdemeanor.

And finally by articles 19 and 20, the liability of owners and employers for the
faults of their servants and representatives is declared to be civil and subsidiary in
its character.

It is contented by the defendant, as its first defense to the action, that the necessary
conclusion from these collated laws is that the remedy for injuries through
negligence lies only in a criminal action in which the official criminally
responsible must be made primarily liable and his employer held only subsidiarily
to him. According to this theory the plaintiff should have procured the arrest of the
representative of the company accountable for not repairing the tract, and on his
prosecution a suitable fine should have been imposed, payable primarily by him
and secondarily by his employer.

This reasoning misconceived the plan of the Spanish codes upon this subject.
Article 1093 of the Civil Code makes obligations arising from faults or negligence
not punished by the law, subject to the provisions of Chapter 11 of Title XVI.
Section 1902 of that chapter reads:

A person who by an act or omission causes damage to another when there is fault
or negligence shall be obliged to repair the damage so done.

SEC. 1903. The obligation imposed by the preceding article is demandable, not
only for personal acts and omissions, but also for those of the persons for whom
they should be responsible.

The father, and on his death or incapacity, the mother, is liable for the damages
caused by the minors who live with them.

xxx xxx xxx

Owners or directors of an establishment or enterprise are equally liable for the
damages caused by their employees in the service of the branches in which the
latter may be employed or in the performance of their duties.

xxx xxx xxx

The liability referred to in this article shall cease when the persons mentioned
therein prove that they employed all the diligence of a good father of a family to
avoid the damages.

As an answer to the argument urged in this particular action it may be sufficient to

point out that nowhere in our general statutes is the employer penalized for failure
to provide or maintain safe appliances for his workmen. His obligation therefore is
one "not punished by the law " and falls under civil rather than criminal
jurisprudence. But the answer may be a broader one. We should be reluctant, under
any conditions, to adopt a forced construction of these scientific codes, such as is
proposed by the defendant, that would rob some of these articles of effect, would
shut out litigants their will from the civil courts, would make the assertion of their
rights dependent upon the selection for prosecution of the proper criminal offender,
and render recovery doubtful by reason of the strict rules of proof prevailing in
criminal actions. Even if these articles had always stood alone, such a construction
would be unnecessary, but clear light is thrown upon their meaning by the
provisions of the Law of Criminal Procedure of Spain (Ley de Enjuiciamiento
Criminal), which, though n ever in actual force in these Islands, was formerly
given a suppletory or explanatory effect. Under article 111 of this law, both classes
of action, civil and criminal, might be prosecuted jointly or separately, but while
the penal action was pending the civil was suspended. According to article 112, the
penal action once started, the civil remedy should be sought therewith, unless it
had been waived by the party injured or been expressly reserved by him for civil
proceedings for the future. If the civil action alone was prosecuted, arising out of a
crime that could be enforced by only on private complaint, the penal action
thereunder should be extinguished. These provisions are in harmony with those of
articles 23 and 133 of our Penal Code on the same subject.

An examination of this topic might be carried much further, but the citations of
these articles suffices to show that the civil liability was not intended to be merged
in the criminal nor even to be suspended thereby, except as expressly provided by
law. Where an individual is civilly liable for a negligent act or omission, it is not
required that the inured party should seek out a third person criminally liable
whose prosecution must be a condition precedent to the enforcement of the civil
right.

Under article 20 of the Penal Code the responsibility of an employer may be

regarded as subsidiary in respect of criminal actions against his employees only
while they are process of prosecution, or in so far as they determinate the existence
of the criminal act from which liability arises, and his obligation under the civil
law and its enforcement in the civil courts is not barred thereby unless by election
of the injured person. Inasmuch as no criminal in question, the provisions of the
Penal Code can not affect this action. This construction renders it unnecessary to
finally determine here whether this subsidiary civil liability in penal actions
survived the laws that fully regulated it or has been abrogated by the American
civil and criminal procedure now in force in the Philippines.

The difficulty in construing the articles of the code above cited in this case appears
from the briefs before us to have arisen from the interpretation of the words of
article 1093, "fault or negligence not punished by law," as applied to the
comprehensive definition of offenses in articles 568 and 590 of the Penal Code. It
has been shown that the liability of an employer arising out of his relation to his
employee who is the offender is not to be regarded as derived from negligence
punished by the law, within the meaning of articles 1092 and 1093. More than this,
however, it can not be said to fall within the class of acts unpunished by the law,
the consequences of which are regulated by articles 1902 and 1903 of the Civil
Code. The acts to which these articles are applicable are understood to be those and
growing out of preexisting duties of the parties to one another. But were relations
already formed give rise to duties, whether springing from contract or quasi
contract, then breaches of those duties are subject to articles 1101, 1103, and 1104,
of the same code. A typical application of the distinction may be found in the
consequences of a railway accident due to defective machinery supplied by the
employer. His liability to his employee would arise out of the contract of
employment, that to the passengers out of the contract for passage. while that to
that injured bystander would originate in the negligent act itself. This distinction is
thus clearly set forth by Manresa in his commentary on article 1093.

We are with reference to such obligations, that culpa, or negligence, may be

understood in two difference senses; either as culpa, substantive and independent,
which on account of its origin arises in an obligation between two persons not
formerly bound by any other obligation; or as an incident in the performance of an
obligation; or as already existed, which can not be presumed to exist without the
other, and which increases the liability arising from the already exiting obligation.
Of these two species of culpa the first one mentioned, existing by itself, may be
also considered as a real source of an independent obligation, and, as chapter 2,
title 16 of this book of the code is devoted to it, it is logical to presume that the
reference contained in article 1093 is limited thereto and that it does not extend to
those provisions relating to the other species of culpa (negligence), the nature of
which we will discuss later. (Vol. 8, p. 29.)

And in his commentary on articles 1102 and 1104 he says that these two species of
negligence may be somewhat inexactly described as contractual and extra-
contractual, the letter being the culpa aquiliana of the Roman law and not entailing
so strict an obligation as the former. This terminology is unreservedly accepted by
Sanchez-Roman (Derecho Civil, fourth section, Chapter XI, Article II, No. 12),
and the principle stated is supported be decisions of the supreme court of Spain,
among them those of November 20, 1896 (80 Jurisprudencia Civil, No. 151), and
June 27, 1894 (75 Jurisprudencia Civil, No. 182). The contract is one for hire and
not one of mandate. (March 10, 1897, 81 Jurisprudencia Civil, No. 107.)

Spanish Jurisprudencia prior to the adoption of the Working Men's Accident Law
of January 30, 1900, throws uncertain light on the relation between master and
workman. Moved by the quick industrial development of their people, the courts of
France early applied to the subject the principles common to the law of both
countries, which are lucidly discussed by the leading French commentators.

The original French theory, resting the responsibility of owners of industrial

enterprises upon articles 1382, 1383, and 1384 of the Code Napoleon,
corresponding in scope to articles 1902 and 1903 of the Spanish Code, soon
yielded to the principle that the true basis is the contractual obligation of the
employer and employee. (See 18 Dalloz, 196, Title Travail, 331.)

Later the hardships resulting from special exemptions inserted in contracts for
employment led to the discovery of a third basis for liability in an article of he
French Code making the possessor of any object answerable for damage done by it
while in his charge. Our law having no counterpart of this article, applicable to
every kind of object, we need consider neither the theory growing out of it nor that
of "professional risk" more recently imposed by express legislation, but rather
adopting the interpretation of our Civil Code above given, find a rule for this case
in the contractual obligation. This contractual obligation, implied from the relation
and perhaps so inherent in its nature to be invariable by the parties, binds the
employer to provide safe appliances for the use of the employee, thus closely
corresponding to English and American Law. On these principles it was the duty of
the defendant to build and to maintain its track in reasonably sound condition, so as
to protect its workingmen from unnecessary danger. It is plain that in one respect
or the other it failed in its duty, otherwise the accident could not have occurred;
consequently the negligence of the defendant is established.

Another contention of the defense is that the injury resulted to the plaintiff as a risk
incident to his employment and, as such, one assumed by him. It is evident that this
can not be the case if the occurrence was due to the failure to repair the track or to
duly inspect, it for the employee is not presumed to have stipulated that the
employer might neglect his legal duty. Nor may it be excused upon the ground that
the negligence leading to the accident was that of a fellow-servant of the injured
man. It is not apparent to us that the intervention of a third person can relieve the
defendant from the performance of its duty nor impose upon the plaintiff the
consequences of an act or omission not his own. Sua cuique culpa nocet. This
doctrine, known as "the fellow-servant, rule," we are not disposed to introduce into
our jurisprudence. Adopted in England by Lord Abinger in the case of Prescott vs.
Fowler (3 Meeson & Welsby, 1) in 1837, it has since been effectually abrogated by
"the Employers' Liability Acts" and the "Compensation Law." The American
States which applied it appear to be gradually getting rid of it; for instance, the
New York State legislature of 1906 did away with it in respect to railroad
companies, and had in hand a scheme for its total abolition. It has never found
place in the civil law of continental Europe. (Dalloz, vol. 39, 1858, Title
Responsibilite, 630, and vol. 15, 1895, same title, 804. Also more recent instances
in Fuzier-Herman, Title Responsibilite Civile, 710.)

The French Cour de Cassation clearly laid down the contrary principle in its
judgment of June 28, 1841, in the case of Reygasse, and has since adhered to it.

The most controverted question in the case is that of the negligence of the plaintiff,
contributing to the accident, to what extent it existed in fact and what legal effect is
to be given it. In two particulars is he charged with carelessness:

First. That having noticed the depression in the track he continued his work; and

Second. That he walked on the ends of the ties at the side of the car instead of
along the boards, either before or behind it.

As to the first point, the depression in the track night indicate either a serious or a
rival difficulty. There is nothing in the evidence to show that the plaintiff did or
could see the displaced timber underneath the sleeper. The claim that he must have
done so is a conclusion drawn from what is assumed to have been a probable
condition of things not before us, rather than a fair inference from the testimony.
While the method of construction may have been known to the men who had
helped build the road, it was otherwise with the plaintiff who had worked at this
job less than two days. A man may easily walk along a railway without perceiving
a displacement of the underlying timbers. The foreman testified that he knew the
state of the track on the day of the accident and that it was then in good condition,
and one Danridge, a witness for the defendant, working on the same job, swore that
he never noticed the depression in the track and never saw any bad place in it. The
sagging of the track this plaintiff did perceive, but that was reported in his hearing
to the foreman who neither promised nor refused to repair it. His lack of caution in
continuing at his work after noticing the slight depression of the rail was not of so
gross a nature as to constitute negligence, barring his recovery under the severe
American rule. On this point we accept the conclusion of the trial judge who found
as facts that "the plaintiff did not know the cause of the one rail being lower than
then other" and "it does not appear in this case that the plaintiff knew before the
accident occurred that the stringers and rails joined in the same place."

Were we not disposed to agree with these findings they would, nevertheless, be
binding upon us, because not "plainly and manifestly against the weight of
evidence," as those words of section 497, paragraph 3 of the Code of Civil
Procedure were interpreted by the Supreme Court of the United States in the De la
Rama case (201 U. S., 303).

In respect of the second charge of negligence against the plaintiff, the judgment
below is not so specific. While the judge remarks that the evidence does not justify
the finding that the car was pulled by means of a rope attached to the front end or
to the rails upon it, and further that the circumstances in evidence make it clear that
the persons necessary to operate the car could not walk upon the plank between the
rails and that, therefore, it was necessary for the employees moving it to get hold
upon it as best they could, there is no specific finding upon the instruction given by
the defendant to its employees to walk only upon the planks, nor upon the
necessity of the plaintiff putting himself upon the ties at the side in order to get
hold upon the car. Therefore the findings of the judge below leave the conduct of
the plaintiff in walking along the side of the loaded car, upon the open ties, over
the depressed track, free to our inquiry.

While the plaintiff and his witnesses swear that not only were they not forbidden to
proceed in this way, but were expressly directed by the foreman to do so, both the
officers of the company and three of the workmen testify that there was a general
prohibition frequently made known to all the gang against walking by the side of
the car, and the foreman swears that he repeated the prohibition before the starting
of this particular load. On this contradiction of proof we think that the
preponderance is in favor of the defendant's contention to the extent of the general
order being made known to the workmen. If so, the disobedience of the plaintiff in
placing himself in danger contributed in some degree to the injury as a proximate,
although not as its primary cause. This conclusion presents sharply the question,
What effect is to be given such an act of contributory negligence? Does it defeat a
recovery, according to the American rule, or is it to be taken only in reduction of
damages?

While a few of the American States have adopted to a greater or less extent the
doctrine of comparative negligence, allowing a recovery by a plaintiff whose own
act contributed to his injury, provided his negligence was slight as compared with
that of the defendant, and some others have accepted the theory of proportional
damages, reducing the award to a plaintiff in proportion to his responsibility for the
accident, yet the overwhelming weight of adjudication establishes the principle in
American jurisprudence that any negligence, however slight, on the part of the
person injured which is one of the causes proximately contributing to his injury,
bars his recovery. (English and American Encyclopedia of law, Titles
"Comparative Negligence" and Contributory Negligence.")

In Grant Trunk Railway Company vs. Ives (144 U. S., 408, at page 429) the
Supreme Court of the United States thus authoritatively states the present rule of
law:

Although the defendant's' negligence may have been the primary cause of the
injury complained of, yet an action for such injury can not be maintained if the
proximate and immediate cause of the injury can be traced to the want of ordinary
care and caution in the person injured; subject to this qualification, which has
grown up in recent years (having been first enunciated in Davies vs. Mann, 10 M.
& W., 546) that the contributory negligence of the party injured will not defeat the
action if it be shown that the defendant might, by the exercise of reasonable care
and prudence, have avoided the consequences of the injured party's negligence.

There are may cases in the supreme court of Spain in which the defendant was
exonerated, but when analyzed they prove to have been decided either upon the
point that he was not negligent or that the negligence of the plaintiff was the
immediate cause of the casualty or that the accident was due to casus fortuitus. Of
the first class in the decision of January 26, 1887 (38 Jurisprudencia Criminal, No.
70), in which a railway employee, standing on a car, was thrown therefrom and
killed by the shock following the backing up of the engine. It was held that the
management of the train and engine being in conformity with proper rules of the
company, showed no fault on its part.

Of the second class are the decision of the 15th of January, the 19th of February,
and the 7th of March, 1902, stated in Alcubilla's Index of that year; and of the third
class the decision of the 4th of June, 1888 (64 Jurisprudencia Civil, No. 1), in
which the breaking down of plaintiff's dam by the logs of the defendant impelled
against it by the Tajo River, was held due to a freshet as a fortuitous cause.

The decision of the 7th of March, 1902, on which stress has been laid, rested on
two bases, one, that the defendant was not negligent, because expressly relieved by
royal order from the common obligation imposed by the police law of maintaining
a guard at the road crossing; the other, because the act of the deceased in driving
over level ground with unobstructed view in front of a train running at speed, with
the engine whistle blowing was the determining cause of the accident. It is plain
that the train was doing nothing but what it had a right to do and that the only fault
lay with the injured man. His negligence was not contributory, it was sole, and was
of such an efficient nature that without it no catastrophe could have happened.

On the other hand, there are many cases reported in which it seems plain that the
plaintiff sustaining damages was not free from contributory negligence; for
instance, the decision of the 14th of December, 1894 (76 Jurisprudencia Civil, No.
134), in which the owner of a building was held liable for not furnishing protection
to workmen engaged in hanging out flags, when the latter must have perceived
beforehand the danger attending the work.

None of those cases define the effect to be given the negligence of a plaintiff which
contributed to his injury as one of its causes, though not the principal one, and we
are left to seek the theory of the civil law in the practice of other countries.

In France in the case of Marquant, August 20, 1879, the cour de cassation held that
the carelessness of the victim did not civilly relieve the person without whose fault
the accident could not have happened, but that the contributory negligence of the
injured man had the effect only of reducing the damages. The same principle was
applied in the case of Recullet, November 10, 1888. and that of Laugier of the 11th
of November, 1896. (Fuzier-Herman, Title Responsibilite Cirile, 411, 412.) Of like
tenor are citations in Dalloz (vol. 18, 1806, Title Trail, 363, 364, and vol. 15, 1895,
Title Responsibilite, 193, 198).

In the Canadian Province of Quebee, which has retained for the most part the
French Civil Law, now embodied in a code following the Code Napoleon, a
practice in accord with that of France is laid down in many cases collected in the
annotations to article 1053 of the code edited by Beauchamps, 1904. One of these
is Luttrell vs. Trottier, reported in La Revue de Jurisprudence, volume 6, page 90,
in which the court of Kings bench, otherwise known as the court of appeals, the
highest authority in the Dominion of Canada on points of French law, held that
contributory negligence did not exonerate the defendants whose fault had been the
immediate cause of the accident, but entitled him to a reduction of damages. Other
similar cases in the provincial courts have been overruled by appellate tribunals
made up of common law judges drawn from other provinces, who have preferred
to impose uniformally throughout the Dominion the English theory of contributory
negligence. Such decisions throw no light upon the doctrines of the civil law.
Elsewhere we find this practice embodied in legislation; for instance, section 2 of
article 2398 of the Code of Portugal reads as follows:

If in the case of damage there was fault or negligence on the part of the person
injured or in the part of some one else, the indemnification shall be reduced in the
first case, and in the second case it shall be appropriated in proportion to such fault
or negligence as provided in paragraphs 1 and 2 of section 2372.

And in article 1304 of the Austrian Code provides that the victim who is partly
changeable with the accident shall stand his damages in proportion to his fault, but
when that proportion is incapable of ascertainment, he shall share the liability
equally with the person principally responsible. The principle of proportional
damages appears to be also adopted in article 51 of the Swiss Code. Even in the
United States in admirality jurisdictions, whose principles are derived from the
civil law, common fault in cases of collision have been disposed of not on the
ground of contradictor negligence, but on that of equal loss, the fault of the one
part being offset against that of the other. (Ralli vs. Troop, 157 U. S. 386; 97.)

The damage of both being added together and the sum equally divided, a decree is
entered in favor of the vessel sustaining the greater loss against the other for the
excess of her damages over one-half of the aggregate sum. (The Manitoba, 122 U.
S., 97)
Exceptional practice appears to prevail in maritime law in other jurisdictions. The
Spanish Code of Commerce, article 827, makes each vessel for its own damage
when both are the fault; this provision restricted to a single class of the maritime
accidents, falls for short of a recognition of the principle of contributory negligence
as understood in American Law, with which, indeed, it has little in common. This
is a plain from other articles of the same code; for instance, article 829, referring to
articles 826, 827, and 828, which provides: "In the cases above mentioned the civil
action of the owner against the person liable for the damage is reserved, as well as
the criminal liability which may appear."

The rule of the common law, a hard and fast one, not adjustable with respects of
the faults of the parties, appears to have grown out the original method of trial by
jury, which rendered difficult a nice balancing of responsibilities and which
demanded an inflexible standard as a safeguard against too ready symphaty for the
injured. It was assumed that an exact measure of several concurring faults was
unattainable.

The reason why, in cases of mutual concurring negligence, neither party can
maintain an action against the other, is, not the wrong of the one is set off against
the wrong of the other; it that the law can not measure how much of the damage
suffered is attributable to the plaintiff's own fault. If he were allowed to recover, it
might be that he would obtain from the other party compensation for hiss own
misconduct. (Heil vs. Glanding, 42 Penn. St. Rep., 493, 499.)

The parties being mutually in fault, there can be no appointment of damages. The
law has no scales to determine in such cases whose wrongdoing weighed most in
the compound that occasioned the mischief. (Railroad vs. Norton, 24 Penn. St. 565,
469.)

Experience with jury trials in negligence cases has brought American courts to
review to relax the vigor of the rule by freely exercising the power of setting aside
verdicts deemed excessive, through the device of granting new trials, unless
reduced damages are stipulated for, amounting to a partial revision of damages by
the courts. It appears to us that the control by the court of the subject matter may
be secured on a moral logical basis and its judgment adjusted with greater nicety to
the merits of the litigants through the practice of offsetting their respective
responsibilities. In the civil law system the desirable end is not deemed beyond the
capacity of its tribunals.
Whatever may prove to be the doctrine finally adopted in Spain or in other
countries under the stress and counter stress of novel schemers of legislation, we
find the theory of damages laid down in the judgment the most consistent with the
history and the principals of our law in these Islands and with its logical
development.

Difficulty seems to be apprehended in deciding which acts of the injured party

shall be considered immediate causes of the accident. The test is simple.
Distinction must be between the accident and the injury, between the event itself,
without which there could have been no accident, and those acts of the victim not
entering into it, independent of it, but contributing under review was the
displacement of the crosspiece or the failure to replace it. this produced the event
giving occasion for damages — that is, the shinking of the track and the sliding of
the iron rails. To this event, the act of the plaintiff in walking by the side of the car
did not contribute, although it was an element of the damage which came to
himself. Had the crosspiece been out of place wholly or partly thorough his act of
omission of duty, the last would have been one of the determining causes of the
event or accident, for which he would have been responsible. Where he contributes
to the principal occurrence, as one of its determining factors, he can not recover.
Where, in conjunction with the occurrence, he contributes only to his own injury,
he may recover the amount that the defendant responsible for the event should pay
for such injury, less a sum deemed a suitable equivalent for his own imprudence.

Accepting, though with some hesitation, the judgment of the trial court, fixing the
damage incurred by the plaintiff at 5,000 pesos, the equivalent of 2,500 dollars,
United States money, we deduct therefrom 2,500 pesos, the amount fairly
attributable to his negligence, and direct judgment to be entered in favor of the
plaintiff for the resulting sum of 2,500 pesos, with cost of both instances, and ten
days hereafter let the case be remanded to the court below for proper action. So
ordered.

Arellano, C.J. Torres and Mapa, JJ., concur.

G.R. No. 97626 March 14, 1997

PHILIPPINE BANK OF COMMERCE, now absorbed by PHILIPPINE
COMMERCIAL INTERNATIONAL BANK, ROGELIO LACSON, DIGNA DE
LEON, MARIA ANGELITA PASCUAL, et al., petitioners,
vs.
THE COURT OF APPEALS, ROMMEL'S MARKETING CORP., represented by
ROMEO LIPANA, its President & General Manager, respondents.

HERMOSISIMA, JR., J.:

Challenged in this petition for review is the Decision dated February 28, 19911
rendered by public respondent Court of Appeals which affirmed the Decision dated
November 15, 1985 of the Regional Trial Court, National Capital Judicial Region,
Branch CLX (160), Pasig City, in Civil Case No. 27288 entitled "Rommel's
Marketing Corporation, etc. v. Philippine Bank of Commerce, now absorbed by
Philippine Commercial and Industrial Bank."

The case stemmed from a complaint filed by the private respondent Rommel's
Marketing Corporation (RMC for brevity), represented by its President and
General Manager Romeo Lipana, to recover from the former Philippine Bank of
Commerce (PBC for brevity), now absorbed by the Philippine Commercial
International Bank, the sum of P304,979.74 representing various deposits it had
made in its current account with said bank but which were not credited to its
account, and were instead deposited to the account of one Bienvenido Cotas,
allegedly due to the gross and inexcusable negligence of the petitioner bank.

RMC maintained two (2) separate current accounts, Current Account Nos. 53-
01980-3 and 53-01748-7, with the Pasig Branch of PBC in connection with its
business of selling appliances.

In the ordinary and usual course of banking operations, current account deposits
are accepted by the bank on the basis of deposit slips prepared and signed by the
depositor, or the latter's agent or representative, who indicates therein the current
account number to which the deposit is to be credited, the name of the depositor or
current account holder, the date of the deposit, and the amount of the deposit either
in cash or checks. The deposit slip has an upper portion or stub, which is detached
and given to the depositor or his agent; the lower portion is retained by the bank. In
some instances, however, the deposit slips are prepared in duplicate by the
depositor. The original of the deposit slip is retained by the bank, while the
duplicate copy is returned or given to the depositor.
From May 5, 1975 to July 16, 1976, petitioner Romeo Lipana claims to have
entrusted RMC funds in the form of cash totalling P304,979.74 to his secretary,
Irene Yabut, for the purpose of depositing said funds in the current accounts of
RMC with PBC. It turned out, however, that these deposits, on all occasions, were
not credited to RMC's account but were instead deposited to Account No. 53-
01734-7 of Yabut's husband, Bienvenido Cotas who likewise maintains an account
with the same bank. During this period, petitioner bank had, however, been
regularly furnishing private respondent with monthly statements showing its
current accounts balances. Unfortunately, it had never been the practice of Romeo
Lipana to check these monthly statements of account reposing complete trust and
confidence on petitioner bank.

Irene Yabut's modus operandi is far from complicated. She would accomplish two
(2) copies of the deposit slip, an original and a duplicate. The original showed the
name of her husband as depositor and his current account number. On the duplicate
copy was written the account number of her husband but the name of the account
holder was left blank. PBC's teller, Azucena Mabayad, would, however, validate
and stamp both the original and the duplicate of these deposit slips retaining only
the original copy despite the lack of information on the duplicate slip. The second
copy was kept by Irene Yabut allegedly for record purposes. After validation,
Yabut would then fill up the name of RMC in the space left blank in the duplicate
copy and change the account number written thereon, which is that of her
husband's, and make it appear to be RMC's account number, i.e., C.A. No. 53-
01980-3. With the daily remittance records also prepared by Ms. Yabut and
submitted to private respondent RMC together with the validated duplicate slips
with the latter's name and account number, she made her company believe that all
the while the amounts she deposited were being credited to its account when, in
truth and in fact, they were being deposited by her and credited by the petitioner
bank in the account of Cotas. This went on in a span of more than one (1) year
without private respondent's knowledge.

Upon discovery of the loss of its funds, RMC demanded from petitioner bank the
return of its money, but as its demand went unheeded, it filed a collection suit
before the Regional Trial Court of Pasig, Branch 160. The trial court found
petitioner bank negligent and ruled as follows:

WHEREFORE, judgment is hereby rendered sentencing defendant Philippine

Bank of Commerce, now absorbed by defendant Philippine Commercial &
Industrial Bank, and defendant Azucena Mabayad to pay the plaintiff, jointly and
severally, and without prejudice to any criminal action which may be instituted if
found warranted:

1. The sum of P304,979.72, representing plaintiffs lost deposit, plus interest

thereon at the legal rate from the filing of the complaint;

2. A sum equivalent to 14% thereof, as exemplary damages;

3. A sum equivalent to 25% of the total amount due, as and for attorney's fees;
and

4. Costs.

Defendants' counterclaim is hereby dismissed for lack of merit.2

On appeal, the appellate court affirmed the foregoing decision with modifications,
viz:

WHEREFORE, the decision appealed from herein is MODIFIED in the sense that
the awards of exemplary damages and attorney's fees specified therein are
eliminated and instead, appellants are ordered to pay plaintiff, in addition to the
principal sum of P304,979.74 representing plaintiff's lost deposit plus legal interest
thereon from the filing of the complaint, P25,000.00 attorney's fees and costs in the
lower court as well as in this Court.3

Hence, this petition anchored on the following grounds:

1) The proximate cause of the loss is the negligence of respondent Rommel

Marketing Corporation and Romeo Lipana in entrusting cash to a dishonest
employee.

2) The failure of respondent Rommel Marketing Corporation to cross-check the

bank's statements of account with its own records during the entire period of more
than one (1) year is the proximate cause of the commission of subsequent frauds
and misappropriation committed by Ms. Irene Yabut.

3) The duplicate copies of the deposit slips presented by respondent Rommel

Marketing Corporation are falsified and are not proof that the amounts appearing
thereon were deposited to respondent Rommel Marketing Corporation's account
with the bank,
4) The duplicate copies of the deposit slips were used by Ms. Irene Yabut to
cover up her fraudulent acts against respondent Rommel Marketing Corporation,
and not as records of deposits she made with the bank.4

The petition has no merit.

Simply put, the main issue posited before us is: What is the proximate cause of the
loss, to the tune of P304,979.74, suffered by the private respondent RMC —
petitioner bank's negligence or that of private respondent's?

Petitioners submit that the proximate cause of the loss is the negligence of
respondent RMC and Romeo Lipana in entrusting cash to a dishonest employee in
the person of Ms. Irene Yabut.5 According to them, it was impossible for the bank
to know that the money deposited by Ms. Irene Yabut belong to RMC; neither was
the bank forewarned by RMC that Yabut will be depositing cash to its account.
Thus, it was impossible for the bank to know the fraudulent design of Yabut
considering that her husband, Bienvenido Cotas, also maintained an account with
the bank. For the bank to inquire into the ownership of the cash deposited by Ms.
Irene Yabut would be irregular. Otherwise stated, it was RMC's negligence in
entrusting cash to a dishonest employee which provided Ms. Irene Yabut the
opportunity to defraud RMC.6

Private respondent, on the other hand, maintains that the proximate cause of the
loss was the negligent act of the bank, thru its teller Ms. Azucena Mabayad, in
validating the deposit slips, both original and duplicate, presented by Ms. Yabut to
Ms. Mabayad, notwithstanding the fact that one of the deposit slips was not
completely accomplished.

We sustain the private respondent.

Our law on quasi-delicts states:

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.

There are three elements of a quasi-delict: (a) damages suffered by the plaintiff; (b)
fault or negligence of the defendant, or some other person for whose acts he must
respond; and (c) the connection of cause and effect between the fault or negligence
of the defendant and the damages incurred by the plaintiff.7

In the case at bench, there is no dispute as to the damage suffered by the private
respondent (plaintiff in the trial court) RMC in the amount of P304,979.74. It is in
ascribing fault or negligence which caused the damage where the parties point to
each other as the culprit.

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

those considerations which ordinarily regulate the conduct of human affairs, would
do, or the doing of something which a prudent and reasonable man would do. The
seventy-eight (78)-year-old, yet still relevant, case of Picart v. Smith,8 provides the
test by which to determine the existence of negligence in a particular case which
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.

Applying the above test, it appears that the bank's teller, Ms. Azucena Mabayad,
was negligent in validating, officially stamping and signing all the deposit slips
prepared and presented by Ms. Yabut, despite the glaring fact that the duplicate
copy was not completely accomplished contrary to the self-imposed procedure of
the bank with respect to the proper validation of deposit slips, original or duplicate,
as testified to by Ms. Mabayad herself, thus:

Q: Now, as teller of PCIB, Pasig Branch, will you please tell us Mrs. Mabayad
your important duties and functions?

A: I accept current and savings deposits from depositors and encashments.

Q: Now in the handling of current account deposits of bank clients, could you
tell us the procedure you follow?

A: The client or depositor or the authorized representative prepares a deposit

slip by filling up the deposit slip with the name, the account number, the date, the
cash breakdown, if it is deposited for cash, and the check number, the amount and
then he signs the deposit slip.

Q: Now, how many deposit slips do you normally require in accomplishing

current account deposit, Mrs. Mabayad?

A: The bank requires only one copy of the deposit although some of our clients
prepare the deposit slip in duplicate.

Q: Now in accomplishing current account deposits from your clients, what do

you issue to the depositor to evidence the deposit made?

A: We issue or we give to the clients the depositor's stub as a receipt of the

deposit.

Q: And who prepares the deposit slip?

A: The depositor or the authorized representative sir?

Q: Where does the depositor's stub comes (sic) from Mrs. Mabayad, is it with
the deposit slip?

A: The depositor's stub is connected with the deposit slip or the bank's copy. In
a deposit slip, the upper portion is the depositor's stub and the lower portion is the
bank's copy, and you can detach the bank's copy from the depositor's stub by
tearing it sir.

Q: Now what do you do upon presentment of the deposit slip by the depositor
or the depositor's authorized representative?

A: We see to it that the deposit slip9 is properly accomplished and then we

count the money and then we tally it with the deposit slip sir.

Q: Now is the depositor's stub which you issued to your clients validated?

A: Yes, sir. 10 [Emphasis ours]

Clearly, Ms. Mabayad failed to observe this very important procedure. The fact
that the duplicate slip was not compulsorily required by the bank in accepting
deposits should not relieve the petitioner bank of responsibility. The odd
circumstance alone that such duplicate copy lacked one vital information — that of
the name of the account holder — should have already put Ms. Mabayad on guard.
Rather than readily validating the incomplete duplicate copy, she should have
proceeded more cautiously by being more probing as to the true reason why the
name of the account holder in the duplicate slip was left blank while that in the
original was filled up. She should not have been so naive in accepting hook, line
and sinker the too shallow excuse of Ms. Irene Yabut to the effect that since the
duplicate copy was only for her personal record, she would simply fill up the blank
space later on. 11 A "reasonable man of ordinary prudence" 12 would not have
given credence to such explanation and would have insisted that the space left
blank be filled up as a condition for validation. Unfortunately, this was not how
bank teller Mabayad proceeded thus resulting in huge losses to the private
respondent.

Negligence here lies not only on the part of Ms. Mabayad but also on the part of
the bank itself in its lackadaisical selection and supervision of Ms. Mabayad. This
was exemplified in the testimony of Mr. Romeo Bonifacio, then Manager of the
Pasig Branch of the petitioner bank and now its Vice-President, to the effect that,
while he ordered the investigation of the incident, he never came to know that
blank deposit slips were validated in total disregard of the bank's validation
procedures, viz:

Q: Did he ever tell you that one of your cashiers affixed the stamp mark of the
bank on the deposit slips and they validated the same with the machine, the fact
that those deposit slips were unfilled up, is there any report similar to that?

A: No, it was not the cashier but the teller.

Q: The teller validated the blank deposit slip?

A: No it was not reported.

Q: You did not know that any one in the bank tellers or cashiers validated the
blank deposit slip?

A: I am not aware of that.

Q: It is only now that you are aware of that?

A: Yes, sir. 13
Prescinding from the above, public respondent Court of Appeals aptly observed:

xxx xxx xxx

It was in fact only when he testified in this case in February, 1983, or after the
lapse of more than seven (7) years counted from the period when the funds in
question were deposited in plaintiff's accounts (May, 1975 to July, 1976) that bank
manager Bonifacio admittedly became aware of the practice of his teller Mabayad
of validating blank deposit slips. Undoubtedly, this is gross, wanton, and
inexcusable negligence in the appellant bank's supervision of its employees. 14

It was this negligence of Ms. Azucena Mabayad, coupled by the negligence of the
petitioner bank in the selection and supervision of its bank teller, which was the
proximate cause of the loss suffered by the private respondent, and not the latter's
act of entrusting cash to a dishonest employee, as insisted by the petitioners.

Proximate cause is determined on the facts of each case upon mixed considerations
of logic, common sense, policy and precedent. 15 Vda. de Bataclan v. Medina, 16
reiterated in the case of Bank of the Phil. Islands v. Court of Appeals, 17 defines
proximate cause as "that cause, which, in natural and continuous sequence,
unbroken by any efficient intervening cause, produces the injury, and without
which the result would not have occurred. . . ." In this case, absent the act of Ms.
Mabayad in negligently validating the incomplete duplicate copy of the deposit
slip, Ms. Irene Yabut would not have the facility with which to perpetrate her
fraudulent scheme with impunity. Apropos, once again, is the pronouncement
made by the respondent appellate court, to wit:

. . . . Even if Yabut had the fraudulent intention to misappropriate the funds

entrusted to her by plaintiff, she would not have been able to deposit those funds in
her husband's current account, and then make plaintiff believe that it was in the
latter's accounts wherein she had deposited them, had it not been for bank teller
Mabayad's aforesaid gross and reckless negligence. The latter's negligence was
thus the proximate, immediate and efficient cause that brought about the loss
claimed by plaintiff in this case, and the failure of plaintiff to discover the same
soon enough by failing to scrutinize the monthly statements of account being sent
to it by appellant bank could not have prevented the fraud and misappropriation
which Irene Yabut had already completed when she deposited plaintiff's money to
the account of her husband instead of to the latter's accounts. 18
Furthermore, under the doctrine of "last clear chance" (also referred to, at times as
"supervening negligence" or as "discovered peril"), petitioner bank was indeed the
culpable party. This doctrine, in essence, states that where both parties are
negligent, but the negligent act of one is appreciably later in time than that of the
other, or when it is impossible to determine whose fault or negligence should be
attributed to the incident, the one who had the last clear opportunity to avoid the
impending harm and failed to do so is chargeable with the consequences thereof.
19 Stated differently, the rule would also mean that an antecedent negligence of a
person does not preclude the recovery of damages for the supervening negligence
of, or bar a defense against liability sought by another, if the latter, who had the
last fair chance, could have avoided the impending harm by the exercise of due
diligence. 20 Here, assuming that private respondent RMC was negligent in
entrusting cash to a dishonest employee, thus providing the latter with the
opportunity to defraud the company, as advanced by the petitioner, yet it cannot be
denied that the petitioner bank, thru its teller, had the last clear opportunity to avert
the injury incurred by its client, simply by faithfully observing their self-imposed
validation procedure.

At this juncture, it is worth to discuss the degree of diligence ought to be exercised

by banks in dealing with their clients.

The New Civil Code provides:

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

If the law or contract does not state the diligence which is to be observed in the
performance, that which is expected of a good father of a family shall be required.
(1104a)

In the case of banks, however, the degree of diligence required is more than that of
a good father of a family. Considering the fiduciary nature of their relationship
with their depositors, banks are duty bound to treat the accounts of their clients
with the highest degree of care. 21

As elucidated in Simex International (Manila), Inc. v. Court of Appeals, 22 in

every case, the depositor expects the bank to treat his account with the utmost
fidelity, whether such account consists only of a few hundred pesos or of millions.
The bank must record every single transaction accurately, down to the last centavo,
and as promptly as possible. This has to be done if the account is to reflect at any
given time the amount of money the depositor can dispose as he sees fit, confident
that the bank will deliver it as and to whomever he directs. A blunder on the part of
the bank, such as the failure to duly credit him his deposits as soon as they are
made, can cause the depositor not a little embarrassment if not financial loss and
perhaps even civil and criminal litigation.

The point is that as a business affected with public interest and because of the
nature of its functions, the bank is under obligation to treat the accounts of its
depositors with meticulous care, always having in mind the fiduciary nature of
their relationship. In the case before us, it is apparent that the petitioner bank was
remiss in that duty and violated that relationship.

Petitioners nevertheless aver that the failure of respondent RMC to cross-check the
bank's statements of account with its own records during the entire period of more
than one (1) year is the proximate cause of the commission of subsequent frauds
and misappropriation committed by Ms. Irene Yabut.

We do not agree.

While it is true that had private respondent checked the monthly statements of
account sent by the petitioner bank to RMC, the latter would have discovered the
loss early on, such cannot be used by the petitioners to escape liability. This
omission on the part of the private respondent does not change the fact that were it
not for the wanton and reckless negligence of the petitioners' employee in
validating the incomplete duplicate deposit slips presented by Ms. Irene Yabut, the
loss would not have occurred. Considering, however, that the fraud was committed
in a span of more than one (1) year covering various deposits, common human
experience dictates that the same would not have been possible without any form
of collusion between Ms. Yabut and bank teller Mabayad. Ms. Mabayad was
negligent in the performance of her duties as bank teller nonetheless. Thus, the
petitioners are entitled to claim reimbursement from her for whatever they shall be
ordered to pay in this case.

The foregoing notwithstanding, it cannot be denied that, indeed, private respondent

was likewise negligent in not checking its monthly statements of account. Had it
done so, the company would have been alerted to the series of frauds being
committed against RMC by its secretary. The damage would definitely not have
ballooned to such an amount if only RMC, particularly Romeo Lipana, had
exercised even a little vigilance in their financial affairs. This omission by RMC
amounts to contributory negligence which shall mitigate the damages that may be
awarded to the private respondent 23 under Article 2179 of the New Civil Code, to
wit:

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

In view of this, we believe that the demands of substantial justice are satisfied by
allocating the damage on a 60-40 ratio. Thus, 40% of the damage awarded by the
respondent appellate court, except the award of P25,000.00 attorney's fees, shall be
borne by private respondent RMC; only the balance of 60% needs to be paid by the
petitioners. The award of attorney's fees shall be borne exclusively by the
petitioners.

WHEREFORE, the decision of the respondent Court of Appeals is modified by

reducing the amount of actual damages private respondent is entitled to by 40%.
Petitioners may recover from Ms. Azucena Mabayad the amount they would pay
the private respondent. Private respondent shall have recourse against Ms. Irene
Yabut. In all other respects, the appellate court's decision is AFFIRMED.

Proportionate costs.

SO ORDERED.

G.R. No. L-45637 May 31, 1985

ROBERTO JUNTILLA, petitioner,

vs.
CLEMENTE FONTANAR, FERNANDO BANZON and BERFOL CAMORO,
respondents.

Valentin A. Zozobrado for petitioner.

Ruperto N. Alfarara for respondents.

GUTIERREZ, JR., J.:

This is a petition for review, on questions of law, of the decision of the Court of
First Instance of Cebu which reversed the decision of the City Court of Cebu and
exonerated the respondents from any liability arising from a vehicular accident.

The background facts which led to the filing of a complaint for breach of contract
and damages against the respondents are summarized by the Court of First Instance
of Cebu as follows:

The facts established after trial show that the plaintiff was a passenger of the public
utility jeepney bearing plate No. PUJ-71-7 on the course of the trip from Danao
City to Cebu City. The jeepney was driven by defendant Berfol Camoro. It was
registered under the franchise of defendant Clemente Fontanar but was actually
owned by defendant Fernando Banzon. When the jeepney reached Mandaue City,
the right rear tire exploded causing the vehicle to turn turtle. In the process, the
plaintiff who was sitting at the front seat was thrown out of the vehicle. Upon
landing on the ground, the plaintiff momentarily lost consciousness. When he came
to his senses, he found that he had a lacerated wound on his right palm. Aside from
this, he suffered injuries on his left arm, right thigh and on his back. (Exh. "D").
Because of his shock and injuries, he went back to Danao City but on the way, he
discovered that his "Omega" wrist watch was lost. Upon his arrival in Danao City,
he immediately entered the Danao City Hospital to attend to his injuries, and also
requested his father-in-law to proceed immediately to the place of the accident and
look for the watch. In spite of the efforts of his father-in-law, the wrist watch,
which he bought for P 852.70 (Exh. "B") could no longer be found.

xxx xxx xxx

Petitioner Roberto Juntilla filed Civil Case No. R-17378 for breach of contract
with damages before the City Court of Cebu City, Branch I against Clemente
Fontanar, Fernando Banzon and Berfol Camoro.

The respondents filed their answer, alleging inter alia that the accident that caused
losses to the petitioner was beyond the control of the respondents taking into
account that the tire that exploded was newly bought and was only slightly used at
the time it blew up.
After trial, Judge Romulo R. Senining of the Civil Court of Cebu rendered
judgment in favor of the petitioner and against the respondents. The dispositive
portion of the decision reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against

the defendants and the latter are hereby ordered, jointly and severally, to pay the
plaintiff the sum of P750.00 as reimbursement for the lost Omega wrist watch, the
sum of P246.64 as unrealized salary of the plaintiff from his employer, the further
sum of P100.00 for the doctor's fees and medicine, an additional sum of P300.00
for attorney's fees and the costs.

The respondents appealed to the Court of First Instance of Cebu, Branch XIV.

Judge Leonardo B. Canares reversed the judgment of the City Court of Cebu upon
a finding that the accident in question was due to a fortuitous event. The
dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered exonerating the defendants from any

liability to the plaintiff without pronouncement as to costs.

A motion for reconsideration was denied by the Court of First Instance.

The petitioner raises the following alleged errors committed by the Court of First
Instance of Cebu on appeal—

a. The Honorable Court below committed grave abuse of discretion in failing

to take cognizance of the fact that defendants and/or their employee failed to
exercise "utmost and/or extraordinary diligence" required of common carriers
contemplated under Art. 1755 of the Civil Code of the Philippines.

b. The Honorable Court below committed grave abuse of discretion by

deciding the case contrary to the doctrine laid down by the Honorable Supreme
Court in the case of Necesito et al. v. Paras, et al.

We find the petition impressed with merit.

The City Court and the Court of First Instance of Cebu found that the right rear tire
of the passenger jeepney in which the petitioner was riding blew up causing the
vehicle to fall on its side. The petitioner questions the conclusion of the respondent
court drawn from this finding of fact.
The Court of First Instance of Cebu erred when it absolved the carrier from any
liability upon a finding that the tire blow out is a fortuitous event. The Court of
First Instance of Cebu ruled that:

After reviewing the records of the case, this Court finds that the accident in
question was due to a fortuitous event. A tire blow-out, such as what happened in
the case at bar, is an inevitable accident that exempts the carrier from liability,
there being absence of a showing that there was misconduct or negligence on the
part of the operator in the operation and maintenance of the vehicle involved. The
fact that the right rear tire exploded, despite being brand new, constitutes a clear
case of caso fortuito which can be a proper basis for exonerating the defendants
from liability. ...

The Court of First Instance relied on the ruling of the Court of Appeals in
Rodriguez v. Red Line Transportation Co., CA G.R. No. 8136, December 29,
1954, where the Court of Appeals ruled that:

A tire blow-out does not constitute negligence unless the tire was already old and
should not have been used at all. Indeed, this would be a clear case of fortuitous
event.

The foregoing conclusions of the Court of First Instance of Cebu are based on a
misapprehension of overall facts from which a conclusion should be drawn. The
reliance of the Court of First Instance on the Rodriguez case is not in order. In La
Mallorca and Pampanga Bus Co. v. De Jesus, et al. (17 SCRA 23), we held that:

Petitioner maintains that a tire blow-out is a fortuitous event and gives rise to no
liability for negligence, citing the rulings of the Court of Appeals in Rodriguez v.
Red Line Transportation Co., CA G.R. No. 8136, December 29, 1954, and People
v. Palapad, CA-G.R. No. 18480, June 27, 1958. These rulings, however, not only
are not binding on this Court but were based on considerations quite different from
those that obtain in the case at bar. The appellate court there made no findings of
any specific acts of negligence on the part of the defendants and confined itself to
the question of whether or not a tire blow-out, by itself alone and without a
showing as to the causative factors, would generate liability. ...

In the case at bar, there are specific acts of negligence on the part of the
respondents. The records show that the passenger jeepney turned turtle and jumped
into a ditch immediately after its right rear tire exploded. The evidence shows that
the passenger jeepney was running at a very fast speed before the accident. We
agree with the observation of the petitioner that a public utility jeep running at a
regular and safe speed will not jump into a ditch when its right rear tire blows up.
There is also evidence to show that the passenger jeepney was overloaded at the
time of the accident. The petitioner stated that there were three (3) passengers in
the front seat and fourteen (14) passengers in the rear.

While it may be true that the tire that blew-up was still good because the grooves
of the tire were still visible, this fact alone does not make the explosion of the tire a
fortuitous event. No evidence was presented to show that the accident was due to
adverse road conditions or that precautions were taken by the jeepney driver to
compensate for any conditions liable to cause accidents. The sudden blowing-up,
therefore, could have been caused by too much air pressure injected into the tire
coupled by the fact that the jeepney was overloaded and speeding at the time of the
accident.

In Lasam v. Smith (45 Phil. 657), we laid down the following essential
characteristics of caso fortuito:

xxx xxx xxx

... In a legal sense and, consequently, also in relation to contracts, a caso fortuito
presents the following essential characteristics: (1) The cause of the unforeseen and
unexpected occurrence, or of the failure of the debtor to comply with his
obligation, must be independent of the human will. (2) It must be impossible to
foresee the event which constitutes the caso fortuito, or if it can be foreseen, it
must be impossible to avoid. (3) The occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in a normal manner. And (4) the
obligor (debtor) must be free from any participation in the aggravation of the injury
resulting to the creditor. (5 Encyclopedia Juridica Espanola, 309.)

In the case at bar, the cause of the unforeseen and unexpected occurrence was not
independent of the human will. The accident was caused either through the
negligence of the driver or because of mechanical defects in the tire. Common
carriers should teach their drivers not to overload their vehicles, not to exceed safe
and legal speed limits, and to know the correct measures to take when a tire blows
up thus insuring the safety of passengers at all times. Relative to the contingency of
mechanical defects, we held in Necesito, et al. v. Paras, et al. (104 Phil. 75), that:
... The preponderance of authority is in favor of the doctrine that a passenger is
entitled to recover damages from a carrier for an injury resulting from a defect in
an appliance purchased from a manufacturer, whenever it appears that the defect
would have been discovered by the carrier if it had exercised the degree of care
which under the circumstances was incumbent upon it, with regard to inspection
and application of the necessary tests. For the purposes of this doctrine, the
manufacturer is considered as being in law the agent or servant of the carrier, as far
as regards the work of constructing the appliance. According to this theory, the
good repute of the manufacturer will not relieve the carrier from liability' (10 Am.
Jur. 205, s, 1324; see also Pennsylvania R. Co. v. Roy, 102 U.S. 451; 20 L. Ed.
141; Southern R. Co. v. Hussey, 74 ALR 1172; 42 Fed. 2d 70; and Ed Note, 29
ALR 788.: Ann. Cas. 1916E 929).

The rationale of the carrier's liability is the fact that the passenger has neither
choice nor control over the carrier in the selection and use of the equipment and
appliances in use by the carrier. Having no privity whatever with the manufacturer
or vendor of the defective equipment, the passenger has no remedy against him,
while the carrier usually has. It is but logical, therefore, that the carrier, while not
an insurer of the safety of his passengers, should nevertheless be held to answer for
the flaws of his equipment if such flaws were at all discoverable. ...

It is sufficient to reiterate that the source of a common carrier's legal liability is the
contract of carriage, and by entering into the said contract, it binds itself to carry
the passengers safely as far as human care and foresight can provide, using the
utmost diligence of a very cautious person, with a due regard for all the
circumstances. The records show that this obligation was not met by the
respondents.

The respondents likewise argue that the petitioner cannot recover any amount for
failure to prove such damages during the trial. The respondents submit that if the
petitioner was really injured, why was he treated in Danao City and not in
Mandaue City where the accident took place. The respondents argue that the doctor
who issued the medical certificate was not presented during the trial, and hence not
cross-examined. The respondents also claim that the petitioner was not wearing
any wrist watch during the accident.

It should be noted that the City Court of Cebu found that the petitioner had a
lacerated wound on his right palm aside from injuries on his left arm, right thigh
and on his back, and that on his way back to Danao City, he discovered that his
"Omega" wrist watch was lost. These are findings of facts of the City Court of
Cebu which we find no reason to disturb. More so when we consider the fact that
the Court of First Instance of Cebu impliedly concurred in these matters when it
confined itself to the question of whether or not the tire blow out was a fortuitous
event.

WHEREFORE, the decision of the Court of First Instance of Cebu, Branch IV

appealed from is hereby REVERSED and SET ASIDE, and the decision of the
City Court of Cebu, Branch I is REINSTATED, with the modification that the
damages shall earn interest at 12% per annum and the attorney's fees are increased
to SIX HUNDRED PESOS (P600.00). Damages shall earn interests from January
27, 1975.

SO ORDERED.

G.R. No. 71871 November 6, 1989

TEODORO M. HERNANDEZ, petitioner,

vs.
THE HONORABLE CHAIRMAN, COMMISSION ON AUDIT, respondent.

Al-Fred O. Concepcion for petitioner.

CRUZ, J.:

It was one of those prosaic decisions not requiring deep thought or long
deliberation. The petitioner arrived at it almost as a matter of course, applying what
he believed then to be common sense. Little did he realize until later that it would
cause him much anguish, even endanger his life, and ultimately lead to this
litigation. But such are the quirks of fate.

At the time of the incident in question, Teodoro M. Hernandez was the officer-in-
charge and special disbursing officer of the Ternate Beach Project of the Philippine
Tourism Authority in Cavite. As such, he went to the main office of the Authority
in Manila on July 1, 1983, to encash two checks covering the wages of the
employees and the operating expenses of the Project. He estimated that the money
would be available by ten o'clock in the morning and that he would be back in
Ternate by about two o'clock in the afternoon of the same day. For some reason,
however, the processing of the checks was delayed and was completed only at
three o'clock that afternoon. The petitioner decided nevertheless to encash them
because the Project employees would be waiting for their pay the following day.
He thought he had to do this for their benefit as otherwise they would have to wait
until the following Tuesday at the earliest when the main office would reopen. And
so, on that afternoon of July 1, 1983, he collected the cash value of the checks and
left the main office with not an insubstantial amount of money in his hands. 1

What would he do with the money in the meantime? The petitioner had two
choices, to wit: (1) return to Ternate, Cavite, that same afternoon and arrive there
in the early evening; or (2) take the money with him to his house in Marilao,
Bulacan, spend the night there, and leave for Ternate the following morning. He
opted for the second, thinking it the safer one. And so, on that afternoon of July 1,
1983, at a little past three o'clock, he took a passenger jeep bound for his house in
Bulacan.

It was while the vehicle was along Epifanio de los Santos Avenue that two persons
boarded with knives in hand and robbery in mind. One pointed his weapon at the
petitioner's side while the other slit his pocket and forcibly took the money he was
carrying. The two then jumped out of the jeep and ran. Hernandez, after the initial
shock, immediately followed in desperate pursuit. He caught up with Virgilio
Alvarez and overcame him after a scuffle. The petitioner sustained injuries in the
lip arms and knees. Alvarez was subsequently charged with robbery and pleaded
guilty. But the hold-upper who escaped is still at large and the stolen money he
took with him has not been recovered. 2

On July 5, 1983, the petitioner, invoking the foregoing facts, filed a request for
relief from money accountability under Section 638 of the Revised Administrative
Code. This was favorably indorsed by the General Manager of the Philippine
Tourism Authority the same day 3 and by its Corporate Auditor on July 27, 1983. 4
The Regional Director, National Capital Region, of the Commission on Audit,
made a similar recommendation on January 17, 1984, and also absolved Hernandez
of negligence. 5 On June 29, 1984, however, the Commission on Audit, through
then Chairman Francisco S. Tantuico, jr. denied the petitioner's request, observing
inter alia:

In the instant case, the loss of the P10,175.00 under the accountability of Mr.
Hernandez can be attributed to his negligence because had he brought the cash
proceeds of the checks (replenishment fund) to the Beach Park in Ternate, Cavite,
immediately after encashment for safekeeping in his office, which is the normal
procedure in the handling of public funds, the loss of said cash thru robbery could
have been aborted. 6
In the petition at bar, Hernandez claims that the respondent Commission on Audit
acted with grave abuse of discretion in denying him relief and in holding him
negligent for the loss of the stolen money. He avers he has done only what any
reasonable man would have done and should not be held accountable for a
fortuitous event over which he had no control.

The petitioner stresses that he decided to encash the checks in the afternoon of July
1, 1983, which was a Friday, out of concern for the employees of the Project, who
were depending on him to make it possible for them to collect their pay the
following day. July 2 and 3 being non-working days and July 4 being a holiday,
they could receive such payment only on the following Tuesday unless he brought
the encashed checks on July 1, 1983, and took it to Ternate the following day.

On his decision to take the money home that afternoon instead of returning directly
to Ternate, he says that the first course was more prudent as he saw it, if only
because his home in Marilao, Bulacan, was much nearer than his office in Ternate,
Cavite. The drive to Ternate would take three hours, including a 30-minute tricycle
ride along the dark and lonely Naic-Ternate road; and as he would be starting after
three o'clock in the afternoon, it was not likely that he would reach his destination
before nightfall. By contrast, the road to Marilao was nearer and safer (or so he
reasonably thought) and there was less risk involved in his taking the money the
following morning to Ternate rather than on that same afternoon of July 1.

The petitioner maintains that the likelihood of robbery during the time in question
was stronger in Ternate than in Marilao, so he should not be blamed if the robbery
did occur while he was on the way to Marilao that afternoon. That was a fortuitous
event that could not have reasonably been foreseen, especially on that busy
highway. At any rate, he contends, he had not been remiss in protecting the money
in his custody; in fact, he immediately pursued the hold-uppers and succeeded in
catching one of them who was subsequently prosecuted and convicted. It might
have been different if he had simply resigned himself to the robbery and allowed
the culprits to go scot-free. But he acted. His action after the robbery only goes to
show his vigilance over the money entrusted to his custody and his readiness to
protect it even at great personal risk.

In his Comment, then Solicitor-General Sedfrey A. Ordonez supported the denial

of the petitioner's request, arguing that Hernandez was negligent in the safekeeping
of the stolen funds as correctly found by the Commission on Audit. 7 Later,
however, his successor, Solicitor General Francisco I. Chavez, submitted a
Manifestation in Lieu of Memorandum in which he sided with the petitioner,
agreeing that Hernandez had not committed any negligence or, assuming he was
guilty of contributory negligence, had made up for it with his efforts to retrieve the
money and his capture of one of the robbers, who was eventually convicted. 8 This
prompted the respondent Commission on Audit to submit its own memorandum.

The Commission on Audit insists in this memorandum that the petitioner should
not be relieved from his money accountability because it was his own negligence
that led to the loss of the cash he had sought to take not to Ternate in Cavite but to
Marilao.

Its contention is that the petitioner should not have encashed the cheeks on July 1,
1983, as the hour was already late and he knew he could not return to Ternate
before nightfall. Knowing this, he should have prudently deferred encashing the
checks until the morning of the next working day on July 5, 1983, when he could
have safely taken the money to Ternate. His alleged concern for the convenience of
his fellow workers was not really a valid reason because one of the checks he had
encashed, in the greater amount of P6,964.00, was in fact not for salaries and
wages but for the operating expenses of the Project. There was no urgency to
encash that check. Moreover, if it is true that he had that much concern for the
employees, he should have gone to the main office earlier than July 1, 1983, since
the vouchers representing the checks had already been prepared as of June 29,
1983.

The memorandum concludes that in deciding to take the money with him to
Marilao after imprudently withdrawing it from the main office, the petitioner was
assuming a risk from which he cannot now be excused after the loss of the money
as a result of the robbery to which it was unreasonably exposed. In any event, the
burden of proof in petitions for relief from money accountability rests with the
petitioner, who has not clearly established that the loss of the money was not the
result of his negligence.

Section 638 of the Revised Administrative Code reads as follows:

Section 638. Credit for loss occurring in transit or due to casualty — Notice to
Auditor. — When a loss of government funds or property occurs while the same is
in transit or is caused by fire, theft, or other casualty, the officer accountable
therefor or having custody thereof shall immediately notify the Auditor General, or
the provincial auditor, according as a matter is within the original jurisdiction of
the one or the other, and within thirty days or such longer period as the Auditor, or
provincial auditor, may in the particular case allow, shall present his application
for relief, with the available evidence in support thereof. An officer who fails to
comply with this requirement shall not be relieved of liability or allowed credit for
any such loss in the settlement of his accounts.

This provision has since then been reiterated, with some slight modification, in
Section 73 of P.D. No. 1445, otherwise known as the "Government Auditing Code
of the Philippines," which was promulgated on June 11. 1978.

Applying the letter and spirit of the above-mentioned laws, and after considering
the established facts in the light of the arguments of the parties, this Court inclines
in favor of the petitioner.

Hindsight is a cruel judge. It is so easy to say, after the event, that one should have
done this and not that or that he should not have acted at all, or else this problem
would not have arisen at all. That is all very well as long as one is examining
something that has already taken place. One can hardly be wrong in such a case.
But the trouble with this retrospective assessment is that it assumes for everybody
an uncanny prescience that will enable him by some mysterious process to avoid
the pitfalls and hazards that he is expected to have foreseen. It does not work out
that way in real life. For most of us, all we can rely on is a reasoned conjecture of
what might happen, based on common sense and our own experiences, or our
intuition, if you will, and without any mystic ability to peer into the future. So it
was with the petitioner.

It is pointless to argue that Hernandez should have encashed the vouchers earlier
because they were dated anyway on June 29, 1983. He was not obliged to encash
the checks earlier and then again there might have been any number of reasons
why he did so only on July 1, 1983. The point is that he did encash the checks on
that date and took the money to Marilao and not Ternate in view of the lateness of
the hour. The question before us is whether these acts are so tainted with
negligence or recklessness as to justify the denial of the petitioner's request for
relief from accountability for the stolen money.

It seems to us that the petitioner was moved only by the best of motives when he
encashed the checks on July 1, 1983, so his co-employees in Ternate could collect
their salaries and wages the following day. Significantly, although this was a non-
working day, he was intending to make the trip to his office the following day for
the unselfish purpose of accommodating his fellow workers. The other alternative
was to encash the check is on July 5, 1983, the next working day after July 1, 1983,
which would have meant a 5-day wait for the payment of the said salaries and
wages. Being a modest employee himself, Hernandoz must have realized the great
discomfort it would cause the laborer who were dependent on their wages for their
sustenance and were anxious to collect their pay as soon as possible.

For such an attitude, Hernandez should be commended rather than faulted.

As for Hernandez's choice between Marilao, Bulacan, and Ternate, Cavite, one
could easily agree that the former was the safer destination, being nearer, and in
view of the comparative hazards in the trips to the two places. It is true that the
petitioner miscalculated, but the Court feels he should not be blamed for that. The
decision he made seemed logical at that time and was one that could be expected of
a reasonable and prudent person. And if, as it happened, the two robbers attacked
him in broad daylight in the jeep while it was on a busy highway, and in the
presence of other passengers, it cannot be said that all this was the result of his
imprudence and negligence. This was undoubtedly a fortuitous event covered by
the said provisions, something that could not have been reasonably foreseen
although it could have happened, and did.

We find, in sum, that under the circumstances as above narrated, the petitioner is
entitled to be relieved from accountability for the money forcibly taken from him
in the afternoon of July 1, 1983. To impose such liability upon him would be to
read the law too sternly when it should be softened by the proven facts.

ACCORDINGLY, the petition is GRANTED, without any pronouncement as to

costs. It is so ordered.
G.R. No. L-87584 June 16, 1992

GOTESCO INVESTMENT CORPORATION, petitioner,

vs.
GLORIA E. CHATTO and LINA DELZA CHATTO, respondents.

DAVIDE. JR., J.:

Assailed in this petition for review under Rule 45 of the Rules of Court are both
the Decision 1 promulgated on 27 July 1988 and the Resolution dated 14 March
1989 2 of the respondent Court of Appeals in CA-G.R. CV No. 09699 which,
respectively affirmed in toto the decision of Branch XXI of the Regional Trial
Court of Cebu in Civil Case No. R-22567 entitled "Gloria Chatto, et al. versus
Gotesco Investment Corporation", and denied petitioner's motion to reconsider the
same.

The trial court ordered the defendant, herein petitioners to pay the plaintiff Lina
Delza E. Chatto the sum of P10,000.00 as moral damages and the plaintiff Gloria
E. Chatto the sum of P49,050.00 as actual and consequential damages, P75,000.00
as moral damages and P20,000.00 as attorney's fees, plus the cost of the suit. These
awards, except for the attorney's fees, were to earn interest at the rate of twelve per
cent (12%) per annum beginning from the date the complaint was filed, 16
November 1982, until the amounts were fully paid.

The antecedent facts, as found by the trial court and affirmed by the respondent
Court, are summarized by the latter in the challenged decision as follows:

The evidence shows that in the afternoon of June 4, 1982 plaintiff Gloria E. Chatto,
and her 15-year old daughter, plaintiff Lina Delza E. Chatto went to see the movie
"Mother Dear" at Superama I theater, owned by defendant Gotesco Investment
Corporation. They bought balcony tickets but even then were unable to find seats
considering the number of people patronizing the movie. Hardly ten (10) minutes
after entering the theater, the ceiling of its balcony collapsed. The theater was
plunged into darkness and pandemonium ensued. Shocked and hurt, plaintiffs
managed to crawl under the fallen ceiling. As soon as they were able to get out to
the street they walked the nearby FEU Hospital where they were confined and
treated for one (1) day.

The next day, they transferred to the UST hospital. Plaintiff Gloria Chatto was
treated in said hospital from June 5 to June 19 and plaintiff Lina Delza Chatto from
June 5 to 11. Per Medico Legal Certificate (Exh, "C") issued by Dr. Ernesto G.
Brion, plaintiff Lina Delza Chatto suffered the following injuries:

Physical injuries:

Contusions:

forehead and drental region, scalp left with hematoma; chest anterior upper
bilateral; back right, scapular region; back, mid-portion, thoraco-lumbar regions,
bilateral

Abrasions:
back lumbar region, horizontal, across midline, from left to right; hand right, palm,
near wrist; hand left, index finger, dorsum, proximal phalanx.

Conclusion, cerebral.

X-Ray — Skull; Thoraco-lumbar

region — All negative.

CONCLUSIONS

1. Physical injuries rioted on the subject.

2. That under normal condition in the absence of complication, said physical

injuries will require medical attendance and/or incapacitate the subject for a period
of from two to four weeks.

On the other hand, the findings on plaintiff Gloria Chatto per Medico Legal
Certificate (Exh. "D") of Dr. Brion are as follows:

xxx xxx xxx

Physical injuries:

Lacerated wounds:

scalp vertex, running across suggittal line, from left to right, 3.0 cm sutured;

Contusion, forearm right, anterior aspect, upper third.

Abrasions:

Shoulder and upper third, arm right, posterior aspect, linear; backright, scapular
region, two in number, linear; elbow right, posterior aspect; forearm right, anterior
aspect, middle third.

Concusion (sic), cerebral.

X-Ray — Skull — Negative.

Cervical spines Straightening of cervical spine, probably to muscular spasm.
CONCLUSIONS:

1. Physical injuries noted on subject.

2. That under normal condition, in the absence of complication, said physical

injuries will require medical attendance and/or incapacitate the subject for a period
of from two to four weeks.

Due to continuing pain in the neck, headache and dizziness, plaintiff went to
Illinois, USA in July 1982 for further treatment (Exh "E"). She was treated at the
Cook County Hospital in Chicago, Illinois. She stayed in the U.S. for about three
(3) months during which time she had to return to the Cook County Hospital five
(5) or, six (6) times.

Defendant tried to avoid liability by alleging that the collapse of the ceiling of its
theater was done due to force majeure. It maintained that its theater did not suffer
from any structural or construction defect. (Exh. 1, 2, 3, 4, & 5)3

In justifying its award of actual or compensatory and moral damages and attorney's
fees, the trial court said:

It has been established thru the uncontradicted testimony of Mrs. Chatto that
during the chaos and confusion at the theater she lost a pair of earrings worth
P2,500 and the sum of P1,000.00 in cash contained in her wallet which was lost;
and that she incurred the following expenses: P500.00 as transportation fare from
Cebu City to Manila on the first leg of her trip to the United States; P350.00 for her
passport; and P46,978.00 for her expense relative to her treatment in the United
States, including the cost of a round-trip ticket (P11,798.00) hospital and medical
bills and other attendant expenses. The total is P51,328.00, which is more than the
sum of P49,050.00 claimed in the complaint, hence should be reduced accordingly.

The same testimony has also established that Mrs. Chatto contracted to pay her
counsel the sum of P20,000.00, which this court considers reasonable considering,
among other things, the professional standing of work (sic) involved in the
prosecution of this case. Such award of attorney's fees is proper because the
defendant's omission to provide the plaintiffs proper and adequate safeguard to life
and limb which they deserved as patrons to (sic) its theater had compelled the
plaintiffs to hire the services of a counsel, file this case and prosecute it, thus
incurring expenses to protect their interest.
The plaintiffs are entitled to moral damages, which are the direct and proximate
result of the defendants gross negligence and omission. Such moral damages
include the plaintiffs' physical suffering, mental anguish, fright and serious anxiety.
On the part of Mrs. Chatto, who obviously suffered much more pain, anguish,
fright and anxiety than her daughter Lina Delza, such damages are compounded by
the presence of permanent deformities on her body consisting of a 6-inch scar on
the head and a 2-inch scar on one arm. The court believes that the sum of
P75,000.00 for plaintiff Gloria E. Chatto and the sum of P10,000.00 for plaintiff
Lina Delza E. Chatto would be reasonable. 4

Petitioner submitted before the respondent Court the following assignment of

errors:

I. THE LOWER COURT ERRED IN ADMITTING PATENTLY —

INADMISSIBLE EVIDENCE PRESENTED BY PLAINTIFF-APPELLEES AND
IN GIVING LESS PROBATIVE VALUE TO PUBLIC DOCUMENTS AND
CERTIFICATIONS OF THE CONDITION OF THE BUILDING,
PARTICULARLY THE CERTIFICATE OF OCCUPANCY ISSUED BY THE
CITY ENGINEER'S OFFICE OF MANILA.

II. THE LOWER COURT ERRED IN FINDING THAT "THE CEILING OF

THE BALCONY COLLAPSED DUE TO SOME STRUCTURAL
CONSTRUCTION OR ARCHITECTURAL DEFECT," AND NOT DUE TO AN
ACT OF GOD OR FORCE MAJEURE.

III. THE LOWER COURT ERRED IN FINDING THAT THE APPELLANT

WAS GROSSLY NEGLIGENT IN FAILING "TO CAUSE PROPER AND
ADEQUATE INSPECTION MAINTENANCE AND UPKEEP OF THE
BUILDING." 5

In its decision, respondent Court found the appeal to be without merit. As to the
first assigned error, it ruled that the trial court did not err in admitting the exhibits
in question in the light of the ruling in Abrenica vs. Gonda 6 on waiver of
objections arising out of failure to object at the proper time Thus:

Exh. "A", the letter dated June 9, 1982 of Tina Mojica of defendant-appellant to
the Administrator of UST Hospital expressing their willingness to guaranty the
payment of the hospital bills of the plaintiffs-appellees was not objected to in trial
court for lack of authentication. It is too late to raise that objection on appeal.
Exhibits "B", "C", "D", "F" to "F-13" are the hospital records at FEU, UST and
Cook County Hospital. It may be true that the doctors who prepared them were not
presented as witnesses. Nonetheless, the records will show that counsel for
defendant-appellant cross examined plaintiff-appellee Gloria Chatto on the matter
especially the content of Exhibits "F" to F-13", Consequently, defendant-appellant
is estopped from claiming lack of opportunity to verify their textual truth.
Moreover, the record is full of the testimony of plaintiffs-appellees on the injuries
they sustained from the collapse of the ceiling of defendant-appellant's theater.
Their existence is crystal clear.

Exh. "E" is the flight coupon and passenger ticket (Northwest Orient) of plaintiff-
appellee Gloria Chatto from the Philippines to the U.S. (Manila-Chicago-Manila).
Certainly, this is relevant evidence on whether or not she actually travelled (sic) to
the U.S. for further medical treatment. Defendant-appellant's contention that the
best evidence on the issue is her passport is off the mark. The best evidence rule
applies only if the contents of the writing are directly in issue. In any event, her
passport is not the only evidence on the matter.

Exh. "G" is the summary of plaintiff-appellee Gloria Chatto's expenses in the U.S
in her own handwriting. Defendant-appellant's objection that it is self serving goes
to the weight of the evidence. The truth of Exh. "G" could be and should have been
tested by cross examination. It cannot be denied however that such expenses are
within the personal knowledge of the witness.

Exh. "H" is the surgical neckwear worn by the plaintiff-appellee Gloria Chatto as
part of her treatment in the U.S. Defendant-appellant objects to its admission
because it is self-serving. The objection is without merit in view of the evidence on
record that plaintiff-appellee Gloria Chatto sustained head injuries from the
collapse of the ceiling of defendant-appellant's theater. In fact, counsel for
defendant-appellant cross examined the said witness on the medical finding of
Cook County Hospital that she was suffering from neck muscle spasm. (TSN,
April 17, 1984, p. 11) The wearing of a surgical neckwear has proper basis.

Exh. "I" is the photograph of plaintiff-appellee Gloria Chatto in the U.S. showing
the use of her surgical neckwear. Defendant-appellant objects to this exhibit its
hearsay because the photographer was not presented as a witness. The objection is
incorrect. In order that photographs or pictures may be given in evidence, they
must be shown to be a true and faithful representation of the place or objects to
which they refer. The photographs may be verified either by the photographer who
took it or by any person who is acquainted with the object represented and testify
(sic) that the photograph faithfully represents the object. (Moran, Comments in the
Rules of Court, Vol. V, 1980 ed., p. 80 citing New York Co vs. Moore, 105 Fed.
725) In the case at bar, Exh. "I" was identified by plaintiff appellee Gloria Chatto.
7

As to the, other assigned errors, the respondent Court ruled:

The lower court did not also err in its finding that the collapse of the ceiling of the
theater's balcony was due to construction defects and not to force majeure. It was
the burden defendant-appellant to prove that its theater did not suffer from any
structural defect when it was built and that it has been well maintained when the
incident occurred. This is its Special and Affirmative Defense and it is incumbent
on defendant-appellant to prove it. Considering the collapse of the ceiling of its
theater's balcony barely four (4) years after its construction, it behooved defendant-
appellant to conduct an exhaustive study of the reason for the tragic incident. On
this score, the effort of defendant-appellant borders criminal nonchalance. Its
witness Jesus Lim Ong testified:

Atty. Barcelona:

Q By the way, you made mention a while ago that your staff of engineer and
architect used to make round inspection of the building under your construction the
of these buildings is Gotesco Cinema 1 and 2, subject matter of this case, and you
also made a regular round up or inspection of the theater. Is that right?

A Yes, sir.

Q And do you personally inspect these buildings under your construction?

A Yes, whenever I can.

Q In the case of Gotesco Cinema 1 and 2, had you any chance to inspect this
building?

A Yes, sir.

Q Particularly in the months of May and June of 1982?

A Yes, in that (sic) months.

Q Now, you said also that sometime in June 1982 you remember that one of
these theaters.

Atty. Barcelona: continuing

particularly Superama 1 the ceiling had collapsed?

A Yes, sir.

Q Did you conduct an investigation?

A Yes, sir.

Q What was your finding?

A There was really nothing, I cannot explain. I could not give any reason why
the ceiling collapsed.

Q Could it not be due to any defect of the plant?

Atty. Florido:

Already answered, Your Honor, he could not give any reason.

COURT:

Objection sustained.

Atty. Barcelona:

Q When that incident happened, did the owner Gotesco Investment

Corporation went (sic) to you to call your attention?

A Yes, sir.

Atty. Florido:

Your Honor, we noticed (sic) series of leading questions, but this time we object.

COURT:
Sustained.

Atty. Barcelona;

Q What did the owner of Gotesco do when the ceiling collapsed, upon
knowing that one of the cinemas you maintained collopsed?

A He asked for a thorough investigation.

Q And as a matter of fact as asked you to investigate?

A Yes, sir.

Q Did you come out with any investigation report.

A There was nothing to report.

Clearly, there was no authoritative investigation conducted by impartial civil and

structural engineers on the cause of the collapse of the theater's ceiling, Jesus Lim
Ong is not an engineer, He is a graduate of architecture from the St. Louie (sic)
University in Baguio City. It does not appear he has passed the government
examination for architects. (TSN, June 14, 1985 p. 4) In fine, the ignorance of Mr.
Ong about the cause of the collapse of the ceiling of their theater cannot be
equated, as an act, of God. To sustain that proposition is to introduce sacrilege in
our jurisprudence. 8

Its motion for reconsideration of the decision having been denied by the
respondent Court, petitioner filed this petition assailing therein the challenged
decision on the following grounds:

1. The basis of the award for damages stems from medical reports issued by
private physicians of local hospitals without benefit of cross-examination and more
seriously, xerox copies of medical findings issued by American doctors in the
United States without the production of originals, without the required consular
authentication for foreign documents, and without the opportunity for cross-
examination.

2. The damage award in favor of respondents is principally, made depend on

such unreliable, hearsay and incompetent evidence for which an award of more
than P150,000.00 in alleged actual, moral and I "consequential" damages are
awarded to the prejudice of the right of petitioner to due process. . . .

3. Unfortunately, petitioners evidence of due diligence in the care and

maintenance of the building was not seriously considered by the Court of Appeals,
considering that frequent inspections and maintenance precautions had to be
observed by hired engineers of petitioner, which enjoys an unsullied reputation in
the business of exhibiting movies in a chain of movie houses in Metro Manila. 9

After the private respondents filed their Comment as required in the Resolution of
17 May 1989, this Court resolved to give due course to the petition and required
the parties to file their respective Memoranda. Subsequently, private respondents,
in a motion, prayed for leave to adopt their Comment as their Memorandum, which
this Court granted on 6 December 1989. Petitioner filed its Memorandum on 10
January 1990.

The petition presents both factual and legal issues. The first relates to the cause of
the collapse of the ceiling while the latter involves the correctness of the admission
of the exhibits in question.

We find no merit in the petition.

The rule is well-settled that the jurisdiction of this Court in cases brought to it from
the Court of Appeals is limited to reviewing and revising the errors of law imputed
to it, its findings of fact being conclusive, 10 except only where a case is shown as
coming under the accepted exception. 11 None of the exceptions which this Court
has painstakingly summarized in several cases 12 has been shown to exist in this
petition. Petitioner's claim that the collapse of the ceiling of the theater's balcony
was due to force majeure is not even founded on facts because its own witness, Mr.
Jesus Lim Ong, admitted that "he could not give any reason why the ceiling
collapsed." Having interposed it as a defense, it had the burden to prove that the
collapse was indeed caused by force majeure. It could not have collapsed without a
cause. That Mr. Ong could not offer any explanation does not imply force majeure.
As early as eighty-five (85) years ago, this Court had the occasion to define force
majeure. In Pons y Compañia vs. La Compañia Maritima 13 this Court held:

An examination of the Spanish and American authorities concerning the meaning

of force majeure shows that the jurisprudence of these two countries practically
agree upon the meaning of this phrase.
Blackstone, in his Commentaries on English Law, defines it as —

Inevitable accident or casualty; an accident produced by any physical cause which

is irresistible; such as lightning. tempest, perils of the sea, inundation, or
earthquake; the sudden illness or death of a person. (2 Blackstone's Commentaries,
122; Story in Bailments, sec. 25.)

Escriche, in his Diccionario de Legislacion y Jurisprudencia, defines fuerza mayor

as follows.

The event which we could neither foresee nor resist; as for example, the lightning
stroke, hail, inundation, hurricane, public enemy, attack by robbers; Vis major est,
says Cayo, ea quae consilio humano neque provideri neque vitari potest. Accident
and mitigating circumstances.

Bouvier defines the same as —

Any accident due to natural cause, directly exclusively without human

intervention, such as could not have been prevented by any kind of oversight, pains
and care reasonably to have been expected. (Law Reports, 1 Common Pleas
Division, 423; Law Reports, 10 Exchequer, 255.)

Corkburn, chief justice, in a well considered English case (1 Common Pleas

Division, 34, 432), said that were a captain —

Uses all the known means to which prudent and experienced captains ordinarily
have recourse, he does all that can be reasonably required of him; and if, under
such circumtances, he is overpowered by storm or other natural agency, he is
within the rule which gives immunity from the effects of such vis major.

The term generally applies, broadly speaking, to natural accidents, such as those
caused by lightning, earthquake, tempests, public enemy ,etc.

Petitioner could have easily discovered the cause of the collapse if indeed it were
due to force majeure. To Our mind, the real reason why Mr. Ong could not explain
the cause or reason is that either he did not actually conduct the investigation or
that he is, as the respondent Court impliedly held, incompetent. He is not an
engineer, but an architect who had not even passed the government's examination.
Verily, post-incident investigation cannot be considered as material to the present
proceedings. What is significant is the finding of the trial court, affirmed by the
respondent Court, that the collapse was due to construction defects. There was no
evidence offered to overturn this finding. The building was constructed barely four
(4) years prior to the accident in question. It was not shown that any of the causes
denominates as force majeure obtained immediately before or at the time of the
collapse of the ceiling. Such defects could have been easily discovered if only
petitioner exercised due diligence and care in keeping and maintaining the
premises. But as disclosed by the testimony of Mr. Ong, there was no adequate
inspection of the premises before the date of the accident. His answers to the
leading questions on inspection disclosed neither the exact dates of said. inspection
nor the nature and extent of the same. That the structural designs and plans of the
building were duly approved by the City Engineer and the building permits and
certificate of occupancy were issued do not at all prove that there were no defects
in the construction, especially as regards the ceiling, considering that no testimony
was offered to prove that it was ever inspected at all.

It is settled that:

The owner or proprietor of a place of public amusement impliedly warrants that the
premises, appliances and amusement devices are safe for the purpose for which
they are designed, the doctrine being subject to no other exception or qualification
than that he does not contract against unknown defects not discoverable by
ordinary or reasonable means. 14

This implied warranty has given rise to the rule that:

Where a patron of a theater or other place of public amusement is injured, and the
thing that caused the injury is wholly and exclusively under the control and
management of the defendant, and the accident is such as in the ordinary course of
events would not have happened if proper care had been exercised, its occurrence
raises a presumption or permits of an inference of negligence on the part of the
defendant. 15

That presumption or inference was not overcome by the petitioner.

Besides, even assuming for the sake of argument that, as petitioner vigorously
insists, the cause of the collapse was due to force majeure, petitioner would still be
liable because it was guilty of negligence, which the trial court denominated as
gross. As gleaned from Bouvier's definition of and Cockburn's elucidation on force
majeure for one to be exempt from any liability because of it, he must have
exercised care, i.e., he should not have been guilty of negligence.
Turning now to the legal issue posed in this petition, the error lies not in the
disquisitions of the respondent Court, but in the sweeping conclusion of petitioner.
We agree with the respondent Court that petitioner offered no reasonable objection
to the exhibits. More than this, however, We note that the exhibits were admitted
not as independent evidence, but, primarily, as part of the testimony of Mrs. Gloria
Chatto. Neither were the exhibits made the main basis for the award of damages.
As to the latter, including the award for attorney's fees, the testimonial evidence
presented is sufficient to support the same; moreover, petitioner was not deprived
of its right to test the, truth or falsity of private respondents' testimony through
cross-examination or refute their claim by its own evidence. It could not then be
successfully argued by petitioner that the admission of the exhibits violated the
hearsay rule. As this Court sees it, the trial court admitted such merely as
independently relevant statements, which was not objectionable, for:

Where, regardless of the truth or the falsity of a statement, the fact that it has been
made is relevant, the hearsay rule does not apply, but the statement may be shown.
Evidence as to the making of such statement is not secondary but primary, for the
statement itself may constitute a fact; in issue, or be circumstantially relevant as to
the existence of such a fact. 16

Furthermore, and with particular reference to the documents issued in the United
States of America (Exhibits "F", "F-1" to "F-13", inclusive), the main objection
thereto was not that they are hearsay. In its written comment and/or opposition to
documentary exhibits, petitioner objected to their admission on the following
grounds only:

. . . for being incompetent evidence considering that the same were not duly
authenticated by the responsible consular and/or embassy officials authorized to
authenticate the said documents. 17

All told, the instant petition is without merit.

WHEREFORE, judgment is hereby rendered DENYING the instant petition with

costs against petitioner.

SO ORDERED.
G.R. Nos. 103442-45 May 21, 1993

NATIONAL POWER CORPORATION, ET AL., petitioners,

vs.
THE COURT OF APPEALS, GAUDENCIO C. RAYO, ET AL., respondents.

The Solicitor General for plaintiff-appellee.

Ponciano G. Hernandez for private respondents.

DAVIDE, JR., J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of
Court urging this Court to set aside the 19 August 1991 consolidated Decision of
the Court of Appeals in CA.-G.R. CV Nos. 27290-931 which reversed the
Decision of Branch 5 of the then Court of First Instance (now Regional Trial
Court) of Bulacan, and held petitioners National Power Corporation (NPC) and
Benjamin Chavez jointly and severally liable to the private respondents for actual
and moral damages, litigation expenses and attorney's fees.

This present controversy traces its beginnings to four (4) separate complaints2 for
damages filed against the NPC and Benjamin Chavez before the trial court. The
plaintiffs therein, now private respondents, sought to recover actual and other
damages for the loss of lives and the destruction to property caused by the
inundation of the town of Norzagaray, Bulacan on 26-27 October 1978. The
flooding was purportedly caused by the negligent release by the defendants of
water through the spillways of the Angat Dam (Hydroelectric Plant). In said
complaints, the plaintiffs alleged, inter alia, that: 1) defendant NPC operated and
maintained a multi-purpose hydroelectric plant in the Angat River at Hilltop,
Norzagaray, Bulacan; 2) defendant Benjamin Chavez was the plant supervisor at
the time of the incident in question; 3) despite the defendants' knowledge, as early
as 24 October 1978, of the impending entry of typhoon "Kading," they failed to
exercise due diligence in monitoring the water level at the dam; 4) when the said
water level went beyond the maximum allowable limit at the height of the typhoon,
the defendants suddenly, negligently and recklessly opened three (3) of the dam's
spillways, thereby releasing a large amount of water which inundated the banks of
the Angat River; and 5) as a consequence, members of the household of the
plaintiffs, together with their animals, drowned, and their properties were washed
away in the evening of 26 October and the early hours of 27 October 1978.3

In their Answers, the defendants, now petitioners, alleged that: 1) the NPC
exercised due care, diligence and prudence in the operation and maintenance of the
hydroelectric plant; 2) the NPC exercised the diligence of a good father in the
selection of its employees; 3) written notices were sent to the different
municipalities of Bulacan warning the residents therein about the impending
release of a large volume of water with the onset of typhoon "Kading" and advise
them to take the necessary precautions; 4) the water released during the typhoon
was needed to prevent the collapse of the dam and avoid greater damage to people
and property; 5) in spite of the precautions undertaken and the diligence exercised,
they could still not contain or control the flood that resulted and; 6) the damages
incurred by the private respondents were caused by a fortuitous event or force
majeure and are in the nature and character of damnum absque injuria. By way of
special affirmative defense, the defendants averred that the NPC cannot be sued
because it performs a purely governmental function.4

Upon motion of the defendants, a preliminary hearing on the special defense was
conducted. As a result thereof, the trial court dismissed the complaints as against
the NPC on the ground that the provision of its charter allowing it to sue and be
sued does not contemplate actions based on tort. The parties do not, however,
dispute the fact that this Court overruled the trial court and ordered the
reinstatement of the complaints as against the NPC.5

Being closely interrelated, the cases were consolidated and trial thereafter ensued.

The lower court rendered its decision on 30 April 1990 dismissing the complaints
"for lack of sufficient and credible evidence."6 Consequently, the private
respondents seasonably appealed therefrom to the respondent Court which then
docketed the cases as CA-G.R. CV Nos. 27290-93.

In its joint decision promulgated on 19 August 1991, the Court of Appeals reversed
the appealed decision and awarded damages in favor of the private respondents.
The dispositive portion of the decision reads:
CONFORMABLY TO THE FOREGOING, the joint decision appealed from is
hereby REVERSED and SET ASIDE, and a new one is hereby rendered:

1. In Civil Case No. SM-950, ordering defendants-appellees to pay, jointly and

severally, plaintiffs-appellants, with legal interest from the date when this decision
shall become final and executory, the following:

A. Actual damages, to wit:

1) Gaudencio C. Rayo, Two Hundred Thirty One Thousand Two Hundred

Sixty Pesos (P231,260.00);

2) Bienvenido P. Pascual, Two Hundred Four Thousand Five Hundred Pesos

(P204.500.00);

3) Tomas Manuel, One Hundred Fifty Five Thousand Pesos (P155,000.00);

4) Pedro C. Bartolome, One Hundred Forty Seven Thousand Pesos

(P147,000.00);.

5) Bernardino Cruz, One Hundred Forty Three Thousand Five Hundred Fifty
Two Pesos and Fifty Centavos (P143,552.50);

6) Jose Palad, Fifty Seven Thousand Five Hundred Pesos (P57,500.00);

7) Mariano S. Cruz, Forty Thousand Pesos (P40,000.00);

8) Lucio Fajardo, Twenty nine Thousand Eighty Pesos (P29,080.00); and

B. Litigation expenses of Ten Thousand Pesos (P10,000.00);

2. In Civil case No. SM-951, ordering defendants-appellees to pay jointly and

severally, plaintiff-appellant, with legal interest from the date when this decision
shall have become final and executory, the following :

A. Actual damages of Five Hundred Twenty Thousand Pesos (P520,000.00);.

B. Moral damages of five hundred Thousand Pesos (P500,000.00); and.

C. Litigation expenses of Ten Thousand Pesos (P10,000.00);.

3. In Civil Case No. SM-953, ordering defendants-appellees to pay, jointly and
severally, with legal interest from the date when this decision shall have become
final and executory;

A. Plaintiff-appellant Angel C. Torres:

1) Actual damages of One Hundred Ninety Nine Thousand One Hundred

Twenty Pesos (P199,120.00);

2) Moral Damages of One Hundred Fifty Thousand Pesos (P150,000.00);

B. Plaintiff-appellant Norberto Torres:

1) Actual damages of Fifty Thousand Pesos (P50,000.00);

2) Moral damages of Fifty Thousand Pesos (P50,000.00);

C. Plaintiff-appellant Rodelio Joaquin:

1) Actual damages of One Hundred Thousand Pesos (P100,000.00);

2) Moral damages of One Hundred Thousand Pesos (P100,000.00); and

D. Plaintifsf-appellants litigation expenses of Ten Thousand Pesos

(P10,000.00);

4. In Civil case No. SM-1247, ordering defendants-appellees to pay, jointly and

severally, with legal interest from the date when this decision shall have become
final and executory :

A. Plaintiffs-appellants Presentacion Lorenzo and Clodualdo Lorenzo:

1) Actual damages of Two Hundred Fifty Six Thousand Six Hundred Pesos
(P256,600.00);

2) Moral damages of Fifty Thousand Pesos (P50,000.00);

B. Plaintiff-appellant Consolacion Guzman :

1) Actual damages of One Hundred forty Thousand Pesos (P140,000.00);

2) Moral damages of Fifty Thousand Pesos (P50,000.00);

C. Plaintiff-appellant Virginia Guzman :

1) Actual damages of Two Hundred Five Hundred Twenty Pesos (205,520.00);

and

D. Plaintiffs-appellants litigation expenses of Ten Thousand Pesos (10,000.00).

In addition, in all the four (4) instant cases, ordering defendants-appellees to pay,
jointly and severally, plaintiffs-appellants attorney fees in an amount equivalent to
15% of the total amount awarded.

No pronouncement as to costs.7

The foregoing judgment is based on the public respondent's conclusion that the
petitioners were guilty of:

. . . a patent gross and evident lack of foresight, imprudence and negligence . . . in

the management and operation of Angat Dam. The unholiness of the hour, the
extent of the opening of the spillways, And the magnitude of the water released,
are all but products of defendants-appellees' headlessness, slovenliness, and
carelessness. The resulting flash flood and inundation of even areas (sic) one (1)
kilometer away from the Angat River bank would have been avoided had
defendants-appellees prepared the Angat Dam by maintaining in the first place, a
water elevation which would allow room for the expected torrential rains.8

This conclusion, in turn, is anchored on its findings of fact, to wit:

As early as October 21, 1978, defendants-appellees knew of the impending

onslaught of and imminent danger posed by typhoon "Kading". For as alleged by
defendants-appellees themselves, the coming of said super typhoon was bannered
by Bulletin Today, a newspaper of national circulation, on October 25, 1978, as
"Super Howler to hit R.P." The next day, October 26, 1978, said typhoon once
again merited a headline in said newspaper as "Kading's Big Blow expected this
afternoon" (Appellee's Brief, p. 6). Apart from the newspapers, defendants-
appellees learned of typhoon "Kading' through radio announcements (Civil Case
No. SM-950, TSN, Benjamin Chavez, December 4, 1984, pp. 7-9).
Defendants-appellees doubly knew that the Angat Dam can safely hold a normal
maximum headwater elevation of 217 meters (Appellee's brief, p. 12; Civil Case
No. SM-951, Exhibit "I-6"; Civil Case No. SM-953, Exhibit "J-6"; Civil Case No.
SM-1247, Exhibit "G-6").

Yet, despite such knowledge, defendants-appellees maintained a reservoir water

elevation even beyond its maximum and safe level, thereby giving no sufficient
allowance for the reservoir to contain the rain water that will inevitably be brought
by the coming typhoon.

On October 24, 1978, before typhoon "Kading" entered the Philippine area of
responsibility, water elevation ranged from 217.61 to 217.53, with very little
opening of the spillways, ranging from 1/2 to 1 meter. On October 25, 1978, when
typhoon "Kading" entered the Philippine area of responsibility, and public storm
signal number one was hoisted over Bulacan at 10:45 a.m., later raised to number
two at 4:45 p.m., and then to number three at 10:45 p.m., water elevation ranged
from 217.47 to 217.57, with very little opening of the spillways, ranging from 1/2
to 1 meter. On October 26, 1978, when public storm signal number three remained
hoisted over Bulacan, the water elevation still remained at its maximum level of
217.00 to 218.00 with very little opening of the spillways ranging from 1/2 to 2
meters, until at or about midnight, the spillways were suddenly opened at 5 meters,
then increasing swiftly to 8, 10, 12, 12.5, 13, 13.5, 14, 14.5 in the early morning
hours of October 27, 1978, releasing water at the rate of 4,500 cubic meters per
second, more or less. On October 27, 1978, water elevation remained at a range of
218.30 to 217.05 (Civil Case No. SM-950, Exhibits "D" and series, "L", "M", "N",
and "O" and Exhibits "3" and "4"; Civil Case No. SM-951, Exhibits "H" and "H-
1"; Civil Case No. SM-953, Exhibits "I" and "I-1"; Civil Case No. SM 1247,
Exhibits "F" and "F-1").

xxx xxx xxx

From the mass of evidence extant in the record, We are convinced, and so hold that
the flash flood on October 27, 1978, was caused not by rain waters (sic), but by
stored waters (sic) suddenly and simultaneously released from the Angat Dam by
defendants-appellees, particularly from midnight of October 26, 1978 up to the
morning hours of October 27,
1978.9
The appellate court rejected the petitioners' defense that they had sent "early
warning written notices" to the towns of Norzagaray, Angat, Bustos, Plaridel,
Baliwag and Calumpit dated 24 October 1978 which read:

TO ALL CONCERN (sic):

Please be informed that at present our reservoir (dam) is full and that we have been
releasing water intermittently for the past several days.

With the coming of typhoon "Rita" (Kading) we expect to release greater (sic)
volume of water, if it pass (sic) over our place.

In view of this kindly advise people residing along Angat River to keep alert and
stay in safe places.

BENJAMIN L. CHAVEZ
Power Plant Superintendent10

because:

Said notice was delivered to the "towns of Bulacan" on October 26, 1978 by
defendants-appellees driver, Leonardo Nepomuceno (Civil Case No. SM-950,
TSN, Benjamin Chavez, December 4, 1984, pp. 7-11 and TSN, Leonardo
Nepomuceno, March 7, 1985, pp. 10-12).

Said notice is ineffectual, insufficient and inadequate for purposes of the opening
of the spillway gates at midnight of October 26, 1978 and on October 27, 1978. It
did not prepare or warn the persons so served, for the volume of water to be
released, which turned out to be of such magnitude, that residents near or along the
Angat River, even those one (1) kilometer away, should have been advised to
evacuate. Said notice, addressed "TO ALL CONCERN (sic)," was delivered to a
policeman (Civil Case No. SM-950, pp. 10-12 and Exhibit "2-A") for the
municipality of Norzagaray. Said notice was not thus addressed and delivered to
the proper and responsible officials who could have disseminated the warning to
the residents directly affected. As for the municipality of Sta. Maria, where
plaintiffs-appellants in Civil Case No. SM-1246 reside, said notice does not appear
to have been served.11

Relying on Juan F. Nakpil & Sons vs. Court of Appeals,12 public respondent
rejected the petitioners' plea that the incident in question was caused by force
majeure and that they are, therefore, not liable to the private respondents for any
kind of damage — such damage being in the nature of damnum absque injuria.

The motion for reconsideration filed by the petitioners, as well as the motion to
modify judgment filed by the public respondents,13 were denied by the public
respondent in its Resolution of 27 December 1991.14

Petitioners thus filed the instant petition on 21 February 1992.

After the Comment to the petition was filed by the private respondents and the
Reply thereto was filed by the petitioners, We gave due course to the petition on 17
June 1992 and directed the parties to submit their respective Memoranda,15 which
they subsequently complied with.

The petitioners raised the following errors allegedly committed by the respondent
Court :

I. THE COURT OF APPEALS ERRED IN APPLYING THE RULING OF

NAKPIL & SONS V. COURT OF APPEALS AND HOLDING THAT
PETITIONERS WERE GUILTY OF NEGLIGENCE.

II. THE COURT OF APPEALS ERRED IN HOLDING THAT THE

WRITTEN NOTICES OF WARNING ISSUED BY PETITIONERS WERE
INSUFFICIENT.

III. THE COURT OF APPEALS ERRED IN HOLDING THAT THE

DAMAGE SUFFERED BY PRIVATE RESPONDENTS WAS NOT DAMNUM
ABSQUE INJURIA.

IV. THE COURT OF APPEALS ERRED IN NOT AWARDING THE

COUNTERCLAIM OF PETITIONERS FOR ATTORNEY'S FEES AND
EXPENSES OF LITIGATION.16

These same errors were raised by herein petitioners in G.R. No. 96410, entitled
National Power Corporation, et al., vs. Court of Appeals, et al.,17 which this Court
decided on 3 July 1992. The said case involved the very same incident subject of
the instant petition. In no uncertain terms, We declared therein that the proximate
cause of the loss and damage sustained by the plaintiffs therein — who were
similarly situated as the private respondents herein — was the negligence of the
petitioners, and that the 24 October 1978 "early warning notice" supposedly sent to
the affected municipalities, the same notice involved in the case at bar, was
insufficient. We thus cannot now rule otherwise not only because such a decision
binds this Court with respect to the cause of the inundation of the town of
Norzagaray, Bulacan on 26-27 October 1978 which resulted in the loss of lives and
the destruction to property in both cases, but also because of the fact that on the
basis of its meticulous analysis and evaluation of the evidence adduced by the
parties in the cases subject of CA-G.R. CV Nos. 27290-93, public respondent
found as conclusively established that indeed, the petitioners were guilty of "patent
gross and evident lack of foresight, imprudence and negligence in the management
and operation of Angat Dam," and that "the extent of the opening of the spillways,
and the magnitude of the water released, are all but products of defendants-
appellees' headlessness, slovenliness, and carelessness."18 Its findings and
conclusions are biding upon Us, there being no showing of the existence of any of
the exceptions to the general rule that findings of fact of the Court of Appeals are
conclusive upon this Court.19 Elsewise stated, the challenged decision can stand
on its own merits independently of Our decision in G.R. No. 96410. In any event,
We reiterate here in Our pronouncement in the latter case that Juan F. Nakpil &
Sons vs. Court of Appeals20 is still good law as far as the concurrent liability of an
obligor in the case of force majeure is concerned. In the Nakpil case, We held:

To exempt the obligor from liability under Article 1174 of the Civil Code, for a
breach of an obligation due to an "act of God," the following must concur: (a) the
cause of the breach of the obligation must be independent of the will of the debtor;
(b) the event must be either unforseeable or unavoidable; (c) the event must be
such as to render it impossible for the debtor to fulfill his obligation in a moral
manner; and (d) the debtor must be free from any participation in, or aggravation
of the injury to the creditor. (Vasquez v. Court of Appeals, 138 SCRA 553; Estrada
v. Consolacion, 71 SCRA 423; Austria v. Court of Appeals, 39 SCRA 527;
Republic of the Phil. v. Luzon Stevedoring Corp., 21 SCRA 279; Lasam v. Smith,
45 Phil. 657).

Thus, if upon the happening of a fortuitous event or an act of God, there concurs a
corresponding fraud, negligence, delay or violation or contravention in any manner
of the tenor of the obligation as provided for in Article 1170 of the Civil Code,
which results in loss or damage, the obligor cannot escape liability.

The principle embodied in the act of God doctrine strictly requires that the act must
be one occasioned exclusively by the violence of nature and all human agencies are
to be excluded from creating or entering into the cause of the mischief. When the
effect, the cause of which is to be considered, is found to be in part the result of the
participation of man, whether it be from active intervention or neglect, or failure to
act, the whole occurrence is thereby humanized, as it were, and removed from the
rules applicable to the acts of God. (1 Corpus Juris, pp. 1174-1175).

Thus it has been held that when the negligence of a person concurs with an act of
God in producing a loss, such person is not exempt from liability by showing that
the immediate cause of the damage was the act of God. To be exempt from liability
for loss because of an act of God, he must be free from any previous negligence or
misconduct by which that loss or damage may have been occasioned. (Fish &
Elective Co. v. Phil. Motors, 55 Phil. 129; Tucker v. Milan, 49 O.G. 4379;
Limpangco & Sons v. Yangco Steamship Co., 34 Phil. 594, 604; Lasam v. Smith,
45 Phil. 657). 21

Accordingly, petitioners cannot be heard to invoke the act of God or force majeure
to escape liability for the loss or damage sustained by private respondents since
they, the petitioners, were guilty of negligence. The event then was not occasioned
exclusively by an act of God or force majeure; a human factor — negligence or
imprudence — had intervened. The effect then of the force majeure in question
may be deemed to have, even if only partly, resulted from the participation of man.
Thus, the whole occurrence was thereby humanized, as it were, and removed from
the laws applicable to acts of God.

WHEREFORE, for want of merit, the instant petition is hereby DISMISSED and
the Consolidated Decision of the Court of Appeals in CA-G.R. CV Nos. 27290-93
is AFFIRMED, with costs against the petitioners.

SO ORDERED.

G.R. No. 126389 July 10, 1998

SOUTHEASTERN COLLEGE INC., petitioner,

vs.

COURT OF APPEALS, JUANITA DE JESUS VDA. DE DIMAANO, EMERITA

DIMAANO, REMEDIOS DIMAANO, CONSOLACION DIMAANO and
MILAGROS DIMAANO, respondents.

PURISIMA, J.:
Petition for review under Rule 45 of the Rules of Court seeking to set aside the
Decision 1 promulgated on July 31, 1996, and Resolution 2 dated September 12,
1996 of the Court of Appeals 3 in CA-G.R. No. 41422, entitled "Juanita de Jesus
vda. de Dimaano, et al. vs. Southeastern College, Inc.", which reduced the moral
damages awarded below from P1,000,000.00 to P200,000.00. 4 The Resolution
under attack denied petitioner's motion for reconsideration.

Private respondents are owners of a house at 326 College Road, Pasay City, while
petitioner owns a four-storey school building along the same College Road. On
October 11, 1989, at about 6:30 in the morning, a powerful typhoon "Saling" hit
Metro Manila. Buffeted by very strong winds, the roof of petitioner's building was
partly ripped off and blown away, landing on and destroying portions of the
roofing of private respondents' house. After the typhoon had passed, an ocular
inspection of the destroyed building was conducted by a team of engineers headed
by the city building official, Engr. Jesus L. Reyna. Pertinent aspects of the latter's
Report 5 dated October 18, 1989 stated, as follows:

5. One of the factors that may have led to this calamitous event is the formation
of the building in the area and the general direction of the wind. Situated in the
peripheral lot is an almost U-shaped formation of 4-storey building. Thus, with the
strong winds having a westerly direction, the general formation of the building
becomes a big funnel-like structure, the one situated along College Road, receiving
the heaviest impact of the strong winds. Hence, there are portions of the roofing,
those located on both ends of the building, which remained intact after the storm.

6. Another factor and perhaps the most likely reason for the dislodging of the
roofing structural trusses is the improper anchorage of the said trusses to the roof
beams. The 1/2' diameter steel bars embedded on the concrete roof beams which
serve as truss anchorage are not bolted nor nailed to the trusses. Still, there are
other steel bars which were not even bent to the trusses, thus, those trusses are not
anchored at all to the roof beams.

It then recommended that "to avoid any further loss and damage to lives, limbs and
property of persons living in the vicinity," the fourth floor of subject school
building be declared as a "structural hazard."

In their Complaint 6 before the Regional Trial Court of Pasay City, Branch 117,
for damages based on culpa aquiliana, private respondents alleged that the damage
to their house rendered the same uninhabitable, forcing them to stay temporarily in
others' houses. And so they sought to recover from petitioner P117,116.00, as
actual damages, P1,000,000.00, as moral damages, P300,000.00, as exemplary
damages and P100,000.00, for and as attorney's fees; plus costs.

In its Answer, petitioner averred that subject school building had withstood several
devastating typhoons and other calamities in the past, without its roofing or any
portion thereof giving way; that it has not been remiss in its responsibility to see to
it that said school building, which houses school children, faculty members, and
employees, is "in tip-top condition"; and furthermore, typhoon "Saling" was "an
act of God and therefore beyond human control" such that petitioner cannot be
answerable for the damages wrought thereby, absent any negligence on its part.

The trial court, giving credence to the ocular inspection report to the effect that
subject school building had a "defective roofing structure," found that, while
typhoon "Saling" was accompanied by strong winds, the damage to private
respondents' houses "could have been avoided if the construction of the roof of
[petitioner's] building was not faulty." The dispositive portion of the lower court's
decision 7 reads, thus:

WHEREFORE, in view of the foregoing, the Court renders judgment (sic) in favor
of the plaintiff (sic) and against the defendants, (sic) ordering the latter to pay
jointly and severally the former as follows:

a) P117,116.00, as actual damages, plus litigation expenses;

b) P1,000,000.00 as moral damages;

c) P100,000.00 as attorney's fees;

d) Costs of the instant suit.

The claim for exemplary damages is denied for the reason that the defendants (sic)
did in a wanton fraudulent, reckless, oppressive or malevolent manner.

In its appeal to the Court of Appeals, petitioner assigned as errors, 8 that:

THE TRIAL COURT ERRED IN HOLDING THAT TYPHOON "SALING", AS

AN ACT OF GOD, IS NOT "THE SOLE AND ABSOLUTE REASON" FOR
THE RIPPING-OFF OF THE SMALL PORTION OF THE ROOF OF
SOUTHEASTERN'S FOUR (4) STOREY SCHOOL BUILDING.

II

THE TRIAL COURT ERRED IN HOLDING THAT "THE CONSTRUCTION

OF THE ROOF OF DEFENDANT'S SCHOOL BUILDING WAS FAULTY"
NOTWITHSTANDING THE ADMISSION THAT THERE WERE TYPHOONS
BEFORE BUT NOT AS GRAVE AS TYPHOON "SALING" WHICH IS THE
DIRECT AND PROXIMATE CAUSE OF THE INCIDENT.

III

THE TRIAL COURT ERRED IN AWARDING ACTUAL AND MORAL

DAMAGES AS WELL AS ATTORNEY'S FEES AND LITIGATION
EXPENSES AND COSTS OF SUIT TO DIMAANOS WHEN THEY HAVE
NOT INCURRED ACTUAL DAMAGES AT ALL AS DIMAANOS HAVE
ALREADY SOLD THEIR PROPERTY, AN INTERVENING EVENT THAT
RENDERS THIS CASE MOOT AND ACADEMIC.

IV

THE TRIAL COURT ERRED IN ORDERING THE ISSUANCE OF THE WRIT

OF EXECUTION INSPITE OF THE PERFECTION OF SOUTHEASTERN'S
APPEAL WHEN THERE IS NO COMPELLING REASON FOR THE
ISSUANCE THERETO.

As mentioned earlier, respondent Court of Appeals affirmed with modification the

trial court's disposition by reducing the award of moral damages from
P1,000,000.00 to P200,000.00. Hence, petitioner's resort to this Court, raising for
resolution the issues of:

1. Whether or not the award of actual damages [sic] to respondent Dimaanos

on the basis of speculation or conjecture, without proof or receipts of actual
damage, [sic] legally feasible or justified.

2. Whether or not the award of moral damages to respondent Dimaanos, with

the latter having suffered, actual damage has legal basis.
3. Whether or not respondent Dimaanos who are no longer the owner of the
property, subject matter of the case, during its pendency, has the right to pursue
their complaint against petitioner when the case was already moot and academic by
the sale of the property to third party.

4. Whether or not the award of attorney's fees when the case was already moot
academic [sic] legally justified.

5. Whether or not petitioner is liable for damage caused to others by typhoon

"Saling" being an act of God.

6. Whether or not the issuance of a writ of execution pending appeal, ex-parte

or without hearing, has support in law.

The pivot of inquiry here, determinative of the other issues, is whether the damage
on the roof of the building of private respondents resulting from the impact of the
falling portions of the school building's roof ripped off by the strong winds of
typhoon "Saling", was, within legal contemplation, due to fortuitous event? If so,
petitioner cannot be held liable for the damages suffered by the private
respondents. This conclusion finds support in Article 1174 of Civil Code, which
provides:

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

The antecedent of fortuitous event or caso fortuito is found in the Partidas which
defines it as "an event which takes place by accident and could not have been
foreseen." 9 Escriche elaborates it as "an unexpected event or act of God which
could neither be foreseen nor resisted." 10 Civilist Arturo M. Tolentino adds that
"[f]ortuitous events may be produced by two general causes: (1) by nature, such as
earthquakes, storms, floods, epidemics, fires, etc. and (2) by the act of man, such as
an armed invasion, attack by bandits, governmental prohibitions, robbery, etc." 11

In order that a fortuitous event may exempt a person from liability, it is necessary
that he be free from any previous negligence or misconduct by reason of which the
loss may have been occasioned. 12 An act of God cannot be invoked for the
protection of a person who has been guilty of gross negligence in not trying to
forestall its possible adverse consequences. When a person's negligence concurs
with an act of God in producing damage or injury to another, such person is not
exempt from liability by showing that the immediate or proximate cause of the
damages or injury was a fortuitous event. When the effect is found to be partly the
result of the participation of man — whether it be from active intervention, or
neglect, or failure to act — the whole occurrence is hereby humanized, and
removed from the rules applicable to acts of God. 13

In the case under consideration, the lower court accorded full credence to the
finding of the investigating team that subject school building's roofing had "no
sufficient anchorage to hold it in position especially when battered by strong
winds." Based on such finding, the trial court imputed negligence to petitioner and
adjudged it liable for damages to private respondents.

After a thorough study and evaluation of the evidence on record, this Court
believes otherwise, notwithstanding the general rule that factual findings by the
trail court, especially when affirmed by the appellate court, are binding and
conclusive upon this Court. 14 After a careful scrutiny of the records and the
pleadings submitted by the parties, we find exception to this rule and hold that the
lower courts misappreciated the evidence proffered.

There is no question that a typhoon or storm is a fortuitous event, a natural

occurrence which may be foreseen but is unavoidable despite any amount of
foresight, diligence or care. 15 In order to be exempt from liability arising from
any adverse consequence engendered thereby, there should have been no human
participation amounting to a negligent act. 16 In other words; the person seeking
exoneration from liability must not be guilty of negligence. Negligence, as
commonly understood, is conduct which naturally or reasonably creates undue risk
or harm to others. It may be the failure to observe that degree of care, precaution,
and vigilance which the circumstances justify demand, 17 or the omission to do
something which a prudent and reasonable man, guided by considerations which
ordinarily regulate the conduct of human affairs, would
do. 18 From these premises, we proceed to determine whether petitioner was
negligent, such that if it were not, the damage caused to private respondents' house
could have been avoided?

At the outset, it bears emphasizing that a person claiming damages for the
negligence of another has the burden of proving the existence of fault or
negligence causative of his injury or loss. The facts constitutive of negligence must
be affirmatively established by competent evidence, 19 not merely by
presumptions and conclusions without basis in fact. Private respondents, in
establishing the culpability of petitioner, merely relied on the aforementioned
report submitted by a team which made an ocular inspection of petitioner's school
building after the typhoon. As the term imparts, an ocular inspection is one by
means of actual sight or viewing. 20 What is visual to the eye through, is not
always reflective of the real cause behind. For instance, one who hears a gunshot
and then sees a wounded person, cannot always definitely conclude that a third
person shot the victim. It could have been self-inflicted or caused accidentally by a
stray bullet. The relationship of cause and effect must be clearly shown.

In the present case, other than the said ocular inspection, no investigation was
conducted to determine the real cause of the partial unroofing of petitioner's school
building. Private respondents did not even show that the plans, specifications and
design of said school building were deficient and defective. Neither did they prove
any substantial deviation from the approved plans and specifications. Nor did they
conclusively establish that the construction of such building was basically flawed.
21

On the other hand, petitioner elicited from one of the witnesses of private
respondents, city building official Jesus Reyna, that the original plans and design
of petitioner's school building were approved prior to its construction. Engr. Reyna
admitted that it was a legal requirement before the construction of any building to
obtain a permit from the city building official (city engineer, prior to the passage of
the Building Act of 1977). In like manner, after construction of the building, a
certification must be secured from the same official attesting to the readiness for
occupancy of the edifice. Having obtained both building permit and certificate of
occupancy, these are, at the very least, prima facie evidence of the regular and
proper construction of subject school building. 22

Furthermore, when part of its roof needed repairs of the damage inflicted by
typhoon "Saling", the same city official gave the go-signal for such repairs —
without any deviation from the original design — and subsequently, authorized the
use of the entire fourth floor of the same building. These only prove that subject
building suffers from no structural defect, contrary to the report that its "U-shaped"
form was "structurally defective." Having given his unqualified imprimatur, the
city building official is presumed to have properly performed his duties 23 in
connection therewith.

In addition, petitioner presented its vice president for finance and administration
who testified that an annual maintenance inspection and repair of subject school
building were regularly undertaken. Petitioner was even willing to present its
maintenance supervisor to attest to the extent of such regular inspection but private
respondents agreed to dispense with his testimony and simply stipulated that it
would be corroborative of the vice president's narration.

Moreover, the city building official, who has been in the city government service
since 1974, admitted in open court that no complaint regarding any defect on the
same structure has ever been lodged before his office prior to the institution of the
case at bench. It is a matter of judicial notice that typhoons are common
occurrences in this country. If subject school building's roofing was not firmly
anchored to its trusses, obviously, it could not have withstood long years and
several typhoons even stronger than "Saling."

In light of the foregoing, we find no clear and convincing evidence to sustain the
judgment of the appellate court. We thus hold that petitioner has not been shown
negligent or at fault regarding the construction and maintenance of its school
building in question and that typhoon "Saling" was the proximate cause of the
damage suffered by private respondents' house.

With this disposition on the pivotal issue, private respondents' claim for actual and
moral damages as well as attorney's fees must fail. 24 Petitioner cannot be made to
answer for a purely fortuitous event. 25 More so because no bad faith or willful act
to cause damage was alleged and proven to warrant moral damages.

Private respondents failed to adduce adequate and competent proof of the

pecuniary loss they actually incurred. 26 It is not enough that the damage be
capable of proof but must be actually proved with a reasonable degree of certainty,
pointing out specific facts that afford a basis for measuring whatever compensatory
damages are borne. 27 Private respondents merely submitted an estimated amount
needed for the repair of the roof their subject building. What is more, whether the
"necessary repairs" were caused ONLY by petitioner's alleged negligence in the
maintenance of its school building, or included the ordinary wear and tear of the
house itself, is an essential question that remains indeterminable.

The Court deems unnecessary to resolve the other issues posed by petitioner.

As regards the sixth issue, however, the writ of execution issued on April 1, 1993
by the trial court is hereby nullified and set aside. Private respondents are ordered
to reimburse any amount or return to petitioner any property which they may have
received by virtue of the enforcement of said writ.
WHEREFORE, the petition is GRANTED and the challenged Decision is
REVERSED. The complaint of private respondents in Civil Case No. 7314 before
the trial court a quo is ordered DISMISSED and the writ of execution issued on
April 1, 1993 in said case is SET ASIDE. Accordingly, private respondents are
ORDERED to return to petitioner any amount or property received by them by
virtue of said writ. Costs against the private respondents. SO ORDERED.

G.R. No. L-53401 November 6, 1989

THE ILOCOS NORTE ELECTRIC COMPANY, petitioner,

vs.
HONORABLE COURT OF APPEALS, (First Division) LILIAN JUAN LUIS,
JANE JUAN YABES, VIRGINIA JUAN CID, GLORIA JUAN CARAG, and
PURISIMA JUAN, respondents.

Herman D. Coloma for petitioner.

Glicerio S. Ferrer for private respondents.

PARAS, J.:

Sought to be reversed in this petition is the Decision * of the respondent Court of

Appeals' First Division, setting aside the judgment of the then Court of First
Instance (CFI) of Ilocos Norte, with the following dispositive portion:

WHEREFORE, the appealed judgment is hereby set aside and another rendered in
its stead whereby defendant is hereby sentenced to pay plaintiffs actual damages of
P30,229.45; compensatory damages of P50,000.00; exemplary damages of
P10,000.00; attorney's fees of P3,000.00; plus the costs of suit in both instances. (p.
27 Rollo)

Basically, this case involves a clash of evidence whereby both patties strive for the
recognition of their respective versions of the scenario from which the disputed
claims originate. The respondent Court of Appeals (CA) summarized the evidence
of the parties as follows:

From the evidence of plaintiffs it appears that in the evening of June 28 until the
early morning of June 29, 1967 a strong typhoon by the code name "Gening"
buffeted the province of Ilocos Norte, bringing heavy rains and consequent
flooding in its wake. Between 5:30 and 6:00 A.M. on June 29, 1967, after the
typhoon had abated and when the floodwaters were beginning to recede the
deceased Isabel Lao Juan, fondly called Nana Belen, ventured out of the house of
her son-in-law, Antonio Yabes, on No. 19 Guerrero Street, Laoag City, and
proceeded northward towards the direction of the Five Sisters Emporium, of which
she was the owner and proprietress, to look after the merchandise therein that
might have been damaged. Wading in waist-deep flood on Guerrero, the deceased
was followed by Aida Bulong, a Salesgirl at the Five Sisters Grocery, also owned
by the deceased, and by Linda Alonzo Estavillo, a ticket seller at the YJ Cinema,
which was partly owned by the deceased. Aida and Linda walked side by side at a
distance of between 5 and 6 meters behind the deceased, Suddenly, the deceased
screamed "Ay" and quickly sank into the water. The two girls attempted to help,
but fear dissuaded them from doing so because on the spot where the deceased
sank they saw an electric wire dangling from a post and moving in snake-like
fashion in the water. Upon their shouts for help, Ernesto dela Cruz came out of the
house of Antonio Yabes. Ernesto tried to go to the deceased, but at four meters
away from her he turned back shouting that the water was grounded. Aida and
Linda prodded Ernesto to seek help from Antonio Yabes at the YJ Cinema building
which was four or five blocks away.

When Antonio Yabes was informed by Ernesto that his mother-in law had been
electrocuted, he acted immediately. With his wife Jane, together with Ernesto and
one Joe Ros, Yabes passed by the City Hall of Laoag to request the police to ask
the people of defendant Ilocos Norte Electric Company or INELCO to cut off the
electric current. Then the party waded to the house on Guerrero Street. The
floodwater was receding and the lights inside the house were out indicating that the
electric current had been cut off in Guerrero. Yabes instructed his boys to fish for
the body of the deceased. The body was recovered about two meters from an
electric post.

In another place, at about 4:00 A.M. on that fateful date, June 29, 1967, Engineer
Antonio Juan, Power Plant Engineer of the National Power Corporation at the
Laoag Diesel-Electric Plant, noticed certain fluctuations in their electric meter
which indicated such abnormalities as grounded or short-circuited lines. Between
6:00 and 6:30 A.M., he set out of the Laoag NPC Compound on an inspection. On
the way, he saw grounded and disconnected lines. Electric lines were hanging from
the posts to the ground. Since he could not see any INELCO lineman, he decided
to go to the INELCO Office at the Life Theatre on Rizal Street by way of
Guerrero. As he turned right at the intersection of Guerrero and Rizal, he saw an
electric wire about 30 meters long strung across the street "and the other end was
seeming to play with the current of the water." (p. 64, TSN, Oct. 24, 1972) Finding
the Office of the INELCO still closed, and seeing no lineman therein, he returned
to the NPC Compound.

At about 8:10 A.M., Engr. Juan went out of the compound again on another
inspection trip. Having learned of the death of Isabel Lao Juan, he passed by the
house of the deceased at the corner of Guerrero and M.H. del Pilar streets to which
the body had been taken. Using the resuscitator which was a standard equipment in
his jeep and employing the skill he acquired from an in service training on
resuscitation, he tried to revive the deceased. His efforts proved futile. Rigor mortis
was setting in. On the left palm of the deceased, Engr. Juan noticed a hollow
wound. Proceeding to the INELCO Office, he met two linemen on the way. He
told them about the grounded lines of the INELCO In the afternoon of the same
day, he went on a third inspection trip preparatory to the restoration of power. The
dangling wire he saw on Guerrero early in the morning of June 29, 1967 was no
longer there.

Many people came to the house at the corner of Guerrero and M.H. del Pilar after
learning that the deceased had been electrocuted. Among the sympathizers was Dr.
Jovencio Castro, Municipal Health Officer of Sarrat, Ilocos Norte. Upon the
request of the relatives of the deceased, Dr. Castro examined the body at about
8:00 A.M. on June 29, 1967. The skin was grayish or, in medical parlance,
cyanotic, which indicated death by electrocution. On the left palm, the doctor
found an "electrically charged wound" (Exh. C-1: p. 101, TSN, Nov. 28, 1972) or a
first degree burn. About the base of the thumb on the left hand was a burned
wound. (Exh. C-2, pp. 102-103, Ibid.) The certificate of death prepared by Dr.
Castro stated the cause of' death as ,'circulatory shock electrocution" (Exh. I; p.
103, Ibid.).

In defense and exculpation, defendant presented the testimonies of its officers and
employees, namely, Conrado Asis, electric engineer; Loreto Abijero, collector-
inspector; Fabico Abijero, lineman; and Julio Agcaoili, president-manager of
INELCO Through the testimonies of these witnesses, defendant sought to prove
that on and even before June 29, 1967 the electric service system of the INELCO
in the whole franchise area, including Area No. 9 which covered the residence of
Antonio Yabes at No. 18 Guerrero Street, did not suffer from any defect that might
constitute a hazard to life and property. The service lines, devices and other
INELCO equipment in Area No. 9 had been newly-installed prior to the date in
question. As a public service operator and in line with its business of supplying
electric current to the public, defendant had installed safety devices to prevent and
avoid injuries to persons and damage to property in case of natural calamities such
as floods, typhoons, fire and others. Defendant had 12 linesmen charged with the
duty of making a round-the-clock check-up of the areas respectively assigned to
them.

Defendant asserts that although a strong typhoon struck the province of Ilocos
Norte on June 29, 1967, putting to streets of Laoag City under water, only a few
known places in Laoag were reported to have suffered damaged electric lines,
namely, at the southern approach of the Marcos Bridge which was washed away
and where the INELCO lines and posts collapsed; in the eastern part near the
residence of the late Governor Simeon Mandac; in the far north near the
defendant's power plant at the corner of Segundo and Castro Streets, Laoag City
and at the far northwest side, near the premises of the Ilocos Norte National High
School. Fabico Abijero, testified that in the early morning before 6 o'clock on June
29, 1967 he passed by the intersection of Rizal and Guerrero Streets to switch off
the street lights in Area No. 9. He did not see any cut or broken wires in or near the
vicinity. What he saw were many people fishing out the body of Isabel Lao Juan.

A witness in the person of Dr. Antonio Briones was presented by the defense to
show that the deceased could not have died of electrocution Substantially, the
testimony of the doctor is as follows: Without an autopsy on the cadaver of the
victim, no doctor, not even a medicolegal expert, can speculate as to the real cause
of death. Cyanosis could not have been found in the body of the deceased three
hours after her death, because cyanosis which means lack of oxygen circulating in
the blood and rendering the color of the skin purplish, appears only in a live
person. The presence of the elongated burn in the left palm of the deceased
(Exhibits C-1 and C-2) is not sufficient to establish her death by electrocution;
since burns caused by electricity are more or less round in shape and with points of
entry and exit. Had the deceased held the lethal wire for a long time, the laceration
in her palm would have been bigger and the injury more massive. (CA Decision,
pp. 18-21, Rollo)

An action for damages in the aggregate amount of P250,000 was instituted by the
heirs of the deceased with the aforesaid CFI on June 24, 1968. In its Answer (Vide,
Record on Appeal, p. 55, Rollo), petitioner advanced the theory, as a special
defense, that the deceased could have died simply either by drowning or by
electrocution due to negligence attributable only to herself and not to petitioner. In
this regard, it was pointed out that the deceased, without petitioner's knowledge,
caused the installation of a burglar deterrent by connecting a wire from the main
house to the iron gate and fence of steel matting, thus, charging the latter with
electric current whenever the switch is on. Petitioner then conjectures that the
switch to said burglar deterrent must have been left on, hence, causing the
deceased's electrocution when she tried to open her gate that early morning of June
29, 1967. After due trial, the CFI found the facts in favor of petitioner and
dismissed the complaint but awarded to the latter P25,000 in moral damages and
attorney's fees of P45,000. An appeal was filed with the CA which issued the
controverted decision.

In this petition for review the petitioner assigns the following errors committed by
the respondent CA:

1. The respondent Court of Appeals committed grave abuse of discretion and

error in considering the purely hearsay alleged declarations of Ernesto de la Cruz
as part of the res gestae.

2. The respondent Court of Appeals committed grave abuse of discretion and

error in holding that the strong typhoon "Gening" which struck Laoag City and
Ilocos Norte on June 29, 1967 and the flood and deluge it brought in its wake were
not fortuitous events and did not exonerate petitioner-company from liability for
the death of Isabel Lao Juan.

3. The respondent Court of Appeals gravely abused its discretion and erred in
not applying the legal principle of "assumption of risk" in the present case to bar
private respondents from collecting damages from petitioner company.

4. That the respondent Court of Appeals gravely erred and abused its discretion
in completely reversing the findings of fact of the trial court.

5. The findings of fact of the respondent Court of Appeals are reversible under
the recognized exceptions.

6. The trial court did not err in awarding moral damages and attorney's fees to
defendant corporation, now petitioner company.

7. Assuming arguendo that petitioner company may be held liable from the
death of the late Isabel Lao Juan, the damages granted by respondent Court of
Appeals are improper and exhorbitant. (Petitioners Memorandum, p. 133, Rollo)
Basically, three main issues are apparent: (1) whether or not the deceased died of
electrocution; (2) whether or not petitioner may be held liable for the deceased's
death; and (3) whether or not the respondent CA's substitution of the trial court's
factual findings for its own was proper.

In considering the first issue, it is Our view that the same be resolved in the
affirmative. By a preponderance of evidence, private respondents were able to
show that the deceased died of electrocution, a conclusion which can be primarily
derived from the photographed burnt wounds (Exhibits "C", "C-1", "C-2") on the
left palm of the former. Such wounds undoubtedly point to the fact that the
deceased had clutched a live wire of the petitioner. This was corroborated by the
testimony of Dr. Jovencio Castro who actually examined the body of the deceased
a few hours after the death and described the said burnt wounds as a "first degree
burn" (p. 144, TSN, December 11, 1972) and that they were "electrically charged"
(p. 102, TSN, November 28, 1972). Furthermore, witnesses Linda Alonzo
Estavillo and Aida Bulong added that after the deceased screamed "Ay" and sank
into the water, they tried to render some help but were overcome with fear by the
sight of an electric wire dangling from an electric post, moving in the water in a
snake-like fashion (supra). The foregoing therefore justifies the respondent CA in
concluding that "(t)he nature of the wounds as described by the witnesses who saw
them can lead to no other conclusion than that they were "burns," and there was
nothing else in the street where the victim was wading thru which could cause a
burn except the dangling live wire of defendant company" (CA Decision, p. 22,
Rollo).

But in order to escape liability, petitioner ventures into the theory that the deceased
was electrocuted, if such was really the case when she tried to open her steel gate,
which was electrically charged by an electric wire she herself caused to install to
serve as a burglar deterrent. Petitioner suggests that the switch to said burglar
alarm was left on. But this is mere speculation, not backed up with evidence. As
required by the Rules, "each party must prove his own affirmative allegations."
(Rule 131, Sec. 1). Nevertheless, the CA significantly noted that "during the trial,
this theory was abandoned" by the petitioner (CA Decision, p. 23, Rollo).

Furthermore the CA properly applied the principle of res gestae. The CA said:

Linda Alonzo Estavillo, a ticket seller, and Aida Bulong, a salesgirl, were with the
deceased during that fateful morning of June 29, 1967. This Court has not been
offered any sufficient reason to discredit the testimonies of these two young ladies.
They were one in the affirmation that the deceased, while wading in the waist-deep
flood on Guerrero Street five or six meters ahead of them, suddenly screamed "Ay"
and quickly sank into the water. When they approached the deceased to help, they
were stopped by the sight of an electric wire dangling from a post and moving in
snake-like fashion in the water. Ernesto dela Cruz also tried to approach the
deceased, but he turned back shouting that the water was grounded. These bits of
evidence carry much weight. For the subject of the testimonies was a startling
occurrence, and the declarations may be considered part of the res gestae. (CA
Decision, p. 21, Rollo)

For the admission of the res gestae in evidence, the following requisites must be
present: (1) that the principal act, the res gestae, be a startling occurrence; (2) that
the statements were made before the declarant had time to contrive or devise; (3)
that the statements made must concern the occurrence in question and its
immediately attending circumstances (People vs. Ner, 28 SCRA 1151; People vs.
Balbas, 122 SCRA 959). We do not find any abuse of discretion on the CA' part in
view of the satisfaction of said requisites in the case at bar.

The statements made relative to the startling occurrence are admitted in evidence
precisely as an exception to the hearsay rule on the grounds of trustworthiness and
necessity. "Trustworthiness" because the statements are made instinctively
(Wesley vs. State, 53 Ala. 182), and "necessity" because such natural and
spontaneous utterances are more convincing than the testimony of the same person
on the stand (Mobile vs. Ascraft 48 Ala. 31). Therefore, the fact that the declarant,
Ernesto de la Cruz, was not presented to testify does not make the testimony of
Linda Alonzo Estavillo and Aida Bulong hearsay since the said declaration is part
of the res gestae. Similarly, We considered part of the res gestae a conversation
between two accused immediately after commission of the crime as overheard by a
prosecution witness (People vs. Reyes, 82 Phil. 563).

While it may be true that, as petitioner argues (vide petitioner's Memorandum, p.

135, Rollo), Ernesto de la Cruz was not an actual witness to the instant when the
deceased sank into the waist-deep water, he acted upon the call of help of Aida
Bulong and Linda Alonzo Estavillo with the knowledge of, and immediately after,
the sinking of the deceased. In fact the startling event had not yet ceased when
Ernesto de la Cruz entered the scene considering that the victim remained
submerged. Under such a circumstance, it is undeniable that a state of mind
characterized by nervous excitement had been triggered in Ernesto de la Cruz's
being as anybody under the same contingency could have experienced. As such,
We cannot honestly exclude his shouts that the water was grounded from the res
gestae just because he did not actually see the sinking of the deceased nor hear her
scream "Ay."

Neither can We dismiss the said declaration as a mere opinion of Ernesto de la

Cruz. While We concede to the submission that the statement must be one of facts
rather than opinion, We cannot agree to the proposition that the one made by him
was a mere opinion. On the contrary, his shout was a translation of an actuality as
perceived by him through his sense of touch.

Finally, We do not agree that the taking of Ernesto de la Cruz' testimony was
suppressed by the private respondents, thus, is presumed to be adverse to them
pursuant to Section 5(e), Rule 131. For the application of said Rule as against a
party to a case, it is necessary that the evidence alleged to be suppressed is
available only to said party (People vs. Tulale, L-7233, 18 May 1955, 97 Phil.
953). The presumption does not operate if the evidence in question is equally
available to both parties (StaplesHowe Printing Co. vs. Bldg. and Loan Assn., 36
Phil. 421). It is clear from the records that petitioner could have called Ernesto de
la Cruz to the witness stand. This, precisely, was Linda Alonzo Estavillo's
suggestion to petitioner's counsel when she testified on cross examination:

Q. And that Erning de la Cruz, how far did he reach from the gate of the house?

A. Well, you can ask that matter from him sir because he is here. (TSN, p. 30,
26 Sept. 1972)

The foregoing shows that petitioner had the opportunity to verify the declarations
of Ernesto de la Cruz which, if truly adverse to private respondent, would have
helped its case. However, due to reasons known only to petitioner, the opportunity
was not taken.

Coming now to the second issue, We tip the scales in the private respondents'
favor. The respondent CA acted correctly in disposing the argument that petitioner
be exonerated from liability since typhoons and floods are fortuitous events. While
it is true that typhoons and floods are considered Acts of God for which no person
may be held responsible, it was not said eventuality which directly caused the
victim's death. It was through the intervention of petitioner's negligence that death
took place. We subscribe to the conclusions of the respondent CA when it found:

On the issue whether or not the defendant incurred liability for the electrocution
and consequent death of the late Isabel Lao Juan, defendant called to the witness-
stand its electrical engineer, chief lineman, and lineman to show exercise of
extraordinary diligence and to negate the charge of negligence. The witnesses
testified in a general way about their duties and the measures which defendant
usually adopts to prevent hazards to life and limb. From these testimonies, the
lower court found "that the electric lines and other equipment of defendant
corporation were properly maintained by a well-trained team of lineman,
technicians and engineers working around the clock to insure that these equipments
were in excellent condition at all times." (P. 40, Record on Appeal) The finding of
the lower court, however, was based on what the defendant's employees were
supposed to do, not on what they actually did or failed to do on the date in
question, and not on the occasion of the emergency situation brought about by the
typhoon.

The lower court made a mistake in assuming that defendant's employees worked
around the clock during the occurrence of the typhoon on the night of June 28 and
until the early morning of June 29, 1967, Engr. Antonio Juan of the National
Power Corporation affirmed that when he first set out on an inspection trip
between 6:00 and 6:30 A.M. on June 29, 1967, he saw grounded and disconnected
electric lines of the defendant but he saw no INELCO lineman. The INELCO
Office at the Life theatre on Rizal Street was still closed. (pp. 63-64, TSN, Oct. 24,
1972) Even the witnesses of defendant contradict the finding of the lower court.
Conrado Asis, defendant's electrical engineer, testified that he conducted a general
inspection of the franchise area of the INELCO only on June 30, 1967, the day
following the typhoon. The reason he gave for the delay was that all their vehicles
were submerged. (p. 337, TSN, July 20, 1973) According to Asis, he arrived at his
office at 8:00 A.M. on June 30 and after briefing his men on what to do they
started out. (p. 338, lbid) One or two days after the typhoon, the INELCO people
heard "rumors that someone was electrocuted" so he sent one of his men to the
place but his man reported back that there was no damaged wire. (p. 385, Id.)
Loreto Abijero, chief lineman of defendant, corroborated Engr. Juan. He testified
that at about 8:00 A.M. on June 29, 1967 Engr. Juan came to the INELCO plant
and asked the INELCO people to inspect their lines. He went with Engr. Juan and
their inspection lasted from 8:00 A.M. to 12:00 noon. (pp. 460, 465, TSN, Jan. 28,
1975) Fabico Abijero lineman of defendant, testified that at about 6:00 on June 29,
1967 the typhoon ceased. At that time, he was at the main building of the Divine
Word College of Laoag where he had taken his family for refuge. (pp. 510-511,
Ibid.)

In times of calamities such as the one which occurred in Laoag City on the night of
June 28 until the early hours of June 29, 1967, extraordinary diligence requires a
supplier of electricity to be in constant vigil to prevent or avoid any probable
incident that might imperil life or limb. The evidence does not show that defendant
did that. On the contrary, evidence discloses that there were no men (linemen or
otherwise) policing the area, nor even manning its office. (CA Decision, pp. 24-25,
Rollo)

Indeed, under the circumstances of the case, petitioner was negligent in seeing to it
that no harm is done to the general public"... considering that electricity is an
agency, subtle and deadly, the measure of care required of electric companies must
be commensurate with or proportionate to the danger. The duty of exercising this
high degree of diligence and care extends to every place where persons have a
right to be" (Astudillo vs. Manila Electric, 55 Phil. 427). The negligence of
petitioner having been shown, it may not now absolve itself from liability by
arguing that the victim's death was solely due to a fortuitous event. "When an act
of God combines or concurs with the negligence of the defendant to produce an
injury, the defendant is liable if the injury would not have resulted but for his own
negligent conduct or omission" (38 Am. Jur., p. 649).

Likewise, the maxim "volenti non fit injuria" relied upon by petitioner finds no
application in the case at bar. It is imperative to note the surrounding
circumstances which impelled the deceased to leave the comforts of a roof and
brave the subsiding typhoon. As testified by Linda Alonzo Estavillo (see TSN, p.
5, 26 Sept. 1972) and Aida Bulong (see TSN, p. 43, 26 Sept. 1972), the deceased,
accompanied by the former two, were on their way to the latter's grocery store "to
see to it that the goods were not flooded." As such, shall We punish her for
exercising her right to protect her property from the floods by imputing upon her
the unfavorable presumption that she assumed the risk of personal injury?
Definitely not. For it has been held that a person is excused from the force of the
rule, that when he voluntarily assents to a known danger he must abide by the
consequences, if an emergency is found to exist or if the life or property of another
is in peril (65A C.S.C. Negligence(174(5), p. 301), or when he seeks to rescue his
endangered property (Harper and James, "The Law of Torts." Little, Brown and
Co., 1956, v. 2, p. 1167). Clearly, an emergency was at hand as the deceased's
property, a source of her livelihood, was faced with an impending loss.
Furthermore, the deceased, at the time the fatal incident occurred, was at a place
where she had a right to be without regard to petitioner's consent as she was on her
way to protect her merchandise. Hence, private respondents, as heirs, may not be
barred from recovering damages as a result of the death caused by petitioner's
negligence (ibid., p. 1165, 1166).
But petitioner assails the CA for having abused its discretion in completely
reversing the trial court's findings of fact, pointing to the testimonies of three of its
employees its electrical engineer, collector-inspector, lineman, and president-
manager to the effect that it had exercised the degree of diligence required of it in
keeping its electric lines free from defects that may imperil life and limb. Likewise,
the said employees of petitioner categorically disowned the fatal wires as they
appear in two photographs taken on the afternoon of June 29, 1967 (Exhs. "D" and
"E"), suggesting that said wires were just hooked to the electric post (petitioner's
Memorandum, p. 170, Rollo). However, as the CA properly held, "(t)he finding of
the lower court ... was based on what the defendant's employees were supposed to
do, not on what they actually did or failed to do on the date in question, and not on
the occasion of the emergency situation brought about by the typhoon" (CA
Decision, p. 25, Rollo). And as found by the CA, which We have already reiterated
above, petitioner was in fact negligent. In a like manner, petitioner's denial of
ownership of the several wires cannot stand the logical conclusion reached by the
CA when it held that "(t)he nature of the wounds as described by the witnesses
who saw them can lead to no other conclusion than that they were 'burns', and there
was nothing else in the street where the victim was wading thru which could cause
a burn except the dangling live wire of defendant company" (supra).

"When a storm occurs that is liable to prostrate the wires, due care requires prompt
efforts to discover and repair broken lines" (Cooley on Torts, 4th ed., v. 3, p. 474).
The fact is that when Engineer Antonio Juan of the National Power Corporation set
out in the early morning of June 29, 1967 on an inspection tour, he saw grounded
and disconnected lines hanging from posts to the ground but did not see any
INELCO lineman either in the streets or at the INELCO office (vide, CA Decision,
supra). The foregoing shows that petitioner's duty to exercise extraordinary
diligence under the circumstance was not observed, confirming the negligence of
petitioner. To aggravate matters, the CA found:

. . .even before June 28 the people in Laoag were already alerted about the
impending typhoon, through radio announcements. Even the fire department of the
city announced the coming of the big flood. (pp. 532-534, TSN, March 13, 1975)
At the INELCO irregularities in the flow of electric current were noted because
"amperes of the switch volts were moving". And yet, despite these danger signals,
INELCO had to wait for Engr. Juan to request that defendant's switch be cut off
but the harm was done. Asked why the delay, Loreto Abijero answered that he
"was not the machine tender of the electric plant to switch off the current." (pp.
467-468, Ibid.) How very characteristic of gross inefficiency! (CA Decision, p. 26,
Rollo)
From the preceding, We find that the CA did not abuse its discretion in reversing
the trial court's findings but tediously considered the factual circumstances at hand
pursuant to its power to review questions of fact raised from the decision of the
Regional Trial Court, formerly the Court of First Instance (see sec. 9, BP 129).

In considering the liability of petitioner, the respondent CA awarded the following

in private respondent's favor: P30,229.45 in actual damages (i.e., P12,000 for the
victim's death and P18,229.45 for funeral expenses); P50,000 in compensatory
damages, computed in accordance with the formula set in the Villa-Rey Transit
case (31 SCRA 511) with the base of P15,000 as average annual income of the
deceased; P10,000 in exemplary damages; P3,000 attorney's fees; and costs of suit.
Except for the award of P12,000 as compensation for the victim's death, We affirm
the respondent CA's award for damages and attorney's fees. Pusuant to recent
jurisprudence (People vs. Mananquil, 132 SCRA 196; People vs. Traya, 147 SCRA
381), We increase the said award of P12,000 to P30,000, thus, increasing the total
actual damages to P48,229.45.

The exclusion of moral damages and attorney's fees awarded by the lower court
was properly made by the respondent CA, the charge of malice and bad faith on
the part of respondents in instituting his case being a mere product of wishful
thinking and speculation. Award of damages and attorney's fees is unwarranted
where the action was filed in good faith; there should be no penalty on the right to
litigate (Espiritu vs. CA, 137 SCRA 50). If damage results from a person's
exercising his legal rights, it is damnum absque injuria (Auyong Hian vs. CTA, 59
SCRA 110).

WHEREFORE, the questioned decision of the respondent, except for the slight
modification that actual damages be increased to P48,229.45 is hereby
AFFIRMED.

SO ORDERED.

G.R. No. L-22533 February 9, 1967

PLACIDO C. RAMOS and AUGUSTO L. RAMOS, petitioners,

vs.
PEPSI-COLA BOTTLING CO. OF THE P.I. and ANDRES BONIFACIO,
respondents.
Placido B. Ramos and Renato L. Ramos for petitioners.
Trinidad & Borromeo for respondents.

BENGZON, J.P., J.:

On June 30, 1958 Placido and Augusto Ramos sued Pepsi-Cola Bottling Co. of the
P.I.1 and Andres Bonifacio in the Court of First Instance of Manila as a
consequence of a collision, on May 10, 1958, involving the car of Placido Ramos
and a tractor-truck and trailer of PEPESI-COLA. Said car was at the time of the
collision driven by Augusto Ramos, son and co-plaintiff of Placido. PEPSI-
COLA's tractor-truck was then driven by its driver and co-defendant Andres
Bonifacio.

After trial the Court of First Instance rendered judgment on April 15, 1961, finding
Bonifacio negligent and declaring that PEPSI-COLA had not sufficiently proved
its having exercised the due diligence of a good father of a family to prevent the
damage. PEPSI-COLA and Bonifacio, solidarily, were ordered to pay the plaintiffs
P2,638.50 actual damages; P2,000.00 moral damages; P2,000.00 as exemplary
damages; and, P1,000.00 attorney's fees, with costs.

Not satisfied with this decision, the defendants appellee to the Court of Appeals.

Said Court, on January 15, 1964, affirmed the trial court's judgment insofar as it
found defendant Bonifacio negligent, but modified it by absolving defendant
PEPSI-COLA from liability, finding that, contrary to the plaintiffs' contention,
PEPSI-COLA sufficiently proved due diligence in the selection of its driver
Bonifacio.

Plaintiffs thereupon appealed to Us through this petition for review of the Court of
Appeals' decision. And appellants would argue before this Court that defendant
PEPSI-COLA's evidence failed to show that it had exercised due diligence in the
selection of its driver in question.

Said point, as stated, was resolved by the Court of Appeals in PEPSI-COLA's

favor, thus:

The uncontradicted testimony of Juan T. Anasco, personnel manager of defendant

company, was to the effect that defendant driver was first hired as a member of the
bottle crop in the production department; that when he was hired as a driver, 'we
had size [sic] him by looking into his background, asking him to submit clearances,
previous experience, physical examination and later on, he was sent to the pool
house to take the usual driver's examination, consisting of: First, theoretical
examination and second, the practical driving examination, all of which he had
undergone, and that the defendant company was a member of the Safety Council.
In view hereof, we are of the sense that defendant company had exercised the
diligence of a good father of a family in the choice or selection of defendant
driver'. In the case of Campo vs. Camarote No. L-9147 (1956), 53 O.G. 2794, cited
in appellee's brief, our Supreme Court had occasion to put it down as a rule that "In
order that the defendant may be considered as having exercised all the diligence of
a good father of a family, he should not have been satisfied with the mere
possession of a professional driver's license; he should have carefully examined the
applicant for employment as to his qualifications, his experiences and record of
service." Defendant Company has taken all these steps.2

Appellants herein seek to assail the foregoing portion of the decision under review
by taking issue with the testimony of Anasco upon which the findings of due
diligence aforestated are rested. Thus, it is now contended that Añasco being
PEPSI-COLA's employee, is a biased and interested witness; and that his
testimony is not believable.

It is rather clear, therefore, that appellants would raise herein an issue of fact and
credibility, something as to which this Court has consistently respected the
findings of the Court of Appeals, with some few exceptions, which do not obtain
herein.3

Stated differently, Añascos credibility is not for this Court now to re-examine. And
said witness having been found credible by the Court of Appeals, his testimony, as
accepted by said Court, cannot at this stage be assailed. As We said in Co Tao vs.
Court of Appeals, L-9194, April 25, 1957, assignments of error involving the
credibility of witnesses and which in effect dispute the findings of fact of the Court
of Appeals, cannot be reviewed in these proceedings. For a question to be one of
law it must involve no examination of the probative value of the evidence
presented by the litigants or any of them. 4 And the distinction is well-known:
There is a question of law in a given case when the doubt or difference arises as to
what the law is on a certain state of facts; there is a question of fact when the doubt
or difference arises as to the truth or the falsehood of alleged facts.5

From all this it follows that for the purposes of this appeal, it must be taken as
established that, as testified to by Añasco, PEPSI-COLA did in fact carefully
examine the driver-applicant Bonifacio as to his qualifications, experiences and
record of service, taking all steps mentioned by the Court of Appeals in its decision
already quoted.1äwphï1.ñët

Such being the case, there can be no doubt that PEPSI-COLA exercised the
required due diligence in the selection of its driver. As ruled by this Court in
Campo vs. Camarote 53 O.G. 2794, 2797: "In order that the defendant may be
considered as having exercised all diligence of a good father of a family, he should
not be satisfied with the mere possession of a professional driver's license; he
should have carefully examined the applicant for employment as to his
qualifications, his experience and record of service."

It should perhaps be stated that in the instant case no question is raised as to due
diligence in the supervision by PEPSI-COLA of its driver. Article 2180 of the
Civil Code provides inter alia:

... 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.

xxx xxx xxx

The responsibility treated of in this Article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family to
prevent damage.

And construing a similar provision of the old Civil Code, this Court said in Bahia
vs. Litonjua, 30 Phil. 624, 627:

From this article two things are apparent: (1) That when an injury is caused by the
negligence of a servant or employee there instantly arises a presumption of law that
there was negligence on the part of the master or employer either in the selection of
the servant or employee, or in supervision over him after the selection, or both; and
(2) that the presumption is juris tantum and not juris et de jure, and consequently
may be rebutted. It follows necessarily that if the employer shows to the
satisfaction of the court that in selection and supervision he has exercised the care
and diligence of a good father of a family, the presumption is overcome and he is
relieved from liability.
As pointed out, what appellants here contend as not duly proved by PEPSI-COLA
is only due diligence in the selection of its driver. And, parenthetically, it is not
surprising that appellants thus confine their arguments to this aspect of due
diligence, since the record — as even appellants' brief (pp. 13-17) reflects in
quoting in part the testimony of PEPSI-COLA's witness — would show sufficient
evidence to establish due diligence in the supervision by PEPSI-COLA of its
drivers, including Bonifacio.

Appellants' other assignment of errors are likewise outside the purview of this
Court's reviewing power. Thus, the question of whether PEPSI- COLA violated the
Revised Motor Vehicle Law and rules and regulations related thereto, not having
been raised and argued in the Court of Appeals, cannot be ventilated herein for the
first time. 6 And the matter of whether or not PEPSI-COLA did acts to ratify the
negligent act of its driver is a factual issue not proper herein.

Wherefore, the decision of the Court of Appeals is hereby affirmed, with costs
against appellants. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and
Castro, JJ., concur.

RESOLUTION ON MOTION FOR RECONSIDERATION

May 16, 1967

BENGZON, J.P., J.:

Petitioners seek a reconsideration1 of Our decision2 in the instant case affirming in

toto the challenged decision of the Court of Appeals absolving respondent PEPSI-
COLA from liability. In Our decision, We refrained from passing on the merits of
the question whether PEPSI-COLA, in operating the tractor-truck and trailer,
violated the Rev. Motor Vehicle Law3 and the rules and regulations related
thereto, for the procedural reason that it did not appear to have been raised before
the Court of Appeals.

It now appears, however, that said question was raised in a motion to reconsider
filed with the Court of Appeals which resolved the same against petitioners. Due
consideration of the matter on its merits, convinces Us that the decision of the
Court of Appeals should still be affirmed in toto.
Petitioners impute to PEPSI-COLA the violation of subpars. 1 and 4(d), par. (a),
Sec. 27 of M.V.O. Administrative Order No. 1, dated Sept. 1, 1951, in that at the
time of the collision, the trailer-truck, which had a total weight of 30,000 kgms.,
was (a) being driven at a speed of about 30 k.p.h. or beyond the 15 k.p.h. limit set
and (b) was not equipped with a rear-vision mirror nor provided with a helper for
the driver.

The cited provisions read:

SECTION 27. Registration, operation, and inspection of truck-trailer

combinations, semi-trailers, and tractors.

(a) No trailer or semi-trailer having a gross weight of more than 2,000 kilograms
and is not equipped with effective brakes on at least two opposite wheels of the
rear axle and are so controlled that the brakes will act in unison with or preceding
the effective action of the brakes of the tractor-truck shall be registered for
operation on public highways of the Philippines; provided, that the trialers without
brakes may be registered from year to year for operation under the following
conditions:

1. No such trailer shall be operated at any time at a speed in excess of 15

kilometers per hour in conjunction with a tractor-truck, the actual gross weight of
which is less than twice the weight of the trailer.

xxx xxx xxx

4(d) Tractor-trucks shall be either equipped with rear-vision mirror to enable the
driver to see vehicles approaching mirror the rear or shall carry a helper who shall
be so stationed on the truck or trailer that he will constantly have a view of the
rear. He shall be provided with means of effectively signalling to the driver to give
way to overtaking vehicles.

4(e) No truck and trailer combination shall be operated at a speed greater than 30
kilometers per hour.

It will be noted that the 15 k.p.h. limit in subpar. 1, supra, refers only to trailers or
semi-trailers having a gross weight of more than 2,000 kgms., AND which are "not
equipped with effective brakes on at least two opposite wheels, of the rear axle and
are so controlled that the brakes will act in unison with or preceding the effective
action of the brakes of the tractor-truck..." This is the condition set in the proviso in
par. (a), supra, wherein "trailers without [such] brakes may be registered from year
to year for operation ..." i.e., they should not "be operated at any time at a speed in
excess of 15 kilometers per hour in conjunction with a tractor-truck ...". But there
was no finding by the Court of Appeals that the truck-trailer here did not have such
brakes. In the absence of such fact, it is subpar. 4(e), supra, that will apply. And
petitioners admit that the truck-trailer was being driven at about 30 k.p.h.

It is a fact that driver Bonifacio was not accompanied by a helper on the night of
the collision since he was found to be driving alone. However, there is no finding
that the tractor-truck did not have a rear-vision mirror. To be sure, the records
disclose that Pat. Rodolfo Pahate, the traffic policeman who went to the collision
scene, testified that he saw the tractor-truck there but he does not remember if it
had any rear vision mirror.4 This cannot prove lack of rear-vision mirror. And the
cited provision — subpar. 4(d) — is complied if either of the two alternatives, i.e.,
having a rear-vision mirror or a helper, is present. Stated otherwise, said provision
is violated only where there is a positive finding that the tractor-truck did not have
both rear-vision mirror and a helper for the driver.

Petitioners also charge PEPSI-COLA with having violated par. (b) of Sec. 8-A of
the Rev. Motor Vehicle Law, providing that:

No motor vehicle operating as a single unit shall exceed the following dimensions:

Overall width ................ 2.5 meters.

xxx xxx xxx

since there was an express finding that the truck-trailer was 3 meters wide.
However, Sec. 9 (d) of the same law, as amended, providing that —

SEC. 9. Special permits, fees for.-The chief of the Motor Vehicles Office with the
approval of the Secretary of Public Works and Communications shall establish
regulations and a tariff of additional fees under which special permits may be
issued in the discretion of the Chief of the Motor Vehicles Office or his deputies,
for each of the following special cases, and without such special permit, no such
motor vehicles shall be operated on the public highways.

xxx xxx xxx

(d) For registration or use of a motor vehicle exceeding the limit of permissible
dimensions specified in subsections (b) and (c) of section eight-A hereof.
(Emphasis supplied)

xxx xxx xxx

expressly allows the registration, or use of motor vehicles exceeding the limits of
permissible dimensions specified in subsec. (b) of Sec. 8-A. So, to conclude that
there was a violation of law — which undisputably constitutes negligence, at the
very least — it is not enough that the width of the tractor-truck exceed the limit in
Sec. 8-A; in addition, it must also appear that there was no special permit granted
under Sec. 9. Unfortunately for petitioners, that vital factual link is missing. There
was no proof much less any finding to that effect. And it was incumbent upon
petitioners-appellants to have proved lack of such permit since the tractor-truck
and the trailer were registered.5 Compliance with law and regularity in the
performance of official duty — in this case, the issuance of proper registration
papers — are presumed6 and prevail over mere surmises. Having charged a
violation of law, the onus of substantiating the same fell upon petitioners-
appellants. Hence, the conclusion that there was a violation of the law lacks factual
basis.

Petitioners would also have Us abandon the Bahia ruling.7 In its stead, We are
urged to apply the Anglo-American doctrine of respondent superior. We cannot
however, abandon the Bahia ruling without going against the explicit mandate of
the law. A motor vehicle owner is not an absolute insurer against all damages
caused by its driver. Article 2180 of our Civil Code is very explicit that the owner's
responsibility shall cease once it proves that it has observed the diligence of a good
father of a family to prevent damage. The Bahia case merely clarified what that
diligence consists of, namely, diligence in the selection and supervision of the
driver-employee.

Neither could We apply the respondent superior principle. Under Article 2180 of
the Civil Code, the basis of an employer's liability is his own negligence, not that
of his employees. The former is made responsible for failing to properly and
diligently select and supervise his erring employees. We do not — and have never
— followed the respondent superior rule.8 So, the American rulings cited by
petitioners, based as they are on said doctrine, are not authoritative here.

In view of the foregoing, the motion for reconsideration is hereby denied.

G.R. No. L-83524 October 13, 1989

ERNESTO KRAMER, JR. and MARIA KRAMER, petitioners,

vs.
HON. COURT OF APPEALS and TRANS-ASIA SHIPPING LINES, INC.,
respondents.

Rodolfo D. Mapile for petitioners.

Jose Al. Perez for private respondent.

GANCAYCO, J.:

The principal issue in this Petition for Review is whether or not a Complaint for
damages instituted by the petitioners against the private respondent arising from a
marine collision is barred by the statute of limitations.

The record of the case discloses that in the early morning of April 8, 1976, the F/B
Marjolea, a fishing boat owned by the petitioners Ernesto Kramer, Jr. and Marta
Kramer, was navigating its way from Marinduque to Manila. Somewhere near
Maricabon Island and Cape Santiago, the boat figured in a collision with an inter-
island vessel, the M/V Asia Philippines owned by the private respondent Trans-
Asia Shipping Lines, Inc. As a consequence of the collision, the F/B Marjolea
sank, taking with it its fish catch.

After the mishap, the captains of both vessels filed their respective marine protests
with the Board of Marine Inquiry of the Philippine Coast Guard. The Board
conducted an investigation for the purpose of determining the proximate cause of
the maritime collision.

On October 19, 1981, the Board concluded that the loss of the F/B Marjolea and its
fish catch was attributable to the negligence of the employees of the private
respondent who were on board the M/V Asia Philippines during the collision. The
findings made by the Board served as the basis of a subsequent Decision of the
Commandant of the Philippine Coast Guard dated April 29, 1982 wherein the
second mate of the M/V Asia Philippines was suspended from pursuing his
profession as a marine officer.1
On May 30, 1985, the petitioners instituted a Complaint for damages against the
private respondent before Branch 117 of the Regional Trial Court in Pasay City.2
The suit was docketed as Civil Case No. 2907-P.

The private respondent filed a Motion seeking the dismissal of the Complaint on
the ground of prescription. He argued that under Article 1146 of the Civil Code, 3
the prescriptive period for instituting a Complaint for damages arising from a
quasi-delict like a maritime collision is four years. He maintained that the
petitioners should have filed their Complaint within four years from the date when
their cause of action accrued, i.e., from April 8, 1976 when the maritime collision
took place, and that accordingly, the Complaint filed on May 30, 1985 was
instituted beyond the four-year prescriptive period.

For their part, the petitioners contended that maritime collisions have peculiarities
and characteristics which only persons with special skill, training and experience
like the members of the Board of Marine Inquiry can properly analyze and resolve.
The petitioners argued that the running of the prescriptive period was tolled by the
filing of the marine protest and that their cause of action accrued only on April 29,
1982, the date when the Decision ascertaining the negligence of the crew of the
M/V Asia Philippines had become final, and that the four-year prescriptive period
under Article 1146 of the Civil Code should be computed from the said date. The
petitioners concluded that inasmuch as the Complaint was filed on May 30, 1985,
the same was seasonably filed.

In an Order dated September 25, 1986,4 the trial court denied the Motion filed by
the private respondent. The trial court observed that in ascertaining negligence
relating to a maritime collision, there is a need to rely on highly technical aspects
attendant to such collision, and that the Board of Marine Inquiry was constituted
pursuant to the Philippine Merchant Marine Rules and Regulations, which took
effect on January 1, 1975 by virtue of Letter of Instruction No. 208 issued on
August 12, 1974 by then President Ferdinand E. Marcos, precisely to answer the
need. The trial court went on to say that the four-year prescriptive period provided
in Article 1146 of the Civil Code should begin to run only from April 29, 1982, the
date when the negligence of the crew of the M/V Asia Philippines had been finally
ascertained. The pertinent portions of the Order of the trial court are as follows —

Considering that the action concerns an incident involving a collision at sea of two
vehicles and to determine negligence for that incident there is an absolute need to
rely on highly technical aspects attendant to such collisions. It is obviously to
answer such a need that the Marine Board of Inquiry (Sic) was constituted pursuant
to the Philippine Merchant Marine Rules and Regulations which became effective
January 1, 1975 under Letter of Instruction(s) No. 208 dated August 12, 1974. The
relevant section of that law (Art. XVI/b/ provided as follow(s):

1. Board of Marine Inquiry (BMI) — Shall have the jurisdiction to investigate

marine accidents or casualties relative to the liability of shipowners and officers,
exclusive jurisdiction to investigate cases/complaints against the marine officers;
and to review all proceedings or investigation conducted by the Special Boards of
Marine Inquiry.

2. Special Board of Marine Inquiry. — Shall have original jurisdiction to

investigate marine casualties and disasters which occur or are committed within the
limits of the Coast Guard District concerned or those referred by the Commandant.

The Court finds reason in the argument of the plaintiff that marine incidents have
those 'peculiarities which only persons of special skill, training and exposure can
rightfully decipher and resolve on the matter of the negligence and liabilities of
parties involved and inasmuch as the report of the Board of Inquiry (sic)
admittedly came out only on April 29, 1982, the prescriptive period provided x x x
under Art. 1146 of the Civil Code should begin to run only from that date. The
complaint was filed with this Court on May 10, 1985, hence the statute of
limitations can not constitute a bar to the filing of this case.5

The private respondent elevated the case to the Court of Appeals by way of a
special civil action for certiorari and prohibition, alleging therein that the trial court
committed a grave abuse of discretion in refusing to dismiss the Complaint filed by
the petitioners. The case was assigned to the Second Division of the appellate court
and was docketed as Case No. CA-G.R. SP No. 12032.6

In a Decision dated November 27, 1987,7 and clarified in a Resolution dated

January 12, 1988,8 the Court of Appeals granted the Petition filed by the private
respondent and ordered the trial court to dismiss the Complaint. The pertinent
portions of the Decision of the appellate court are as follows —

It is clear that the cause of action of private respondent (the herein petitioners
Ernesto Kramer, Jr. and Marta Kramer) accrued from the occurrence of the mishap
because that is the precise time when damages were inflicted upon and sustained
by the aggrieved party and from which relief from the court is presently sought.
Private respondents should have immediately instituted a complaint for damages
based on a quasi-delict within four years from the said marine incident because its
cause of action had already definitely ripened at the onset of the collision. For this
reason, he (sic) could cite the negligence on the part of the personnel of the
petitioner to exercise due care and lack of (sic) diligence to prevent the collision
that resulted in the total loss of their x x x boat.

We can only extend scant consideration to respondent judge's reasoning that in

view of the nature of the marine collision that allegedly involves highly technical
aspects, the running of the prescriptive period should only commence from the
finality of the investigation conducted by the Marine Board of Inquiry (sic) and the
decision of the Commandant, Philippine Coast Guard, who has original jurisdiction
over the mishap. For one, while it is true that the findings and recommendation of
the Board and the decision of the Commandant may be helpful to the court in
ascertaining which of the parties are at fault, still the former (court) is not bound by
said findings and decision. Indeed, the same findings and decision could be
entirely or partially admitted, modified, amended, or disregarded by the court
according to its lights and judicial discretion. For another, if the accrual of a cause
of action will be made to depend on the action to be taken by certain government
agencies, then necessarily, the tolling of the prescriptive period would hinge upon
the discretion of such agencies. Said alternative it is easy to foresee would be
fraught with hazards. Their investigations might be delayed and lag and then
witnesses in the meantime might not be available or disappear, or certain
documents may no longer be available or might be mislaid. ... 9

The petitioners filed a Motion for the reconsideration of the said Decision but the
same was denied by the Court of Appeals in a Resolution dated May 27, 1988.10

Hence, the instant Petition wherein the arguments raised by the petitioner before
the trial court are reiterated.11 In addition thereto, the petitioner contends that the
Decision of the Court of Appeals 12 The private respondent filed its Comment on
the Petition seeking therein the dismissal of the same.13 It is also contended by the
private respondent that the ruling of the Court in Vasquez is not applicable to the
case at bar because the said case involves a maritime collision attributable to a
fortuitous event. In a subsequent pleading, the private respondent argues that the
Philippine Merchant Marine Rules and Regulations cannot have the effect of
repealing the provisions of the Civil Code on prescription of actions.14

On September 19,1988, the Court resolved to give due course to the petition.15
After the parties filed their respective memoranda, the case was deemed submitted
for decision.
The petition is devoid of merit. Under Article 1146 of the Civil Code, an action
based upon a quasi-delict must be instituted within four (4) years. The prescriptive
period begins from the day the quasi-delict is committed. In Paulan vs. Sarabia,16
this Court ruled that in an action for damages arising from the collision of two (2)
trucks, the action being based on a quasi-delict, the four (4) year prescriptive
period must be counted from the day of the collision.

In Espanol vs. Chairman, Philippine Veterans Administration, 17 this Court held as

follows-

The right of action accrues when there exists a cause of action, which consists of 3
elements, namely: a) a right in favor of the plaintiff by whatever means and under
whatever law it arises or is created; b) an obligation on the part of defendant to
respect such right; and c) an act or omission on the part of such defendant violative
of the right of the plaintiff ... It is only when the last element occurs or takes place
that it can be said in law that a cause of action has arisen ... .

From the foregoing ruling, it is clear that the prescriptive period must be counted
when the last element occurs or takes place, that is, the time of the commission of
an act or omission violative of the right of the plaintiff, which is the time when the
cause of action arises.

It is therefore clear that in this action for damages arising from the collision of two
(2) vessels the four (4) year prescriptive period must be counted from the day of
the collision. The aggrieved party need not wait for a determination by an
administrative body like a Board of Marine Inquiry, that the collision was caused
by the fault or negligence of the other party before he can file an action for
damages. The ruling in Vasquez does not apply in this case. Immediately after the
collision the aggrieved party can seek relief from the courts by alleging such
negligence or fault of the owners, agents or personnel of the other vessel.

Thus, the respondent court correctly found that the action of petitioner has
prescribed. The collision occurred on April 8, 1976. The complaint for damages
was filed iii court only on May 30, 1 985, was beyond the four (4) year prescriptive
period.

WHEREFORE, the petition is dismissed. No costs.

SO ORDERED.
G.R. No. 144412 November 18, 2003

ALLIED BANKING CORPORATION, Petitioner,

vs.
COURT OF APPEALS and POTENCIANO L. GALANIDA, Respondents.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review1 assailing the Decision2 of 27 April 2000
and the Resolution of 8 August 2000 of the Court of Appeals in CA-G.R. SP No.
51451. The Court of Appeals upheld the Decision3 of 18 September 1998 and the
Resolution of 24 December 1998 of the National Labor Relations Commission
("NLRC") in NLRC Case No. V-000180-98. The NLRC modified the Decision
dated 23 December 1997 of Labor Arbiter Dominador A. Almirante ("Labor
Arbiter") in NLRC Case No. RAB VII-05-0545-94 holding that Allied Banking
Corporation ("Allied Bank") illegally dismissed Potenciano L. Galanida
("Galanida"). The NLRC awarded Galanida separation pay, backwages, moral and
exemplary damages, and other amounts totaling ₱ 1,264,933.33.

Antecedent Facts

For a background of this case, we quote in part from the Decision of the Court of
Appeals:

Private respondent Potenciano Galanida was hired by petitioner Allied Banking

Corporation on 11 January 1978 and rose from accountant-book(k)eeper to
assistant manager in 1991. His appointment was covered by a "Notice of Personnel
Action" which provides as one of the conditions of employment the provision on
petitioner’s right to transfer employees:

"REGULAR APPOINTMENT: xxx It is understood that the bank reserves the

right to transfer or assign you to other departments or branches of the bank as the
need arises and in the interest of maintaining smooth and uninterrupted service to
the public."
Private respondent was promoted several times and was transferred to several
branches as follows:

"a) January, 1978 to March, 1982 – Tagbilaran City Branch

"b) April, 1982 to May, 1984 – Lapulapu City Branch

"c) June, 1984 – Mandaue City Branch

"d) July, 1984 to April, 1986 – Tagbilaran City Branch

"e) May, 1986 to May, 1987 – Dumaguete City Branch

"f) June, 1987 to August, 1987 – Carbon Branch, Cebu City

"g) September, 1987 to Sept. 1989 – Lapulapu City Branch, Cebu

"h) October, 1989 to Sept. 1992 – Carbon Branch, Cebu City

"i) October 1992 to Sept. 1994 – Jakosalem Regional Branch, Cebu City" (Rollo,
p. 47)

Effecting a rotation/movement of officers assigned in the Cebu homebase,

petitioner listed respondent as second in the order of priority of assistant managers
to be assigned outside of Cebu City having been stationed in Cebu for seven years
already. Private respondent manifested his refusal to be transferred to Bacolod City
in a letter dated 19 April 1994 citing as reason parental obligations, expenses, and
the anguish that would result if he is away from his family. He then filed a
complaint before the Labor Arbiter for constructive dismissal.

Subsequently, petitioner bank informed private respondent (Rollo, p. 86) that he

was to report to the Tagbilaran City Branch effective 23 May 1994. Private
respondent refused. In a letter dated 13 June 1994, petitioner warned and required
of private respondent as follows:

"There is no discrimination in your transfer. In fact, among the officers mentioned,

only you have refused the new assignment citing difficulty of working away from
your family as if the other officers concerned do not suffer the same predicament.
To exempt you from the officer transfer would result in favoritism in your favor
and discrimination as against the other officers concerned.
"In furtherance of maintaining a smooth and uninterrupted service to the public,
and in accordance with the Bank’s order of priority of rotating its accountants’
places of assignments, you are well aware that Roberto Isla, AM/Accountant,
assigned in Cebu for more than ten (10) years, was, on February 14, 1994,
reassigned to Iligan City Branch and then to Cagayan de Oro City Branch on June
8, 1994. Hence, your objection on the ground of your length of service is without
merit.

xxx

"As discussed, your refusal to follow instruction concerning your transfer and
reassignment to Bacolod City and to Tagbilaran City is penalized under Article XII
of the Bank’s Employee Discipline Policy and Procedure [which] provides:

‘XII Transfer and Reassignment

Refusal to follow instruction concerning transfers and reassignments.

First and subsequent offenses –

The penalty may range from suspension to dismissal as determined by

management. The employee shall be required to comply with the order of transfer
and reassignment, if the penalty is not termination of employment.’

"In view of the foregoing, please explain in writing within three (3) days from
receipt hereof why no disciplinary action should be meted against you for your
having refused to follow instructions concerning the foregoing transfer and
reassignment." xxx4

On 16 June 1994, Galanida replied that "(w)hether the bank’s penalty for my
refusal be Suspension or Dismissal xxx it will all the more establish and fortify my
complaint now pending at NLRC, RAB 7."5 In the same letter, he charged Allied
Bank with discrimination and favoritism in ordering his transfer, thus:

xxx What I cannot decipher now under the headship of Mr. Olveda is
management’s discriminatory act of transferring only the long staying accountants
of Cebu in the guise of its exercise of management prerogative when in truth and in
fact, the ulterior motive is to accommodate some new officers who happen to enjoy
favorable connection with management. How can the bank ever justify the transfer
of Melinda T. Co, a new officer who had experienced being assigned outside of
Cebu for more than a year only to Tabunok Branch? If the purpose is for check and
balance, is management implying that Melinda Co can better carry out such
function over Mr. Larry Sabelino, who is a seasoned and experienced accountant
or any of the Metro Cebu accountants for that matter? Isn’t this act of management
an obvious display of favoritism? xxx6

On 5 October 1994, Galanida received an inter-office communication7 ("Memo")

dated 8 September 1994 from Allied Bank’s Vice-President for Personnel, Mr.
Leonso C. Pe. The Memo informed Galanida that Allied Bank had terminated his
services effective 1 September 1994. The reasons given for the dismissal were: (1)
Galanida’s continued refusal to be transferred from the Jakosalem, Cebu City
branch; and (2) his refusal to report for work despite the denial of his application
for additional vacation leave. The salient portion of the Memo reads:

Therefore, your refusal to follow instruction concerning your transfer and

reassignment to Bacolod City and to Tagbilaran City is without any justifiable
reason and constituted violations of Article XII of the Bank’s EDPP xxx

In view of the foregoing, please be informed that the Bank has terminated your
services effective September 1, 1994 and considered whatever benefit, if any, that
you are entitled as forfeited in accordance with 04, V Administrative Penalties,
page 6 of the Bank’s EDPP which provides as follows:

"04. Dismissal.

Dismissal is a permanent separation for cause xxx

Notice of termination shall be issued by the Investigation Committee subject to the

confirmation of the President or his authorized representative as officer/employee
who is terminated for cause shall not be eligible to receive any benefit arising from
her/his employment with the Bank or to termination pay."

It is understood that the termination of your service shall be without prejudice to

whatever legal remedies which the Bank may have already undertaken and/or will
undertake against you.

Please be guided accordingly. (Emphasis supplied)8

The Ruling of the Labor Arbiter

After several hearings, the Labor Arbiter held that Allied Bank had abused its
management prerogative in ordering the transfer of Galanida to its Bacolod and
Tagbilaran branches. In ruling that Galanida’s refusal to transfer did not amount to
insubordination, the Labor Arbiter misquoted this Court’s decision in Dosch v.
NLRC,9 thus:

As a general rule, the right to transfer or reassign an employee is recognized as an

employer’s exclusive right and the prerogative of management (Abbott
Laboratories vs. NLRC, 154 SCRA 713 [1987]).

The exercise of this right, is not however, absolute. It has certain limitations. Thus,
in Helmut Dosch vs. NLRC, et al. 123 SCRA 296 (1983), the Supreme Court,
ruled:

"While it may be true that the right to transfer or reassign an employee is an

employer’s exclusive right and the prerogative of management, such right is not
absolute. The right of an employer to freely select or discharge his employee is
limited by the paramount police power xxx for the relations between capital and
labor are not merely contractual but impressed with public interest. xxx And
neither capital nor labor shall act oppressively against each other.

Refusal to obey a transfer order cannot be considered insubordination where

employee cited reason for said refusal, such (sic) as that of being away from the
family."10 (Underscoring supplied by the Labor Arbiter)

The Labor Arbiter reasoned that Galanida’s transfer was inconvenient and
prejudicial because Galanida would have to incur additional expenses for board,
lodging and travel. On the other hand, the Labor Arbiter held that Allied Bank
failed to show any business urgency that would justify the transfer.

The Labor Arbiter also gave credence to Galanida’s claim that Allied Bank gave
Ms. Co special treatment. The Labor Arbiter stated that Allied Bank deliberately
left out Ms. Co’s name from the list of accountants transferred to Cebu as
contained in Allied Bank’s letter dated 13 June 1994. However, Mr. Regidor
Olveda, Allied Bank’s Vice President for Operations Accounting, testified that the
bank transferred Ms. Co to the Tabunok, Cebu branch within the first half of 1994.

Still, the Labor Arbiter declined to award Galanida back wages because he was not
entirely free from blame. Since another bank had already employed Galanida, the
Labor Arbiter granted Galanida separation pay in lieu of reinstatement. The
dispositive portion of the Labor Arbiter’s Decision of 23 December 1997 provides:

WHEREFORE, premises considered, judgment is hereby rendered ordering

respondent Allied Banking Corporation to pay complainant the aggregate total
amount of Three Hundred Twenty Four Thousand Pesos (₱ 324,000.00)
representing the following awards:

a) Separation pay for ₱ 272,000.00;

b) Quarter bonus for 1994 – ₱ 16,000.00;

c) 13th month pay for 1994 – ₱ 16,000.00;

d) Refund of contribution to Provident Fund - ₱ 20,000.00.

SO ORDERED.11

The Ruling of the NLRC

On appeal, the NLRC likewise ruled that Allied Bank terminated Galanida without
just cause. The NLRC agreed that the transfer order was unreasonable and
unjustified, considering the family considerations mentioned by Galanida. The
NLRC characterized the transfer as a demotion since the Bacolod and Tagbilaran
branches were smaller than the Jakosalem branch, a regional office, and because
the bank wanted Galanida, an assistant manager, to replace an assistant accountant
in the Tagbilaran branch. The NLRC found unlawful discrimination since Allied
Bank did not transfer several junior accountants in Cebu. The NLRC also held that
Allied Bank gave Ms. Co special treatment by assigning her to Cebu even though
she had worked for the bank for less than two years.

The NLRC ruled that Galanida’s termination was illegal for lack of due process.
The NLRC stated that Allied Bank did not conduct any hearing. The NLRC
declared that Allied Bank failed to send a termination notice, as required by law for
a valid termination. The Memo merely stated that Allied Bank would issue a notice
of termination, but the bank did not issue any notice.

The NLRC concluded that Allied Bank dismissed Galanida in bad faith,
tantamount to an unfair labor practice as the dismissal undermined Galanida’s right
to security of tenure and equal protection of the laws. On these grounds, the NLRC
promulgated its Decision of 18 September 1998, the relevant portion of which
states:

In this particular case, We view as impractical, unrealistic and no longer

advantageous to both parties to order reinstatement of the complainant. xxx For
lack of sufficient basis, We deny the claim for 1994 quarter bonus. Likewise, no
attorney’s fees is awarded as counsels for complainant-appellee are from the City
Prosecutor’s Office of Cebu.

WHEREFORE, premises considered, the decision of the Labor Arbiter dated

December 23, 1997 is hereby MODIFIED by increasing the award of separation
pay and granting in addition thereto backwages, moral and exemplary damages.
The respondent-appellant, ALLIED BANKING CORPORATION, is thus ordered
to pay to herein complainant-appellee, POTENCIANO L. GALANIDA, the
following amounts:

a) ₱ 336,000.00, representing separation pay

b> ₱ 833,600.00, representing backwages
c> ₱ 5,333.23 representing proportional 1994 13th month pay
d> ₱ 20,000.00 representing refund of Provident Fund Contribution
e> ₱ 50,000.00 representing moral damages
f> ₱ 20,000.00 representing exemplary damages

===========₱ 1,264,933.33 TOTAL AWARD

All other claims are dismissed for lack of basis. The other respondents are dropped
for lack of sufficient basis that they acted in excess of their corporate powers.

SO ORDERED.12

Allied Bank filed a motion for reconsideration which the NLRC denied in its
Resolution of 24 December 1998.13

Dissatisfied, Allied Bank filed a petition for review questioning the Decision and
Resolution of the NLRC before the Court of Appeals.

The Ruling of the Court of Appeals

Citing Dosch v. NLRC,14 the Court of Appeals held that Galanida’s refusal to
comply with the transfer orders did not warrant his dismissal. The appellate court
ruled that the transfer from a regional office to the smaller Bacolod or Tagbilaran
branches was effectively a demotion. The appellate court agreed that Allied Bank
did not afford Galanida procedural due process because there was no hearing and
no notice of termination. The Memo merely stated that the bank would issue a
notice of termination but there was no such notice.

The Court of Appeals affirmed the ruling of the NLRC in its Decision of 27 April
2000, thus:

WHEREFORE, for lack of merit, the petition is DISMISSED and the assailed
Decision of public respondent NLRC is AFFIRMED.

SO ORDERED. 15

Allied Bank filed a motion for reconsideration which the appellate court denied in
its Resolution of 8 August 2000.16

On 26 April 2001, Allied Bank appealed the appellate court’s decision and
resolution to the Supreme Court. Allied Bank prayed that the Supreme Court: (1)
issue a temporary restraining order or writ of preliminary injunction ex parte to
restrain the implementation or execution of the questioned Decision and
Resolution; (2) declare Galanida’s termination as valid and legal; (3) set aside the
Court of Appeals’ Decision and Resolution; (4) make permanent the restraining
order or preliminary injunction; (5) order Galanida to pay the costs; and (6) order
other equitable reliefs.

The Issues

Allied Bank raises the following issues:

1. WHETHER UNDER THE FACTS PRESENTED THERE IS LEGAL BASIS

IN PETITIONER’S EXERCISE OF ITS MANAGEMENT PREROGATIVE.

2. WHETHER PRIVATE RESPONDENT’S VIOLATIONS OF COMPANY

RULES CONSTITUTE A GROUND TO WARRANT THE PENALTY OF
DISMISSAL.

3. WHETHER UNDER THE FACTS PRESENTED, THERE IS LEGAL BASIS

TO HOLD THAT ALLIED BANK AFFORDED PRIVATE RESPONDENT THE
REQUIRED DUE PROCESS.
4. WHETHER UNDER THE FACTS, THERE IS LEGAL BASIS TO HOLD
THAT PRIVATE RESPONDENT CANNOT RECOVER ANY MONETARY
AWARD.17

In sum, Allied Bank argues that the transfer of Galanida was a valid exercise of its
management prerogative. Allied Bank contends that Galanida’s continued refusal
to obey the transfer orders constituted willful disobedience or insubordination,
which is a just cause for termination under the Labor Code.

On the other hand, Galanida defended his right to refuse the transfer order. The
memorandum for Galanida filed with this Court, prepared by Atty. Loreto M.
Durano, again misquoted the Court’s ruling in Dosch v. NLRC, thus:

xxx His [Galanida’s] refusal to transfer falls well within the ruling of the Supreme
Court in Helmut Dosch vs. NLRC, et. al., 123 SCRA 296 (1983) quoted as
follows:

xxx

Refusal to obey a transfer order cannot be considered insubordination where

employee cited reason for said refusal, such as that of being away from the
family."18

The Ruling of the Court

The petition is partly meritorious.

Preliminary Matter: Misquoting Decisions of the Supreme Court

The memorandum prepared by Atty. Durano and, worse, the assailed Decision of
the Labor Arbiter, both misquoted the Supreme Court’s ruling in Dosch v. NLRC.
The Court held in Dosch:

We cannot agree to Northwest’s submission that petitioner was guilty of

disobedience and insubordination which respondent Commission sustained. The
only piece of evidence on which Northwest bases the charge of contumacious
refusal is petitioner’s letter dated August 28, 1975 to R.C. Jenkins wherein
petitioner acknowledged receipt of the former’s memorandum dated August 18,
1975, appreciated his promotion to Director of International Sales but at the same
time regretted "that at this time for personal reasons and reasons of my family, I
am unable to accept the transfer from the Philippines" and thereafter expressed his
preference to remain in his position, saying: "I would, therefore, prefer to remain in
my position of Manager-Philippines until such time that my services in that
capacity are no longer required by Northwest Airlines." From this evidence, We
cannot discern even the slightest hint of defiance, much less imply insubordination
on the part of petitioner.19

The phrase "[r]efusal to obey a transfer order cannot be considered insubordination

where employee cited reason for said refusal, such as that of being away from the
family" does not appear anywhere in the Dosch decision. Galanida’s counsel lifted
the erroneous phrase from one of the italicized lines in the syllabus of Dosch found
in the Supreme Court Reports Annotated ("SCRA").

The syllabus of cases in official or unofficial reports of Supreme Court decisions or

resolutions is not the work of the Court, nor does it state this Court’s decision. The
syllabus is simply the work of the reporter who gives his understanding of the
decision. The reporter writes the syllabus for the convenience of lawyers in reading
the reports. A syllabus is not a part of the court’s decision.20 A counsel should not
cite a syllabus in place of the carefully considered text in the decision of the Court.

In the present case, Labor Arbiter Almirante and Atty. Durano began by quoting
from Dosch, but substituted a portion of the decision with a headnote from the
SCRA syllabus, which they even underscored. In short, they deliberately made the
quote from the SCRA syllabus appear as the words of the Supreme Court. We
admonish them for what is at the least patent carelessness, if not an outright
attempt to mislead the parties and the courts taking cognizance of this case. Rule
10.02, Canon 10 of the Code of Professional Responsibility mandates that a lawyer
shall not knowingly misquote or misrepresent the text of a decision or authority. It
is the duty of all officers of the court to cite the rulings and decisions of the
Supreme Court accurately.21

Whether Galanida was dismissed for just cause

We accord great weight and even finality to the factual findings of the Court of
Appeals, particularly when they affirm the findings of the NLRC or the lower
courts. However, there are recognized exceptions to this rule. These exceptions
are: (1) when the findings are grounded on speculation, surmise and conjecture; (2)
when the inference made is manifestly mistaken, absurd or impossible; (3) when
there is grave abuse of discretion in the appreciation of facts; (4) when the factual
findings of the trial and appellate courts are conflicting; (5) when the Court of
Appeals, in making its findings, has gone beyond the issues of the case and such
findings are contrary to the admissions of both appellant and appellee; (6) when the
judgment of the appellate court is premised on a misapprehension of facts or when
it has failed to consider certain relevant facts which, if properly considered, will
justify a different conclusion; (7) when the findings of fact are conclusions without
citation of specific evidence on which they are based; and (8) when the findings of
fact of the Court of Appeals are premised on the absence of evidence but are
contradicted by the evidence on record.22 After a scrutiny of the records, we find
that some of these exceptions obtain in the present case.

The rule is that the transfer of an employee ordinarily lies within the ambit of the
employer’s prerogatives.23 The employer exercises the prerogative to transfer an
employee for valid reasons and according to the requirement of its business,
provided the transfer does not result in demotion in rank or diminution of the
employee’s salary, benefits and other privileges.24 In illegal dismissal cases, the
employer has the burden of showing that the transfer is not unnecessary,
inconvenient and prejudicial to the displaced employee.25

The constant transfer of bank officers and personnel with accounting

responsibilities from one branch to another is a standard practice of Allied Bank,
which has more than a hundred branches throughout the country.26 Allied Bank
does this primarily for internal control. It also enables bank employees to gain the
necessary experience for eventual promotion. The Bangko Sentral ng Pilipinas, in
its Manual of Regulations for Banks and Other Financial Intermediaries,27
requires the rotation of these personnel. The Manual directs that the "duties of
personnel handling cash, securities and bookkeeping records should be rotated"
and that such rotation "should be irregular, unannounced and long enough to
permit disclosure of any irregularities or manipulations."28

Galanida was well aware of Allied Bank’s policy of periodically transferring

personnel to different branches. As the Court of Appeals found, assignment to the
different branches of Allied Bank was a condition of Galanida’s employment.
Galanida consented to this condition when he signed the Notice of Personnel
Action.29

The evidence on record contradicts the charge that Allied Bank discriminated
against Galanida and was in bad faith when it ordered his transfer. Allied Bank’s
letter of 13 June 199430 showed that at least 14 accounting officers and personnel
from various branches, including Galanida, were transferred to other branches.
Allied Bank did not single out Galanida. The same letter explained that Galanida
was second in line for assignment outside Cebu because he had been in Cebu for
seven years already. The person first in line, Assistant Manager Roberto Isla, who
had been in Cebu for more than ten years, had already transferred to a branch in
Cagayan de Oro City. We note that none of the other transferees joined Galanida in
his complaint or corroborated his allegations of widespread discrimination and
favoritism.

As regards Ms. Co, Galanida’s letter of 16 June 1994 itself showed that her
assignment to Cebu was not in any way related to Galanida’s transfer. Ms. Co was
supposed to replace a certain Larry Sabelino in the Tabunok branch. The employer
has the prerogative, based on its assessment of the employees’ qualifications and
competence, to rotate them in the various areas of its business operations to
ascertain where they will function with maximum benefit to the company.31

Neither was Galanida’s transfer in the nature of a demotion. Galanida did not
present evidence showing that the transfer would diminish his salary, benefits or
other privileges. Instead, Allied Bank’s letter of 13 June 1994 assured Galanida
that he would not suffer any reduction in rank or grade, and that the transfer would
involve the same rank, duties and obligations. Mr. Olveda explained this further in
the affidavit he submitted to the Labor Arbiter, thus:

19. There is no demotion in position/rank or diminution of complainant’s salary,

benefits and other privileges as the transfer/assignment of branch officers is
premised on the role/functions that they will assume in the management and
operations of the branch, as shown below:

(a) The Branch Accountant, as controller of the branch is responsible for the proper
discharge of the functions of the accounting section of the branch, review of
documentation/proper accounting and control of transaction. As such, the
accounting functions in the branch can be assumed by any of the following officers
with the rank of: Senior Manager/Acctg.; Manager/ Acctg.; Senior Asst.
Manager/Acctg.; Asst. Manager/Acctg.; Accountant or Asst. Accountant.

xxx

20. The transfer/assignment of branch officer from one branch, to another

branch/office is lateral in nature and carries with it the same position/rank, salary,
benefits and other privileges. The assignment/transfer is for the officer to assume
the functions relative to his job and NOT the position/rank of the officer to be
replaced.
There is also no basis for the finding that Allied Bank was guilty of unfair labor
practice in dismissing Galanida. Unfair labor practices relate only to violations of
"the constitutional right of workers and employees to self-organization"32 and are
limited to the acts enumerated in Article 248 of the Labor Code, none of which
applies to the present case. There is no evidence that Galanida took part in forming
a union, or even that a union existed in Allied Bank.

This leaves the issue of whether Galanida could validly refuse the transfer orders
on the ground of parental obligations, additional expenses, and the anguish he
would suffer if assigned away from his family.

The Court has ruled on this issue before. In the case of Homeowners Savings and
Loan Association, Inc. v. NLRC,33 we held:

The acceptability of the proposition that transfer made by an employer for an illicit
or underhanded purpose – i.e., to defeat an employee’s right to self-organization, to
rid himself of an undesirable worker, or to penalize an employee for union
activities – cannot be upheld is self-evident and cannot be gainsaid. The difficulty
lies in the situation where no such illicit, improper or underhanded purpose can be
ascribed to the employer, the objection to the transfer being grounded solely upon
the personal inconvenience or hardship that will be caused to the employee by
reason of the transfer. What then?

This was the very same situation we faced in Phil. Telegraph and Telephone Corp.
v. Laplana. In that case, the employee, Alicia Laplana, was a cashier at the Baguio
City Branch of PT&T who was directed to transfer to the company’s branch office
at Laoag City. In refusing the transfer, the employee averred that she had
established Baguio City as her permanent residence and that such transfer will
involve additional expenses on her part, plus the fact that an assignment to a far
place will be a big sacrifice for her as she will be kept away from her family which
might adversely affect her efficiency. In ruling for the employer, the Court upheld
the transfer from one city to another within the country as valid as long as there is
no bad faith on the part of the employer. We held then:

"Certainly the Court cannot accept the proposition that when an employee opposes
his employer’s decision to transfer him to another work place, there being no bad
faith or underhanded motives on the part of either party, it is the employee’s
wishes that should be made to prevail."
Galanida, through counsel, invokes the Court’s ruling in Dosch v. NLRC.34
Dosch, however, is not applicable to the present case. Helmut Dosch refused a
transfer consequential to a promotion. We upheld the refusal because no law
compels an employee to accept a promotion, and because the position Dosch was
supposed to be promoted to did not even exist at that time.35 This left as the only
basis for the charge of insubordination a letter from Dosch in which the Court
found "not even the slightest hint of defiance, much less xxx insubordination."36

Moreover, the transfer of an employee to an overseas post, as in the Dosch case,

cannot be likened to a transfer from one city to another within the country,37
which is the situation in the present case. The distance from Cebu City to Bacolod
City or from Cebu City to Tagbilaran City does not exceed the distance from
Baguio City to Laoag City or from Baguio City to Manila, which the Court
considered a reasonable distance in PT&T v. Laplana.38

The refusal to obey a valid transfer order constitutes willful disobedience of a

lawful order of an employer.39 Employees may object to, negotiate and seek
redress against employers for rules or orders that they regard as unjust or illegal.
However, until and unless these rules or orders are declared illegal or improper by
competent authority, the employees ignore or disobey them at their peril.40 For
Galanida’s continued refusal to obey Allied Bank’s transfer orders, we hold that
the bank dismissed Galanida for just cause in accordance with Article 282 (a) of
the Labor Code.41 Galanida is thus not entitled to reinstatement or to separation
pay.

Whether Galanida’s dismissal violated the

requirement of notice and hearing

To be effective, a dismissal must comply with Section 2 (d), Rule 1, Book VI of

the Omnibus Rules Implementing the Labor Code ("Omnibus Rules"), which
provides:

For termination of employment based on just causes as defined in Article 282 of

the Labor Code:

(i) A written notice served on the employee specifying the ground or grounds of
termination, and giving said employee reasonable opportunity within which to
explain his side.
(ii) A hearing or conference during which the employee concerned, with the
assistance of counsel if he so desires is given opportunity to respond to the charge,
present his evidence, or rebut the evidence presented against him.

(iii) A written notice of termination served on the employee indicating that upon
due consideration of all the circumstances, grounds have been established to justify
his termination.

The first written notice was embodied in Allied Bank’s letter of 13 June 1994. The
first notice required Galanida to explain why no disciplinary action should be taken
against him for his refusal to comply with the transfer orders.

On the requirement of a hearing, this Court has held that the essence of due process
is simply an opportunity to be heard.42 An actual hearing is not necessary. The
exchange of several letters, in which Galanida’s wife, a lawyer with the City
Prosecutor’s Office, assisted him, gave Galanida an opportunity to respond to the
charges against him.

The remaining issue is whether the Memo dated 8 September 1994 sent to
Galanida constitutes the written notice of termination required by the Omnibus
Rules. In finding that it did not, the Court of Appeals and the NLRC cited Allied
Bank’s rule on dismissals, quoted in the Memo, that, "Notice of termination shall
be issued by the Investigation Committee subject to the confirmation of the
President or his authorized representative."43 The appellate court and NLRC held
that Allied Bank did not send any notice of termination to Galanida. The Memo,
with the heading "Transfer and Reassignment," was not the termination notice
required by law.

We do not agree.

Even a cursory reading of the Memo will show that it unequivocally informed
Galanida of Allied Bank’s decision to dismiss him. The statement, "please be
informed that the Bank has terminated your services effective September 1, 1994
and considered whatever benefit, if any, that you are entitled [to] as forfeited
xxx"44 is plainly worded and needs no interpretation. The Memo also discussed
the findings of the Investigation Committee that served as grounds for Galanida’s
dismissal. The Memo referred to Galanida’s "open defiance and refusal" to transfer
first to the Bacolod City branch and then to the Tagbilaran City branch. The Memo
also mentioned his continued refusal to report for work despite the denial of his
application for additional vacation leave.45 The Memo also refuted Galanida’s
charges of discrimination and demotion, and concluded that he had violated Article
XII of the bank’s Employee Discipline Policy and Procedure.

The Memo, although captioned "Transfer and Reassignment," did not preclude it
from being a notice of termination. The Court has held that the nature of an
instrument is characterized not by the title given to it but by its body and
contents.46 Moreover, it appears that Galanida himself regarded the Memo as a
notice of termination. We quote from the Memorandum for Private Respondent-
Appellee, as follows:

The proceedings may be capsulized as follows:

1. On March 13, 199447 Private Respondent-Appellee filed before the Region VII
Arbitration Branch a Complaint for Constructive Dismissal. A copy of the
Complaint is attached to the Petition as Annex "H";

xxx

5. On September 8, 1994, Petitioner-Appellant issued him a Letter of Termination.

A copy of said letter is attached to the Petition as Annex "N";

6. Private Respondent-Appellee filed an Amended/ Supplemental Complaint

wherein he alleged illegal dismissal. A copy of the Amended/Supplemental
Complaint is attached to the Petition as Annex "O"; xxx 48 (Emphasis supplied)

The Memorandum for Private Respondent-Appellee refers to the Memo as a

"Letter of Termination." Further, Galanida amended his complaint for constructive
dismissal49 to one for illegal dismissal50 after he received the Memo. Clearly,
Galanida had understood the Memo to mean that Allied Bank had terminated his
services.

The Memo complied with Allied Bank’s internal rules which required the bank’s
President or his authorized representative to confirm the notice of termination. The
bank’s Vice-President for Personnel, as the head of the department that handles the
movement of personnel within Allied Bank, can certainly represent the bank
president in cases involving the dismissal of employees.

Nevertheless, we agree that the Memo suffered from certain errors.1âwphi1

Although the Memo stated that Allied Bank terminated Galanida’s services as of 1
September 1994, the Memo bore the date 8 September 1994. More importantly,
Galanida only received a copy of the Memo on 5 October 1994, or more than a
month after the supposed date of his dismissal. To be effective, a written notice of
termination must be served on the employee.51 Allied Bank could not terminate
Galanida on 1 September 1994 because he had not received as of that date the
notice of Allied Bank’s decision to dismiss him. Galanida’s dismissal could only
take effect on 5 October 1994, upon his receipt of the Memo. For this reason,
Galanida is entitled to backwages for the period from 1 September 1994 to 4
October 1994.

Under the circumstances, we also find an award of ₱ 10,000 in nominal damages

proper. Courts award nominal damages to recognize or vindicate the right of a
person that another has violated.52 The law entitles Galanida to receive timely
notice of Allied Bank’s decision to dismiss him. Allied Bank should have
exercised more care in issuing the notice of termination.

WHEREFORE, the Decision of 27 April 2000 of the Court of Appeals in CA-G.R.

SP No. 51451 upholding the Decision of 18 September 1998 of the NLRC in
NLRC Case No. V-000180-98 is AFFIRMED, with the following
MODIFICATIONS:

1) The awards of separation pay, moral damages and exemplary damages are
hereby deleted for lack of basis;

2) Reducing the award of backwages to cover only the period from 1 September
1994 to 4 October 1994; and

3) Awarding nominal damages to private respondent for ₱ 10,000.

This case is REMANDED to the Labor Arbiter for the computation, within thirty
(30) days from receipt of this Decision, of the backwages, inclusive of allowances
and other benefits, due to Potenciano L. Galanida for the time his dismissal was
ineffectual from 1 September 1994 until 4 October 1994.

Labor Arbiter Dominador A. Almirante and Atty. Loreto M. Durano are

ADMONISHED to be more careful in citing the decisions of the Supreme Court in
the future.

SO ORDERED.